Grand Committee
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Arrangement of Business
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The Deputy Chairman of Committees (Lord Bichard) (CB)
My Lords, welcome to the Grand Committee. If there is a Division in the House, the Committee will adjourn for 10 minutes.
Health: Neglected Tropical Diseases
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Baroness Hayman
To ask Her Majesty’s Government what progress has been made in combating neglected tropical diseases since the London Declaration in 2012; and how that issue will feature in the post-2015 Millennium Development Goals health agenda.
Baroness Hayman (CB)
My Lords, I am delighted to have the opportunity to introduce today’s debate on progress in combating neglected tropical diseases and I draw attention to my non-financial interests in health and development, particularly as a trustee of the Sabin Vaccine Institute and the Malaria Consortium. I am also delighted that what many would consider an abstruse and minority interest subject has attracted such a large and expert speakers list—and even an equally distinguished audience in the Moses Room—and I look forward to hearing the contributions.
I am also glad to see the noble Lord, Lord Bates, here today as the Minister replying. I welcome him to our world of worms, snails, flukes and flies, the vectors of the group of parasitic and bacterial diseases that are categorised as neglected tropical diseases—NTDs. Of course, these diseases—afflictions such as river blindness, human hookworm and elephantiasis—are not actually part of our world as people who live in rich, developed countries. They are the diseases of the world’s poorest people, predominantly the rural poor. For them, NTDs are far from abstruse or a specialised interest; they are illnesses that affect one in six of the world’s population and blight the development of half a billion of the world’s poorest children.
Although NTDs do not cause as many immediate deaths as AIDS, TB and malaria, they kill, they maim and disfigure and they stunt and disable, causing decades of pain and, often, isolation. These diseases not only have direct effects but also weaken the immune system, cause anaemia, put infected individuals at higher risk of contracting other diseases and impair the ability to resist infection. They increase the risks in pregnancy and childbirth and they can have a negative effect on the efficacy of treatments for diseases such as TB. The link in particular between genital schistosomiasis and HIV infection, particularly in young women, has not been taken seriously enough in the past. Beyond those health effects, NTDs also form a terrible barrier to education and employment. They are not only the diseases of poverty; they are the diseases that cause poverty. Combating NTDs is therefore one of the best routes to cutting the cycle of poverty itself and to the sustainable development that we all seek.
The good news is that, unlike with many diseases, we have many of the tools necessary to combat those afflictions. We know that the combination of mass drug administration and water and sanitation projects, for example, can result in dramatic benefits and reduction in the incidence of disease. With concerted effort, with research into new vaccines, new diagnostics, new insecticides and medicines, with improved mapping and monitoring, with operational research, we could make much more progress. Much of that work is in train in academic institutions, in the voluntary sector and in the countries themselves
The London declaration of 2012, whose second anniversary we mark with this debate, was hugely important, because it brought together funders, both national and philanthropic, pharmaceutical companies that donate the drugs necessary for mass drug administration programmes and endemic countries themselves in an effort to co-ordinate the fight against these diseases. Together with the ongoing support of the World Health Organisation, which has championed this work in recent years, we have seen a significant shift in the global prioritisation of neglected tropical diseases. Their inclusion in the healthy lives goal of the high-level panel on the post-2015 development agenda, published in May last year, was, I believe, a crucial step forward.
I welcome, too, the formation of NTD coalitions, such as the very successful one that we have in the UK, in countries across the world and, particularly importantly, the drawing up of integrated NTD control strategies in endemic countries. The academic and voluntary sector, both of which are so strong in the United Kingdom, have much to offer both in research and in resource. For example, the London Centre for Neglected Tropical Disease Research, which had just been launched when we debated this subject a year ago, works continuously to improve the effectiveness of control measures. We need to know how to do what we do better. Such technical support will be essential for plans such as the recently drawn-up Africa regional NTD strategy if it is to be successful.
As well as technical support, money remains an issue. Even given the relative cheapness—we know that many would argue that treating NTDs was the best bang for your buck that you could get in public health expenditure—and the cost efficiency of NTD control work, given the extensive drug donations, it has been estimated that there is still a £200 million funding gap to be bridged if we are to meet the goals of the London declaration. I am not asking Her Majesty’s Government to meet that gap themselves; they have already been generous and committed in this area. However, I ask the Minister what progress the Government are making in championing investment in NTD work with other key international donor Governments, particularly perhaps France, Germany and Australia.
As we have recently and sadly seen with polio eradication, conflict can threaten to destroy the painstaking work of decades. When countries experience violence and civil wars, health programmes and the benefits that they provide to the poor and the marginalised are threatened. Through the Malaria Consortium, I know of the situation in South Sudan. There, it is working on DfID-supported programmes and bringing long-standing expertise in malaria to bear on programmes to combat neglected tropical diseases. We have discussed in your Lordships’ House before the issue of not working in silos in this area. Members of the charity’s staff had to be evacuated during the recent violence and have only just been able to return. I pay tribute to the courage and commitment of the very many—both local and international—NGO workers throughout the world who continue to operate in extremely difficult and often dangerous circumstances. On the specifics of South Sudan, I understand that the DfID NTD programme, though not the malaria programme, is on hold because of the perceived continuing dangers. I wonder whether the Minister could give any indication today, or perhaps in writing, of when that programme might be restarted.
I return to the issue of a post-2015 millennium development goal. Combating NTDs punches above its weight in broader health and wider development terms. We need to renew and reinvigorate our commitment to research, prevention and treatment programmes. By integrating existing strategies such as mass drug administration with broader public health programmes such as those on water, sanitation and education, we not only enhance the effectiveness of those strategies but start to build from the bottom up the sort of universal health coverage and health systems needed to underpin development. Therefore, I end by congratulating the Government on the leadership that they, together with the United States, have given so far and I urge them to ensure that NTD control features in the final formulation of the sustainable post-2015 health agenda.
Lord Stone of Blackheath (Lab)
My Lords, it was the passion and expertise of the noble Baroness, Lady Hayman, that brought me into this world. More than 200 million individuals in Africa are infected by schistosomiasis, causing malnutrition, stunting, anaemia and eventually early death through liver disease and bladder cancer. Dr Alan Fenwick and his team at the Schistosomiasis Control Initiative at Imperial College run huge and detailed programmes that reduce all this enormously. I declare a non-financial interest as a trustee. His team and I are concerned first with the humanitarian effects and alleviating suffering. I am there not as a medic but to see that the charitable moneys are used cost effectively—and they certainly are.
In Africa, in 10 countries that receive aid from us, 50 million people lose their ability to work each year to these diseases. Even if they each earn a dollar a day, this amounts to $18 billion a year lost through disability. DfID is currently investing £50 million over five years towards the control of schistosomiasis and intestinal worms. For this amount, we will be heading to eliminate these infections in two of these countries and, for an estimated £50 million more, we could approach elimination in another four of these countries. It will take longer in the larger countries such as Ethiopia and DRC, but I was in Egypt only this weekend, where they have demonstrated that it can be done.
Since the London declaration in January 2012, we have certainly taken several positive steps. Donations from the pharmaceutical industry have increased. GSK and Johnson & Johnson have donated more de-worming medicines, and more than 700 million people every year receive albendazole either for lymphatic filariasis control or worm treatment or both. Merck has increased its donation of praziquantel from an annual 25 million to 250 million tablets in 2016, enough to treat 100 million children every year. But this is not elimination.
The member states of the 2012 World Health Assembly adopted a resolution to try to eliminate schistosomiasis where feasible by 2020. All that is being done will help to reach elimination in some countries but not without technical assistance and supplementary funding. In addition, DfID has doubled its support and between 2011 and 2016 we will assist Governments in the 10 countries to deliver 200 million treatments. Mindful business people have stepped in, such as Luke Ding, who manages his philanthropy through Prism the Gift Fund, where I am a trustee. We administer the giving by individuals such as Luke and by large foundations by helping them to gift significant amounts to charities cost effectively. Luke made a donation last year of £275,000 to assist SCI in general and our programme in Madagascar.
All this is great. We know that we could reach elimination with economic development and better water and sanitation, which could be done by pulling together British and American aid programmes to work synergistically across Africa. With an additional sum of £200 million for 2014 and 2020, we would have the guaranteed funding for the programme for the integrated control of schistosomiasis in sub-Saharan Africa, or ICOSA. We could expand coverage and move towards the WHO target of elimination of schistosomiasis in particular and the other NTDs in the poorest rural communities in Africa. That sounds a lot of money, but noble Lords should remember that the successful elimination would save 50 million DALYs—disability annual lost years—which would mean $18 billion a year saved for ever more. Will the Minister meet us and our partners to plan how this might be organised?
Lord Chidgey (LD)
My Lords, first I must apologise because I have come to this debate with a finely honed speech of just three minutes to find that I actually have four. I could spend that being rude to people, but I shall promise not to. There will be some extra time at the end that noble Lords might want to share among themselves, if they are a bit worried about the length of their speeches. Anyway, here comes my three minutes.
The London declaration in 2012 on neglected tropical diseases set a target for control and eradicating at least 10 of these devastating diseases by 2020. The commitment was to sustain, expand and extend programmes that ensure the supply of drugs and other interventions to help to eradicate these 10 diseases. International donors such as DfID could address this by explicitly targeting NTD programming at the poorest and most marginalised populations. When the Minister replies, I hope that he can comment on that and on what DfID’s role will be.
In the list of NTDs, Guinea worm disease caught my attention because, in my relative youth, I worked for some years in the rainforests and mountains of Guinea in west Africa. Tropical diseases flourished there, but never once did I come across Guinea worm.
As some noble Lords may know, Guinea worm is a parasitic infection contracted by drinking contaminated water containing water fleas harbouring infective Guinea worm larvae. Inside the human’s abdomen, the larvae mate and female worms mature and grow. They grow as long as three feet or more and, after a year of incubation, the worm creates a lesion in the skin and slowly emerges from the host person’s body. The contamination cycle begins when the victims immerse their limbs in water to ease their agonising pain, stimulating the emerging worm to release larvae into the water and begin the cycle all over again. Guinea worms can be removed by winding them around a small stick and manually extracting them in a slow and painful process which can take several weeks.
Through the intervention of the Carter Center and its partners, cases of Guinea worm have been reduced by more than 99.9% since 1986. In 2013, only approximately 150 cases were reported, mainly in South Sudan. Guinea worm disease is on track to be only the second disease in history to be eradicated after smallpox. Sadly, this is only one success.
However, it is worth comparing to the situation with tuberculosis. As far as I am aware, about 20 years ago TB too was believed to be on the point of eradication. I am not a medical man and I am not sure, but that is what I recall. Somehow that initiative was lost and now TB is the second most deadly disease in the world. It is estimated to have killed more people than any other pandemic in history. It is shocking to find that only one new TB drug has been developed in the past 42 years.
Even more troubling is that a signatory to the London declaration on NTDs appears to have effectively abandoned that commitment. According to a recent edition of the Times, AstraZeneca, the UK’s second largest drug company, has confirmed it will no longer carry out early stage research into NTDs, TB and malaria. It will be focusing instead on making products that attract big profits. It seems to be effectively turning its back on the poor.
The NTDs affect the achievement of almost all millennium development goals. There is unquestionably a case for strengthening NTD control and elimination programmes and for the inclusion of NTDs within the health goal in the MDG framework. Do the Government accept this case? In so doing, they would recognise the plight of more than 1.4 billion desperately poor people blighted by NTDs.
Lord Patel (CB)
My Lords, I declare an interest as a chancellor of the University of Dundee, which has a drug development unit that focuses on finding treatments for five of the key neglected tropical diseases—human African trypanosomiasis, Chagas disease, visceral leishmaniasis, malaria and tuberculosis—and which has only recently announced a potential drug for the treatment of malaria.
However, today I wish to speak not about drug development at Dundee—fantastic though it is—but, in the few minutes that I have, about why a focus on neglected tropical diseases should be given priority in women’s health and gender equality in the millennium development goals post 2015, alongside HIV/AIDS, nutrition, access to contraception and poverty reduction.
I shall speak specifically about two helminth infections—hookworm infections and schistosomiasis. These are the two key infections affecting women living in poverty in Africa and elsewhere today. Nearly 40 million women of childbearing age and 7 million pregnant women per year are infected, leading to increased maternal, neonatal and infant mortality, not to mention increased morbidity. Further, more than 10 million women suffer from genital schistosomiasis. Apart from causing much pain and distress, this condition also is linked to horizontal transmission of the HIV/AIDS virus and is a possible major factor in the AIDS epidemic. Hence, it is important for the control of HIV/AIDS, particularly in Africa.
It is believed from research carried out that highly vascular and CD4+ cell-enriched patches in the cervix or elsewhere in the female genital tract may provide host entry routes for sexually transmitted HIV, although other mechanisms are plausible. There is an urgent need for expanded studies. If this is shown to be true, it would be a major case, allowing millions of young women who are infected to control HIV/AIDS. Such findings are therefore critical for designing potential intervention strategies of the future.
A recent publication by Hotez and Whitham in the American Journal of Obstetrics & Gynaecology—I am an honorary fellow of the college—highlights in detail the problems and the solutions. An urgent expansion of mass drug administration, not only to children but to women of childbearing age, for the eradication of hookworm and schistosomiasis is needed. Current programmes hardly reach a third of the children in Africa and less then 10% of young girls, particularly women. Millennium development goals post 2015 should include new policies and advocacy of neglected tropical diseases, including the elimination of helminth infection, which is possible, and better alignment. Control of these infections to HIV/AIDS and malaria control is what is required, hence the need for the inclusion of neglected tropical diseases in the millennium development goals post 2015. I hope the Minister will ensure that the UK will support that.
Lord Sheikh (Con)
My Lords, I am interested in this subject as I was born and brought up in east Africa. I have seen how the diseases that we are discussing today affect the lives of people. I thank the noble Baroness, Lady Hayman, for initiating this debate.
I applaud this Government’s continued commitment to international aid. Combating disease is a crucial part of this programme. We are now marking the two-year anniversary of the historic London declaration on neglected tropical diseases. Neglected tropical diseases affect more than a billion people throughout the world. They often affect the poorest people in the hardest-to-reach areas. The combined personal and family suffering also translates into wider economic hardship, trapping communities in a cycle of poverty. Eliminating NTDs is thought to be one of the most cost-effective and comprehensive ways to achieve development goals and eliminate poverty. Therefore, it is important that work to combat NTDs is absorbed into wider-scale initiatives on poverty.
Prevention is also a key principle. Measures such as better health education, greater nutrition and the provision of safe drinking water will help to reduce cases in the first instance. We must celebrate the progress that has been made in a number of ways. We have made political progress. Last May, 32 countries took part in deliberations during which the World Health Assembly adopted a resolution on all 17 neglected tropical diseases. This resolution calls for more effective financing and implementation of prevention and eradication programmes. It makes important references to increasing access to treatments. I am proud that the United Kingdom strongly supported this resolution and has pledged to continue playing an important role in this respect.
We have made progress on awareness. Neglected tropical diseases are receiving more coverage than ever before and are firmly on the international agenda. The engagement and generosity of pharmaceutical companies must also be noted. We now have all the treatments required to control and eliminate the seven most common NTDs. These account for over 90% of the global burden.
Although we have made progress, though, we must of course not be complacent. It is still necessary to further increase and maintain this progress if we are to reach our target. The millennium development goals expire in 2015. This provides us with a perfect opportunity to renew and accelerate the focus on eradicating NTDs. In its report last summer, the High-level Panel of Eminent Persons on the Post-2015 Development Agenda included the reduction of NTDs as part of its recommended goal of ensuring healthy lives.
In my view, the 2020 road map for the elimination of at least 10 diseases by the end of the decade is firmly in sight. It is very ambitious but I believe that it can, and I hope will, be achieved.
Lord Alton of Liverpool (CB)
My Lords, I, too, pay tribute to my noble friend Lady Hayman for her assiduous and indefatigable commitment to the elimination of neglected tropical diseases. I should mention that I am a patron emeritus of the Liverpool School for Tropical Medicine, which is one of the partners in the Global Network for neglected tropical diseases and is a leader in NTD research. I am also a patron of a project providing clean water in Turkana and a health project in Ghana.
As recently as 27 January, former Ghanaian President John Kufuor was in London to mark the anniversary of the 2012 declaration. He rightly says:
“There is no silver bullet remedy to helping a country break the cycle of poverty, but investing in the health of its population offers one of the best options for unlocking economic potential”.
Scaling up integrated NTD control and elimination strategies is considered one of the most cost-effective ways to reduce global poverty. Virtually all of the “bottom billion”, the 1.4 billion people around the world who are living on less than $1.25 a day, are afflicted with one or more of the seven most common NTDs: elephantiasis, hookworm, river blindness, roundworm, whipworm, trachoma and snail fever. NTDs disable, debilitate and perpetuate poverty and in worst-case scenarios they can kill. They cause blindness, huge swelling in appendages and limbs, severe malnutrition and anaemia—all brilliantly highlighted, I might add, in the END7 Youtube video featuring Eddie Redmayne and others.
Those afflicted include more than 500 million children. In a randomised controlled trial in Ethiopia, researchers found that consistently treating trachoma halved childhood mortality, while a study in Kenya demonstrated that deworming children leads to a 25% decrease in school absenteeism. Compare the cost of one cup of coffee at Starbucks, which can range from £1.75 to £3.50, to the fact that just 30p—or 50 cents, half a US dollar—per person per year is all that is needed to treat and protect one person against all seven NTDs. This in turn averts malnutrition, improves education outcomes, improves maternal and child health, reduces new cases of HIV and sets the stage for sustainable economic development. In Africa, the entire at-risk population could be treated for £250 million or less annually. Yet efforts to control and eliminate NTDs receive less than 2% of total global health funding, and the elimination of many of the NTDs will not be achieved without significant investment in water and sanitation interventions. Such an approach should surely be central to post-2015 objectives, and I hope that we will hear from the Minister on this.
I am particularly concerned that the 2013 report of the Sustainable Development Solutions Network, An Action Agenda for Sustainable Development, does not mention NTDs. Surely that should be rectified. I hope that the Minister will comment on that.
Many of the curses that afflict us cannot be conquered but NTDs can. These ancient diseases can and should be a thing of the past, and it is not misty romanticism or idealism to talk of a world free of NTDs for the next generation. This is achievable, and we would be failing millions, and failing our duty, not to do it. My noble friend therefore deserves our thanks for keeping this issue on the agenda, and the United Nations and development agencies should be lobbied by parliamentarians and Governments the world over to make this achievable objective a reality. I hope that the Minister will tell us that the Government are committed to doing precisely that.
Baroness Warwick of Undercliffe (Lab)
My Lords, I, too, thank my noble friend Lady Hayman for introducing this timely debate and for her continued commitment to bringing this important subject to our attention.
The promises made by the pharmaceutical companies, global health organisations and government representatives in the London declaration two years ago were truly admirable. They were intended to be game-changing and I am delighted to hear from my noble friend that the drug donations, research and development funding and co-operation are making real inroads in the attempt to control, eliminate or eradicate the 10 named NTDs by 2020. The promise of the pharmaceutical companies under the London declaration to donate many more drugs, worth hundreds of millions of dollars a year, was a wonderful step but, as Dr Margaret Chan, director-general of the World Health Organisation, said at the time, drug donation is one solution but not the only solution.
In my four minutes, I will stress the importance of our investment in research into NTDs and highlight the work of some of our health-focused universities and their major contribution to development. The UK is a hub of research excellence, with many academics from different institutions all contributing to the fight against NTDs. Their work has global impact and changes the lives of some of the poorest people on the planet. The breadth of UK academic expertise and research in this area is world-leading. It covers anthropology, public health, basic science, epidemiology, clinical medicine, mathematical modelling and operational research.
Two institutions leading the way are Imperial College and the London School of Hygiene and Tropical Medicine. Together with the Natural History Museum, they last year formed the London Centre for Neglected Tropical Disease Research. The centre’s research builds on the long-standing expertise of UK academics in the epidemiology and transmission of NTDs, such as that of Professor Alan Fenwick, whose team, working with ministries of health across sub-Saharan Africa, assisted in the delivery of 100 million treatments in Africa and, indeed, the Middle East during 2013. Other speakers have referred to the research priorities of the centre, including bilharzia and intestinal worms.
Elsewhere in the UK, our universities are well placed for multidisciplinary approaches from the bench to the field. The Drug Discovery Unit at Dundee, referred to by the noble Lord, Lord Patel, has made major breakthroughs in NTD research, with £10 million of funding from the Wellcome Trust, including more than £8 million for a partnership with GlaxoSmithKline. Its teams work across academia, industry and the charitable sector worldwide.
There is always more that needs to be done. For example, there has been very little research into Buruli ulcer, an NTD in the leprosy family which is on WHO’s road map but not included in the London declaration. The exact mode of transmission is still unknown. There is no vaccine for primary prevention, and secondary prevention is based on early detection. WHO says that 80% of cases detected early can be cured with a combination of antibiotics. But early detection and antibiotic treatment require health education at community level, training of health workers and village volunteers, strengthening of health facilities, laboratory confirmation of cases, standardised recording and reporting systems, and monitoring and evaluation of control activities.
I hope that the noble Lord the Minister will agree with me that research remains fundamental to this vital work. Two years on from the London declaration, it is important to remind ourselves that medicines alone will not eradicate the diseases of poverty.
Lord Trees (CB)
My Lords, it is my pleasure to join others in thanking the noble Baroness, Lady Hayman, for initiating this important debate. The control of NTDs is a challenge, the success of tackling which has been to some extent quite remarkable to date. To make it a total success story, it is critical that the international community maintains the momentum of the London declaration of 2012 to achieve the goals of the WHO NTD 2012 road map on implementation for the control, elimination and in some cases eradication of NTDs between 2015 and 2020.
Most of the NTDs are parasitic or bacterial diseases characterised, as has been said, by high morbidity and chronicity, which affect some 1.4 billion people in the world. These are severely debilitating and, in some cases, disfiguring diseases, which have profound social, cultural and economic effects. They contribute to poverty and poverty contributes to their causes in a potentially permanent cycle of poverty. This restrains economic development, social justice, equality and female emancipation, as females and children are particularly at risk. The targeting of these diseases is therefore an important contribution for the attainment of the millennium development goals and any such targets to be set thereafter.
Historically, these have been relatively neglected diseases, although, as a number of noble Lords have commented, not by the very strong UK scientific community working in this area. Indeed, we can take pride in the efforts of British scientists such as Professor David Molyneux at Liverpool, Professor Peter Holmes in Glasgow—he is chairman of the NTD committee of WHO—and many others. We have heard about the contributions from Dundee, Imperial and others. We can take great pride in the contribution of those British scientists to ensuring that these diseases are getting adequate research attention. Critically, the WHO and the Bill and Melinda Gates Foundation, among other NGOs, are now taking these diseases seriously.
The other major factor, which has not had a great deal of attention in this debate so far but is a major contribution to the control of these diseases, is the generous donation of drugs worth between $2 billion and $3 billion a year by a number of pharmaceutical companies. In spite of this remarkable commercial philanthropy, there is still a funding gap, as the noble Baroness, Lady Hayman, has commented, not only in ensuring adequate surveillance, monitoring and delivery of the drugs that we have, but also in research to improve therapies and to provide, in some cases, vaccines. British institutions have a major role to play in this.
Only 0.6% of overseas development assistance for health is devoted to NTDs. The British Government have set an excellent example, along with the US Government and NGOs, but I join the noble Baroness, Lady Hayman, in urging the Government to exert all the pressure that they can on other richer countries, particularly in the EU, to ensure that they contribute more to this endeavour.
If ever there was a case of enlightened self-interest, this is it. Healthier, wealthier populations can feed themselves better, relieving the pressure on global food supplies; they are more stable, relieving the pressure on migration; and, ultimately, they will be purchasers of the products and services that richer countries can provide. Tackling the NTDs gives a big bang for one’s buck. Huge benefits accrue from relatively modest investment. Not only does it make economic sense, but it satisfies our obligations to relieve poverty, create opportunity and achieve fairness and social justice for all in our world.
Lord Crisp (CB)
My Lords, I, too, congratulate my noble friend Lady Hayman on her eloquent speech and for keeping this issue so well highlighted. There has been good progress but there is much more to do. I also congratulate the Government on taking such a strong lead on this. In doing so, I of course encourage them to continue to do so in the future.
I declare an interest as chair of trustees of Sightsavers, which deals with two of the major blinding diseases. Trachoma was endemic in London 400 years ago—so it can be eliminated—and I am delighted that DfID has supported Sightsavers to lead a collaboration of partners who are mapping trachoma worldwide. This will enable us to understand exactly what the level of trachoma is in every community and how we can go about eliminating it. It is a very important programme. DfID has also been supporting us in tackling trachoma in Nigeria in particular, with another project with the Government there. I am also delighted that the Diamond Jubilee Trust has chosen trachoma to be its major target for the funding that has been raised, with the intention of eliminating trachoma from five countries in the Commonwealth.
The other great disease we deal with is onchocerciasis, or river blindness. This reminds me of the wonderful co-operation there is in the world of neglected tropical diseases. It is public-private, as we have heard, and, in the case of onchocerciasis, Merck committed itself 25 years ago to give the drug ivermectin free for as long as it takes to eliminate the disease around the world. There is co-operation between countries and co-operation between academic departments and services, which several noble Lords have highlighted. It is worth remembering that there are people who have been quietly working away for 25 to 30 years on those diseases before they had a high public profile, and it is great to see them now getting some recognition for that tremendous work over those many years.
The other group worth mentioning is the communities themselves in Africa. The African Programme for Onchocerciasis Control, which is one of our partners at Sightsavers, has 100,000 community distributors of drugs, one in each village, who, once a year, deliver the drugs to everyone in the village in an attempt to eliminate the disease. That is an excellent example of community self-help, but it also allows them to distribute drugs for other diseases. A point of co-operation in this field is the way that we in Sightsavers, while focusing on blindness, also distribute drugs through that network for lymphatic filariasis and other things.
Your Lordships will gather that I am proud of what Sightsavers does, but I am also proud as a British citizen of what the UK is doing. That seems to me to be real solidarity between some of the richest people in the world and some of the poorest. Of course, there is more to do. As my noble friend Lord Alton said, the reason why it is so urgent is that, largely, we know what to do. We need money and the priority to do it.
Let me finish on three final points. The first, as other noble Lords have said, is that this programme of dealing with neglected tropical diseases needs to integrate with the wider development push, so that it is not just dealing with those diseases but linking it in with water cleanliness and everything else.
The second point, which has not been raised, is that although this is a fight to eliminate those diseases, many people are disabled by them. On the wider issue of disability, there are about 1 billion people disabled in the world, and 80% live in developing countries. They have not been systematically included in international aid programmes, and we ask DfID to develop a strategic approach to disability-inclusive development to sit alongside the valuable work on preventing disability. I ask the Minister to respond on that point; I would very happy to receive a letter. I hope that he can, because that is very important and would be another example of the UK’s leading the way internationally on development by having disability-inclusive development in all its aspects.
My final point is to add my voice to those continuing to press for inclusion of neglected tropical diseases in the MDG successor framework.
Lord Collins of Highbury (Lab)
My Lords, I must admit that the discipline of three minutes had enabled me to eliminate all the Latin names for neglected tropical diseases and, in the extra minute I have, I do not intend to put them back.
I too thank the noble Baroness, Lady Hayman, for initiating today's debate. Although neglected tropical diseases are the most common infections among the world’s poorest communities, they still receive little public attention. I am also pleased that the noble Baroness has made this debate a regular event since the 2012 global health summit, which set out a way forward to achieve a world free of NTDs.
As we have heard in the debate, NTDs disproportionately affect the world's poorest people and are a serious impediment to economic development in developing nations. Thanks to the noble Baroness, I recently met the special envoys for the Global Network for Neglected Tropical Diseases. I too, like the noble Lord, Lord Alton, would like to quote the former President of Ghana, John Kufuor, who I met. I will repeat the quote in full:
“There is no silver bullet remedy to helping a country break the cycle of poverty, but investing in the health of its population offers one of the best options for unlocking economic potential. With full support both from national governments and from the global community, we can … put an end to NTDs on the African continent”—
and beyond.
Treating NTDs is extremely cost-effective, as my noble friend Lord Stone and the noble Lord, Lord Trees, highlighted, through successful public-private partnerships. Pharmaceutical companies donate nearly all the drugs necessary for counteracting the seven most common NTDs. Fifty US cents per person per year can treat and protect against NTDs, as the noble Baroness, Lady Hayman, said, and in turn avert malnutrition, improve education outcomes, improve maternal and child health, reduce new cases of HIV, and set the stage for sustainable economic development.
Despite the momentum since the 2012 summit, and as we have heard, long-term elimination goals cannot be reached without addressing primary risk factors for NTDs, such as the noble Lord, Lord Crisp, highlighted, having access to clean water and basic sanitation, vector control and stronger health systems in endemic areas. These issues will need to be addressed beyond the WHO 2020 goals and as part of the post-2015 development framework. Will the Minister update us on the Government’s overall strategy to help control or eliminate the seven major neglected tropical diseases? As the noble Baroness, Lady Hayman, said, it is welcome that the high-level panel included NTDs in the healthy living section, but can the Minister tell us what steps the Government will take to ensure that other countries will support us to include specific targets and indicators for NTDs in the final post-2015 framework?
Lord Bates (Con)
My Lords, I am pleased to have the opportunity to respond to this debate, which has been fascinating, and led so movingly and passionately by the noble Baroness, Lady Hayman, who comes to this area with great expertise as a trustee in the Sabin Vaccine Institute and the Global Network for Neglected Tropical Diseases. Putting this on the map annually is a way of ensuring that it keeps the heels of Her Majesty’s Government and others to the fire. It ensures that progress continues to be made.
The noble Baroness welcomed me to her world, which is a fascinating one. She outlined some of the creatures that inhabited it. I was going to make a quick aside about being no stranger to this world because it sounded rather familiar as a member of the Government Whips Office, but it would be inappropriate to do so. I am pleased to answer the question because every year neglected tropical diseases adversely affect the lives of more than a billion people, causing disability, disfigurement, stigma and an estimated half a million deaths, mainly in the poorest countries. By helping countries to tackle them we alleviate unnecessary suffering and help to reduce poverty. That point was made by many noble Lords, including the noble Lords, Lord Collins and Lord Alton, who quoted the former President of Ghana, John Kufuor, in talking about the silver bullet and the bang for the buck, which I think the noble Lord, Lord Crisp, mentioned, in terms of public health and its effect on alleviating poverty.
The noble Lord, Lord Collins, asked me to update your Lordships on progress made since the London declaration. Since that meeting the UK has launched a trachoma programme that completes the mapping of the disease. The noble Lord, Lord Crisp, referred to that in his association with Sightsavers. It is an incredible programme that will be immensely beneficial as part of the general research effort. We are delighted to be part of it. New programmes will be developed to tackle NTDs in an integrated fashion in Nigeria and South Sudan. I will come back to the point about South Sudan, which the noble Baroness, Lady Hayman, referred to, later in my remarks. We have helped World Health Organisation to strengthen its NTD capacity, and approved a programme to help deal with kala azar in south Asia and east Africa, which I am sure that my noble friend Lord Sheikh will be pleased to note given the personal experiences that he brought to the debate.
We have maintained UK support for the Carter Center’s Guinea worm eradication programme, and I am grateful to my noble friend Lord Chidgey for raising that example. As someone who was clearly coming to this from a non-expert position, to be frank, it was heartening to hear that a disease that in 1986 had 3.5 million people suffering with Guinea worm in 20 countries could be reduced to 154 in four countries, through concerted effort and focus and investment in research. Within a lifetime, that is a remarkable case study. He was also absolutely right to remind us that we cannot be complacent, because of the example of TB, which he highlighted.
The noble Lord, Lord Stone, spoke about support on river blindness and bilharzia. We have extended our support for that, including the elephantiasis programme. We have invested in more research on how best to deliver the NTD programme in a cost-effective and sustainable way. The point about research, raised effectively by the noble Baroness, Lady Warwick, was important. I will come back to that if I can, because research is at the heart of this. It was heartening to have so many contributions, including those from the noble Lords, Lord Patel, Lord Alton and Lord Crisp, referring to the excellence in research. Those were the words of the noble Baroness, Lady Warwick: the UK is a hub of research excellence. The noble Lord, Lord Stone, spoke about exciting initiatives with Imperial College combining with the London School of Hygiene and Tropical Medicine to provide further research in that area. I would be delighted to arrange a meeting with the appropriate Ministers and officials in the Department for International Development to see how we can support that work going forward.
There are also product development partnerships, including the Foundation for Innovative New Diagnostics and the Drugs for Neglected Diseases initiative—FIND and DNDi—which we are supporting. We also support operational research through a number of channels, including our existing commitments to the World Health Organisation’s tropical disease research programme and wider health-related research programme consortia.
Underpinning the results lies a collaborative network. We continue to work closely with donor colleagues, particularly the US Agency for International Development, the World Bank, the World Health Organisation and, of course, the Bill & Melinda Gates Foundation, to improve the way in which we tackle these diseases. National Governments are key partners too, particularly in the delivery of mass drug administration through schools and communities. An important point was made on that by, I think, the noble Lord, Lord Crisp, about this being about not just national Governments—that because these are diseases of the rural poor we should have people down at a village level engaged in tackling them.
Several of your Lordships mentioned the need for better integration between different NTD initiatives, as well as closer working with other disease programmes and with sectors such as water and sanitation, which are all part of the same issue. The noble Baroness, Lady Hayman, mentioned that, and the noble Lords, Lord Alton and Lord Crisp, and of course the noble Lord, Lord Collins, all referred to the vital way at which we should get better at integrating how we tackle these diseases—not just with medicines, but with water, sanitation and research. These challenges would be much tougher without the major contribution that the pharmaceutical industry makes through sustained and highly effective drug donation programmes. Combining their donations and our support to improve delivery is at the heart of the public and private sector. Several noble Lords referred specifically to the work of Merck in that capacity, and the great generosity that it has shown.
The noble Baroness, Lady Hayman, asked for an update on the closure of AstraZeneca, and the noble Lord, Lord Chidgey, also referred to that. It has announced that it is closing a major factory in India that was producing NTD medicines. Her Majesty’s Government believe that the pharmaceutical industry has an important contribution to make in enhancing access for the poor to essential medicines. The AstraZeneca decision appears to be part of a wider restructuring programme. Other pharmaceutical companies remain active in this precise area, including Merck, Johnson & Johnson and GlaxoSmithKline, and they donate free drugs to certain neglected diseases. The French drug maker Sanofi is also working on a vaccine for dengue fever. That is part of the update there.
The noble Lord, Lord Crisp, asked me to consider what DfID could be doing for those living with disabilities. More than 1 billion people, 15% of the global population, live with disability. Many of the programmes tackling NTDs prevent disability, so as well as prevention DfID is also pressing for disability to be included in the post-2015 framework under the principle, outlined in the high-level panel report, of “no one left behind”. That is a very important principle that I hope offers some reassurance to the noble Lord, who rightly raises those concerns.
In 2012 we substantially increased our commitment in terms of donations. Several noble Lords referred to the amount of funding that goes into this area and the funding gap that is still there. We acknowledge that, but it is worth putting on record that if you look back to 2008 you see that the average budget going into NTDs from the UK Government for research, medicines and so on was about £1 million. As a result of the London declaration conference that went up to £10 million per annum, and now it stands on average at about £40 million per annum.
The noble Lords, Lord Patel and Lord Alton, spoke about how it was important to encourage other countries to step up to the plate and make their contributions in this area. Her Majesty’s Government are continuing to do that. It is also the place of international organisations to do that much more effectively, such as the World Health Organisation.
I turn to the millennium development goals. This of course brings us right back, as the noble Baroness, Lady Hayman commented, not to repeating the same Motion before your Lordships’ House as last year but, this year, emphasising the importance of the millennium development goals. The high-level panel, which was co-chaired by my right honourable friend the Prime Minister, included in its recommendations that NTDs should not just be listed as “other diseases” under MDG 6, as they are in the present MDGs, but actually ought to be specified and listed—at least seven of them, and perhaps 10. That was the recommendation that it made, which her Majesty’s Government absolutely support. That programme is now under review. There are some 30 groups that the UN Secretary-General has established to take forward the recommendations by the high-level panel, and they will be put before the General Assembly when it meets in September. The period of time between now and September to re-emphasise the importance of having those diseases specified is therefore very important.
This has been a very important debate in raising this issue in a timely and effective way. Again, I pay tribute to the noble Baroness, Lady Hayman, for mentioning it. The words of the Secretary-General of the United Nations, Ban Ki-moon, when he said that:
“Poverty reduction and the elimination of NTDs go hand-in-hand”,
was quite precise and to the point. That is why Her Majesty’s Government are supporting that, not only with our efforts behind the millennium development goals but with the money that we are putting into research and medicines.
Pre-emption of Parliament: Constitution Committee Report
(10 years, 10 months ago)
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Baroness Jay of Paddington
To ask Her Majesty’s Government what is their response to the report of the Constitution Committee on the pre-emption of Parliament (13th Report, Session 2012-13, HL Paper 165).
Baroness Jay of Paddington (Lab)
My Lords, I am pleased to have this opportunity to debate the Constitution Committee’s report on the pre-emption of Parliament. As your Lordships are aware, I had the privilege of chairing the committee, and the report follows a short inquiry which we undertook last year. As always, I am grateful to the witnesses who appeared, to our expert advisers, to our officials and to the members of the committee for their invaluable help in producing the report.
At first sight, it may appear somewhat arcane as a subject even for the Constitution Committee but in fact parliamentary pre-emption concerns the central constitutional principle that, in the United Kingdom, Parliament makes the laws and Governments implement them. To put it simply, Ministers may propose changes to matters of policy which involve changes to organisations or institutions—or, indeed, to have full-scale reform and introduce new structures—but they can do so only once Parliament has passed the necessary legislation. That principle is obviously especially important when the proposed policy requires the expenditure of large amounts of public money.
As your Lordships will be aware, however, Governments sometimes jump the gun—changes are begun and money is spent before the relevant Bill has passed through all the stages of Parliament. The argument for doing that is usually that it improves public administration and cost effectiveness, but we have called that practice the pre-emption of Parliament.
I am particularly glad that my noble friend Lord Beecham is speaking for the Opposition today, as he has been one of several Members of the House to draw the Constitution Committee’s attention to this matter. He was particularly concerned about the passage of the Public Bodies Act 2011. At that time, many organisations—notably, the Youth Justice Board—were initially told that they would be abolished. After the passage of the Bill, and particularly amendments made in this House, they were reprieved—but not, of course, before there had been considerable disruption and anxiety within the organisation. A similar issue—sadly, with a different result—arose during the House of Lords proceedings on the Health and Social Care Act 2012. The noble Lord, Lord Owen, who regrets that he is unable to be here today, sought to challenge the Government for beginning widespread reorganisation of the NHS, which affected many services, before the Bill had passed, but in that instance was told that it was too late to stop the changes.
The Constitution Committee decided that there were sufficient recent examples to provide the basis for a focused inquiry to enable us to take evidence on the origins of and authority for pre-emption and how it is understood in government. It was a surprisingly fascinating exercise. We uncovered historical precedents and significant conventions which had been hidden in layers of obscurity. We discovered government action often depending on agreements drawn up more than 80 years ago, or on historical advice from individual lawyers which had become enshrined as Whitehall “doctrine”.
I must emphasise that we did not find evidence of deliberate constitutional malpractice or a widespread determination to bypass parliamentary process. Rather, we concluded that the rules governing pre-emption are both complex and unclear and that certain so-called conventions and understandings are anachronistic and unfit for the political realities of the 21st century.
There are two separate strands to our report, the first covering the governance controls on pre-emptive activity and expenditure, and I shall address those in my remarks. The second is the very important legal basis for pre-emption, which my noble friend Lord Hart, who is a fellow committee member, will speak to.
A central aspect to our inquiry was the role played by the Treasury in authorising government expenditure before legislation receives Royal Assent. The foundation of this authority is concordat drawn up as long ago as 1932 between the Treasury and the House of Commons Public Accounts Committee, which states that the authority for government expenditure should normally derive from a specific Act of Parliament rather than from any general authority of the annual Appropriation Act. In other words, in the interests of constitutional propriety Parliament must specifically approve expenditure, indicating that it should not normally be incurred before Parliament has approved the expenditure through an Act.
The problems that can arise are well illustrated by the matter that I have already mentioned—the passage of the Health and Social Care Act, when the noble Lord, Lord Owen, among others, raised the question of pre-emptive expenditure and was told that the scale of the expenditure undertaken on NHS reorganisation before the Bill had passed made it practically impossible for the Bill to be abandoned. This effectively meant that Parliament was being told that it could not refuse to pass the legislation. The practical consequences for the NHS, we were told, would have been overwhelming, so the constitutional principle was apparently abandoned.
The Treasury publishes guidance for the Ministers and their departments on pre-emptive public expenditure; this is called Managing Public Money. The guidance states that to incur such expenditure there must be a genuine, urgent need for it and it must be in the public interests. The relevant Bill must have passed Second Reading in the House of Commons and the planned legislation must be certain to become law in the near future. In evidence to us, Mrs Paula Diggle, Treasury officer of accounts and a very senior official, said that the requirements were interpreted by the Treasury as encapsulating parliamentary control over pre-emptive expenditure. She said that the Treasury was the “guardian of Parliament” and ensured that departments did not spend money before appropriate approval had been given. In its written evidence, the Treasury described this as an “ancient convention”. However, the committee concluded that, while the Treasury’s role is important within government, Parliament’s interests over pre-emptive expenditure should primarily be guarded by Parliament itself. Given this, we did not think that it was appropriate to describe the Treasury’s role as a convention in the constitutional sense.
We felt that the same was true for the general understandings about public expenditure being legitimate after a Commons Second Reading had been passed. We found no evidence that Parliament has ever endorsed this practice and, therefore, we felt that it should not be called a constitutional convention.
More significantly, we concluded that there is really no basis for assuming that pre-emptive spending can be justified after Second Reading in the Commons. Of course, a successful Second Reading in another place is usually an indicator that a Bill will become law. However, as your Lordships will be aware, particularly from some recent experiences, a Bill may well still be defeated or significantly amended at a later stage. The Second Reading practice is obviously complicated when a Bill starts in the Lords. We therefore decided that the Second Reading really carries no independent constitutional force.
In our final section, on the political oversight and authority for pre-emption, we concluded that Parliament should be much better informed than it is at present about the details of pre-emptive activity in advance. At the moment, there is no standard procedure and we recommend that a consistent method of explanation and information should be developed, perhaps by way of an Oral Statement during a Bill’s passage or through statements in documents accompanying a Bill. We further recommend that the Government should at the end of each Session produce a Written Statement summarising the pre-emptive activity undertaken across all departments and including the amount spent and the powers under which the Ministers acted. I am grateful that the Government have accepted those recommendations in their written response to us.
Overall, we felt that it would be useful and constitutionally important that the principles and practices covering pre-emption should be consolidated into one authoritative statement, to be included in the next edition of the Cabinet Manual. In their response the Government agreed to revise the relevant guidance in the Treasury document Managing Public Money and to refer to it in the Cabinet Manual.
I emphasise that the committee’s central concern was that at present the rules and understandings used by Ministers are opaque and, in places, inappropriately ancient. This militates against both good public administration and good constitutional practice, even when that constitution is unwritten.
I am grateful to the Government for their written reply to our report and for accepting some of our recommendations. Although their response is positive in tone, I think it is fair to describe some of the replies to our points as somewhat terse. Perhaps the Minister could be slightly more expansive today.
I return to the fundamental point in our report: where pre-emptive activity or expenditure is such that it threatens effective parliamentary scrutiny, it should not be undertaken. It is for Parliament, not the Executive, to decide whether and when to change the law. I look forward to the debate and to the Minister’s reply.
Lord Norton of Louth (Con)
My Lords, I congratulate the noble Baroness, Lady Jay of Paddington, on initiating this debate and the Constitution Committee on producing this timely and important report. In the time available, I wish to make two points. The first is one of clarification. For me, the key quotation in the report is that of Sir Stephen Sedley at paragraph 68, as distinguishing,
“between acting in certain ways in case draft legislation becomes law, and acting as if it were already law. The latter is prohibited in general terms; the former is not”.
That is a clear distinction, but it is one somewhat masked by the title of the report. The report states in paragraph 2:
“During this inquiry we have described Government action in anticipation of Parliament passing a bill as the ‘pre-emption of Parliament’”.
For me, “pre-emption” constitutes the second of Sir Stephen Sedley’s categories. It does not encompass both. There is a difference between anticipatory action and pre-emptive action. The first, in some circumstances, may be acceptable. The second is not.
There are no grounds for pre-empting Parliament’s capacity to enact primary legislation. If there is some urgency, it is in the gift of Government to seek all-party agreement to a Bill being passed in the course of 24 or 48 hours. There are various instances where that has occurred. Any claim for pre-emption in the event of a national emergency has in large measure been eliminated by the Civil Contingencies Act.
My second point is on the other aspect, that of anticipatory action. The committee recognises that waiting for a Bill to pass may impose such strict restraint on the Executive as to be inefficient or expensive. This, it says, is widely recognised. The report proceeds on the basis of the acceptance that there is a case for such anticipatory action. It does not seek to challenge it; it is more concerned with the mechanisms by which it is reported and scrutinised.
I fear that I am going to take a more sceptical view. We really need to test the case rather than take it as given. I do not challenge the claim that preparatory work may need to be undertaken by the Government before a law comes into effect. However, we already have a mechanism for that, one that ensures parliamentary approval before action is taken. I refer to commencement orders. Through their use, one does not have to anticipate parliamentary approval. Parliament has already considered the measure and the Minister is acting on the basis of statutory authority in deciding when to bring the provisions into effect. I initiated a debate in November last year on such orders and, in replying to the debate, my noble friend Lord Gardiner of Kimble confirmed that the Government had no plans to change the use of commencement orders.
Given the use of such orders, then, what therefore is the case for anticipatory action by Government? The report cites two activities that could qualify but I am not persuaded by either example. Hiring a project team is something that should await enactment and is the sort of thing that can be undertaken before a provision is commenced. One could sound out the potential members in advance, but that is a different matter, entailing no commitment and no expense. As for scoping inquiries, I am not clear why they would be undertaken after a Bill has been introduced. I would be rather worried if a measure had been drafted before a scoping inquiry was undertaken.
I therefore invite the Minister to explain the case for anticipatory action in the context of my point about commencement orders. It is not sufficient to say that there is a case for taking anticipatory action if that action can be taken following Parliament’s approval of the measure and before the relevant provision is commenced. We need to be far more rigorous in making sure that anticipatory action is undertaken only in truly exceptional circumstances—I look forward to hearing what they are—and that the Government, in reporting these to the House, explain why the action cannot be taken after Royal Assent but can be before the relevant provision is commenced. That at the very least will impose a useful discipline and, I trust, a deterrent.
I very much welcome the committee’s report, shedding light as it does on a largely neglected but important topic. I welcome the Government’s response, but we need to build on what is before us in order to ensure that Parliament is not taken for granted.
Baroness Andrews (Lab)
My Lords, I too congratulate the noble Baroness, Lady Jay, on securing the debate and the committee on its choice of subject, for many of the reasons raised by the noble Lord, Lord Norton. The report reveals government practices that are indeed obscure. They may be occasional, but if one can determine a pattern then that is very helpful to the House. They are governed by an obscure and complex set of protocols, and when they are described as a convention that sets alarm bells ringing in this House. I found the evidence fascinating and, to borrow the noble Baroness’s term, certainly arcane.
I have two reasons for contributing today. First, I completely agree with the witness who said that this development belonged to the,
“longstanding narrative detailing the sidelining of Parliament by the executive and the perceived decline of Parliament as an institution”.
I take that point. Many years ago I was a clerk in the House of Commons, and from that position I have watched the erosion of parliamentary control, with the distinguished exception of the recent Select Committee system, and it is of profound concern to me. Secondly, at the time when the Public Bodies Bill was passed, I was the chair of English Heritage and therefore I declare an interest in retrospect.
The committee spent a lot of time trying to get to the bottom of the Ram doctrine and dealing with the Treasury assumption of guardianship of Parliament, which is a very counterintuitive concept. The question of how far the Government can go, or how much it can it get away with—I take the noble Baroness’s point that there is nothing very deliberate or malign about this, but there is certainly a behaviour—was asked and answered in many different ways in this report.
Like the noble Lord, Lord Norton, I found that Sir Stephen Sedley made a particularly important clarification between the legitimacy of anticipatory acts and the abuse of power explicit in presumptuous acts. I welcome the distinction that the noble Lord made regarding commencement orders because that gives us an important point to think about.
I read the conclusions of the report with pleasure, particularly that,
“restraint … should apply to all pre-emptive actions, not just those involving expenditure under the new services rules”.
My concern, however, was rather specific. Having been assiduous and read the written evidence, I came across the Treasury’s own written memorandum and—in the Treasury’s own words—the demanding conditions to justify pre-emption that must be met in every respect. Frankly, it is not clear to me how the Public Bodies Act and the Health and Social Care Act ever passed those tests at all. The memorandum describes how the rules apply in practice:
“Proposals to anticipate Royal Assent are always declined where … the bill in question is sufficiently controversial that its passage cannot be assured”.
It goes on to say in detail in paragraph 16:
“There must be little doubt that the legislation will pass substantially unchanged, and in the near future”.
I do not think that there have ever been two Bills presented to this House that fell more resoundingly into this category than the Bills I have mentioned. By no stretch of the imagination could they not have been called controversial. The assumption raises questions: on what basis did the Government make that assumption? Where does consultation fit into this?
As we know, both Bills were notorious because of the lack of consultation. If I may make a personal reference, English Heritage was not threatened with dismantling before Second Reading but we were on death row with all the others, with a deeply uncertain future ahead of us. The first that the public bodies attached to the DCMS knew about the Bill—and there are many, because it is essentially a devolved department—was when we were summoned by the Secretary of State and told about it, and the bare bones were set out. I asked immediately whether there would be consultation, to which the Secretary of State, who was Jeremy Hunt at the time, said, “No”. I said, “Well, how are we going to know?” and he said, “You will be listed in a schedule to the Bill”. That was the extent of consultation.
Likewise, much of the burden of the argument against the NHS Bill was that it controverted a manifesto commitment not to introduce major change—therefore, by definition, there could have been no consultation. The evidence of the Youth Justice Board underlined this point. It said that if consultation had taken place before a decision was finally made, it was just possible that the Government might have changed their mind, so heavy was the burden of contradiction in the evidence. The noble Lord, Lord Beecham, made the same point in his evidence.
The other condition that was identified by the Treasury that was also unmet was that:
“The action proposed must be reversible or retain some use if not confirmed, ie no potentially nugatory commitment of any significance can be entered into”.
I cannot see how that is fulfilled by the Public Bodies Act in relation to the RDAs, for example—and again I cite the noble Lord, Lord Beecham. The Treasury answered that by saying that the public bodies legislation contained wider flexibilities, but it was not so wide that it would have been justified in demolishing without replacement the fundamental character of those bodies. Neither was it true of the NHS Act—and my noble friend has made that point. The argument constantly used against the Opposition was that we were actually making it worse by pursuing opposition that would only add to the chaos of what was already happening on the ground in the NHS. There is a huge leap of logic here, because the argument in the Treasury response was that it enabled the Department of Health to put in place the transition programme, but that programme was necessary only because the Government had sprung a major reform on the NHS that went far beyond its duty of promoting a comprehensive health service. I hope that the Minister will feel able to comment on the memorandum and on how it was applied in those cases.
My point is to strengthen the case, which has already been made in the report, that these two Bills expose the issue raised by pre-emption and the explanations offered for that. The point about the difference between anticipation and presumption fits into that argument. I thought that the summary of conclusions was appropriate and precise, and I agree with it—and I think that the Committee has won some ground from the Treasury over language and process. But, my word, this House needs to be vigilant in future about the operation of this.
Lord Maclennan of Rogart (LD)
My Lords, I should like to congratulate the noble Baroness, Lady Jay, and the committee on producing what I believe to be a notable constitutional report. The response of the Government seems to have recognised its significance although, as the noble Baroness, Lady Jay, said, it was somewhat terse. What is required is a clear statement from the Government not just about pre-emptive public expenditure but about pre-emptive action that bypasses Parliament. They have indicated that they will set out their pre-emptive public expenditure rules in their text, Managing Public Money, and refer to it in the Cabinet Manual, but that does not go quite far enough. The Public Bodies Act has been mentioned several times in the course of this short debate, and I agree with all the points that have been made about that.
It is exceedingly important that Parliament and the Executive are open with each other and that they come together when there is a need for pre-emptive action, make that need explicit and clear and seek to justify it. There is a good deal of uncertainty in the law about the Crown’s common-law powers.
It is fair to argue that if we had to have the Executive enabled by legislation to do absolutely everything, that would impose a huge burden on Parliament and simply not make sense, but with government as immensely powerful as it now is, we have to have a better dialogue. That is what I am so grateful to the committee for having opened up. I believe that we will see real progress and that the power of Parliament to comment on executive action will be enormously enhanced by the recognition of that problem.
Lord Lexden (Con)
My Lords, my little contribution to this debate is almost entirely in an historical vein, but I have one or two preliminary observations. For the best part of two years, I have had the good fortune to be a member of the Constitution Committee. I am extremely grateful to my chairman, the noble Baroness, Lady Jay, and all my colleagues. I am also very conscious of the large debt that is owed to the committee staff, its clerk, policy analyst, administrative assistant and legal advisers. They all serve us quite superbly.
During this inquiry, we learnt about the strict enforcement of unchanging rules laid down long ago under which the Treasury will authorise spending before a Bill becomes law. For me as a historian, the most memorable aspect of that absorbing inquiry was the touching faith in the internal validity and force of the rules displayed in the Treasury’s evidence to us on the grounds of their longevity. The Treasury’s written note to us in January 2013 referred to,
“an ancient convention that the Treasury should strive to look after Parliament’s interest in Whitehall”.
The note went on to refer to the Ram doctrine, adumbrated in November 1945, with which we became extremely familiar during the course of our inquiry as the reformulation in more modern form of “an ancient convention”.
“Ancient” is of course a relative term, but I was struck by the extent to which, in the Treasury’s view, it covers all but the most recent times and provides an apparent justification for a lack of precise answers to historical questions. In the committee’s oral evidence session with Treasury representatives, which took place exactly a year ago on 6 February 2013, it emerged that one of the conventions on which the Treasury has been relying,
“dates back a long way. We have traced something that may be of help. It is from a fat book that is very ancient and yellow, and calls itself the Public Accounts Committee Epitome of Reports”.
The date of that very ancient yellow work? 1884, the year that Gladstone passed the third Reform Act and, as it happened, my grandfather was born. Neither Gladstone’s feet nor my grandfather’s would normally be thought of as having walked in ancient times.
I was left feeling very puzzled by all that. Questions about the origins of ancient conventions that go back no further than the 19th century ought surely to be taken straight to the Treasury’s archives for full, detailed answers. Gladstone, perhaps the greatest of all 19th-century Chancellors, would have insisted on proper record-keeping. It is highly likely that the Treasury’s self-appointed role as the guardian of “Parliament interest in Whitehall” stems from Gladstone’s years as Chancellor in the 1850s and the 1860s—years when, in his own words, he gloried in the name of skinflint, saving the nation’s candle ends. By establishing the Treasury’s firm control over Westminster’s costs at this time he brought down public spending in this country as a proportion of GNP from 10% to 6.4%. The people’s William did not believe in spending the people’s money to create public services for the people.
This rather lengthy historical detour leads to an obvious request of my noble friend the Minister. Could he please check on the state of the Treasury’s archives and, assuming that no misfortune has befallen it, consider issuing a departmental directive that it should be consulted to provide answers to historical points of the kind that were not insignificant in the committee’s inquiry into the pre-emption of Parliament? What emerged clearly from the committee’s consideration of the historical background to the Treasury’s central role since the 19th century is that working habits and practices, which have come to be venerated and hallowed on the grounds of their ancient character have, over the years, mutated into conventions. The committee’s report called for redefinition. It states:
“We accept that the Treasury was not seeking to elevate its internal practices to the status of constitutional conventions. However, clarity in this area is important. We recommend that the Treasury's practices should not be described as ‘conventions’”.
In their very succinct reply to the report the Government stated that they would
“no longer use the term convention to describe these matters”.
That is very satisfactory and other aspects of the Government’s response are also welcomed by us. Not one of the committee’s recommendations has been rejected, although, as has already been pointed out, the acceptance of some was extremely terse. There are reasons for regarding the Government’s response as resembling a heartening outcome for the members of the committee and its excellent staff.
Lord Hart of Chilton (Lab)
My Lords, I am also a member of your Lordships’ Select Committee on the Constitution, whose report on the pre-emption of Parliament we are debating today. I thank my noble friend Lady Jay for instigating this debate. She has described the ambit of the report and its principal themes.
I simply wish to add a few words on chapter 3 concerning the legal basis of pre-emption in the context of the Crown’s common-law powers, which have been summarised as the power to do things that are ancillary or incidental to the ordinary business of central government. As we shall see, some have argued that the powers go wider than that. The statement of the ministerial powers that has been most frequently relied on by the Government is to be found in a memorandum drafted by Sir Granville Ram—of whom we have already heard from the noble Lord, Lord Lexden—who was then the First Parliamentary Counsel in 1945. However, it was not published until 2003, following a series of Questions by the noble Lord, Lord Lester of Herne Hill.
So, who was Sir Granville Ram? The Dictionary of National Biography states that he was,
“a shortish, bespectacled man with a suspicion of a paunch and a rather misleading air of Pickwickian benevolence … was perhaps less scholarly, and certainly more rumbustious than the typical parliamentary counsel. He usually relied on his assistants to produce the first draft of a bill, before he pulled their work to pieces and comprehensively recast it. His pride in his own legal prose was such that he would repeatedly smother texts with stylistic alterations, some of them trivial. Subordinates, who favoured more functional wording, called him the Maestro behind his back”.
My professional life has often been pre-empted by the Granville Rams of this world, and the memorandum states that a Minister of the Crown is unlike a statutory body, which is a creature of statute and has no powers, except those conferred on it. In contrast, a Minister is not a creature of statute and may, as an agent of the Crown, exercise any powers which the Crown can exercise except those precluded by statute. The memorandum, of course, is an opinion prepared by counsel for his client—in this case, the Government. As such it has no force in law. Furthermore, the majority of our witnesses agreed that, whatever may have been the position in 1945, the memorandum is not an accurate reflection of the common-law powers today. Today, in addition to statutory restraints, Ministers’ ability to exercise common-law powers is constrained by public law, by limitations on government action enforced by judicial review, by human rights law, by the pre-existing rights and significant interests of private persons, and by rules on financial propriety set out in the 1932 concordat and the Treasury guide Managing Public Money.
More troubling to the committee was the statement by the Treasury that there existed a doctrine, derived from the Ram memorandum, enshrined in the proposition that “Ministers can do anything a natural person can do”, which is echoed in the current Cabinet Manual. This was questioned by several of our witnesses, including Sir Stephen Sedley, a retired Lord Justice of Appeal, and Sir Jeffrey Jowell, a distinguished academic. The Attorney-General believed it to be an inaccurate summary because the powers were now constrained by public law, propriety, the rule of law and human rights. Our view, therefore, was that the so-called Ram doctrine was unhelpful, inaccurate and should no longer be used.
We found there to be some disagreement as to the scope of the Crown’s common-law powers. Some, such as the noble Lord, Lord Lester of Herne Hill, said:
“If the Crown has common law as well as statutory or prerogative powers then I agree they are ancillary only and extend to such matters as entering into contracts, paying rents or salaries and conveying property. They do not extend … to enable the Government to pre-empt Parliament’s legislative process, and to contend otherwise would be contrary to the rule of law”.
Others, such as the noble and learned Lord, Lord Brown of Eaton-under-Heywood, and the Attorney-General, thought that the powers went beyond ancillary powers and were more extensive. Two decisions in the Court of Appeal in 2000 and 2008, referred to in our report, did not satisfactorily resolve the position because there were conflicting obiter dicta from Lord Justice Richards and Lord Justice Carnwath, as he then was.
The true extent of the common-law power of the Crown can be definitively determined only by the courts. Nevertheless, we concluded that although the Crown has common-law powers and is therefore qualitatively different from a statutory body such as local authorities, those powers are constrained and circumscribed by the principles that I have mentioned and are referred to in our report. Accordingly, we recommended that where government publications such as the Cabinet Manual refer to the Crown’s common-law powers, it is made abundantly clear that those powers are limited by the restraints of public law and constitutional principle.
The Government’s response has been to accept that the advice in the Ram memorandum is necessarily incomplete because it pre-dates important developments in public law as well as the Human Rights Act, and they accept that it cannot have the force of law. However, they go on to say that the principle described in the Ram opinion remains valid and that the Crown has common-law powers which may be exercised subject to overarching legal constraints. Interestingly, the current 2013 edition of Managing Public Money does not refer to the Ram memorandum. So matters are still not completely clear and I would welcome the Minister’s detailed response.
Lord Beecham (Lab)
My Lords, this Government have a record of pressing on with legislation paying scant attention to the views, for example, of the Joint Committee on Human Rights on draft Bills, Select Committees in the Commons designed to provide a measure of pre-legislative scrutiny or, indeed, the outcomes of what are often short periods of consultation. I coined the phrase “pre-legislative implementation”, now supplanted by the term “pre-emption”, in relation to what happened under the then Public Bodies Bill, where, in what was trumpeted as a bonfire of the quangos, the abolition of regional development agencies was proposed. Despite receiving repeated assurances from the noble Lord, Lord Taylor, whom I acquit of any personal culpability, that there would be consultation and that each case would be considered on its merits, the Government pressed ahead as if the Bill had been enacted, and stripped the RDAs of their staff, budgets and assets without any consultation long before Royal Assent.
The Constitution Committee noted, as we have heard, analogous approaches in relation to the Youth Justice Board and the then Health and Social Care Bill, in respect of which the noble Lord, Lord Owen, observed,
“we should not feed the idea that legislation can reach us but we cannot do anything about it because it has already been pre-empted”.—[Official Report, 8/2/12; col. 261.]
Similar considerations arose over the proposed abolition of the Chief Coroner’s Office, which, like the Youth Justice Board, was ultimately saved.
The most worrying and immediate example of pre-emption is currently in process. It concerns the future of a service with a critical impact on public safety and the lives of those for whom it is responsible—namely, the probation service. The Government are bent on privatising 70% of the work of this service without properly piloting how the new system would work. There is huge concern about the risk to the public of outfits like G4S, Serco and other organisations that purport to be able to deliver almost any public service without prior experience. This is particularly acute as offenders move between risk categories. A binary system for probation is clearly unsatisfactory. The noble Lord, Lord Ramsbotham, and I collaborated in moving amendments to the Offender Rehabilitation Bill, which began its life in this House, without which the matter would never even have been discussed. The amendment requiring any major reorganisation to be approved by Parliament was passed by this House but overturned in the House of Commons. It will no doubt return to us shortly.
The Government, it emerged from the documents, deliberately avoided including their proposals in the Bill precisely because of the opposition that they knew would be engendered. They simply ignored the concerns and pressed on with this massive reorganisation—or should I say fragmentation?—of a service with a demonstrable record of achievement, recognised by a national award. They continue to do so now, even though their timetable has slipped beyond the recklessly adopted target date of, appropriately enough, 1 April, and they do so under the cover of a misrepresentation of which the Lord Chancellor should be ashamed. He makes much of the reoffending rate of prisoners released after serving short sentences as if this were something for which the probation service were responsible whereas, as he must know, the service has no responsibility for those offenders. This is the latest and most egregious example of a Government overreaching themselves and treating Parliament with contempt. If the Government get their way with this issue, they will be signing a blank cheque in their own favour, enabling them to act first and legislate afterwards, if at all.
The Government’s response to the report from the Constitution Committee is surely unsatisfactory. While they accept the committee’s advice in principle, they merely note its conclusion that it should be recognised that Parliament’s interests are primarily guarded by Parliament itself, rather than being assumed by the Treasury. Why did the Government not accept, rather than merely “note”, the committee’s recommendation? Will the Minister now say that they accept the recommendation?
For that matter, why has the noble Lord, Lord Deighton, who is much respected across this House, been given—or perhaps drawn—the short straw of having to reply to this debate as if it were a Treasury matter? It is not. As noble Lords have said, it is a constitutional matter going well beyond the remit of one individual department. Will the Government seek Parliament’s endorsement for the guidance that they propose to issue? That would be one test of the seriousness with which they take this very valuable report.
The Government adheres stubbornly to the advice of the Ram opinion, which emerged shortly after I was born in early 1945—not quite as ancient as those referred to by the noble Lord, Lord Lexden, but, I feel, getting on for that. However, the Government take the view that,
“the Crown does have common law powers which may be exercised subject to overarching legal constraints”,
as my noble friend has just pointed out. However, surely the question is not whether the Government can legally fall back on an ancient principle but whether it is right and reasonable to do so.
The Government merely note the committee’s central conclusion—that,
“the principle of restraint in the name of good constitutional practice should apply to all pre-emptive actions, not just those involving expenditure”.
The Government adopt the same stance in relation to the committee’s ringing assertion that:
“Where the pre-emption involved is such that it threatens effective parliamentary scrutiny, it should not be undertaken. It is for Parliament, not the Government, to decide whether to change the law”.
It was a leading Conservative, Viscount Hailsham, who warned of the dangers of an elective dictatorship. It would appear that a Conservative-led Government are ready to ignore that warning whenever it suits them to do so.
The Commercial Secretary to the Treasury (Lord Deighton) (Con)
I thank all noble Lords for their contributions today and in particular the members of the Select Committee on the Constitution for their extremely thorough report and the airing that it has brought to these very important issues. I have found the discussion that we have just had extremely interesting. I learnt a lot. I am not a lawyer; I had never heard of the Ram doctrine or Sir Greville Ram before I was briefed for this opportunity to take the short straw and respond on behalf of the Government. I am a lot smarter now than I was 45 minutes ago.
For reasons of time, I may not be able to respond to all the individual issues that have been raised but I will try to cover the key aspects of the Government’s response, answer some of the broad concerns raised today and lay out the steps that the Government are taking to address them. I start by stressing that the pre-emption of parliamentary assent is an area that the Government take seriously, and Her Majesty’s Treasury polices it strongly. We were pleased to note, and I thank the noble Baroness, Lady Jay, for pointing this out, that the inquiry revealed no widespread use of pre-emption that went against constitutional principles. As the report says, the Treasury does not allow expenditure on new policies until after Second Reading in another place, and then only in very limited circumstances, including there being an urgent public interest to do so. The Treasury has strict criteria to determine whether an area of proposed expenditure is urgent and in the public interest. Although value for money is important, regularity, propriety and Parliament’s wishes are key and fully respected.
Many noble Lords will have seen the written government response. The noble Baroness, Lady Jay, is right that it is terse, but it is positive. I will be a little more expansive, but my experience of watching Ministers being too expansive gives me some warning. Several of the recommendations in the report that have been mentioned have already been taken on board, and I shall run through a few to illustrate this because it is important to look at the changes that we have made. For me, the most critical thing about what the committee’s findings bring to light is the importance of transparency and codification. Those two go together because the codification is part of what allows for the transparency, and of course it is the transparency—the noble Lord, Lord Maclennan, referred to the dialogue—that allows us all to determine whether the judgments being made are appropriate, given all the circumstances. So although our response is terse, it accepts the need for that codification and transparency, and everything else follows from that.
To list some of the things that we have done, we accept that Ministers should always make clear when pre-emption is intended—where possible, orally at Second Reading but, failing that, in a Written Ministerial Statement; Written Ministerial Statements are always made before a contingency fund advance is permitted, which, as noble Lords know, is how pre-emption is funded; and the Government will publish an annual summary at the end of the parliamentary Session of when pre-emption has taken place during the period. I can tell the Committee that in the current parliamentary Session there have been three instances where spend was permitted in advance of Royal Assent. Two of those were in advance of the Energy Act that received Royal Asset on 18 December 2013, and one advance relates to the Pension Bill, where Royal Assent is planned for April 2014.
The main guidance to departments on the pre-emption of Parliament—or “new services”, in the Treasury’s parlance—is a publication that has been referred to, called Managing Public Money. I can say from my own 14-month experience in the Treasury that there is no duty or activity that is taken more seriously than the control that the Treasury imposes on individual departments. That is a very strongly exercised function. That publication, as has been referred to, was updated in July 2013 in line with the recommendations in the report. We removed the references to the Second Reading conventions—we have stopped calling things conventions that, as noble Lords have pointed out, actually are not—and, to the relief of many noble Lords here, we have also taken out any reference to the Ram doctrine.
The Cabinet Manual also uses these terms but again, consistent with the report’s recommendations, the Cabinet Office will take those views on board when it next reviews the guidance. The Treasury is also going to issue an update to the detailed annexe on new services in the near future to be clearer about the very limited scope for pre-empting Parliament.
The only specific recommendation that the Government are not intending to act on is the proposal that there should be a Written Ministerial Statement at the end of each parliamentary Session listing all ministerial directions made across Government. That is because this information is already published in all departments’ annual accounts and further publication is not considered necessary. However, by way of information, there have been no ministerial directions during the life of the current Government. The Government appreciate that the accounting officer of a department could potentially seek a direction from the Minister if pushed to pre-empt Parliament. However, this is really a signal that further discussion is needed to find a practical and appropriate way through. As noble Lords will be aware, directions are always a last resort.
I shall dip a little further into the detail of some of the issues that noble Lords referred to. The noble Baronesses, Lady Jay and Lady Andrews, referred to the disquiet caused in the cases of both the Health and Social Care Act and the Public Bodies Act. I did my research on these because I understood that that was what had prompted the committee to have a look at this issue. The essence of the Government’s position was that they already had the powers to effect the changes that were put in place. That is why there was no need to call on the contingency fund. The Government were essentially relying on their existing powers to cause those reorganisations.
In the case of the Health and Social Care Act, the Secretary of State for Health has broad duties and wide powers under existing legislation, including the National Health Service Act 2006, which confers a duty to promote a comprehensive health service and allows public expenditure to do so. That enabled the Department of Health to put in place the transition programme, which included setting up clinical commissioning groups, closing down primary care trusts and so on. The savings that the programme is designed to deliver would have been wanted irrespective of the organisation of the NHS to meet the requirements of the spending review.
In the case of the Public Bodies Act, to which a number of noble Lords referred—clearly this was a controversial subject at the time, so I understand their reaction—each of the bodies involved had a bespoke set of duties and responsibilities appropriate to its functions. The powers that they already had left considerable discretion about exactly how the functions should be discharged, which allowed for some reorganisation ahead of Royal Assent. That was the basis on which those actions took place.
The noble Lord, Lord Norton, talked about commencement orders. This is not my particular area of expertise but, as I understand it, it is a timing question, because commencement orders cannot be put until Royal Assent has been given, so it does not help with anticipation.
For clarification, it may be worth my running through the criteria that the Treasury applies to determine whether an action is urgent and in the public interest. The reason why the test would be met is that otherwise there would be an increase in implementation costs, efficiency savings would be lost or it would be detrimental to the public. Ministerial or policy imperative is not a relevant criterion in securing a contingencies fund advance.
A lot of the discussion was around pre-emptive action rather than pre-emptive expenditure. I agree that this is a difficult issue, which is why transparency and scrutiny are so important. In the vast majority of cases, though, pre-emptive actions will require a financial element, which is why Managing Public Money and the Treasury’s watchdog approach are a substantial defence, although I agree that that cannot work in absolutely every case.
The noble Lord, Lord Hart, was far more eloquent about the Ram doctrine than I could possibly be. I can tell the Committee that we have removed reference to it. The Treasury and the Government absolutely accept that the actions of a Minister are constrained by public law, human rights law and so on, as the noble Lord pointed out. It is the balance that really counts.
To sum up, the Government take controlling the pre-emption of Parliament extremely seriously. We are grateful that noble Lords have shown such an interest in this area and shed such light on it. I think that the changes that will result will make us a better Government. We have looked again at our guidance and modified it, and we are satisfied that we are operating a robust system.
Social Mobility
(10 years, 10 months ago)
Grand CommitteeRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord McFall of Alcluith
To ask Her Majesty’s Government what assessment they have made of the impact of inequality on social mobility in the United Kingdom.
Lord McFall of Alcluith (Lab)
My Lords, it is a privilege to have secured this debate today on inequality and social mobility.
The American and British dream, that if you work hard and do the right thing, you prosper and do better economically than your parents, no longer applies. Indeed, the funeral rites for that were announced this week by President Obama in his State of the Union address when he said:
“Today, after four years of economic growth, corporate profits and stock prices have rarely been higher, and those at the top have never done better. But average wages have barely budged. Inequality has deepened. Upward mobility has stalled. The cold, hard fact is that even in the midst of recovery, too many Americans are working more than ever just to get by—let alone get ahead. And too many still aren't working at all”.
That picture is almost identical to the situation that exists in the United Kingdom, where we have seen a rapid increase in inequality in the past few decades and we are now at a lowly 28th out of 34 in the OECD equality league table. The IMF, the World Economic Forum at Davos and the Economist put inequality as one of the top global risks. In our country, Alan Milburn, the social mobility czar, and ex-Prime Minister John Major have expressed similar sentiments. They say that one of the causes of deepening inequality and static social mobility is the entrenched elitism in the United Kingdom.
That trend is most marked at the top of the pay scale. The income share of the top 1% doubled from 7.1% in 1970 to 14.3% in 2005. In 1997, the income of the top 0.1% of earners was 61 times the average of those in the bottom 90% of earners; by 2007, that multiple had climbed to 95 times and is still rising.
Why should we be concerned by that inequality? Frankly, because the disparity between rich and poor is leading to more alienation that, allied with high youth unemployment and growing inequality, harbours serious economic, social and political divisions. If not tackled, it will worsen.
Is growth the answer? We have seen growth without gain. The social contract in society is broken. It went along the lines that everyone got a share of the pie—some got a bigger share, some got a smaller share—but now some are getting no share of the pie at all.
The conventional political response has been framed simply as securing a steady recovery. In the past, we could assume that living standards always increased when the economy grew, but that was contingent on social and economic characteristics of the economy which no longer prevail. Change has taken place imperceptibly under our very feet and we can therefore no longer assume that a return to growth will mean gain for everyone. One of the most depressing statistics on social mobility came out of the OECD in a document about what was termed inter-generational social mobility. It demonstrated in the UK the extent to which a son's earnings are likely to reflect those of the father. Britain was top of the poll in that. So the message is that, in Britain, if you have rich parents your prosperity is more guaranteed; if you have poor parents, your future prosperity is stunted. That is why we need to look at that problem again.
The high levels of income inequality definitely generate political and social problems. In the book, What Money Can't Buy, by Michael Sandel, which I recommend to everyone, he states that,
“at a time of rising inequality, the marketisation of everything means that people of affluence and people of modest means lead increasingly separate lives. We live and work and shop and play in different places. Our children go to different schools”.
The big question for society is: how do we learn to negotiate, abide by our differences and come to care for the common good? At a recent talk given by the most reverend Primate the Archbishop of Canterbury, he said that when he and his wife first came to London after spending many years in the north, it was a tale of two of cities, as Charles Dickens would have said. These are issues to which we must attend. As Parliamentarians the question is: do the present policies aid or detract from the common good? In this Palace, 35% of our MPs were privately educated in a country where 7% of the population have been privately educated. Ten per cent of our MPs were educated at just 13 schools, 12 of which were private. So, 60 of the nation’s Parliamentarians come from a microcosm of the educational establishment in our country. If we have 4,500 schools and 10% come from 13 schools, it shows the problem that has been built up.
I do not want to enter into class issues, although Warren Buffett got it right when he said amusingly class warfare had been going on for 20 years and that his class had won. It certainly won in the economic stakes. Given the shocking lack of social mobility, how do we, in the words of Alan Milburn, the social mobility tsar, break the glass ceiling? More and more people are coming out against that, whether in the law, medicine, politics or journalism. Alan Milburn said that it had all the hallmarks of social engineering.
Change can come only from the highest level of government, and only if the Prime Minister takes personal charge of the inequality and social mobility agenda. No. 10 has to be the driver in this to break the conventional approach to such problems. Departments should have to report to the Prime Minister’s Office on what new mindset and initiatives they are adopting to ensure that policies achieve a fairer society with equal opportunities for all, irrespective of class, income or gender. We need a new long-term agenda. We should abandon the political horizon of four or five years, equivalent to a Parliament.
I chaired for the Fabian Society a very dense document, which I recommend for bed-time reading as I am sure that noble Lords would get there quickly. The 2030 Vision report recognised that not all public money was spent well. As a result, we recommended that all spending decisions should include a 10-year test on what they would achieve, and a 10-year cost. By doing so, the long-term impacts would be considered, including the effects on society and on the public agencies. The problems are not confined to the United Kingdom; they are mirrored elsewhere and started decades ago. International co-operation is a must if we have to tackle this properly.
Talking of Davos, Klaus Schwab, who established it said that,
“systems that propagate inequality, or that seem unable to stem its rise, contain the seeds of their own destruction”.
To avoid such scenarios and create pathways to increase social mobility will require not only new policies but a new mindset.
Economic prosperity and social stability are two sides of the same coin. Only if they move forward in concert can we achieve a better, fairer and more prosperous society. As the ex-American President said, “It’s the economy, stupid”. I suggest that it is also the social, stupid.
Baroness Eaton (Con)
My Lords, a fair society is an open society, one in which every individual is free to succeed. The lack of social mobility is damaging to individuals and leaves countries’ economic potential unfulfilled. That is why improving social mobility is the principal goal of Her Majesty’s Government’s social policy.
Her Majesty’s Government have recognised that things can be done to aid the development of social mobility. Some examples are the creation of the business compact to encourage fair access to job opportunities; the increase in the pupil premium; access to early years education for two year-olds; the youth contract; and the increase in the availability of apprenticeships. Evidence shows that improvements are being made in some areas but there is still more that can be done.
In May 2012 the Social Mobility APPG published a report, Seven Key Truths about Social Mobility. I thank the noble Baroness, Lady Tyler, who is in her place, and the members of the APPG for their work in this area. The report identified that character and resilience are the missing link in mobility,
“a force at play throughout the lifecycle but too often overlooked in favour of more tangible, easier-to- measure factors”.
So what can be defined as character and resilience? What characteristics does an individual possess that make for resilience? The list is long: tenacity and perseverance; the ability to overcome obstacles; self-esteem; self-discipline; aspiration and expectation; understanding the relationship between effort and reward; and staying power and self-reliance.
The golden age of social mobility is often said to have been between the post-war years and the 1970s. I am sure that many of us here today are the product of parents and ancestors who demonstrated character and resilience in their lives. My mother was adopted into a family where the sons, much older than my mother, who had survived the First World War returned to what seemed a very bleak future. They organised a barrow and started a business selling groceries on the streets of Bradford. The business developed and my grandmother became the owner, with her sons, of a successful grocery and delicatessen business, no longer working from a wheelbarrow. The family recognised the value of education, which in those days was not freely available, and paid for my mother to attend a good school. Their success was down to drive and resilience.
My father lost his father when he was very young. There was no widow’s pension in those days to support his mother and his partially sighted brother. My father was bright and was offered a place at the grammar school. However, his mother, who worked as a housekeeper to provide a home for her family, could not afford to pay the fees so my father could not accept the place. He had to leave school at 14 and work long hours, studying for a degree at night. He became an apprentice to Mr Rolls of Rolls-Royce fame and developed a successful career as a professional engineer.
I know that there are many who fight against the odds today and succeed in spite of all that life throws at them. I fully approve of the care that the welfare state provides today in all its forms, but I sometimes wonder how much resilience we have lost along the way. Governments have a role in ensuring that barriers to mobility are removed and that equality is truly achievable. The key determinant is, however, the attitude of the individual—the fire in the belly. The desire to succeed comes from within and is not something that government and state can create.
Lord McNally (LD)
My Lords, it is a great pleasure to follow the noble Lord, Lord McFall. I shall take up two points that he made that are important to the character of this debate. He talked about the inequalities that have grown over the past few decades. It is important that we see that this has been under the stewardship of both parties—indeed, all three parties. He also made the point that not all public money has been well spent. That also colours the debate.
I probably belong to what I would describe as the guilty generation. My father never earned more than £1,000 a year in the whole of his working life. I was born on an ICI estate, but I went to grammar school on a Lancashire county scholarship and to university on a similar scholarship with a grant. I was never quite aware of how universities were funded in those days, but it certainly meant that my social mobility was on the back of a very generous state. In those days, of course, the early 1960s, I represented only 6% of my generation. I have never accepted that more means worse as far as university education is concerned, and have welcomed the expansion over recent years.
If I look back at the real advantages that I had, I see that I had aspirational parents; I had a home with books; I had a secure family background; and I lived in a stable community—not a particularly wealthy community, but one with values. I want to share two things that stick in my mind from my experience over the past few years as a Minister. One was a visit to a school in Leicester. I was walking around and talking to the deputy headmaster. I asked him, “Any problems here?” and he said, “Yes, that big estate over there is mainly white working class. In that estate now, we have the third generation of welfare dependency”. The other was a visit to a young offender institute. I was walking around with one of the people in charge, and we crossed a yard and saw about a dozen young, mainly black, youths, He just nodded across and said, “Most of those can’t read or write. Their contact with our educational system has been but passing for the whole of their lives”.
Those two stories encapsulate the problem for people of my generation and that of the noble Lord, Lord McFall. I came into politics with certainties. We were going to implement the Beveridge report, provide a welfare state that would deal with poverty and we would have comprehensive education that would be not bog-standard but a gateway for social mobility. We need to accept that some of the aspirations of the 1950s, 1960s and 1970s have not come about. As was said by the noble Lord, Lord McFall, we have found mounting inequalities over the past three decades. What is more, we have found them being embedded in our society. I received a very good brief from Oxfam. It quotes Sir Peter Lampl of the Sutton Trust, who said recently:
“Social mobility in Britain is much lower than in other advanced countries and is declining—those from less privileged backgrounds are more likely to continue facing disadvantage into adulthood, and the affluent continue to benefit disproportionately from educational opportunities”.
I do not think that there is some magic solution to this. Perhaps we will get a fourth way or a fifth way later—I do not know. Michael Gove and Iain Duncan Smith may not be everybody’s cup of tea politically but there is no doubt that, in trying to deal with welfare dependency and educational failure, they are addressing the right problems. In that respect, there needs to be a certain humility across the political divide in meeting those problems.
I believe that what the noble Baroness, Lady Eaton, said was right: we have got to go upstream to the very young as a first step. I look forward, certainly with humility on my side, to the contributions that will follow.
The Lord Bishop of Derby
My Lords, I, too, thank the noble Lord, Lord McFall, for his analysis, not least his observation that growth is not the answer and the unintended consequences of marketisation, as he called it. I probably want to explore what he might have meant by “the social, stupid”—there is an important clue in that.
I am engaged in this issue. In the City of Derby, where I work, I chair the inner city renewal project. That is the local authority and all kinds of voluntary and faith groups looking at how we can tackle this at grass-roots level, where there are a lot of people who are disadvantaged, with no social mobility and no equality in terms of finance, environment or opportunity. There are two ways of doing this. One is a needs-based approach—what are the needs and what resources can you put in to try to improve things?—and there is what they call an asset-based approach, which means asking what these people have in their own potential, as the noble Baroness, Lady Eaton, said—what do they have that can be grown so that they can contribute?
I want to name a couple of presuppositions that we have to be careful of in this debate. We live in a world where everyone wants the social mobility graph to go up. There is a celebrity culture and everyone wants to be up there. Of course, things can only go up if other things go down. It is a very complex world. We tend to see equality and social mobility through a very individual lens. That is where “the social, stupid” is so important.
I want to talk about what I think is the missing ingredient here—perhaps the noble Lord, Lord McNally, hinted at it with his common values—which is mutuality. This is a debate with anecdotes and stories, and I am going to tell a very short story to illustrate mutuality. Aristotle says that we are social animals and the Christian Gospel says that you have to love your neighbour. We cannot live on our own—mutuality.
A couple of weeks ago I was privileged to rededicate the grave of a man called William Coltman VC. He received four other awards for bravery in the First World War, and he is buried in a village called Winshill near Burton-on-Trent. He went to war as a young man with a wife and young child, and he was a stretcher-bearer. On the front he won many awards and was in fact the most highly decorated soldier in the whole of the First World War—this is someone who did not have an officer rank. There are amazing stories of him crawling out and rescuing people, Germans as well as Allied people, saving lives and serving others. He came back to the little village that he had left, Winshill, as a local hero, but he resumed his job for the local council. He was a council gardener—he worked in what we call the parks department, I suppose—for all his life. There was no social mobility in terms of his becoming a vice-chancellor, his salary going up or whatever. His life was about service to others. He was involved in the Christian church in the place and he ran a Sunday school to form young people in mutuality. However, his life was fulfilled, exemplary and appropriate. He did not have to go up the social scale and did not have to earn a certain amount of money, but he lived a life that was full of mutuality.
In a world where mutuality is disappearing in personal relationships, which we see through an individual lens, from the workplace, because it is all about individual rights and benefits, and from politics, because the pitch that we make is to the selfish interests of each voter to vote for their own best deal, there is an enormous challenge to all of us to face up to what has been called “the social, stupid”. I ask the Minister: what role do the Government have, along with other agencies, to encourage people to look at this whole issue of inequality and the lack of social mobility, not just through the economic and individual lenses of progress and that kind of thing—going up the chart—but through the kind of common values that create communities and mutuality, where there is a different way of handling the downs as well as the ups and you are not measuring yourself or crucifying yourself against the wrong criteria?
Certainly, the inner city renewal project that I am involved in will flourish only through mutuality. There is not enough money, resources or good jobs to lift all these people, but there is something in the human spirit that can deliver. Governments do not control the human spirit but I think that they can initiate partnerships, set benchmarks and give signals to challenge “the social, stupid”, which is about measuring individual achievement, and they can try to bat for mutuality.
Baroness Garden of Frognal (LD)
My Lords, I, too, thank the noble Lord, Lord McFall, for initiating this debate. Working for a fairer society and improving social mobility have long been at the heart of Liberal Democrat policies. We do not have a monopoly on that—and certainly mutuality would be something else that we would espouse. But being in coalition government has given us the opportunity to put forward measures and arguments which, as with today’s debate, resonate not only with our coalition partners but across political parties and well beyond.
As the Social Mobility and Child Poverty Commission highlighted in their excellent report, when one in six children—2.3 million children—are officially classified as poor, it extracts a high social price, and there is an economic price in wasted potential and lower growth. I shall concentrate my remarks on education and training for adult life, particularly for those whose start in life has been disadvantaged, and I acknowledge that women and girls can experience additional difficulties in the campaign for equality.
One of the forms of poverty that most severely hampers growth is poverty of aspiration. My noble friend Lord McNally spoke eloquently about aspiration. For those children whose experience has been limited and who know little of stable family life, or perhaps of the rewards and demands of working life, schools have a vital part to play in introducing them to the opportunities of the world of work. From an early age, children should understand the connections between school and work, between study and business, and between applying themselves and earning a living. Even at primary school, children’s imaginations can be captured by hearing about jobs and careers that they knew nothing about—and better still by visits to workplaces and meeting those genuinely enthusiastic about the work that they do. If this is important for children who enjoy academic learning, it is even more so for those who struggle with conventional lessons but who may have practical skills and talents that are not immediately valued, especially in league tables in a school environment.
Having worked for years on vocational qualifications for City & Guilds, I have seen how pupils can blossom when the curriculum gives them a chance to shine. I had been a classroom teacher, and I recall visiting schools that offer prevocational qualifications. The enthusiasm of the students was contagious as they applied themselves to mending car engines, caring for babies, planning and cooking meals—the very young people, as the schools told me, who had been demotivated and disruptive in academic lessons. They were acquiring not only skills but confidence and self-respect, which is much more likely to happen with good careers advice. One of the report’s recommendations was to urge the Government to improve resources for careers advice, a call that we are now hearing from all sides. I shall not task my noble friend the Minister with committing to this, but I hope that the Department for Education and Skills can be persuaded of the importance of careers education even given all the constraints on public spending and indeed, on the school timetable.
As my noble friend Lady Eaton said, we all welcome the increase in apprenticeships as a valid alternative to university, a true aid to social mobility. In a statement last March, the Government announced:
“We are extending apprenticeships to higher level skills and into the professions like insurance, accountancy and the law”.—[Official Report, 14/3/13; col. 400.]
Many of us are probably old enough to remember the days when professions had direct routes from school which were as highly regarded as graduate entry and led to careers that could be just as successful. For many young people, learning at work is more in line with their culture and ambitions, and we look forward to expansion of these routes into more professions and the end of inequalities between academic and practical attainment. As the commission recommends, non-graduate routes should become the norm across the professions.
Finally, I pay tribute to youth organisations for the part that they play in social mobility. Organisations such as scouting and girl guiding and the cadet organisations, and a wide range of voluntary and community youth groups, provide invaluable services, particularly in more disadvantaged areas and give young people an opportunity to develop personal and social skills, take responsibility and gain confidence, and learn both self-respect and respect for others. With the uniformed organisations and schemes such as the Duke of Edinburgh’s Award scheme, young people are faced with challenges; they learn how to manage risk and develop ways which, whatever their start in life, can lead to fulfilling and useful lives. We cannot afford to squander the talents of any of our people, but I would submit that it is not just government that has a key role. All of us as members of society can play our part in helping young and old to fulfil their potential, realise aspirations and build a fairer society.
Lord Giddens (Lab)
My Lords, I want to take my noble friend Lord McFall’s question seriously and ask: what is the relationship between inequality and social mobility? There are often problems when a technical concept enters popular and political discourse, and that has certainly been the case with the notion of social mobility. There are many misunderstandings about it. If one does not sort them out, it is almost impossible to make proper policy.
For example, the idea has taken hold that there has been a serious decline in social mobility over the past three or four decades. To quote the Observer, social mobility “has ground to a halt”. It was this concern that prompted the Milburn report and a range of other publications. However, there are two problems with this view. First, it seems to be substantially false. It has been subjected to a powerful critique from John Goldthorpe and his colleagues at the University of Oxford. Secondly—I hope that noble Lords will forgive me for being an academic about this but it is essential—the current discussion of social mobility fails to grasp the crucial distinction which sociologists make between absolute and relative mobility. We cannot understand current patterns of mobility if we do not grasp that notion. It is an essential distinction to make.
Absolute mobility refers to the proportion of people from specific class backgrounds who move upwards: in other words, the number of people who move upwards. Relative social mobility is a very different notion. It is the one that many people equate with social mobility, but that is wrong. Relative social mobility means the chances of individuals becoming mobile. In other words, it is a measure of social fluidity. It refers, if you like, to some individuals succeeding at the expense of others. It means that if there are high levels of relative upward mobility, there must be high levels of downward mobility as well. They are two very different notions and we have to sort them out.
The results of Goldthorpe's work are interesting and instructive for policy. They show that rates of absolute mobility from one generation to another across the 20th century in the UK and elsewhere have actually been quite high and remain high. The reason is simple: there has been an expansion of white-collar and professional occupations at the expense of less skilled manual jobs. The main reason for the apparent fluidity of our society is that structural change has produced a lot more opportunities at the top. Goldthorpe also shows, interestingly, that relative mobility has remained static across that period. In other words, contrary to what one might assume, the UK did not become a more fluid society over the past 40 or 50 years; there was not more fluidity and movement. Almost all the movement was upward mobility going into the jobs that were created.
Of course, as the noble Lord, Lord McNally, described, individual capacities make a difference as to who gets into those positions. However, the dominant feature is structural mobility over that period not, if you like, a more just or equal society.
Obviously, that does not mean that the plethora of policies contained in the Milburn report are without value but, as Goldthorpe says, no matter how gratifying those policies may be, politically their impact is likely to be quite limited. He is right to say that. In other words, more advantaged groups are often able to draw on their resources to negate the policies introduced with the best of intentions for introducing more relative mobility. That is a serious issue for such policies. For example, you might introduce a policy to help kids from an inner-city school to get into a higher level of the system, but middle-class parents can easily mobilise to negate that because they are not stupid and they know what is going on, too. So there is a powerful dialectic in all of this.
The conclusion that I draw is similar to Goldthorpe’s conclusion, which is that we must place the emphasis on equality rather than mobility. Social mobility in everyday talk these days functions as a kind of relatively seemingly painless equivalent for equality. As the noble Lord, Lord McFall, stressed, equality comes first because without greater equality we cannot improve social mobility. Equality not only trumps mobility, it is the main source of achievement. I do not see what policies the Government have for limiting the structural inequalities that were so well defined in the opening speech of the noble Lord, Lord McFall.
Baroness Tyler of Enfield (LD)
My Lords, I pay tribute to the noble Lord, Lord McFall, for securing this vital debate. From listening to today’s debate and to wider debates in the area, it is sometimes tempting to think that there is a singular causal connection between these two worrying economic trends—growing income inequality and slowing social mobility. I suspect that the truth is not so simple. There is a significant body of research suggesting that rising inequality and lower social mobility are both symptoms of the same condition. This condition, as we heard so eloquently from the noble Lord, Lord Giddens—I do not pretend to have his academic background—is what is sometimes called the hollowing out of the labour market. Increasingly the UK labour market is characterised by very high-skill, high-wage jobs on the one hand and low-skill, low-wage jobs on the other. This is having a major impact on feelings of fairness and social cohesion. For the record, yes I think that the widening gap between the rich and the poor really matters.
In the light of this fact about our labour market, I would like to focus today on the role that education plays in creating greater equality of opportunity. This is not because I do not think that certain economic measures can improve income equality. In fact, I believe that things such as raising the minimum wage and encouraging employers to pay a living wage, which is something I support very strongly, could make a significant difference. I want to focus on education because, as the noble Lord, Lord McNally, said, it is only through education that we can truly tackle the pernicious problem of intergenerational social mobility. As the Save the Children’s briefing for this debate highlighted, the top performing countries on international educational comparisons—Hong Kong, Canada, and Japan—all have a comparatively low correlation between the socioeconomic status of a child’s parents and his or her performance in school. Therefore, if we are going to improve our education system to meet the highest international standards, which we must, we have to meet the challenge of improving inter-generational mobility head on.
Through my work as the vice-chair of the All-Party Group on Social Mobility, I have come to the conclusion that any social mobility strategy needs to have the following primary goal: continuously evaluating and improving our education system to ensure that all children develop the skills necessary to succeed in a demanding and changing labour market. This means investing to improve the quality of education that underprivileged children receive throughout their lives. Given that privileged children continue to enjoy disproportionately high access to a good education it should be no surprise that a person’s ability to get on in today’s jobs market is strongly correlated with the resources enjoyed by his or her parents. This lack of intergenerational mobility will continue unless we make a commitment to ensure that all children have access to a high-quality education. I think that state sector education should be as good as, if not better than education in the independent sector. Importantly, this equality of access refers not only to education during the school years, but early years education, further education and higher education. I would say that further education is often neglected in these debates.
I shall refer briefly, as did the noble Lord, Lord McFall, to the 2010 OECD report on income inequality. That report made clear that one of the best ways for developed nations to improve their overall rate of social mobility is by lengthening at both ends the portion of a child’s life that he or she spends learning, regardless of his or her parents’ income level. Today, access to high-quality early years education as well as higher education is still disproportionately enjoyed by those on the higher end of the income spectrum. This must change if we are to see any improvement in the overall level of social mobility.
Lengthening the time that every person spends in education will ultimately help more people be more qualified for better jobs. Employers are increasingly looking for employees with technological literacy, advanced foreign language skills and other key qualifications for a career in the 21st century. At the same time, employers are looking for certain character and resilience traits. They want people who do not get discouraged when the going gets tough, who can bounce back, who can work in teams and build meaningful relationships. These soft skills—or non-cognitive skills—are crucial to social mobility and should feature far more prominently among our educational priorities, particularly in the early years. The evidence shows how important this is.
I am grateful to my noble friend Lady Eaton for mentioning that, next week, the All-Party Parliamentary Group on Social Mobility will publish a major manifesto on character and resilience, and I hope that there will be an opportunity to debate it.
Lord Kennedy of Southwark (Lab)
My Lords, I also thank my noble friend Lord McFall for tabling this Question for Short Debate. It has enabled an excellent opportunity for us to discuss this important subject.
The 2013 report of the Social Mobility and Child Poverty Commission is, in part, sombre and depressing reading. Despite being one of the richest countries in the world, and becoming richer, we have struggled to become fairer. As my noble friend Lord McFall pointed out, the UK is now ranked 28th out of 34 countries in the OECD equality table.
In this short debate it will not be possible to make all the points and put all the questions to the noble Lord, Lord Wallace of Saltaire, that I wish to. However, I have a few points to make and a few questions. I do not expect to get all the answers today but I would like a commitment from the Minister to write to me after the debate and place a copy of the letter in the Library of the House.
The figures on child poverty are there for us all to see. By making a real effort to tackle the causes of child poverty, we could create a tangible boost to the economy by as much as twice the cost that we are paying for child poverty today. The achievement of lower child poverty and higher social mobility comes back to universal affordable child care, higher quality jobs, fair access to higher education, work incentives that encourage employment and tackling income inequality. There is plenty of evidence out there that if we were fairer as a nation we would all be better off.
I support initiatives such as breakfast clubs and universal free school meals to help children. They would ensure that children had a hot meal inside them and were able to learn better. I commend the report of the inquiry by the London Assembly, chaired by my friend, Fiona Twycross AM. The report is entitled A Zero Hunger City and has the backing of the Mayor of London, Boris Johnson. It makes many recommendations, including working with partners to establish sustainable breakfast clubs in London; lobbying the Government to agree with the London Food Board to identify models for providing universal free school meals for all schoolchildren; monitoring risk factors for food poverty, including welfare reform; school plans to identify and address hunger throughout the school day; and support for families in food poverty.
The noble Baroness, Lady Eaton, made some excellent points about resilience and people working to achieve their goals despite what life throws at them. I agree with the points made by the noble Lord, Lord McNally, when he spoke about growing up and being lucky. I am a little younger than the noble Lord but we also did not have a great deal of money and my parents had to have second jobs to pay the bills and make ends meet. They arrived in this country in the 1950s as immigrants from Ireland. However, I lived in a stable family on a safe council estate in Southwark. I was always encouraged and supported and I am lucky to have had that.
I have always been of the opinion that going to work was good for people. We must have in place measures to make work pay and to deal with low pay. It is most regrettable that the UK remains at the wrong end of the international league table on wages, with more than one in five full-time workers classified as low-paid. Those most at risk of being low-paid are young, female, low-skilled workers in temporary or part-time work, often in the hospitality, retail or care sectors. Given this and the imbalance in the growth of the economy, things can be very tough in some parts of the regions and nations of this country. The noble Lord, Lord McNally, also made a point about his visit to Leicester. That reminded me of a conversation that I had with my noble friend Lord Donoughue, who told me that he had gone back to where he had grown up and met people who had not worked in three generations. That is something that we have to address; that cannot be right.
Many times in the Grand Committee and in the Chamber of the House of Lords we have talked about reducing the deficit. There is no arguing about that—we have to reduce it. However, it is unfair for the lowest earning fifth of households to make a larger contribution than any other group than the top 20%, both as a proportion as their incomes and in absolute terms, with low-income families, and especially lone parents, losing out by more than their peers as a proportion of their net income. The fact is that we are a divided country; there are haves and have-nots. Because we are not fairer, we all lose out and, in particular, some people never get the chance to develop, let alone to realise their true potential.
Have the Government looked at the London Assembly report, A Zero Hunger City? What did they think of it—and, if they have not looked at it, will they look at it? In reducing the deficit, as we come to the last part of this Parliament, what are they going to do to make the debt reduction programme fairer for all? It appears likely at present that the Government will not meet their 2020 targets on child poverty. What is the plan to get that back on track? What are we going to do to make work pay in more cases than at present, and what examples are the Government setting on making work pay? Is the living wage the answer? What government departments and agencies pay the living wage, and do the companies that they contract do so? What do they say to business about making work pay for employees? He may not reply to all those points today, but if he could write to me I would appreciate it. I thank my noble friend for this debate.
Lord Wallace of Saltaire (LD)
My Lords, this has been an invaluable debate. I was reading the debate that we had under the leadership of the noble Baroness, Lady Tyler, some six months ago, and I hope that we shall have another one in another six months’ time because there are some really serious issues that we all have to struggle with.
The noble Lord, Lord McFall, compared the British position to the American position. I recognise the comparison but I also recognise the differences. The American Administration are not attempting to push through a social mobility strategy as we are doing. Indeed, the inequalities in the United States, in economic and other terms, are much wider than they are in Britain. At least we have a consensus across all parties in Britain that we have to tackle what has been a long-term problem with a long-term response. The noble Lord mentioned the former Prime Minister John Major as well as Harold Macmillan; this issue has developed over the past 25 to 30 years and it will take 25 to 30 years to cope with it, against the headwinds of continuing economic and technological changes, both within Britain and abroad. After all, it is partly a result of global economic trends, with the collapse of the old mass-manufacturing industry that supported the skilled working class in stable working-class communities, with the institutions that held those communities together, such as the chapel, the trade union and the Workers’ Educational Association—a co-operative, heaven knows—which have also decayed with the decay of the economic structures that held them all together. I see the right reverend Prelate nodding. I can say from the point of view of West Yorkshire that the church has survived more successfully than many of the non-conformist churches in some of those areas, and I am very grateful for that.
Lord Giddens
The time when those organisations were dominant was a time when mobility was lower than it was later, for the reasons that I mentioned.
Lord Wallace of Saltaire
Yes, there was selective mobility, and that is part of the issue that we have. The noble Baroness, Lady Eaton, talked about her father and her grandmother. My parents-in-law were the youngest in a working class family and their eldest brothers and sisters paid for them to stay at school through Bradford grammar school and university. There was in those years very small-scale social mobility for a small minority of the bright poor who got out, so to speak.
Lord Wallace of Saltaire
Precisely. Britain’s situation also reflects the historic anomaly, of which I am very conscious as I have just come from a meeting of the advisory board on the centenary of World War I and have been reading into early 20th century history, that we have much more continuity of social structures over the past 150 years than many of our comparators. We still have the structure of private schools, which supported the Empire. We still have an unelected House of Lords. We still have a social hierarchy which is remarkably resistant to change, whereas in Germany, the Netherlands, Denmark, Belgium and, to some extent, also in France and Italy those old structures were swept away, which made it easier to have a more mobile and mutually respecting society.
The coalition Government’s social mobility agenda is something which we see as a cross-party, cross-government exercise, and it starts from the assumption that there has to be a partnership between economy, society and state—we have to get all those things in balance. I say to the noble Lord, Lord Giddens, that we shall be working on that against a number of very difficult global economic trends and against the challenge of the next round of economic and technological change, which may well sweep away a very large number of basic white-collar jobs, thus raising all sorts of issues about moving towards a society in which there are a number of extremely successful, very well paid people and, at the other end, a number of poorly paid, poorly skilled people. Dealing with that will take quite a lot of effort in our turn.
I should tell the noble Lord, Lord Giddens, that when I was an undergraduate, my most inspirational teacher was a graduate student called John Goldthorpe, so I have a great deal of respect for everything that John has written and continues to write. However, as the noble Lord knows well, perfect equality is not achievable; a reduction in the degree of inequality is. That is, after all, what a liberal society should attempt to work for. This Government are mounting an attack on tax avoidance. We face the problem of what I have to call the rootless rich, who have escaped the boundaries of nation states and thus managed extremely successfully to avoid tax. We need taxes on wealth, which is much less mobile than income. At the bottom, we have increased the threshold at which people start to pay income tax. There is the move towards universal credit and in encouraging more people into work. We are extremely happy that the level of youth unemployment is now on a downward trend, and we are doing as much as we can to ensure that that continues.
International economic trends help us. The Financial Times had an interesting article yesterday which suggested that there is now a downward trend in excessive executive salaries after the excesses of the past 20 years. We are affected by what is happening elsewhere, and we have to push very hard to provide for our own deeply interdependent society as much of a social compact in the global economy as we can. I worry about the impact on British society and the British economy of the influx of the super-wealthy from non-democratic states. That ought to be of concern, particularly to all those who live in London and the south-east of England.
We have now reached the stage where we all realise that the state cannot deal with a problem like that alone; the state cannot provide everything and our taxpayers are unwilling to pay for much more of what is needed. They want the services, but they are deeply resistant to higher taxation, so we have to talk about the role of independent social initiatives—what I still like to call the big society—the role of local communities and local action. Incidentally, we have to think about planning and building communities which hang together. Living in Saltaire, which is a very dense village where it is impossible not to know your neighbours, and having canvassed when I was the local candidate for Shipley in a number of the new housing estates where you do not know your neighbours, the husband has gone out in the only family car and the wife is marooned on her own, I am very conscious that the way in which we build communities in Britain also deserves a great deal more attention. We need more local government and local engagement and, as we have said about other areas, we need to persuade more of the young to vote and become engaged, because we know that all our political parties are pooled towards supporting the old and not putting enough money into the young.
On equality of education, the Government are now extending the pupil premium. In September 2014 we will extend 15 free hours of high-quality early education to 40% of two year-olds—not an easy task when at the same time the number of two year-olds is rising quite sharply. We inherited Teach First from our predecessor Labour Government and we have continued to expand it. The Teach First teachers that I have seen in various schools in West Yorkshire are absolutely first-class. We all know from what the All-Party Group on Social Mobility has said that raising the quality of teaching is a very important part of all this. Intergenerational equity, putting more money into children at the early stage, is very much part of what we need to do.
The noble Lord, Lord McFall, also mentioned the professions. I have to say that the figures on professions are deeply worrying, and I hope that whichever Government come in next time will look in particular at the question of recruitment into the legal profession as the one that sticks out most strongly as an inherited one.
Aspiration, character and resilience are clearly extremely important; I think that we have all now gripped that. Providing children with a sense of self-worth through school, careers guidance, music, sports, volunteering and mentoring is important. I am an extremely strong supporter of the National Citizen Service; I am about to ask the Cabinet Office whether it will be willing to provide an introduction to the NCS to any Member of the House of Lords who would like to see it, because I became enthusiastic when I had seen one or two courses myself. Through partnership with business, the Government now have a business compact. The Deputy Prime Minister has just given Opening Doors awards to a number of businesses that have been extremely good at pulling people into work. Apprenticeships are important, and I have to say that the apprentice that we had in the Government Whips’ Office was a classic example—a young woman who had been a hairdresser, and had not thought that she could be anything else, who blossomed in the six months that she was with us. All these things help to give young people a greater sense that they can do things. That is a very large agenda.
As the right reverend Prelate the Bishop of Derby said, we have to be careful to get beyond the idea that it is all about everyone getting to the top. The importance of the apprenticeship schemes, which I am extremely proud of this Government expanding, is that they are giving a number of young people a sense of self-worth in craft skills. That is a revival of an old mutuality of respect that we clearly need to do. Unfortunately, we cannot provide the independent business that also used to be part of the business of respect. I come from four different families and my great-grandparents were all small shopkeepers, so I am incredibly petty bourgeois. The mutuality of respect is part of what we all now need to rebuild.
We are out of time but we could have debated this for a great deal longer. I thank the noble Lord for raising this issue, and I repeat: I hope that we will continue to address this subject as a very broad long-term issue for this country over the years to come.
House of Lords
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Introduction: The Lord Bishop of Portsmouth
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Electoral Fraud
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Baroness Hanham
To ask Her Majesty’s Government what assessment they have made of the recommendations in the final report of the Electoral Commission Electoral fraud in the UK.
Lord Wallace of Saltaire (LD)
My Lords, we are carefully considering the Electoral Commission’s recent report and its three main recommendations and will respond in the coming months. We welcome the commission’s finding that electoral fraud is not widespread and agree that we should continue to consider ways to safeguard electoral integrity. That is why the Government are introducing individual electoral registration from June this year, which will help make registration more secure.
Baroness Hanham (Con)
My Lords, I thank the Minister for that reply. I am sure that many Members of this House will welcome the proposals in the package put forward by the Electoral Commission to be introduced by 2014. However, it proposes to leave the introduction of one area until 2020: individual identification at polling stations. In responding to the report, will the Government consider encouraging the commission to bring that forward, as it is a very important aspect of preventing fraud?
Lord Wallace of Saltaire
My Lords, the Government are considering that although I have to say that Ministers are not yet convinced of its desirability. We all know from the American experience that demanding qualifications and identification at polling stations tends to discourage people from going to vote and we do not wish to discourage people from going to vote. There is less evidence of personation at polling stations than there is of multiple registration—ghost voters being put on the register—or of postal vote fraud, so we are not yet persuaded that the response is proportionate to the problem we face.
Lord Campbell-Savours (Lab)
My Lords, is it not interesting to note in the detail of the report that the Electoral Commission is finally prepared to recognise that there are high-risk areas, which it identifies and lists, which are identifiable as having ethnic minority populations, where it believes that there is a particular problem? Is it not true that if the commission had been prepared to admit that four years ago, when the legislation was introduced, we could have avoided spending tens of millions of pounds on an individual registration scheme, which is a total waste of public money, and could have targeted that resource on the areas where there is a particular problem? We are wasting public money on a scheme which is utterly ridiculous.
Lord Wallace of Saltaire
My Lords, I entirely disagree with the noble Lord on that. We are one of the few democracies that clings to the 19th century approach of household registration. Individual electoral registration is much more appropriate to the population we now have.
Lord Tyler (LD)
My Lords, given that my noble friend has already said that the most prevalent problem in the past has been fraudulent use of the postal vote system, is he confident that the returning officers, who will now have to check personal identifiers for every single postal vote returned, will have the necessary resources this year to deal with that? Will he assure the House that a proper and careful review will be carried out in advance of the 2014 elections to make sure that the system works much better than it has done in the past in this respect in preparation for a higher turnout, presumably, in 2015?
Lord Wallace of Saltaire
My Lords, I am informed that, in practice, almost all electoral registration officers are already checking 100% of postal votes, although they are currently required by law to check only 20%.
Lord Hunt of Kings Heath (Lab)
My Lords, coming back to the point raised by my noble friend and the issue of potential impersonation at polling stations, does the Minister recognise that in some places, particularly Birmingham, there are instances in which large crowds of men gather outside schools and intimidate some voters to prevent their going into vote? Does the noble Lord agree that that is what attention should be focused on and that the police need to be advised that they should take action when it occurs?
Lord Wallace of Saltaire
My Lords, I do a lot of my politics in Bradford, as the noble Lord knows, and I am well aware of the differences between the local problems we have with the voting system. One of the reasons that the new regulations allow for police community support officers to be present in polling stations is precisely to deal with that sort of occasional outbreak of intimidation. There is, as we all know, a problem of registration fraud—ghost voters being put on the register—but, again, it is localised. As I am sure all noble Lords know, this is much more of a problem for local elections than for parliamentary elections.
Lord Glentoran (Con)
Is the noble Lord aware that personal identification is now in operation in Northern Ireland, has been for some time, and is, I believe, a success?
Lord Wallace of Saltaire
My Lords, I am well aware of that. Indeed, the Electoral Commission looked at the Northern Ireland scheme in particular and has estimated that if we were to extend it to Great Britain, with likely take-up, based on the Northern Ireland model, of 10%—mostly young voters—it would cost some £28 million.
The Lord Bishop of Wakefield
My Lords, following the question of the noble Lord, Lord Campbell-Savours, about areas of high risk, in our diocese of Wakefield the local authority of Kirklees has been pinpointed as just one such area for the sort of reasons that the noble Lord mentioned. The local authority is working hard with a number of agencies to ensure the probity of the next elections. Will the Minister say what sort of support will be given to councils to enable them to fulfil this important duty?
Lord Wallace of Saltaire
My Lords, I was discussing that exact question with the electoral registration officer of Kirklees the summer before last, including the authority’s co-operation with the police. We all know that there are pockets of problems within Kirklees. It is a matter for local co-operation with the police, who are well aware of this. We are also well aware that there is a certain tendency in some local elections for candidates to use allegations of electoral fraud against each other as part of the local campaign. That is one of the reasons why the police are occasionally a little sceptical about allegations being thrown around during the campaign.
Lord Forsyth of Drumlean (Con)
My Lords, is my noble friend aware that the Electoral Commission is responding to complaints from members of the public about the Scottish Government using taxpayers’ money for propaganda purposes, as part of the independence referendum campaign, by saying that it is not the commission’s responsibility? Does that not make a mockery of having election expenses and rules for expenditure in referendum campaigns? What is the head of the Civil Service going to do about this continuing abuse?
Lord Wallace of Saltaire
My Lords, I am well aware of this; indeed, the noble Lord has made sure that I am well aware of it. I am conscious that the Cabinet Office owes him a letter, which is in process, in reply to his previous Question.
Lord Campbell-Savours
My Lords, does the Minister accept that this whole debate is riddled with political correctness? For the great majority in the United Kingdom, there is no problem whatever of electoral fraud. Why are we wasting tens of millions of pounds?
Lord Wallace of Saltaire
I am not quite as confident that there is no problem of electoral fraud outside the South Asian Muslim community, which I think the noble Lord was getting close to saying. As a young Liberal, I listened to many people talking about quite considerable electoral fraud among the white population during elections held in the 1940s and 1950s. I am not entirely sure that it has completely disappeared today.
Prisons: Deaths of Young People
(10 years, 10 months ago)
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Lord Ramsbotham
To ask Her Majesty’s Government whether they intend to hold an independent review into deaths of young people in custody as recommended in the report by Inquest and the Prison Reform Trust Fatally Flawed; and, if so, when.
The Minister of State, Ministry of Justice (Lord Faulks) (Con)
My Lords, we have decided to hold an independent review to learn lessons from self-inflicted deaths of young adults in custody aged between 18 and 24 and to identify actions to prevent further deaths. The review will be led by the noble Lord, Lord Harris of Haringey, who I see is in his place. He is the chair of the Independent Advisory Panel of the Ministerial Council on Deaths in Custody. The review will report by spring 2015.
Lord Ramsbotham (CB)
My Lords, I am grateful to the Minister for that positive response, but I am sorry that the review’s remit does not include children aged under 18. Since January 2011, 16 young adults aged between 18 and 21 have taken their own lives in custody and, worryingly, eight of those deaths have occurred in the last four months. All of them took place in adult prisons, to which it is currently the policy to send young adults rather than to young offender institutions.
In a thematic review, Suicide is Everyone’s Concern, in 1999, I made specific recommendations regarding the safety of young people, yet year after year the same old failings following young suicides are recorded in inspection and inquest reports, such as the lack of institutional understanding of, or attention paid to, the particular needs of that vulnerable age group. Now the Ministry of Justice plans to create secure colleges—fortified schools—for under-18s and, as I have mentioned already, to put all those aged over 18 into adult prisons, both of which could exacerbate existing flaws and create significant risk to young lives. Does the Minister accept that a degree of urgency exists and will he consider advancing the time by which the noble Lord, Lord Harris, is required to complete his review so that necessary improvements to current practice, based on the mass of existing evidence, can be considered in time to be built into the new proposals?
Lord Faulks
My Lords, the review will start as soon as resources are in place, and we are anxious that it should report back by the spring of 2015. That does not mean that lessons are not continuously learnt from all the other sources that provide information. The review will focus on key themes, including vulnerability information sharing and the safety of young people.
The noble Lord referred to the secure colleges which are shortly to be established, the announcement of which is contained in the Criminal Justice and Courts Bill. The secure colleges will put education at the heart of youth custody and are intended to provide an innovative and holistic approach to the education and rehabilitation of young offenders so that fewer go on to reoffend.
Those aged under 18 are currently held in secure children’s homes, secure training centres and young offender institutions. No under-18s are mixed with over-18s. As to 18 to 20 year-olds, they are currently in young offender institutions, and the Government consultation on whether this age group should be in prisons with older adults closed in December. We are putting on hold the Government response to the consultation pending the result of this particular review.
Lord Patel of Bradford (Lab)
My Lords, what inquiries are the Government making and, better still, what action are they taking with respect to what appears to be the disproportionate number of young black men dying in a range of custodial settings?
Lord Faulks
My Lords, every single death in custody is investigated by means of an inquest by the Prisons and Probation Ombudsman and all lessons are shared. One of the purposes of the review is to go beyond the focus on individual circumstances, important though they are, to see whether lessons can be learnt from putting together all the individual facts which are derived from those investigations. I accept what the noble Lord says and, if there are specific aspects deriving from ethnic origins, I am sure that those will be taken into consideration.
Baroness Linklater of Butterstone (LD)
My Lords, for a child to commit suicide at all is a tragedy, but for a child to commit suicide while in custody is a catastrophe. Will the Minister ensure that professionals inside and outside the prison are required to share information and to look at the underlying issues as part of sentence planning for these children? This is not routine practice today. Will the Minister also ensure that much more specialist training is given to prison staff? These children are very disturbed, damaged and difficult, but also in deep distress. The Government must act on this intolerable situation instantly.
Lord Faulks
My Lords, the noble Baroness identifies a matter of great concern to the Government. Under-18s are considered in various ways, through the work of the Youth Justice Board and the NOMS review of the assessment, care in custody and teamwork process—the acronym ACCT will be familiar to the noble Baroness and to the House. However, we intend to learn from this review as applied to this age group.
I entirely accept that suicide in any circumstances is a tragedy. We are concerned to focus on the early days in custody, when young offenders are particularly vulnerable. All prisoners will receive an initial health screening within 24 hours of reception and there will be an initial assessment of their risk of self-harm. If the prisoner is identified as being at particular risk, the assessment will take place within 24 hours and governors must ensure that arrangements are in place for staff to monitor prisoner safety and well-being throughout the first night in the prison. It is right to say that there is a disproportionate occurrence of suicide during the early stages of custody, so the suicide prevention strategy will be specifically targeted at that stage.
Lord Beecham (Lab)
My Lords, the Government have drawn attention to the problem of the deaths of young people in custody. I welcome the Minister’s announcement today, although I continue to share some of the concerns expressed by the noble Lord, Lord Ramsbotham. There is continuing concern about the incidence of self-harm and suicide among women prisoners, who form 5% of the prison population but account for one-third of the incidence of self-harm and four times the number of suicides as men. They are 36 times more likely to commit suicide or die of an accidental overdose of drugs in the first two weeks after release. It is time for a radical change of policy in relation to the imprisonment of women and especially in the practice of segregation.
Lord Faulks
My Lords, we have been working hard to improve support for women in prison. We have issued gender-specific standards in all areas of prison regimes, including training for staff working with female offenders in prisons, which has now been extended to service providers in the community. New search arrangements ending routine full searching for women prisoners have also been introduced. The House will know that there are six mother and baby units in England and Wales which provide an overall capacity of 64 places.
I am slightly surprised at the noble Lord’s statistics. He is right that my research into this matter shows that women are disproportionately more likely to self-harm than men, relative to their occupation of prisons. Fortunately, the self-harm, compared with men’s self-harm, does not tend to be as serious, and does not usually require hospitalisation, although I do not suggest for a moment that any self-harm is not a significant factor. The statistics that I have been given do not indicate that women form a large part of those who have been responsible for self-inflicted deaths. I will write to the noble Lord with statistics. I hesitate to bandy them across the Dispatch Box but I do not think he is quite right.
Earl Cathcart (Con)
My Lords, will legal aid be available following a death in custody if there is an inquiry?
Lord Faulks
My noble friend identifies a statutory source of inquiry that is of great importance to the inquest, which very much expanded following the application of Article 2 of the European convention. The House will know of the establishment of the post of chief coroner, who gives directions as to how these inquests should be carried out. Although the Government, because of the restricted financial circumstances, have had to make various cutbacks in legal aid, I am glad to say that the scope of exceptional funding under Section 10 of the LASPO Act allows the Director of Legal Aid Casework to provide legal aid in circumstances where Article 2 is engaged and there is a convention right. The Lord Chancellor’s guidance to the director makes it clear that,
“It is … likely that an arguable breach of the substantive obligation will occur where the individual has died in State custody other than from natural causes: for example, killings or suicides in prison”,
so it is highly likely that legal aid will be available.
Baroness Howarth of Breckland (CB)
My Lords, the Minister will be quite aware that it is the build-up of stress throughout the system that leads to these young people self-harming. He will also be aware that, at the very beginning of the process, many of them are being held inappropriately in police cells because of the lack of facilities in the rest of the system. Would he ensure that that is included in the inquiry? I am absolutely sure that, if it is not, there will be a tragedy and we will have another inquiry.
Lord Faulks
We have the good fortune of having the noble Lord, Lord Harris, present in the Chamber. I am sure he will have heard that question and taken it into account. I am unable to give the House actual statistics on the situation that the noble Baroness describes, but clearly the duty on the state to look after young people arises just as acutely whether they are in police cells or in prison.
The Chancellor of the Duchy of Lancaster (Lord Hill of Oareford) (Con)
My Lords, we will hear from the Labour Benches first. I am sure we can get both questions in if we are quick, and if the questions are short and the answers brief.
Baroness McIntosh of Hudnall
My Lords, briefly, could the Minister confirm that the health assessment at the very beginning of custody includes assessment of mental health? If it does—which I hope it does—can the Minister say who conducts those mental health assessments and whether they are fully competent to do so?
Lord Faulks
The noble Baroness makes a very good point. Prisoners are screened on arrival in prison by a trained nurse to find out their health needs, and people with mental health problems who might be vulnerable to suicide are referred for a mental health assessment. All prisoners have access to an on-site healthcare team which deals with most problems. If a prisoner is suffering from a severe mental health illness, they may be transferred to a secure hospital. Approximately 1,200 prisoners with a severe mental illness are transferred to NHS secure services. We recognise that prison may not be the most appropriate place and we are developing liaison and diversion services, together with the Department of Health and the Home Office, to ensure that people who are vulnerable are identified and can be diverted, if necessary, away from the criminal justice system.
Lord Shutt of Greetland
My Lords, I have a simple but important question. Is the inquiry of the noble Lord, Lord Harris, to be an inquiry under the Inquiries Act 2005?
Lord Faulks
I am unable to give a precise answer, but it is certainly not within the scope of those terms specifically. I will write to the noble Lord to confirm that.
Flooding: Somerset
(10 years, 10 months ago)
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Lord Skelmersdale
To ask Her Majesty’s Government what the Army has so far done to help people affected by the floods in Somerset.
The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord De Mauley) (Con)
My Lords, military personnel and Somerset County Council have conducted a joint reconnaissance of affected areas. This concluded that the civil authority’s response, augmented by the substantial deployment of the national fire and rescue service’s assets, had sufficient capacity to manage the necessary tasks. There is an established system for authorities to request military assistance, which has been called upon several times over recent weeks. A range of defence assets remain on six-hour notice to move in Somerset.
Lord Skelmersdale
My Lords, the ongoing floods on the Somerset Levels in particular are causing misery to people and animals on farms. Does not the fact that the county council can when necessary call in the Army and the fact that the Bellwin formula has been extended to the end of March show that the Government are doing all that they can to exacerbate the problem, but that it is for the people on the ground actually to do the work?
Lord De Mauley
I am sure that my noble friend did not mean exactly what the Opposition thought he meant. The Army is on standby if necessary, as I have said. High-volume pumps have been deployed from the National Asset Register and they are in place to prevent further increases in levels of flood water. The pumping operation is in fact one of the largest that the country has seen. My right honourable friend the Secretary of State has asked for a clear action plan for the sustainable future of the Somerset Levels and moors to resolve the problem for the next 20 years. Noble Lords will be aware that I am repeating a Statement later to deal with extra funds for repairs.
Lord Berkeley (Lab)
My Lords, has the Environment Agency got its priorities right on the floods? It says that it does not want to do any dredging. I was told by one of its officers that there is no point in dredging, because there is a high tide and the water is coming in, but it must understand that there is also a low tide and it can go out. I had an e-mail this morning from the Environment Agency about the Dawlish Warren, and as we know the railway will be closed for six weeks. The agency says that it will study the bird movement on the beach over the next year to see whether it can move any sand back there. Are we looking after birds before humans?
Lord De Mauley
My Lords, the agencies are working together to ensure that measures such as dredging can proceed as rapidly as possible and meet the existing environmental requirements. The Environment Agency, Natural England and the local authorities are working together to expedite this.
Lord King of Bridgwater (Con)
My Lords, is my noble friend aware that while what has been done so far in terms of pumping is a great improvement, in certain respects the situation is deteriorating significantly? I heard reports this morning that parts of Bridgwater are now liable to flooding at this time. The pledge from the Prime Minister on further action that will be taken is much appreciated. Meanwhile, is my noble friend aware that while it is not a matter for the military, I hear nothing but tributes for the work of the emergency authorities and services at the moment? Undoubtedly, if one looks at the weather forecast, there could be a serious and maybe continuing deteriorating situation.
Lord De Mauley
My Lords, I think that all noble Lords would share with me sympathy for the people of Somerset, who are experiencing a really dreadful time. Like my noble friend I pay tribute to the local authorities, the emergency services, and the fire and rescue services. All services assisting in this exercise are wonderful.
Baroness Royall of Blaisdon (Lab)
My Lords, I realise that the Minister will shortly make a Statement that, apart from anything else, will be about funding. I am told by colleagues and friends in Somerset that the people there are collecting money. They are looking to raise £1.4 million to deal with dredging and whatever is necessary. While we must of course take responsibility for many things that happen within our communities, the people of Somerset should not have to foot any of the bills in relation to flooding, and future flooding and defences. May I suggest that once the present crisis has passed, the Minister gives an undertaking that the Government will look at the funds allocated to Defra and how they are allocated within it? It seems to me that something is not quite right at the moment.
Lord De Mauley
I am sorry to hear that the noble Baroness thinks that. As she knows, I will be repeating a Statement which covers funding, among other things. I agree with her expression of sympathy for local residents. However, it is reasonable to say that there is a scheme of partnership funding and, certainly in other parts of England, it is working extremely well.
Lord Jenkin of Roding (Con)
My Lords, I do not think that my noble friend really gave a proper answer to the very relevant question asked by the noble Lord, Lord Berkeley. There have been many complaints by the residents of the Somerset Levels that the Environment Agency seems to be prioritising birds over the needs of people. What is the Environment Agency’s answer to that charge, which seems to be very widely felt by the people in the area?
Lord De Mauley
What I can say to my noble friend, which will not entirely satisfy him, is that I referred earlier to an action plan that has been demanded by my right honourable friend. Dredging will form part of that plan but it will not provide the whole answer. The plan will have to consider a whole range of options for improving the area’s resilience in the long term.
The Countess of Mar (CB)
My Lords, the noble Lord, Lord Skelmersdale, mentioned animal welfare. We have all seen pictures on our television of cattle in a barn that seems to be on an island. Should the water get any higher, are there any contingency plans for evacuating those animals to higher ground?
Lord De Mauley
I, too, have seen the clips that the noble Countess is referring to. What is really important at this stage is that when people are asked to evacuate by the Environment Agency, the emergency services and the police, they must listen to the advice that is given. We are also facing some potential tragedies with our farms and animals on those farms. The county council and the emergency services are working as best they can but people must come first.
Baroness Bakewell of Hardington Mandeville (LD)
My Lords, the floodwaters are now beginning to affect people who were previously on the periphery, bringing increased demand on the scarce resources of the fire and rescue and Army services, as we have heard. Where drivers recklessly enter floodwaters by removing “Road Closed” barriers, will the Minister join me, a resident of Somerset, in supporting the emergency services in charging those thoughtless people who have to be rescued, sometimes more than once?
Lord De Mauley
What I can do is share with my noble friend her rap on the knuckles for those who do that and do not take the advice of the emergency services.
Business of the House
(10 years, 10 months ago)
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Lord Hill of Oareford
That the Questions for Short Debate in the names of Baroness Jones of Moulsecoomb, Baroness Wheeler, Baroness Royall of Blaisdon and Lord Mawson set down for Wednesday 12 February shall each be limited to one hour.
Water Bill
(10 years, 10 months ago)
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Lord Whitty
“Consumer objective
In section 2(2B) of the Water Industry Act 1991, after “interests of” insert “current and future”.”
Lord Whitty (Lab)
My Lords, Amendment 109 is one of several before us today that are intended to tweak Ofwat’s responsibility into a more long-term aim on sustainability and resilience.
Ofwat is an economic regulator and currently its prime duty is to the interests of consumers—the consumer objective. But Ofwat has never been simply an economic regulator and since 2003—2005 in terms of implementation—it has had secondary duties relating to environmental and social sustainability. We will be having a debate shortly about whether those duties, too, should be primary duties.
Although historically it would be true to say that Ofwat has interpreted its economic regulator status somewhat narrowly, in practice it has always had a sustainability dimension—albeit at times that this may have been interpreted rather weakly. The five-yearly price review looks at financing long-term infrastructure as well as immediate business and householder water supply demands. In this Bill, there is yet more emphasis on social and environmental considerations. As the next but one debate will show, some of your Lordships want to take that further.
It is important to recognise that even the purely, or mainly, economic interest of the consumer—the need for water at affordable prices—is multifaceted and changes over different timeframes. As an economic regulator, Ofwat should act not only in the current interest of consumers, or the next-five-years’ interest, but in the long-term interest of both current consumers and future consumers. That duty fits more clearly with resilience and sustainability considerations or objectives. My amendment would make that clear. It would make it clear that Ofwat’s responsibility, as laid down simply in terms of consumers in the 1991 Act and repeated thereafter, should apply also to future consumers. We made a similar change regarding Ofgem in the Energy Act passed by the Labour Government in 2008. Ofgem has responsibility for future consumers. Some might argue that that has not made a dramatic difference to Ofgem’s deliberations, but at least that responsibility is clearly there. It has had the effect of holding it responsible for such longer-term issues.
In the water sector, we have five-yearly price reviews, six-year water catchment management plans and 25-year water resource management plans. They all require water undertakers to be concerned about the long term. However, it is also important that the consumer objective is seen in the long as well as the short term. That is what my amendment seeks to ensure. I beg to move.
Lord Redesdale (LD)
My Lords, I rise to support this amendment. I believe that the noble Lord, Lord Whitty, has underestimated the effect of the change to the primary duties of Ofgem in the 2008 Act, which states that the duties for present and future customers are one of the underlying bases of its commitment to sustainability. The problem that it faces is that the limitations of the sustainable action that should be undertaken have not yet been tested. I had the fun of suggesting to Ofwat that we could take it to judicial review to suggest that it was not fulfilling this pledge. That had an enormous effect on Ofgem. Ofgem should be commended for the strides that have been taken over the past six years to move from an organisation that saw sustainability as something outside its remit to seeing it as something that is very much part of its remit. The value of this—in an amendment first moved by the noble Lord, Lord Oxburgh, to which I added my name—is such that it has changed the culture of Ofgem. It is rather unfortunate that Ofwat does not have the same duty and therefore the same drive to understand that it has that responsibility.
The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord De Mauley) (Con)
My Lords, the purpose of Amendment 109 is to ensure that, in discharging its primary duty to protect consumers, Ofwat must take account of the needs of both current and future customers.
I agree that this is an essential objective. Water is an industry with unusually long planning and investment horizons. Our water resources management-planning processes require companies to plan, as a minimum, 25 years ahead and encourage them to plan over much longer timeframes. Although much of our current infrastructure will be expected to serve customers well for decades or even centuries to come, this is why we have introduced the new duty of resilience, which requires Ofwat to secure the long-term resilience of systems to the long-term pressures identified in the water White Paper, such as climate change, environmental pressures and population growth. It also requires Ofwat to ensure that the companies take action to meet the long-term needs of consumers by promoting appropriate long-term planning and investment; and by taking any and all relevant measures to manage water resources sustainably and reduce demand.
So let me assure the noble Lord, Lord Whitty, that I concur entirely with his aims. However, I consider his amendment to be unnecessary, because its effect would be to duplicate an identical existing provision in Section 2(5A) of the Water Industry Act 1991, which provides a definition of “consumers” for the purpose of the consumer duty. It clearly states that,
“‘consumers’ includes both existing and future consumers”.
I hope that this will satisfy the noble Lord and that he will feel able to withdraw his amendment.
Lord Whitty
My Lords, I thank the noble Lord, Lord Redesdale, for his support and agree with him that I was perhaps too dismissive in relation to the effect on Ofgem. Such a responsibility has had an effect on Ofgem and on the way in which its work, output and regulatory responsibilities are seen by the companies and consumers within the energy sector, so it has made a difference.
The arguments that the Minister has just put were very similar to those put initially by Energy Ministers in relation to the amendment to the 2008 Bill pursued by the noble Lords, Lord Oxburgh and Lord Redesdale. I cannot remember whether I openly supported them, but I certainly spoke to the then Minister—it was none other, I believe, than the noble Lord, Lord Hunt of Kings Heath—who agreed that the briefing that he had from his department was too negative and reflected the usual view of Whitehall that just because there were references to it in other documents you should not make it clear in the Bill. The Minister should perhaps go back to his own officials and say, “Well, yes, it may be that we can point to other documents, but people will look at the Bill”. They will look particularly at the front end of the Bill, if they get that far, which amends the 1991 Act—although that bit of it has not been amended yet by the Minister.
The role of future consumers is reflected very early on in the Bill in defining Ofwat’s responsibilities. The flexibility shown by Ministers in responding to the amendments to the 2008 Bill proposed by the noble Lords, Lord Oxburgh and Lord Redesdale, should be repeated here. Perhaps the Minister could agree to go back to his officials. I do not suppose that he will tell me that he is going to do that, so I will withdraw the amendment now and allow him time and grace to do that, because I would like to see this matter addressed on Report. I beg leave to withdraw the amendment.
Lord Redesdale
Lord Redesdale
My Lords, I shall speak also to Amendments 111 and 112. I want also to express support for Amendment 113, which is in this group. The purpose of the amendments is very simple: to put in the Bill a duty on Ofwat to further sustainable development. This has not been a short debate; it started a number of years ago and follows on from debates that we had in relation to Ofgem, about how you bring the regulator to understand that its duties as an economic regulator also encompass the environment and issues going forward into the future.
The wording of the previous amendment—I will have to check this—referred not just to present and future customers but to acting for the good of present and future customers. This comes to the heart of the problem that I see in the Bill. We have a greater understanding of the changes that have taken place in the environment. I believe that climate change is a fact: anybody standing up to their waist in water on the Somerset Levels at the moment would believe that we live in a situation where the climate is changing. Of course, the problem is that, at a time when there are floods, the idea of drought seems somehow very distant. However, it was not very long ago that we were actively discussing droughts.
My noble friend Lord Moynihan is sitting in his place. I remember a discussion we had in the Bishops’ Bar about water, because there was a real possibility that London would not have enough water and the Olympics were coming up. My noble friend Lord Moynihan said, “That’s fine; we have an agreement with Thames Water that we will get water whatever happens”. I am not sure that the Olympics would have been the fantastic success that they were—and I must commend him on the work he did on them—if people in the surrounding area were having to deal with massive water shortages because we were throwing water without reservation at the Olympics.
This comes to the heart of the issue: that there has to be a change in our view of water. Water has very much been seen as a resource that could be dealt with because it just comes out of the tap and you pay for as much as you want. With a population that is growing so rapidly, however, and with the constraints we are facing in our urban areas, we are going to face real issues about the amount of water that we can actually use. Therefore, putting in the Bill the word “sustainability” would change the very nature of how Ofwat would go about its duties. It should look not just at the economic issues, because looking just at the price is a very narrow definition.
The cost of those floods is going to be substantial indeed, and the cost of droughts to water companies is incredibly expensive. Noble Lords will remember the time when Yorkshire Water actually had to tanker drinking water by lorry. That is an incredible expense which would have to be borne by the consumer. We may have had 220% of our normal rainfall pattern, but last year we were looking at one of the wettest droughts in history. It did not change the fact that the water companies still had real problems with the aquifers and the amount of water available.
I realise that the Minister is going to say that the duties of resilience that the Government have put in the Bill deal with my concerns. My problem with the duties is that, while the Minister and the Defra team have worked incredibly hard to make sure that those resilience duties are encompassing, resilience has a different concept of dealing with an issue, while sustainability is talking about how we can look into the future to deal with those issues.
The Government will probably reject this amendment. I always live in absolute hope that the Government will see the error of their ways—as the Labour Government did in 2008 when they moved forward in changing Ofgem’s duties—and come forward to say, “My noble friend Lord Redesdale’s amendment is quite perfect in every way. We will accept it and he is to be commended”. That would, of course, be the end of it, but I have a feeling that they might reject it. Obviously, after 23 years and however many thousands of amendments I have put down that have been rejected out of hand, they might well come forward with that position. However, I think there is a discussion to be had. It is central to this Bill that we change how the regulators view this, not just in economic terms but realising that there must be a holistic approach and we have issues to deal with.
I have not met anybody with whom I have discussed this issue who has not turned around and said, “Surely, sustainability of the water supply has to be the starting point, because without water being sustainable, we will actually die”. You cannot do without water for very long. It is a ridiculous position to say that this is absurd rumour-mongering; we have a Statement after noon today on the floods. Within a year or two we will have Statements on the next drought that we face. These things come and go. Just because we are not in a drought at the moment does not mean that it will not happen. Therefore, while the Government might be fundamentally opposed to sustainability, a discussion looking at some of the aspects that could be added to the resilience clause would be very helpful.
The Earl of Selborne (Con)
My Lords, I am always impressed by the fervency with which my noble friend Lord Redesdale promotes the cause of sustainable development. Who could disagree with him that the sustainable use of water is clearly desirable? But does the more specific mention of sustainable development in the Bill help towards those causes or duplicate what is already there and in previous legislation? Does it give a much clearer direction to Ofwat? None of us would dispute that the major issue that must be addressed is long-term sustainable management of water resources. None of us disputes that the new resilience duties on Ofwat are extremely helpful. However, my noble friend Lord Redesdale did not remind us that this issue of whether the situations of Ofgem and Ofwat are totally parallel was looked at by the Gray review in 2011, the advice of which was to reject that. I accept that the Government rejected much other advice—from the Cave review and others—so that is not a roadblock. However, it must be recognised that there are already duties on Ofwat to promote sustainable development.
I am always a little nervous about those who find themselves supporting sustainable development. The concept has three pillars: the economic benefits, the societal benefits and the environmental benefits, all of which must be interconnected. The argument put forward by my noble friend Lord Redesdale was almost entirely based on the environmental and water efficiency benefits. Those are very worthy and very important, but I have also heard sustainable development prayed in aid of some pretty harsh economic messages. Clearly, that is not an appropriate way to interpret it. Is the Minister really sure that this is going to help to clarify Ofwat’s roles? I am not as convinced as my noble friend Lord Redesdale.
Lord Crickhowell (Con)
My Lords, at Second Reading I said I was green with envy that the environmental regulators will now have the Bill rather than the legislation that I had to deal with as chairman of the National Rivers Authority when I was in almost continual friendly conflict—I emphasise the word “friendly”—with Ian Byatt the economic regulator. It was so friendly that I have two cartoons at home, which were sent to me by a notable newspaper, showing both of us in the boxing ring. In the first, we are engaged in a vigorous fight, and the second shows us collapsing together exhausted at the end of the exchange. We have made huge progress since then, and the existing sustainable development duty, as I understand it, is now being given statutory authority in the Bill. The clear steer that has been provided by the Government is now being given statutory effect in the Bill. As I understand it, Ofwat now has sustainable development as a central objective. It will have to take account of that. It will have to carry out its functions in accordance with the strategic priorities and objectives identified by the Secretary of State.
So while I entirely understand and, indeed, sympathise with the arguments advanced by the noble Lord, Lord Redesdale—and perhaps it is because we have made such a huge advance from the position with which I had to deal when the economic regulator just did not think he had any obligations to provide for the environment and blocked almost every proposal that came from Europe or from us—I would like my noble friend to clarify what is to be gained or lost if we accept the proposition put forward by the noble Lord, Lord Redesdale, over what we have already in the Bill. I find it very difficult to understand exactly what benefit we would gain. If there is nothing to be lost by including it, I would not be against including it. Against the background of a huge step forward having been taken, I am seeking from my noble friend clarification of the benefits and possible downsides of having this written into the Bill in the way proposed.
Baroness Parminter (LD)
My Lords, I thank my noble friend Lord Redesdale for raising this issue yet again. He has done so on numerous occasions, as have many other noble Lords. It is an important debate. It is quite clear that the Government are committed to sustainable development, but they believe that they do not need to elevate the primary duty of sustainable development for the regulator in the water industry because it has a secondary duty. What they are prepared to give is the new primary duty for resilience. I think we are going to carry on arguing about whether resilience delivers the environmental and social benefits that those of us who are concerned about sustainable development believe it does. The Government say it does and I am sure that the Minister will reiterate today that he believes that resilience will deliver the sustainable benefits that we believe are crucial for the regulator to deliver. There are others who believe that the resilience duty does not.
I would like to pick up on what my noble friend Lord Redesdale has said. We should try and move the debate on from arguing about what “sustainable development” and “resilience” mean to what we actually want to achieve. It is significant that my noble friend Lord Redesdale raised the issue of water efficiency. That is, bluntly, what we want to achieve—a more resilient future for our water industry which protects the scarce resources that we have, to the benefit of the environment and communities. I urge the Minister to reflect again between now and Report on a duty to promote water efficiency. I think that is a constructive way forward. There will be a difference between those of us who believe resilience is sufficient and those of us who would have liked to see a primary duty on the regulator. I do not think the Government are going to move, but I do think that a duty to look at the issue of water efficiency is a helpful way forward.
Lord Whitty
My Lords, I have tabled an amendment in this group which attempts to deal in a slightly different way with exactly the same issue as the amendment of the noble Lord, Lord Redesdale. Which is the closest approximation to perfection I am not entirely sure, and whether either of them is perfectible in the eyes of the Government, I am not entirely sure.
We do have an issue. The noble Baroness, Lady Parminter, stated the current situation correctly. I say to the noble Lord, Lord Crickhowell, that, since 2003, Ofwat has had a sustainable development responsibility but it is a secondary objective. What these amendments attempt to do is to put it on a par with the economic objective for consumers. There is an economic, a social and an environmental dimension of sustainability which goes wider than that responsibility to consumers, now and in the future. The reason why relations and general coherence are better than the early days which the noble Lord, Lord Crickhowell, described, is that Ofwat has recognised that it is more than an economic regulator, and the Environment Agency has recognised that it has economic objectives as well as environmental objectives. Some of those have become a little controversial in recent days, in that, for example, flood defence priorities are determined largely in terms of economic effect. Both agencies now have all three—certainly environmental and economic objectives—which they routinely integrate within their operations. For that reason it is slightly odd that there is a differential between the objectives to consumers on the economic side and the objectives of sustainability on the other side, in terms of Ofwat’s requirements. The Government have made two attempts at convincing those of us who are interested in this subject through some very well written briefs. They were much more understandable than the Bill itself, or indeed the Explanatory Notes. By and large, I understood those briefs; they have nevertheless failed to convince me. They are arguing in terms that are now obsolete. They argue that the economic regulator is Ofwat and the environmental regulator is the EA. They both overlap and they need to operate a coherent approach to this in relation to sustainability.
The Government have moved significantly, as the noble Baroness, Lady Parminter, was hinting, in stretching the definition of “resilience”. Resilience is a jolly good, robust term. We all approve of resilience, and long-term resilience is clearly a responsibility of Ofwat and indeed the EA, in relation to water resources and their delivery. It is not quite the same as sustainability. It is part of sustainability but it is not the totality. The noble Baroness and the noble Lord, Lord Redesdale, have both pointed to the energy efficiency dimension, which, let us be fair, has been lacking until at least very recently in some of Ofwat’s priorities, when it allows expenditure during the price review. It is that which worries people—that this issue will fall out.
The Minister told me the other day that resilience includes social resilience; it presumably therefore includes issues of affordability and access as well as environmental and social issues. That may be so but the normal meaning of “resilience” is protection and upgrading of the assets that you have, and which need a long-term permanence to protect them. The Government are in danger of stretching the term rather beyond what the Oxford English Dictionary would term as resilience.
Lord De Mauley
My Lords, I turn first to Amendments 110 to 112, in the name of my noble friend Lord Redesdale. I thank him for them, as I thank my noble friends Lord Selborne, Lord Crickhowell and Lady Parminter and the noble Lord, Lord Whitty, for their comments on these amendments, which would extend the new duty of resilience so that it became a dual duty of resilience and sustainable development. Of course, as my noble friend knows well, Ofwat has had a stand-alone statutory duty to contribute to the achievement of sustainable development since 2005. The Government have reinforced the importance of this duty by providing clear statutory guidance that sustainable development is central to everything that Ofwat does and must be fully embedded throughout its regulatory decision-making. We also require an annual report from Ofwat on its contribution to sustainable development.
I know that my noble friend Lord Redesdale has a long-standing interest in this issue, and I am particularly grateful to him for his assiduousness in pursuing this. He wishes, understandably, to see meaningful changes to culture and practice in economic regulation in water. These changes are already taking place: by correcting the historic bias towards capital investment, for example, the current price review looks set to achieve a much more equitable balance between capital and operational solutions than has previously been the case. Similarly, Ofwat has been working with the industry and Infrastructure UK to halt the stop-start pattern of work, sometimes described as “cyclical investment”, that has been a cause for concern in this sector for many years. Again, we are seeing measurable changes in behaviour. Ofwat has recently given permission to water companies to bring forward £100 million of investment into 2014 to smooth the investment profile and benefit the wider water supply chain.
My noble friends Lord Redesdale and Lady Parminter suggested a water efficiency duty for Ofwat. My noble friend Lord Redesdale referred to the fact that the water companies do indeed have a water efficiency duty. Ofwat has an obligation to ensure that the companies can perform their functions.
Having said all that, we are not and must not be complacent. That is why we have created a new duty of resilience, designed to address the specific issues relating to the long-term pressures facing the water industry. The resilience duty encompasses all the activities that water companies can undertake to manage those pressures: from investing in the additional water storage, to tackling unsustainable abstraction, to focusing on environmental management across the catchment. This duty recognises the need to address the pressures caused by climate change and population growth, and to protect the natural environment on which our water sector relies.
In response to concerns raised by people such as my noble friend, I am delighted that we have already amended this duty in another place to be absolutely explicit about the need to manage water resources sustainably and to manage demand to alleviate pressures on those precious resources. I think that I can say that our amendments have been welcomed, for example by the coalition of environmental NGOs with a particular interest in this area, the Blueprint for Water, with which my noble friend has been closely involved. I met this coalition recently, and it expressed itself satisfied with what we had done in this regard. I therefore hope that I will be able to persuade my noble friend that, given the changes already made, further amendment of the kind he proposes is not required.
Turning to Amendment 113 in the names of the noble Lords, Lord Whitty and Lord Grantchester, the noble Lord, Lord Whitty, has argued that elevating the existing sustainable development duty to primary status would help us to achieve a wide range of important objectives. Let me be quite clear: the Government support those objectives. As I said in the debate on the previous group, we want to see the regulatory regime for water recognise more clearly the needs of future, as well as current, consumers. We recognise the need for a strategic response to climate change, and we firmly believe that catchment management and demand management should form a mainstream part of water company activity.
The Government commissioned the Ofwat review to consider the case for elevating the sustainable development duty as proposed by the noble Lords. Having looked carefully at the arguments, David Gray concluded that he simply did not believe that the creation of a primary sustainable development duty would have the effect that its proponents were looking for. Despite the scepticism of the noble Lord, Lord Whitty, therefore, while we—and I speak for the entire Government—remain fully committed to the principles of sustainable development, we do not believe that the amendment is the best way to achieve the objectives that the noble Lords wish to see. I also believe that we should recognise where changes have already begun to take place. I have already spoken about the way Ofwat’s new price review methodology, to which the noble Lord, Lord Whitty, referred, has addressed the industry’s perceived preference for capital investment, resulting in the companies bringing forward business plans that propose a much more even split between capital and operational expenditure, such as demand management activity.
During our particularly constructive Second Reading debate, a number of noble Lords highlighted the importance of taking a proportionate approach to changes to Ofwat’s duties. Of course, it must be right that we should occasionally amend the duties to ensure that they remain up to date with the Government’s policy priorities. This is what we have done in the case of the resilience duty, in order to reflect the core policy message of the water White Paper on the need to build the long-term resilience of the sector. We have amended this provision in another place to emphasise that this must include the sustainable management of water resources. However, I agree that we must demonstrate restraint in applying new duties to the regulator; and the changes that we have already proposed strike the appropriate balance. I must therefore ask my noble friend to withdraw his amendment.
Lord Redesdale
My Lords, yet again I am not disappointed in my expectation that I will not get anything out of the Government. However, it seems almost a waste of a parliamentary process to have a White Paper which is full of water efficiency proposals and then to say, “We’ve had enough duties”, so that something which all noble Lords believe should be an objective is not moved forward on.
The noble Earl, Lord Selborne, and the noble Lord, Lord Crickhowell, raised very interesting points. I will make two points. First, the battles that the noble Lord, Lord Crickhowell, undertook, which were incredibly valuable, are not now taking place in the same way. Most groups agree that there has been a shift from the regulator against the balanced approach to economic environmental regulations. The noble Earl, Lord Selborne, raised the Gray review. I met Mr Gray to discuss this; one of his recommendations was that it is fine, because the Environment Agency leads on policy on this area, and therefore deals with this issue. Since the review, however, the Environment Agency has lost that ability, so it is out of kilter. Things have moved on so that the balance which the regulator has to take—and I understand the difficulties it faces between price, social cohesion and environment, which is tricky—has to be dealt with. However, the problem is that the regulator is seen as not meeting that objective.
The Minister talked about meeting with the NGOs. I believe he met with the RSPB and the WWF, but those are not all the NGOs that make up Blueprint for Water. I have discussed this with Blueprint for Water, and meeting with one, two or three NGOs out of a group of them is always slightly difficult. The whole group does not believe that, but those two NGOs will speak on their behalf. Therefore the Minister’s view that the Bill does not need amending to expand the role of resilience, even though it was amended in the other place, was unfortunate. It leaves no option when we come to the next stage but to try to force through sustainability as a solution to that problem. That may not be the simplest way of dealing with this issue, but, as was proved by Ofgem’s change in attitude, it does have an effect. Therefore it is rather unfortunate that the Minister has not agreed even to have discussions on this. Although I shall withdraw the amendment, I hope to bring it back at the next stage because this is a core issue.
This is not a political matter, which is why I very carefully did not ask the noble Lord, Lord Whitty, or any other noble Lords to put their names to this amendment. This is about whether we believe that water should be a sustainable resource and whether there is somehow a political lever. Most people in this country do not believe that water should be dealt with in a political context; it is about whether we have it or not and whether the regulator makes sure that we judiciously use this resource. If that means that I am a wishy-washy liberal, I sit on these Benches so I am quite happy to be described in those terms—and not as one of abuse. However, the Conservative Party talked about being the “greenest Government ever” and the coalition has moved forward on many of these green policies, so I find it incredible that we are bringing politics into this area. Therefore I hope that the Government will think again about a water efficiency duty. On that basis, I beg leave to withdraw the amendment.
Lord Oxburgh
“( ) In support of the measures indicated in subsection (2DA), the Secretary of State shall be authorised to allow metering of water supplies both in areas of water stress and areas of potential water stress and additionally in areas where metering might generate other social benefits.”
Lord Oxburgh (CB)
My Lords, I add my thanks to the Minister for his courteous and helpful replies to questions raised at Second Reading, and in particular for the publication today of a new briefing note from his department about the bodies involved in the regulation of water, which I hope may go some way towards dispelling the concerns that were expressed in the previous discussion. I have not had time to digest it yet but look forward to reading it.
I have commented previously that my experience of water matters comes from a different jurisdiction, and that I expected to find some differences in this jurisdiction. That said, I had not expected the convoluted morass of uncodified legislation and regulation that surrounds the water supply in this country. My only comfort is that someone as experienced in water and legislative matters as the noble Lord, Lord Crickhowell, is as frustrated as I am.
Baroness Parminter
My Lords, I thank the noble Lord, Lord Oxburgh, for his probing amendment. My Amendment 133, also in this group, seeks to amend the Water Industry Act 1991 to allow water companies to introduce compulsory metering, if supported by their customers.
Current legislation means that water companies are able to introduce domestic water meters on a compulsory basis only where the Secretary of State has determined that either the whole or part of their area is an area of serious water stress. My amendment would simply remove this barrier, allowing water businesses to do what they felt was in the best interests of their customers and increasingly scarce water resources.
We know that metering gives consumers greater control over their water consumption and so can improve affordability. It also helps water companies to target households using large amounts of water, provide water efficiency support and tackle leaks. On that point, perhaps I may say how welcome it is that this Bill transfers the responsibility for supply pipes from customers to water companies as this should help to drive down leakages. The case for smart metering, combined with advice on how to reduce water usage, and social tariffs that minimise affordability issues for disadvantaged heavy-use households, is strong, and has been well made by the noble Lord, Lord Oxburgh. As he has said, the independent Walker review in 2009 recommended a widespread switchover, as, indeed, did the EFRA Committee in the other place.
We know now that some water companies denied pursuing this course of action by current legislation want it. The chief executive of Northumbrian Water, Heidi Mottram, supports it. The company knows that it has to plan its businesses for the future, when climate change and other constraints may well impact on areas not presently water stressed. Given the opportunities in this Bill to trade water, they want all the tools they can get to maximise the precious and increasingly valuable resource that water is.
This seems to be a reasonable amendment. All it would do is give companies the right to speak to their customers and manage their businesses to their benefit, with increasingly scarce water resources. It does not force, rather it enables water companies to consider the wider social and environmental benefits that metering brings.
Lord Curry of Kirkharle (CB)
My Lords, I, too, thank the Minister and the department for the very helpful briefing notes we have been given, and for the opportunity to explore the Bill with him and his team. I fully endorse the comments of the noble Baroness, Lady Parminter, on Amendment 133. I also firmly support the noble Lord, Lord Oxburgh. I declare an interest in that I chair the management board of a rural estate that has an extraction licence.
At a time when the management of water is such a critical issue, I would go even further than this amendment. I think that a timetable should be set, by which time all consumers of water are charged for the volumes they use. These amendments mark a step towards that objective. I cannot understand the reluctance to expand the use of water meters. I know that there is an installation cost involved and that it will take time. The potential costs of installation could be fairly significant, as the noble Lord, Lord Oxburgh, pointed out, and of course meters have a limited life and will need to be replaced over time. However, these costs need to be set against the fact that metered customers use between 10% and 15% less water. Some will use more and some less, but the overall net benefit of a saving of 10% to 15% is massive.
The current policy of allowing companies to apply for the right to install water meters in areas of water stress has a certain logic. However, we have seen vividly over the past two years the dramatic impact of extreme weather events, whether they are the result of climate change or whatever. Flooding in winter and drought in summer could become much more frequent occurrences than has been the case historically, and water stress could become a reality well beyond the south and east of England. Even using the existing definition, we are likely to see a requirement for increased water use. Better, I would suggest, that we should extend the option of charging now in anticipation of the inevitable pressures on supplies, as mentioned earlier by the noble Lord, Lord Redesdale.
I come back to the issue of managing water. The well-known maxim, “If you can’t measure it, you can’t manage it”, seems to apply very precisely to the subject of water. As I have mentioned, I chair an estate. We are now well advanced in the process of installing meters in every household and enterprise across the entire estate. We know where every litre goes and we can charge appropriately. We are also able to monitor, remotely in the office, how much water is being used, where and by whom. It is very effective and much more efficient. The water industry needs to become much smarter in its management of water, and measuring is essential. I understand that Anglian Water now has around 90% of its customers metered, not through compliance but because it makes sound economic sense. Other companies, particularly in the freed-up market that we are trying to achieve through this Bill, need to be encouraged to do the same.
I would like to make one final point. It costs all of us £14 every year to cover the costs of unpaid water bills. It is a fact of life that if we do not appreciate the value of water, we are likely to be much more indiscriminate in our use of it. We should take the opportunity in this Bill to further establish the principle of charging for water use. The Walker review, which has already been mentioned twice, firmly endorsed this approach, and I hope that the Minister will give this proposal his serious consideration.
Earl Cathcart
My Lords, when preparing to speak to this amendment, I was going to support the amendment of the noble Lord, Lord Oxburgh, but having listened to the debate so far, I find myself supporting both amendments. I support in particular the part of the amendment tabled by the noble Lord, Lord Oxburgh, which states that,
“the Secretary of State shall be authorised to allow metering … in areas where metering might generate other social benefits”.
I was talking to somebody outside who, on asking what I was doing here and learning that I was involved in the Water Bill, said that they were on the board of a water company, which had been stopped by Ofwat when it tried to roll out meters across its area. I hope that I have this right—listening to the noble Baroness, Lady Parminter, I think that I have—but the reason was that the company was not in an area of water stress. This seems unbelievable. If true, and I have no reason to doubt it, what gives Ofwat the right, or the power, to stop the rollout of meters when we all recognise the advantages that we have talked about, such as reducing demand, cutting costs for consumers, promoting fairness et cetera? If Ofwat has that power, what are the Government going to do to—I was going to use the word “curtail”, but let me use the word that the Minister used in a previous amendment—amend Ofwat’s powers in this regard?
The Earl of Selborne
My Lords, I am sure that the Minister will help my noble friend Lord Cathcart, but the short answer is that, unless a water company is operating in an area of water stress, it needs the Secretary of State’s permission to introduce a universal metering programme. As the noble Lord, Lord Oxburgh, has pointed out, that is an unhelpful provision. I am sure that we all agree that, if we could move faster on metering, we would see some of the long-term objectives of the Bill delivered much more quickly.
The White Paper, Water for Life, to which we referred so much at Second Reading, gave one every encouragement that the Government would be promoting universal metering. It points out how universal metering changes our attitude to water, as the noble Lord, Lord Curry, has reminded us. Metering helps you determine where the leaks are, particularly when they are within your property—you suddenly take a great deal of interest when it is going to be reflected in your bill as opposed to that of society as a whole. It allows you, without in any way raising the spectre of de-averaging, to introduce all sorts of innovative incentivisation such as summer schemes, where you pay more on a summer tariff than on a winter tariff, and water reduction devices.
All these measures can and have been achieved once universal metering programmes have been introduced. In the Southern Water area, because we are a water-stressed area, these measures have been introduced and the water industry is looking with a great deal of interest at a number of the lessons which have been learnt from this programme. It is clearly correct that water use goes down. That is the first and most important message, but as the probing amendment of the noble Lord, Lord Oxburgh, points out, there are many other societal benefits. It is a no-brainer and we need to go for it.
Earl Cathcart
I thank my noble friend for correcting my wrong conclusion that the power lies with Ofwat. I should probably change my question to ask what the Secretary of State is going to do to change his attitude in this regard.
Baroness Northover (LD)
My Lords, I thank the noble Lord, Lord Oxburgh, and my noble friend Lady Parminter for tabling these amendments, which give us an important opportunity to discuss the role of water meters. In many ways, the debate follows on from the comments of my noble friend on water efficiency in the context of sustainable water supplies, which is the context in which noble Lords have addressed these amendments.
I will take the comments of the noble Lord, Lord Oxburgh, on codification and simplification back to the department. I noted that, as he made those comments, the noble Baroness, Lady O’Neill, with her wide experience was nodding behind him. Noble Lords are very good at holding the Government to account in this regard, and so they should.
I will start by laying out the Government’s position in relation to water meters. We are seeking to strike a careful balance. I note that noble Lords feel that we have not struck the balance quite correctly, but I will outline our position. We agree that meters provide a fair way to pay and we want companies to do more to promote metering to those who would benefit. However, we are also conscious that universal metering could lead to increased bills for some struggling customers, which is a point that the noble Lord, Lord Curry, referred to. I thank him for noting that, even if he then went on to say that he did not really agree with it. That is why we do not wish to impose a blanket approach to metering across the country.
This balance reflects the current legislation. Section 144A of the Water Industry Act 1991 ensures that any customer can request a meter from their water company. The company must then fit a meter, which it does free of charge. All the companies also allow their customers a cooling-off period of one year should they wish to revert to paying according to rateable value. As a result, there is a permissive position there. On the very rare occasions where fitting a meter would be disproportionately costly, the company offers an assessed charge, based on an assessment of the water actually used by that household.
However, Section 144B restricts the power of water companies to impose universal metering across all of their household customers, which is the issue that we are addressing here. There are circumstances, as noble Lords have noted, in which this restriction does not apply, which are set out in the Water Industry (Prescribed Conditions) Regulations 1999. For example, companies whose areas of appointment have been designated by the Secretary of State as areas of serious water stress—based on advice from the Environment Agency—may impose metering. They may also do so where the household has particularly high water use for a number of specified reasons, such as filling a swimming pool.
As my noble friend indicated, the purpose of her amendment is to add another reason to allow unrestricted metering. That would allow all water companies to meter all their customers, if they considered that this would enable them to meet their statutory duty to supply water or their statutory duty to promote the efficient use of water. About 41% of all homes already have a meter, and we expect this to rise to 50% by 2015. Anglian Water and South West Water already have 70% metering. A number of companies in areas of serious water stress are in the process of rolling out universal metering or have plans to do so. These include Southern Water, Thames Water, Sutton and East Surrey Water, Affinity Water and South East Water. Noble Lords have made a powerful case for why these developments are taking place.
However, we must recognise that the costs and benefits of metering vary from region to region. The evidence suggests that benefits on a scale that outweigh the costs of metering will only be found in areas where incentivising reduced water usage is of critical importance—that is to say, water-stressed areas, where universal metering is already a possibility. As I have noted, we are concerned that there are costs associated with implementing universal metering, which are funded through the bills of all customers in the region. We have always been clear that, with climate change and population growth, the case for universal metering may change, but it may do so at different times for different areas.
The amendment of the noble Lord, Lord Oxburgh, would ensure that the Secretary of State has powers to allow metering of water supplies in areas that are currently or may become water stressed and where metering may generate other social benefits. I confirm that the Secretary of State already has these powers. He has the power to issue the prescribed conditions regulations, as I have already mentioned. For example, at present under the regulations, water companies in areas classified as seriously water stressed must evaluate whether compulsory metering is the most effective way to address their supply-demand balance alongside other options when preparing water resource management plans.
The Secretary of State recently asked the Environment Agency for updated advice on the designation of serious water stress. The new methodology defines serious water stress as occurring in areas where either the current household demand for water is a high proportion of the rainfall which is available to meet that demand or the future household demand for water is likely to be a high proportion of the rainfall available to meet that demand.
The Secretary of State already has the power to revise and reissue the prescribed conditions regulations—clearly, my noble friend Lord Selborne knew that—but I assure my noble friends Lord Cathcart and Lord Selborne that we hear what they say in this regard. My right honourable friend the Secretary of State would of course revise and reissue these regulations if he believed that allowing universal metering to be rolled out in a larger number of areas would lead to social benefits. We will keep these regulations under review. However, as I have said, I have already set out that at present we consider that the existing regulations strike the appropriate balance.
I heard with great interest what the noble Lord, Lord Oxburgh, said about smart meters and his other proposals. In relation to the installing of meters, restrictions on the power of companies to charge by meter do not extend to their power to fit a meter. Any company may do that and some, such as Anglian Water, have a policy of doing so for the reasons that the noble Lord laid out. We recognise fully the important role that water meters can play. I hope the fact that I have been able to spell out in more detail the Government’s position on this has assisted noble Lords and that they are willing to withdraw their amendment.
Lord Oxburgh
I thank all noble Lords who have participated in what has been a very useful discussion about metering. Can I just be clear in my understanding that it is the Government’s position that water companies already have the authority to install water meters anywhere they choose and that the only restriction is on charging?
Baroness Northover
As the noble Lord is aware, the emphasis at the moment is on water-stressed areas, which are more widely defined in the reissued regulations that I have just mentioned. I also mentioned that a customer can ask for a meter. I note that there is a bit of a gap between that position and the position for which noble Lords are arguing. If I have stated that incorrectly in any way, I will make sure that the noble Lord has a letter about it. It would be useful anyway if all this was laid out clearly to noble Lords who are interested in it, because it is obviously an area that concerns people and they want to have it clear in their minds.
Lord Oxburgh
That is extremely useful. If the Government are prepared to move at all on this area, it might be valuable for the Minister to hold a small meeting, as he has done most helpfully on various topics in recent weeks, to discuss whether the existing legislation covers the desirable possibilities or whether there is something that might meet the concerns that have been expressed here and would also be acceptable to the Government. We do not want—dare I say it—the water horse to bolt too soon.
Baroness Northover
We cannot be having that. On behalf of my noble friend Lord de Mauley, I can say that we would be happy to facilitate such a meeting.
Winter Floods
(10 years, 10 months ago)
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The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord De Mauley) (Con)
My Lords, with your Lordships’ permission, I will repeat a Statement made in another place by my right honourable friend the Secretary of State for Communities and Local Government. The Statement is as follows:
“Mr Speaker, I wish to make a Statement on behalf of Her Majesty’s Government on the action taken in light of the recent floods and extreme weather. My right honourable friend the Secretary of State for Environment, Food and Rural Affairs is unable to update the House today, but we wish him a speedy return to his usual robust health.
One of the defining characters of Britain is her weather. However, in recent months it has been particularly savage. Parts of the country have been subjected to flooding from the sea, rivers, surface water and groundwater. In December, we saw the highest surge on the east coast for 60 years. This January has been the wettest since George III was on the throne. We will continue to face severe weather well into next week.
I want to put on the record my utmost sympathy for those affected. Flooding has devastating effects on communities. I know that it has been especially difficult for those families who have been flooded for many weeks, and those who have been flooded on more than one occasion in recent months. I think we have all been struck by the stark images of the stranded residents of the Somerset Levels, and their brave resolve to continue their daily lives, be it by boat or tractor.
I should also like to pay tribute to the hard work of councils, the Environment Agency’s on-the-ground staff and our emergency services, who have supported communities 24 hours a day, literally through hell and high water. Yet Britain’s flood defences have protected more than 1.2 million properties since 5 December, and the Thames Barrier has protected £200 billion of property.
None the less, it is evident that those defences are taking a pounding. There is damage to transport infrastructure and sea defences, including the railway line at Dawlish, as well as to power networks. More than 5,000 properties have been flooded, including at least 40 in Somerset. There are currently two severe flood warnings in the West Country, 61 flood warnings and 223 flood alerts in place. COBRA has met regularly since 29 January and has responded to every local request for assistance. The Prime Minister will chair a further meeting of COBRA later today.
Following the Prime Minister’s statement yesterday, I can now report to the House the Government’s plans for further funding for flood and coastal erosion risk management. In the short term, I can announce that the Government will provide an additional £130 million for emergency repairs and maintenance: £30 million in the current year and £100 million next year. This will cover costs incurred during the current emergency response and recovery, as well as essential repairs to ensure that defences are maintained.
Emergency work on repairs started during December’s coastal surge. However, the full picture of the damage caused to flood defences has not yet emerged, and the weather continues to be savage. The Government will therefore carry out a rapid review of the additional work needed to restore our flood defences and maintain them in target condition.
In addition, I am publishing before the House today details of how my department is enhancing the terms of the Bellwin scheme. This helps local authorities in England meet the exceptional and unexpected costs associated with protecting lives and properties. The changes I am announcing today include: paying the Bellwin grant at 100% above threshold instead of the normal default 85%; allowing upper-tier authorities with responsibility for fire to claim on a comparable basis to stand-alone fire authorities; reducing Bellwin thresholds for all county councils and unitary authorities; and extending the eligible spending period until the end of March 2014.
No council has yet made a formal claim under the Bellwin scheme, so no council has lost out. Indeed, far more councils will now be eligible to claim. The enhanced scheme terms reflect the exceptional nature of the recent weather events and the challenges facing local authorities in their role as first responders. However, it is clear that the Bellwin scheme needs further reform—an opportunity that was missed under the previous Administration. We will be undertaking a full review of the Bellwin scheme in due course, while ensuring that councils continue to have the right incentives to stop flooding happening in the first place. I can also tell the House that immediately after this Statement, Ministers will be holding a teleconference with council leaders from across the West Country to discuss further flood recovery measures.
Of course, flood prevention is as important as flood recovery. The additional funding that we have outlined today will allow the Government’s programme of capital investment to continue, fulfilling our commitment to improving defences throughout England. We have already put in place investment plans to improve the protection of at least 465,000 households by the end of the decade.
In addition, today we are announcing 42 new flood defence schemes for 2014-15. Together with other projects beginning construction in 2014-15, these will protect more than 42,000 households. They include schemes in Salford, which will improve protection for more than 2,000 homes and businesses; in Clacton, where more than 3,000 homes are currently at risk; and in Willerby in the East Riding of Yorkshire, where more than 8,000 properties will be better protected. There are also smaller, but no less important, schemes in Lincoln, Stockton and Todmorden. We will work to defend both town and country. For the record, I do not agree with the comments of Lord Smith, who implied that there is a choice between the two.
Looking further forward, we have made an unprecedented long-term six-year commitment to record levels of capital investment in improving defences: £370 million in 2015-16, and then the same in real terms each year, rising to more than £400 million by the end of this decade. By the Autumn Statement, we will publish a six-year programme of work running right up to 2021, including a new long-term investment strategy on flood defence. This will provide an assessment of the future need for flood and coastal defence, taking account of the latest risk maps and economic analysis.
We should certainly look at how councils plan and mitigate flood risk. However, I note that the level of development on flood-risk areas is now at its lowest rate since modern records began, and 99% of planning applications for new homes in flood-risk areas are in line with expert advice.
After the dark skies clear, there will be lessons to learn: from the way we help local authorities, to the role of quangos and the need for local accountability, to the influence of manmade policies on dredging and tree planting on our landscape and rivers, and to the resilience of our nation as a whole in the 21st century.
The measures that the coalition Government have announced today provide an clear commitment to reducing the risks of flooding and coastal erosion. The additional funding means that, over this Parliament, this Government will be investing more than £3.1 billion, compared to £2.7 billion in the previous five years under the previous Labour Government. This is more than ever before. We will spend it well and we will spend it wisely.
We cannot control the weather. But we can and will provide the security that hard-working people deserve to allow them to get on with the daily lives. I commend this Statement to the House”.
My Lords, that concludes the Statement.
Lord Whitty (Lab)
My Lords, I thank the Minister for repeating the Statement, particularly the announcement on Bellwin, which will be a great relief to the authorities and communities affected. I also thank him for his support for the people who are struggling to cope, in Somerset in particular, with the extraordinary and devastating events in that part of our country.
As noble Lords know, until two years ago I was a member of the board of the Environment Agency. I know the area; I live about 20 miles away. It is an extraordinarily complex system to manage. When an emergency occurs, it is the Environment Agency, the emergency services and local people who act together to try to minimise the effect, but it is a colossal effect and all our support should go out to the farms, families and villages that are in such serious difficulty.
Of course, as the noble Lord said, the problems are not just in Somerset. As it happens, while your Lordships were amusing yourselves with the European Union (Referendum) Bill last Friday, I was on the train to Plymouth, and a beautiful railway line it is—or was. It had been known that the line was vulnerable. There is now a serious problem as to how we restore communications with the far south-west of our country.
While it is important to recognise the efforts of the emergency services, it is also important to learn lessons. It appears that central government were taken a little by surprise on this occasion. It is an unusual event and therefore may not be in the normal contingency plans of central government. Nevertheless, the expectation of the population—certainly the expectation of the people of Somerset and other affected areas—was that the response would have been quicker than it was. In Questions, the noble Lord, Lord King, said that the level of pumping is the highest ever. It undoubtedly is. However, getting the pumps in was quite difficult, as the standing pumps were overwhelmed by the event. Whoever does it, the response must start a lot earlier than it did on this occasion.
Obviously there are issues behind this. The noble Lord has quoted some figures for expenditure on flood defences. The fact is that when the Government came in, for the first year they cut expenditure on flood defences—via the Environment Agency and in total—by £100 million. They have now restored some of that cut, but it has led to a hiatus. I would like the Minister to explain whether concentrating the resources of the Environment Agency on front-line activity at the moment—rightly so—has hit its ability to prioritise and to put in place a strategy for flood defences in the medium term. I think that there are serious concerns in that respect. Despite the Government’s claims, the resources available to the Environment Agency have not been made up by the funding from elsewhere—the £148 million to which the Government referred—as not all of it has been delivered, some of it is double-counted, and it is mainly from other public authorities. Therefore, there is an issue of public expenditure as well.
We need more priority given to flood defences of all sorts. By that I do not mean just pouring concrete, but catchment management. If anything, the Somerset Levels show very clearly how important catchment management is. It is not only a question of dredging; in my view, dredging will make relatively little impact, as the water must go somewhere. Dredging may be part of a solution, but it transfers the water somewhere else that may be more vulnerable, with more businesses and people involved. The catchment as a whole needs looking at, from the top of the hills, where there has been deforestation and inappropriate land use, right down through the streams into the sea. In an area that is below sea water, with a tidal river, these problems are particularly difficult. It requires a long-term plan and it is not yet entirely clear that we have a long-term plan.
I welcome the Bellwin scheme and the efforts that are now being made to deal with the immediate situation. However, the immediate situation includes a lot of people who are in ancillary distress. It would be helpful if the Minister could indicate, for example, when he expects the electricity supply to be restored to all of those who have been hit. When does he expect the restoration of the rail services west of Exeter beyond Dawlish? Six weeks sounds a bit optimistic, I must say. We must recognise that while we are rightly worried about the hundreds of people affected in the Somerset Levels, some 1.3 million people are cut off from their main means of communication to Plymouth and Cornwall—an area that is greatly lacking in communications in the first place. I hope that we can have some urgency on that. It may require more drastic changes to the railways in that area. There is serious damage in Dawlish itself, which is an emergency equal to that in Somerset.
This has happened before. After the 2007 floods, the previous Government commissioned a report from Sir Michael Pitt. He made a lot of recommendations, some of which have been implemented. However, the Government have stopped producing progress reports on half of them. I would like the Minister to indicate when we will go back to those recommendations or any modification of them. In particular, could he refer to the recommendations relating to reducing the risk of flooding and the 10 recommendations, not yet acted on, concerning being rescued and cared for during an emergency?
There is also a superstructure issue. We have had 20-odd meetings of COBRA. However, Sir Michael Pitt proposed a national resilience forum. Although it is not necessary to have a Cabinet committee telling the Prime Minister how to run the Government, a national resilience forum is a good idea. It was being discussed towards the end of the previous Government. We would like to see progress in relation to that.
In immediate terms, I return to the issue of the long-term plan for the Somerset Levels. A number of assertions have been made, or have reportedly been made. However, the area needs to know what its future is. This emergency has hit a relatively poor part of the country pretty hard. Changes may be needed. The area is also one of great beauty and of significant economic importance to the agricultural and tourist sectors in that area. We must know how quickly a clear, long-term plan can be put in place.
I thank the Minister for the Statement. As the Prime Minister is now in charge of these issues, I suspect that he could do without the interruption to the Water Bill. I was to some extent expecting the Leader of the House to take this Statement. Nevertheless I welcome the contribution of the Minister and would like to hear his answers.
Lord De Mauley
My Lords, I thank the noble Lord for his supportive comments, especially his sympathies for those who have suffered and the households and farms that have been flooded. As discussed in Questions, they have suffered a terrible experience. Like the noble Lord, I pay tribute to the emergency services, the Environment Agency and the Flood Forecasting Centre staff and to the leadership shown by the local authorities.
As alluded to by the noble Lord, there has been significant damage to sea and flood defences and road and rail infrastructure. Urgent repairs were made to critical coastal defences before the spring tides early this month. The Environment Agency is currently assessing the damage to flood defences. It may take a number of weeks to achieve a full assessment as water levels fall.
The noble Lord referred specifically to the Somerset Levels. As discussed in Questions, my right honourable friend the Secretary of State for Environment, Food and Rural Affairs has asked for an action plan to be developed within the next six weeks to look at different options as to how flood risk could be better managed sustainably on the levels and moors over the next 20 years. Dredging will form part of that plan but it will not provide the whole answer. The plan will look at a number of other options for improving the area’s resilience in the longer term.
The noble Lord, Lord Whitty, referred to lessons learnt. I agree with him very strongly about that. Those lessons will go quite wide. I also agree with him on the importance of a catchment management approach. The noble Lord referred to power shortages. My understanding is that of the 50,000 people who lost power the night before last, the substantial majority had power again yesterday. The energy companies are working hard on that. The noble Lord referred to transport. Immediate work is already underway, with that urgency that he described as so necessary. The noble Lord asked about the capability of the Environment Agency to continue to perform. The Secretary of State has been assured by the chief executive of the Environment Agency that he has every intention of protecting front-line services concerned with flooding. I have no reason to doubt his ability to do that.
I return to lessons learnt. The Minister for Government Policy is undertaking a review specifically to identify those lessons. There are a whole range of things that it will look at, and I know that he is looking to report to the Prime Minister as soon as he can—that will be weeks, not months.
The noble Lord referred to the Pitt review. The vast majority of its recommendations have been implemented. We are committed to implementing the remaining five by the end of this year. Some of the main aspects to come out of Pitt that we have implemented so far are the creation of the Flood Forecasting Centre, much lauded in recent weeks for its ability to warn us where the problems were coming, the publication of the National Flood Emergency Framework and the provision of funding to more than 100 specialist flood rescue teams. The Environment Agency has published its national strategy, which will help communities and all parties to work together to manage flood and coastal erosion risk.
Lord Oxburgh (CB)
Before the Minister sits down, might I ask him whether he would be willing to include in the list of those whom he has thanked for their contribution in understanding and managing the present difficulties the Met Office? We may not enjoy the information that it gives us, but it is certainly useful.
Lord De Mauley
That was an outrageous omission of mine, my Lords, and I absolutely do that.
Lord King of Bridgwater (Con)
Having listened to the statement made from the opposition Front Bench in another place, perhaps I may say how much I preferred the response of the noble Lord, Lord Whitty, and his constructive approach to this very serious issue. He has the advantage of actually knowing something about the subject.
The most worrying sentence in this Statement is:
“We will continue to face severe weather well into next week”.
And no one knows what it is going to be like after that. Anyone who is familiar with the current state of the Somerset Levels will know how that water is spreading and how the situation is deteriorating in certain areas as the water moves around. I am all in favour of sensible, constructive meetings of COBRA but it is the co-ordination on the ground that is extremely important. I appreciate the Prime Minister’s personal efforts and I know that the Prime Minister and the Government are now fully focused on this, but I hope that the sympathy will not go when the floods go down. In certain respects, there could be a serious health problem. A number of septic tanks and parts of the sewerage system are not working and problems may arise with rotting vegetation. I hope that the concentration of the Government will not end when the floods disappear but will remain totally focused on what will clearly be a very serious situation for some time to come.
Lord De Mauley
I absolutely endorse my noble friend’s point about the importance of local co-ordination on the ground. My impression is that that is making considerable progress and I congratulate those who are involved.
My noble friend’s reference to ongoing attention—to Somerset, for example—I endorse as well. I must say that we should not lose sight of the other places that have suffered from flooding during this spate of weather. I shall not name any of them because I will forget to include some, but there are many places around the country which have suffered.
Lord Faulkner of Worcester (Lab)
My Lords, I reinforce what my noble friend Lord Whitty said about the importance to Devon and Cornwall of the reinstatement of the main railway line that has been washed away at Dawlish. I declare an interest as a member of the First Great Western stakeholder board. Businesses are quoted this morning as saying that every day that the line is closed is costing them £30 million, so any delay beyond six weeks for its reinstatement will have a devastating effect on those economies—it is not just Cornwall; it is not just Plymouth; it is the whole of Torbay as well. I urge the Government to make sure that Network Rail is given every possible resource it needs to reinstate the line.
Looking a little further ahead, will the Minister consider the need for a possible new alignment that takes the line at the coast inland? It is something that Isambard Kingdom Brunel looked at but felt was not necessary. He thought that his wall would survive for ever, but, as we have seen with the weather of recent days, that might not be the case. Another possibility would be the reopening of the old Southern Railway line to Plymouth, which would at least give an alternative route through from Exeter.
Lord De Mauley
I agree with the noble Lord about the particular railway line of which he spoke, which is perhaps one of the most exciting and beautiful of our railway lines. I know of his great interest in railways. I can assure him that the line is getting and will continue to get urgent attention. His comments drag me rather beyond my knowledge and responsibilities in terms of specifics about railways, but I will take his comments back.
Lord May of Oxford (CB)
My Lords, perhaps I may add a footnote to this discussion, which I unfortunately missed because, for the past hour, I have been over at the BBC discussing the floods on “Daily Politics”. I expressed myself uninhibitedly amazed that anyone would ever have thought that it was a good idea to stop dredging on Sedgemoor, but then I learnt—this is a superb example of how good intentions can go awry—that this was a conservation measure in order deliberately to return it to marsh land in the interests of wildlife. It underlines the complexity of some of the issues that we have to deal with.
Lord De Mauley
My Lords, it is a shame that the noble Lord was not here at Questions because we addressed that specific point. I said then that the agencies are working together to ensure that measures such as dredging can proceed. That is likely to be part of the outcome of the action plan which my right honourable friend the Secretary of State has demanded. We are looking for that to proceed as rapidly as possible. It is fair to say, however, that it should do so while meeting our environmental requirements, which are set by among others the EU.
Baroness Parminter (LD)
My Lords, perhaps I may pick up on the point about the Dawlish line being likely to be closed for six weeks. Further stretches are at risk from strong waves, meaning that other areas are likely to suffer—that is obviously not just local people but businesses. I thank my noble friend for the comments he has made today, but my understanding is that no research has ever been done on the significant impact of flooding on businesses, often small businesses, that make up the backbone of rural economies and the disproportionate effect of that on rural economies, particularly in places like Somerset. There is no research that shows how flooding affects the range of supply and demand chains in an area and identifies what impact this has on the overall community resilience of an area. After the devastation of this winter’s flooding and given that we are facing more in the next few years, do the Government have any plans to commission research into and to investigate the impact of flooding on the economic resilience of local communities in order to identify any further necessary policy interventions or resources?
Lord De Mauley
I thank my noble friend for that question. She suggests that there has been no research on the effects of flooding on businesses. I will take that matter away. I am pretty sure that it will be covered in the action plan that my right honourable friend is looking at, but I shall look into it.
Baroness McIntosh of Hudnall (Lab)
My Lords, I wonder whether I might ask the Minister the question that I was hoping to ask him at Question Time, which bears directly on the observations of the noble Lord, Lord King of Bridgwater. Has any assessment yet been made of the possible public health impact or implications of land being under water for sustained periods, particularly where that land contains, for example, domestic sewerage infrastructure and where animal waste is also involved? Who, if anyone, is undertaking that assessment?
Lord De Mauley
Yes, my Lords. Somerset County Council is working with Wessex Water to ensure that proper water sampling is carried out and to co-ordinate any mitigation measures that are needed. Public Health England has issued clear advice on how to avoid any risk to health. People in the affected areas are urged to follow that advice.
Lord Crickhowell (Con)
My Lords, as the former chairman of the National Rivers Authority—thankful that I no longer have various responsibilities in these circumstances—may I join in the expressions of sympathy for those who have suffered the horrors of being flooded and in the tributes to the Environment Agency’s ground staff and the other emergency services who have been doing sterling work? I welcome the capital commitments that have been made and the proposed changes to the Bellwin scheme.
I would like to take up two particular points that have arisen. The first is on the local accountability question. In my Second Reading speech on the Water Bill, I said that for the NRA, the cornerstone of our activities was catchment management and the existence of our regional advisory boards, chaired by a member of the board and involving all the locally involved organisations. I have a feeling that that arrangement, which was so crucial to our successes, was discontinued at some time. Can the Minister assure me that a similar arrangement will be put in place? On the subject of dredging, may I suggest that regular dredging year by year of the lower reaches of rivers is likely to be much more cost-effective than one-off occasional action to try to relieve pinch points that should never have been allowed to develop in the first place?
Lord De Mauley
First, I reassure my noble friend that proper, ongoing local co-ordination is vital and is being, and will continue to be, undertaken. On his comments on dredging, I hear what he says and am conscious that he is quite right that it is not good enough to do it once: you have to do this process continually. I agree with him on that.
Lord Curry of Kirkharle (CB)
I support the comments made by the noble Lord, Lord Whitty, and by the noble Baroness earlier on, on the impact of flooding on the farmers whose land has been submerged under water for weeks on end. This is the second year in succession that many of those farmers have suffered this effect. May I take the opportunity—I am sure the whole House will support me in saying this—to thank His Royal Highness the Prince of Wales for going down on Tuesday? His visit was very well received by the residents and farmers of the Somerset Levels. I have to declare an interest: I am a trustee of the Prince’s Countryside Fund and His Royal Highness announced that £50,000 would be made available to help the farmers of the Somerset Levels. His Grace the Duke of Westminster also made a contribution, so we are very grateful for that financial support.
The funds will be channelled through the agricultural charities for the immediate costs incurred by farmers as a consequence of flooding, whether for animal feed or whatever. However, it will not restore the pastures and crops that have been submerged under water. The longer-term impact of this is not well understood. My noble friend may well have views on that. May I ask him to think longer-term about how those farmers might be assisted in maintaining their livelihoods following this dramatic impact on the land that is under water?
Lord De Mauley
First, I echo the noble Lord’s thanks to the Prince of Wales for his visit and financial contribution, and for the contribution of the Duke of Westminster, which are extremely welcome. We want to ensure that farmers are able to deal with challenges such as bad weather, to grow their businesses, create jobs and compete effectively in the marketplace. It has been very helpful that, in response to recent events, our colleagues at the Animal Health and Veterinary Laboratories Agency have agreed to a derogation to move cattle in Somerset without a pre-movement test. That may sound like a small thing, but it is important. I am aware, as the noble Lord said, that a number of charities are supporting struggling farmers more generally. I can also say to him that we have not heard from those charities that they have yet experienced a huge increase in demand, but I take on board his comments, which were extremely important.
Lord Skelmersdale (Con)
My Lords, earlier today, I appeared to criticise the Government for making the situation worse when I asked my supplementary question. I used the word, “exacerbate” when I should, of course, have said, “alleviate”—as this Statement shows very clearly. Whether that counts as a personal apology, I am not entirely sure. However, much of the Somerset Levels is classified as a site of special scientific interest. The problem has been made worse not only, as my noble friend has just said, by not constantly dredging the main rivers, but by farmers being allowed to change their farming practices by, for example, not dredging their individual rhynes. Would my noble friend take this point into the department’s thinking on the long-term ways of improving the situation, not least with the Environment Agency?
Lord De Mauley
My Lords, I certainly will. It is an interesting and important point.
Baroness Bakewell of Hardington Mandeville (LD)
My Lords, I welcome this Statement and will try not to repeat what others have said. In particular, I welcome the additional resources for emergency repairs. As the Minister has indicated, the full extent of the damage will not be known until the water subsides. The announcement on the review of the Bellwin scheme is encouraging and I look forward to hearing the detail on this. The Minister has referred to the partnerships working on the ground, and I am proud of the work and intervention in respect of this of South Somerset District Council, of which I am a member. It will take a lot more hard work and co-operation in partnership before we are through this current process. As with previous speakers, I am concerned for the future livelihoods of those living on the Somerset Levels, particularly the farmers. The debate about how to take this forward has to be started soon. Overall, however, I welcome the steps in the right direction made by the Government, but there is still some way to go.
Lord Elystan-Morgan (CB)
My Lords, I would like to raise a constitutional point relating to Wales in the context of these storms. Some weeks ago, a number of noble Lords, including myself, were told by the noble Baroness, the Minister, that essentially, responsibility for these matters had been devolved to the Welsh Assembly. I appreciate that responsibility for marine structures, coastal defences and so on has no doubt been transferred. On the other hand, under the 20 headings that I included in the schedules to the Government of Wales Act 2006, there is great vagueness. There is nothing at all to say whether responsibility for storm damage or for substantial havoc caused by nature has ever been transferred. I would be most grateful if the Government would publish some sort of reasoned opinion in relation to the matter. With regard to the Bellwin proposals, I remember 30 years ago, soon after I came to this House, how sterling they were. Is Wales eligible to profit from such a fund—and, if so, to what extent?
Lord De Mauley
The noble Lord has a habit of bowling fast constitutional balls. Of course, coastal regions right across the United Kingdom, including in Scotland, Wales and Northern Ireland, have been affected by flooding and severe weather conditions. Responsibility for flood management is, as he suspects, devolved to the Welsh Assembly, the Scottish Parliament and the Northern Ireland Assembly. It is for those bodies and their agencies to determine how best to allocate resources to support affected areas.
Baroness Browning (Con)
I declare an interest as a former resident of beautiful Dawlish; the railway line from Exeter to the outskirts of Dawlish went through the constituency that I was very honoured to represent. I am therefore very familiar with the problems and quite horrified to see the size of the waves—with which, again, I am very familiar. May I reinforce to my noble friend the request of the noble Lord, Lord Faulkner, to look at alternative railway access to the far south-west? May I also urge my noble friend to encourage the Department for Transport to urgently reassess the need for more dualling of roads into the far south-west—the A30 immediately comes to mind— and to make sure that the economies of, particularly, Somerset, Devon and Cornwall are not impaired in this way if this is the sort of weather pattern we are to expect in the future?
Lord De Mauley
My Lords, I have got the message and will take it back to the Department for Transport.
Lord Grade of Yarmouth (Con)
My Lords, after the water subsides, I suspect that the next headache will be an insurance nightmare. One has not heard in the considerations of the lessons learnt whether the Government will try to understand the insurance implications for farmers, householders and businesses. One would imagine that, as a result of the now frequent flooding, many of those properties and businesses will be absolutely uninsurable—or insurable only at a cost that is entirely prohibitive. I hope that, once the catastrophe has been managed, the insurance implications going forward will be considered.
Lord De Mauley
My noble friend is ever topical, because we will debate the issue of flood insurance, specifically in the context of the Water Bill, on Tuesday. He will know that we have been working very hard for many months with the Association of British Insurers on this very issue.
NHS: Seven-day Working
(10 years, 10 months ago)
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Lord Ribeiro
To ask Her Majesty’s Government what assessment they have made of the implications of introducing seven-day working in the National Health Service.
Lord Ribeiro (Con)
My Lords, in opening this debate I must first record my interests in the register and my chairmanship of the Independent Reconfiguration Panel. I support the introduction of a seven-day service, promoted by Sir Bruce Keogh, medical director of the NHS, but I believe that it should focus on emergency and urgent care, which is currently poorly provided at weekends. The move to a seven-day service has the support of the Medical Royal Colleges, NHS Confederation, NHS Employers and the BMA, but why is it necessary?
When I was a consultant, I often provided an emergency service at weekends, initially every four weekends and then every eight as staffing numbers increased. That was a requirement to go into the hospital to deal with emergencies when they occurred, rather than a commitment to be there all day as I would be during the week. What has changed is, of course, the increasing number of elderly patients with comorbidities requiring care and the findings of the Francis report that patients felt vulnerable at weekends when,
“staff absences and shortages are more noticeable”.
A report commissioned by NHS London in 2011 found that increasing cover by consultants in acute medical and surgical units at weekends could prevent 500 deaths a year in London. Further evidence in the Journal of the Royal Society of Medicine in 2012, analysing 14.2 million admissions in NHS hospitals in England in 2009-10, found that patients admitted on Sundays were 16% more likely to die than those admitted on Wednesdays, and 11% more likely to die if admitted on Saturdays. The Dr Foster Hospital Guide in 2012 reported similar findings, confirming that a higher level of senior medical staff at the weekend is associated with lower mortality. The case for change in respect of emergency admissions has been made and now something must be done.
Despite a reduction of acute beds by a third in the past 25 years, the number of unplanned admissions of those over 65 continues to rise, with some 2 million admissions a year. Length of stay is also important: for those under the age of 65, the average length of stay is three days but for over 65s it rises to nine days and for those over 85 it is 11 days. To prevent unplanned admissions we need more consultants because consultants make the decisions. They are able to decide whether patients can be sent home or need to be admitted. Junior doctors often lack the confidence to do that. We also need the infrastructure and systems in general practice and social care to allow those patients to be treated nearer their home. That must also be available at weekends.
My noble friend the Minister will no doubt point out that “seven-day working”, as this debate is titled, is not the same as a seven-day service. I agree but the public need to be clear what sort of service they receive. When we promise them the same service at weekends as in the week, they will assume that that implies seven-day working. That means that there will need to be a massive expansion of consultant numbers. I have recently heard the figure of 1,800 quoted as likely. Do we actually have enough qualified trainees to fill those posts—and trainees of the right calibre? Over what timescale do we expect to have this expansion? If the service is to be both for elective procedures, including routine operations, and emergencies, then a bigger challenge is funding and the staffing of theatres, X-ray rooms, and pathology and scientific laboratories—all of which must be supplied if we are to provide the same service at weekends as we do during the week.
We should not promise what we cannot deliver. The seven days a week forum report commissioned by Sir Bruce Keogh, which the Library kindly sent round as a briefing document for those involved in this debate, identifies 10 clinical standards that are evidence based. Three of them incorporate standards developed by the Academy of Medical Royal Colleges, whose committee on this was chaired by the president of the Royal College of Surgeons—so I have a slight inside track on what was developed. The standards cover the patient’s experience through to the transfer to the community. They focus mainly on the management of emergency admissions. Of the 10 standards, eight revolve around hospital care. They recognise that a one-size-fits-all solution cannot be applied in this situation and that what will work best is usually based around local solutions. But there is an emphasis on emergency care that does match the rhetoric of providing care for all at the weekend.
The NHS Confederation and NHS Employers recognised that we already work seven days a week, but it is how we do that work that is in question. Changing to a seven-day service could be liberating for many staff. I heard one lady consultant on southern TV last week say how much she enjoyed working at weekends. I think she worked at Southampton General. One reason she enjoyed working at weekends was that it provided a better work-life balance for her family. We should grasp the opportunity that this offers to use our workforce more flexibly. With the increasing feminisation of the workforce, remembering that more than 60% of our medical school intake is female, it is important that we take families, children and women into account when we design our workforce of the future. It is also important that many women with children would find working at weekends helpful because it would mean that their partners were there to look after the family and home while they were away working. I am not against that but will put forward some arguments as to why we should deal with the emergency problems first.
We also need to be much more creative about how we utilise some of our older, senior staff. I say that advisedly as I retired at 64 and was doing emergency admissions until the age of 60. How I could have done that between 60 and 64 I do not know; I feel for my colleagues who still do. Between the ages of 55 and 60, you could take most senior doctors off the emergency on-call rota and have them there providing mentorship for more junior consultant colleagues, and perhaps undertaking elective work at weekends if that could be managed.
Much could be done to achieve seven-day care but I am daunted by the cost of implementing both an emergency and elective service at weekends. The seven-day services improvement programme, which I believe was due to start in January this year, is focused in its first year on emergency care and the provision of enhanced recovery pathways and diagnostic and support services. The programme freely admits that its big challenge is how to actually develop those diagnostic and support services. I wonder where it will focus its attention in the next two years of the three-year programme it has set out. In addition, what are the likely costs of staffing a seven-day service in both primary and secondary care? The figures of £3 billion, from the Department of Health, and £32 billion, from the BMA, have been quoted as the cost of introducing seven-day care right across the piece in primary, secondary and social care.
From my experience of service reconfiguration, the public want high-quality care, but are wary of change, particularly if it affects their local hospital. We have seen the benefits of such service change, particularly here in London. Stroke services, acute heart condition services and trauma care concentrated in fewer centres have already delivered improved outcomes, so we have the evidence. A new project in Northumbria to produce a specialist emergency care hospital, which is due to open in 2015 at a cost of £200 million, is an example of a local solution to rural problems. Local solutions driven by clinicians and co-designed with the public can lead to centres of excellence.
It is important that we focus our attention on delivering an emergency service. If we base this on the 22 trauma centre networks that were designed by Profession Keith Willett and Sir Bruce Keogh, the success of the centres will trickle down to the spoke hospitals which are linked to them. By aiming for this low-hanging fruit, we can demonstrate success to the public, and the effectiveness can be translated to elective care. However, I do not think we are yet in a position where we can provide care at the weekend in the way we go shopping at Tesco and Sainsbury’s. Please do not forget the European working time directive, which applies to junior doctors and equally to consultants, because the SiMAP and Jaeger agreements are still there and they will require compensatory rest for consultants who work at weekends.
I have identified barriers to change. I am not a naysayer, but I have concerns about staff and cost implications, particularly with an austerity budget designed to reduce our deficit, GP contracts—will they be asked to work nights and weekends again?—the ability of social services to cope with seven-day working and whether payment by results can be adjusted to take account of the increased emergency work. I support the proposals for a seven-day service, but I have misgivings about implementation and the costs involved. I hope the Minister will be able to reassure me.
Baroness Jolly (LD)
My Lords, I remind noble Lords that this is a time-limited debate and, with the exception of the Minister, speeches are restricted to four minutes. When four is on the clock, time is up.
Lord Warner (Lab)
My Lords, I congratulate the noble Lord, Lord Ribeiro, on securing this platform to enable us to discuss this very important issue. I declare my interest as an adviser to Synlab, a German pathology company.
There is not much to disagree about in principle on the idea of seven-day working in healthcare with such a large number of emergency admissions to hospital. The evidence is pretty clear that we need the most senior doctors working later in the day and at weekends in those places dealing with emergency conditions. The noble Lord, Lord Ribeiro, told us the scale of those admissions each year. The interesting thing is that the Academy of Medical Royal Colleges has made clear that patients with these conditions need on-site consultant inspection at least once every 24 hours. Those admitted on Friday may not be seen by a consultant until Monday. That is clearly a dangerous practice. I would be very interested to know whether the Minister accepts that in hospitals which have A&E departments they would expect there to be seven-days-a-week consultant cover to enable a person to be seen by an on-site consultant at least once every 24 hours. Is that now government policy or just an aspiration set by the Academy of Medical Royal Colleges?
We know all about the difficult practical issues of implementing this kind of policy. We have also heard from the noble Lord, Lord Ribeiro, the different financial estimates for doing this. It is very interesting that the BMA’s estimate of £32 billion for seven-day working overall is roughly the same size as NHS England’s estimate of a £30 billion funding gap by the end of this decade on present plans for the NHS. There is some symmetry and agreement around about £30 billion; it is just a question of whether it applies to the gap or the funding increase you would need for this kind of policy.
I do not disagree with anything the noble Lord, Lord Ribeiro, said, but I want to focus on the point he made about money. Before I do that, I pay tribute to the work he has been doing in his capacity as chairman of the Independent Reconfiguration Panel. The trouble with that work is that he has to wait for what is served up to him. He is not allowed to take the initiative. We know many of the failing health economies. The NHS Trust Development Authority was set up to deal with many of these bodies. We have a situation where we are thinking of dreaming up a highly desirable change in patients’ access to consultant cover on urgent admission to hospital when we know full well that we have a very large number of almost insolvent trusts carrying out A&E admissions day in, day out. They are propped up by handouts from other bits of the NHS. This is the reality that the NHS faces daily. I suggest that we can implement this policy only if we grasp the nettle of reconfiguring services rapidly and consolidate more of these specialist services on a single site.
Baroness Brinton (LD)
My Lords, I, too, thank the noble Lord, Lord Ribeiro, for securing this key debate. It is shocking that your chances of receiving prompt treatment and, indeed, of surviving are worse if you are admitted to hospital over a weekend or on a bank holiday. The 2011 Freemantle report provided the evidence that more than 500 deaths could be prevented in London each year purely by increasing consultant cover in acute medical and surgical units.
The good news is that there are early adopters and pathfinders who are demonstrating that it can be done. I hope your Lordships’ House will indulge me with a personal anecdote. I was very unwell over Christmas and had the good fortune to be admitted to the acute admissions unit at Watford General Hospital. The unit was set up in 2009 to help reduce pressures on A&E and the main hospital. The £12 million 120-bed unit shares the building with A&E but all referrals have to come from a GP and the maximum length of stay is 72 hours, although stays are usually much shorter. Consultants are on duty 24 hours a day and see patients as they are admitted so care is tailored very quickly. The AAU and A&E share their own MRI scanner, X-ray and ultrasound unit, a catheterisation unit for angioplasty, blood testing facilities and pharmacy. My experience of the care was outstanding: tests, scans, monitoring and observation and treatment were all prompt, and I felt that the entire clinical team worked smoothly as one unit. I know that I am not alone in my praise for the unit.
Seventy-two hours seems to be about the right length of time. I have seen reports of other acute units where the time is only 36 hours. Recently a Leeds hospital reported that there is still pressure on the main wards from this shorter timescale.
The briefing from the Royal College of Surgeons states:
“Seven day services may also reduce pressure and stress on doctors. For example, consultants can spend much of Monday morning dealing with weekend admissions that are waiting for review or discharge”.
However, this does not affect just doctors: radiologists and many other clinical support staff are similarly affected by the Monday morning catch-up that impacts on an already busy week. Can the Minister assure the House that the NHS will provide robust modelling and review structures using the examples of early adopters to ensure that seven-day working is introduced carefully and effectively?
There needs to be a realistic timetable and a full understanding of the workforce issues—not just consultants or contracts and payments, but also appropriate staffing levels right through the NHS. It therefore seems sensible to move ahead on urgent and emergency care first and then reassess for wider clinical services, rather than rushing ahead with elective care at the start.
Many people are concerned about the costs of adopting a seven-day working system. With careful modelling—and with units such as the one I described earlier—in addition to inevitable new costs, we will find that there are some cost savings. Overall, the biggest change will be in culture and attitude. The NHS heart is willing. We all need to use our heads and energy to make it happen.
Baroness Masham of Ilton (CB)
My Lords, I thank the noble Lord, Lord Ribeiro, for asking this question. I am sure all noble Lords speaking today want to see improvements in the NHS.
A few years ago, I attended an open day at the Harrogate hospital trust. When we were shown the MRI scanner and other equipment, one of my group asked, “Would it not be desirable and beneficial to keep everything running seven days a week?”. The radiologist said, rather forlornly, “There are only one and a half of us”. The public would be very pleased to see a seven-day service in the NHS, but this would need more trained staff right through the system, and a culture of co-operation and communication. There should be an eradication of bullying and fear among managers and all staff. There should be a duty of candour and transparency, and dedicated teams looking after patients. Patients need continuity of care. They are so dismayed when their operations are cancelled at the last minute. Is there too much pressure on our existing National Health Service? General practice is facing a growing crisis as it struggles to provide the care needed for an increasing patient population.
I agree with the forum’s ambitions but, first, it is surely important to improve the safety of patients and the training of staff, so that they become experts in diagnosis and treatment. So much money is wasted on compensation and there is so much heartbreak for the nearest and dearest—and for the patients, if they live—when something goes wrong. Before the much hoped for seven-day working there should be improvements for what we already have in the NHS. For example, hospital A&E costs for stand-in doctors have increased by millions over three years. Blood donors are turned away by clinics because of late-running sessions and sick staff. If they feel their gift is not respected and they are not well treated, they will not turn up next time. I have an interest, as blood transfusions saved my life. Volunteers play an important part in the NHS, and they should be appreciated. There are huge variations in how GP surgeries provide a service to patients across the country.
I for one appreciate our health service, but we need to keep it safe and sustainable, and it has to grow with the increasing demands. Carrots are better than sticks. How can we keep our good doctors in a competitive world? How can we make nurses put patients first, giving them TLC? Without commitment and enthusiasm, it will be difficult to keep the NHS in full sail for seven days a week. Does the Minister agree that safety of patients at weekends should be addressed now?
Lord Parekh (Lab)
My Lords, I thank the noble Lord, Lord Ribeiro, for securing this debate and introducing it so well. A case for seven-day working in the NHS seems so overwhelming that I am surprised that it has taken us so long to raise it. I can think of half a dozen powerful reasons why seven-day working is an absolute must. As the noble Lord, Lord Ribeiro, has said, it reduces mortality, which can rise by as much as 16% for patients admitted over the weekend. In law—although I have not had the time to get this tested—it would amount to indirect discrimination to suggest that people who are admitted over the weekend receive less satisfactory treatment and invite death earlier than in other cases. That would constitute a case of indirect discrimination.
If we have seven-day working, it will amount to better use of diagnostic machines, laboratory equipment and operating theatres. It will also decrease the patient’s length of stay in hospital and thereby not only reduce pressure on hospitals but increase GDP because people will come out of hospital earlier and be able to work more days. The amount of patient satisfaction would also be considerable. For all these reasons, a case for seven-day working seems compelling.
I add an extra reason to assist the Minister in his negotiations with doctors who might resist this, but it is not the comparison with retail traders opening on a Sunday, as that is not a good analogy. We ask that our hospitals be open over the weekends, and that consultants and others be available, because these are issues of human lives. Where human lives are concerned, you cannot make a distinction between a weekend and a weekday.
Given that the case is so overwhelming, what are the objections? I hear three objections from many doctor friends who I am privileged to know. First, I am told it will impose extra burdens on consultants and senior clinical staff. The answer to that is, first, it need not be so because the workload can be properly distributed. Secondly, the same doctors who talk about the extra burden have absolutely no difficulty attending private clinics and private hospitals where they perform operations over the weekend. That is an argument of self-interest, which does not wash with me.
The second argument is that it will increase the cost. It could, and we have had figures bandied about. To that, my answer is: first, if you have better rota and shift planning, you need not employ a large number of extra consultants or senior clinical staff. You will also reduce the patient’s length of stay in hospital, which would mean a considerable saving. Hospitals under the same trust should be able to share clinical staff, so it does not necessarily mean each hospital having its own extra consultant. Equipment could be more effectively shared—that would mean a considerable saving—and, of course, there will be a reduction in the current payments for unusual hours that are paid to doctors. For all these reasons, I think that the objections based on cost can be addressed.
There is a third objection that many of my friends have made, which is that it could be hard on women. The noble Lord, Lord Ribeiro, said that many women consultants and others might welcome working over the weekend; but there are also many others who would find it difficult to work over the weekend and might resent being compelled to work in exactly the same way as their male colleagues would. There again, talking to consultant friends, I am told there is an answer: better rota and shift planning so that women need not necessarily be involved over the weekend. I suggest that there are enough reasons to go ahead, full steam, with this project.
Baroness Barker (LD)
My Lords, in 2003, the noble Lord, Lord Hunt of Kings Heath, the Minister and I were deep in the depths of the delayed discharges Bill. During our discussions, the journal Nursing Older People published clear evidence that if older people were discharged on a Friday, they were more likely to be readmitted to an acute hospital, or to die.
Let us flick forward to July 2013, when Sir Bruce Keogh concluded, in his review of 14 Trusts for NHS England, that,
“performance … was much worse … for their emergency patients, with admissions at the weekend and at night particularly problematic. General medicine, critical care and geriatric medicine were treatment areas with higher than expected mortality rates”.
In its 2013 report, Dr Foster stated that the mortality rate for patients who had routine surgery is 24% higher if the operation is performed just before the weekend and that the number of patients who return to hospital after being admitted at the weekend is 3.9% higher, so 10 years on it is the same story.
A lot has happened in that decade. Technology has improved and kit is marvellous these days. Data have become much more copious and available. Patients have become better informed and empowered. The pressure on resources was changed out of all recognition during the Labour Government, when lots more resources went into the NHS, but the rising tide of demand continued on ahead. It is the same story over a decade. One thing that we can conclude is that this is not about resources. That is not the answer to these issues.
This is therefore an interesting question for the Government to think about now that we are in a period of austerity. How do we address what we know to be long-standing and systemic issues? First, in order to have a seven-day-a-week NHS, we have to have better integrated social care and improved access to low-level social support. We know that 50% of the users of the NHS in future will be older people with long-term comorbidities, particularly dementia. The bulk of their care will not come from consultants; it will come from their families and friends. What is important is supporting their families and friends to look after them in the community.
Secondly, GPs have a critical role in determining access to the NHS. I think we can by now conclude that the GP contract negotiated by the previous Government was not the roaring success that it was made out to be at the time. GPs have a critical role in managing care pathways and access and we now need to go back and say to them, particularly since their response to Sir Bruce Keogh was simply to talk about resources, that there needs to be a change in their role in managing that point between all-out A&E access and long-term care.
Finally, we need to be absolutely clear with the British public that having a full seven-days-a-week service is not going to be realised in the short term. The general public will have to understand which parts of the health service they can expect to be available seven days a week and which they should not. The British public are very proud of the NHS and are, by and large, responsible. They want to make the best and most sparing use of it they can. Let us not deceive or mislead them into being wasteful and thinking that they are going to have everything all the time.
Viscount Bridgeman (Con)
My Lords, the whole House will be grateful to my noble friend Lord Ribeiro for securing this debate. He produced devastating statistics from Sir Bruce Keogh and NHS London but this debate surely cannot be complete without revisiting the working time directive. I have one or two further telling facts from my noble friend’s own royal college. For example, 86% of surgical trainees working to a working time directive-compliant rota have seen their work-life balance deteriorate. A survey published by Pulse of 500 junior doctors on the impact of the working time directive reported that 65% of respondents felt that it is having a detrimental effect on their training and 75% felt that there is now insufficient cover on the wards.
Further analysis by the royal college says that the number of hours available to surgical trainees for training and experience in compliance with the working time directive has been significantly reduced. Every month, 280,000 surgical training hours are lost to that directive and the doctors beginning their surgical training today will have 3,000 fewer hours to learn throughout their training, which is the equivalent of 128 whole days. This is but a snapshot of the telling statistics showing the handicap which the working time directive is imposing not only on patients today but on the precious investment in young medical talent for the future.
My message to my noble friend the Minister is to ask what pressure can be brought on the Commission to improve the working of the directive, which, let us not forget, has at its core wholly admirable aims. The Commission does listen. The United Kingdom, led by the Department of Health, has over the past two years taken the lead in inducing the Commission to modify the free movement directive which has hitherto prohibited the regulatory bodies in healthcare, such as the GMC and the Nursing and Midwifery Council, from testing health workers from the EEA for English-language competence before registration, potentially releasing healthcare workers on to the market with less than adequate English. That is a disaster for patient safety waiting to happen. The Commission has now listened and taken measures to modify the directive to ensure that language competency is established before a certificate of fitness to practise can be issued.
I use that as an example where the issue was patient safety. Let us be in no doubt that in the case we are debating it is simply that again, whether it is in the inadequate training of doctors to which I referred or the lack of continuity which was provided under the old structure of the firm, whose demise was one of the principal casualties of the directive. The introduction of the shift system also plays against continuity. Can my noble friend give an assurance that his department will build on his earlier successes with the Commission and give a high priority to securing a modification to the working time directive?
I finish with an instance which I assure your Lordships is not simply hearsay. I know of doctors who need to get work experience in another country within the European Union. Both the time and money available are limited and, to get the best value out of their secondments, they have quite simply chosen to go to member states where the working time directive is openly disregarded. By the way, these are not newer accession states but old, western members of the Union with highly sophisticated health services. This country has a history of abiding by the law and I leave my noble friend the Minister, and all your Lordships, to draw their own conclusions.
Baroness Manzoor (LD)
My Lords, I, too, thank the noble Lord, Lord Ribeiro, for securing this debate. As other noble Lords have stated, the variation in outcomes and patient experience for patients admitted as emergencies at the weekend is evidenced in higher readmission rates, higher mortality rates, poorer patient experience and an increased length of hospital stays, while the availability of diagnostics such as imaging can be 40% lower. These facts are, on the whole, not in dispute so it is not my intention to mention the many excellent surveys and reports which evidence them. However, it would be remiss of me not to restate the importance of the report commissioned by NHS London in 2011, which concluded that increasing consultant cover in acute medical and surgical units at the weekends could prevent more than 500 deaths a year in London alone. The evidence clearly demonstrates the need for the NHS to take action.
Like other noble Lords, I applaud Sir Bruce Keogh’s report and its conclusions, except that it is rather disappointing that it took nearly a year to produce. I would like to hear what the Government are doing to ensure that the pace of change is rapid and that the report’s implementation programme is given greater priority. Quite rightly, there is much emphasis by the Government and NHS England on clinical outcomes and reducing inequalities in care, but NHS England will not deliver on its mandate should the current status of health services prevail at weekends.
While the £3.8 billion Better Care Fund which the Government have made available, pooled with local government, is also welcome, NHS England has yet to demonstrate how clinical commissioning groups are addressing the need for services at weekends and what support CCGs are giving to local authorities which support patients being discharged from hospitals and prevent unnecessary admission to hospitals, particularly as CCGs spend three-quarters of the £98 billion NHS budget. Indeed, I find it difficult to understand how the regulator, the Care Quality Commission, could have judged any hospital to be outstanding when such inequalities in care and service have existed in the NHS and been evidenced as such for at least the past 12 years. Perhaps the Minister can reassure the House that regulators will not be awarding outstanding status until a hospital is deemed to have improved its record of safety and patient care for patients at the weekend.
NHS England should also demonstrate how, as the commissioner of primary services, it is ensuring that it addresses and improves the variable quality offered by general practitioners. Although an optimist, I remain concerned by the slow pace of change. On the current evidence, NHS England cannot deliver on its mandate, and Public Health England will fail to close the inequality gap in social provision for some of the most vulnerable in our society, such as the elderly and people who need access to mental health services at the weekend. This is mainly because there is an absence or limited availability of consistent support services such as diagnostics, and a lack of community and primary care services which, if available, could prevent some unnecessary admissions and support the timely discharge of patients. It remains, as has been said, difficult to get routine blood tests, X-rays, MRI scans, pharmacy, physiotherapy and social services at weekends. Of course, I have already mentioned the variable out-of-hours primary care.
Sir Bruce is quite right when he advocates a whole-system approach to improve the current, unacceptable standards being offered in the NHS at the weekends. However, although I do not support yet another reorganisation of the NHS, with tight finance restraints, the Government may need to think further about simplifying the current and complex NHS system. They will also need to consider how budgets are shared and pooled between organisations, including with local authorities, and who will lead on this. The NHS is a great institution, and it is our duty to make it fit for the 21st century.
Lord Hunt of Kings Heath (Lab)
My Lords, I, too, am grateful to the noble Lord, Lord Ribeiro, for instituting this debate. It is clear that all noble Lords who have spoken are broadly in favour of moving to what we are calling a seven-day week for the NHS. However, there is a range of views about whether it is deliverable. I hope that the noble Earl will be able to address some of the substantive points that have been put to him.
The argument for seven-day working to its full extent is of course persuasive. Noble Lords have talked about the high mortality rate at weekends, the variable staffing levels, the absence of senior decision-makers and a lack of consistent specialist services, such as diagnostics. It is also clear that capital is not used by the NHS to the extent that one would desire if very expensive machines are left idle for quite a part of the week.
However, there are three major questions about whether this is workable which I will put to the noble Earl. First, is the rest of the health and social care system able to match the seven-day working of the health service? It seems that the major pressure problem facing the NHS is frail, older people who probably should not have been admitted, but have been because either nursing homes or social care provision was not sufficient. Once they are admitted to hospital, it often becomes difficult to enable them to be discharged quickly because of an absence of community infrastructure. If we are going to have full seven-day working within acute hospitals, it is essential that GPs and social and community services also embrace seven-day working.
I do not know to what extent the Bruce Keogh work has really reflected that. It will have to be tackled. We cannot carry on any longer with GPs who are inaccessible and unable to do what is necessary to help people who have been discharged into the community. The same goes for social services, which still seem to shut down over bank holidays and the Christmas period. This simply is not going to work unless the whole of the system is working to the same tune.
Secondly, there are mixed views on resources. My noble friend Lord Parekh thought that the cost of this could be contained. I must say that I rather share the view of my noble friend Lord Warner and the noble Lord, Lord Ribeiro, that this is in fact going to be massively expensive. The noble Lord, Lord Ribeiro, talked about the necessary massive expansion of consultants. That must be true because we do not want seven-day working that involves staffing up at the weekends and reducing staffing during the week. I suspect that mortality rates would go up during the week because you would not have the necessary cover. I am afraid that some of the plans of acute hospitals are indeed to squeeze staffing during the week. That is a crazy way to go about it. I am very concerned that, in time, we will see a rise in mortality rates during the week. I do not think that this has been fully considered by those who say that we can do this simply by a better ordering of the way in which things are done. I refer the noble Earl to the Institute of Fiscal Studies report published today, about the resource challenges facing the NHS, and ask him how this is to be afforded.
Finally, does the noble Earl think that, as a result, the noble Lord, Lord Ribeiro, will be even more engaged in dealing with reconfiguration issues? Does the noble Earl agree that the implications of this are that we have to have radical reconfiguration of services? Will Ministers support that? Equally, will they tell Monitor and the competition authorities to back off from instituting competition procedures if this reconfiguration is necessary to make this work?
The Parliamentary Under-Secretary of State, Department of Health (Earl Howe) (Con)
My Lords, I congratulate my noble friend Lord Ribeiro on securing a debate on this important issue. I know that as a former consultant surgeon and former president of the Royal College of Surgeons this is a subject in which he takes a great deal of interest. I also take this opportunity to pay tribute to the work done on seven-day services by NHS England, the NHS Services Seven Days a Week forum, the Academy of Royal Medical Colleges and the Royal College of Surgeons, among others.
The historical five-day service model offered in many NHS hospitals no longer meets justifiable patient and public expectations of a safe, efficient, effective and responsive service. I very much echo the comments of the noble Lord, Lord Parekh, in that context. Over the past 10 years, a growing body of national and international evidence has emerged that links poor outcomes, including a higher risk of death, to patients admitted to hospital at the weekend, around the world. It is impractical and inefficient to continue to operate a five-day approach when our illnesses and conditions do not limit themselves to office hours. Patients are entitled to receive the same standard of care regardless of the day of the week.
As the largest and most comprehensive health service in the world, the NHS is well positioned to solve the issue of poorer outcomes and reduced levels of service provision at the weekend. That is why NHS England has set out a vision for the NHS which is of a service more closely organised around the lives of the public it serves. To develop this vision, NHS England established the NHS Services Seven Days a Week forum in February last year to consider how NHS services can be improved to provide a more responsive and patient-centred service across the seven-day week.
The forum’s work has been met with nothing but positive feedback and support from the public and patients, the Academy of Medical Royal Colleges and the British Medical Association, among other organisations. The immediate focus for improvement activity will be addressing the need for high-quality urgent and emergency care services, seven days a week. NHS England is also looking to make similar improvements across primary and community health services and social care, and the forum will report in autumn this year, setting out proposals for the creation of a fully integrated service. NHS England’s ambition is for seven-day services to be fully implemented in England by the end of 2016-17.
I recognise that we cannot talk about the idea of seven-day services without giving full consideration to questions of staffing and finance; many noble Lords have raised those issues. NHS providers and their commissioners already face difficult choices when deciding where to invest their resources in order to maximise the outcomes for patients and value for taxpayers. Early indications are that seven-day services have the potential to be part of the solution. However, more information is needed. NHS England is therefore conducting research which will provide a helpful indication of the likely costs providers and commissioners face when considering how to redesign their services to provide comprehensive seven-day care. In addition, to answer my noble friend Lady Brinton, NHS England intends to commission financial and system modelling and analysis of the implications of its strategy for achieving seven-day service provision in the NHS.
My noble friend Lord Ribeiro rightly highlighted the workforce implications of having a consistent, high-quality service seven days a week. The department, alongside NHS England, Health Education England, NHS Employers and a number of strategic partners, is considering that very issue. Its analysis is considering issues such as junior doctors feeling unsupported during weekend working and the resulting need to ensure that education contracts include appropriate seven-day senior supervision; and numbers of diagnostic and scientific staff, with NHS England intending to undertake a thorough assessment of the different roles needed in diagnostic and scientific services to support an extended service.
Of course, many commissioners and providers will need support to address the challenges presented by seven-day services. To that end, NHS Improving Quality has just introduced a new, large-scale transformation change programme, set up in collaboration with all healthcare commissioners and providers, to support the spread of seven-day services over a three-year period.
I realise that the move towards seven-day care will not be easy, but there are encouraging examples of pioneering NHS organisations that have moved to make healthcare services more accessible seven days a week to avoid compromising safety and patient experience. For example, Sheffield Teaching Hospitals NHS Foundation Trust has adopted seven-day service provision, improving patient flow of frail and older people through the emergency pathway. Bed occupancy for emergency care for older patients has now reduced by more than 60 beds. Other examples in my brief include Salisbury District Hospital and the Lancashire Intermediate Support Team, both of which have produced impressive results.
We know that across the country, more hospitals, primary and community care organisations and social care services are working together to break the link between poorer outcomes for patients and the reduced level of service provision at the weekend. We also know that patients and the public want us to act now to make seven-day services a reality in all parts of our NHS.
A number of noble Lords, including my noble friend Lord Ribeiro and the noble Lords, Lord Parekh and Lord Hunt of Kings Heath, raised the issue of cost. Interestingly, there is already evidence that seven-day services can be implemented in a way that does not increase the overall cost of healthcare. The average cost of implementation at trusts pioneering the service was 1.5% to 2% of their total income. Costs vary according to local service models, but research shows that they can be reduced by reconfiguring services and by trusts working collaboratively. Seven-day services at the front end—that is to say, A&E departments—could also pay for themselves by reducing admissions and lengths of stay.
Seven-day services would not work under a one size fits all model—a point made by my noble friend Lord Ribeiro. Local solutions need to be found and pioneering NHS providers and commissioners are already working to develop them.
In answer to the noble Baroness, Lady Masham, on the issue of safety at weekends, we expect all NHS services to be able to meet patients’ needs as they arise. To do this, trusts should adopt the clinical standards developed by the seven-day services forum to drive up clinical outcomes and improve patient experience at weekends.
My noble friend Lady Manzoor referred to the CQC. The CQC and the Chief Inspector of Hospitals are considering how implementation of the clinical standards could best be assessed by the CQC and how this might be reflected in its forthcoming ratings and the judgments it makes when it inspects.
As I said, workforce is a major issue. The noble Baroness, Lady Masham, was right to raise that point. There are over 12,200 more clinical staff in the NHS than there were before the election, thanks to the money we have invested in the service and to the reforms we have carried out. Nevertheless, there is an issue about motivating staff to work at weekends, as the noble Baroness rightly said. We understand that contractual levers and incentives are required to drive change. NHS England and a number of key strategic partners are already looking into this. However, in many cases seven-day services have reportedly already had a positive impact on individuals’ work-life balance, offering greater certainty in planning ahead and flexibility in time off. In addition, the medical royal colleges are all in support of seven-day services. Building seven-day service provision into recruitment, job planning and appraisal processes will help create a sense of common purpose to underpin organisational delivery.
A number of noble Lords, including my noble friends Lord Ribeiro and Lady Barker, referred to the role of GPs. To address that important role in the mix of services the NHS provides, we recently announced the setting up of a £50 million fund to support innovative GP practices in improving services, and in particular access for their patients, including seven-day week access and evening opening hours and the testing of a variety of services including Skype, e-mail and phone consultations.
However, as the noble Lord, Lord Hunt of Kings Heath, emphasised—as did my noble friend Lady Barker—community services and social care are absolutely integral to this as well, particularly when it comes to the care of the frail elderly. Social care and the NHS are priorities for the Government and we know that there is interdependency between the two systems. However, providing more resources is not enough on its own. We have provided more resources from the Department of Health but we need to do more. NHS England is currently working with the Local Government Association to create a health and social care system that is truly seamless so that people receive the right care at the right time and in the right place. The Seven Days a Week forum will report on that work in the autumn, setting out proposals for a fully integrated service.
The Better Care Fund is a key enabler for change, as my noble friend Lady Manzoor pointed out. As part of the process for accessing funding, clinical commissioning groups and local authorities will have to demonstrate, as part of agreed local plans, that they are addressing a number of national conditions, including seven-day services in health and social care.
The noble Lord, Lord Warner, asked whether the Government would expect A&E departments to have weekend consultant cover. We recognise that the consultant contract is a key enabler of seven-day services. In October last year the Government mandated NHS Employers to enter into formal negotiations with the BMA to deliver joint proposals for consultant contract reform, including changes that will support seven-day services.
My noble friend Lord Bridgeman focused on the working time directive. He may know that we asked the president of the Royal College of Surgeons, Professor Norman Williams, to chair an independent task force to look at the implementation of the working time directive, and the impact of the directive on the delivery of patient care and the training of the next generation of doctors. The independent review will provide its report during March 2014. Professor Williams is working with stakeholders from the Royal College of Surgeons, NHS organisations, the BMA, National Voices and others, and we ourselves are working with the task force to ensure that it has appropriate legal and analytical support.
There is a compelling case for healthcare services to be accessible seven days a week. To echo the noble Lord, Lord Parekh, if we were starting the NHS from scratch I very much doubt whether we would design a part-time system. We would surely create a seven-day service to better meet patients’ needs. Seven-day service provision is about equitable access, care and treatment, regardless of the day of the week. It is a cause for some pride that the NHS will be the global pioneer in providing equality of access to consistent, high-quality healthcare seven days a week.
Lord Hunt of Kings Heath
My Lords, before the noble Earl sits down, I was remiss in not declaring my interests at the start as chair of a foundation trust, president of GS1 and a consultant trainer with Cumberlege Connections. I know that we all know that, but I have to do it every time.
Water Bill
(10 years, 10 months ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Moynihan
“Duty to facilitate competition
(1) Section 37 of the Water Industry Act 1991 (general duty to maintain water supply system etc.) is amended as follows.
(2) In the heading, after “system” insert “and facilitate competition”.
(3) After subsection (1) insert—
“(1A) It shall be the duty of every water undertaker—
(a) to fulfil its duties under Chapter 2A of Part 3 in a way which does not prevent, restrict or distort competition in the provision of water services; and(b) without prejudice to the generality of subsection (1A)(a), to ensure that no undue preference is shown (including for itself) and that there is no undue discrimination in the relationship between its monopoly business, its competitive business and a water supply licensee.(1B) For the purposes of subsection (1A) above—
(a) an undertaker’s monopoly business comprises all of the activities carried on by it within the scope of its appointment, with the exception of its competitive business;(b) an undertaker’s competitive business comprises those activities carried on by it within the scope of its appointment, but which, in the absence of such an appointment, could only be carried on by it with the benefit of a water supply licence and the business of any associated water supply licensee; and(c) a water supply licence is a licence granted under section 17A, water supply licensee shall be construed accordingly and associated shall have the meaning set out in paragraph 11 of Schedule 2A.”(4) In subsection (2) for “duty” there is inserted “duties”.”
Lord Moynihan (Con)
My Lords, in moving Amendment 115, I wish to speak also to Amendments 116, 138, 139, 140, 141, 142, 143, 144 and 145.
This set of amendments brings us back to the central issue of creating through this legislation a clear, unequivocal market framework for competition. The amendments would provide a duty to facilitate competition. All participants must have access to clear and accessible prices, clearly defined and common levels of service and standard terms and conditions. As I have mentioned before to your Lordships, the Bill is based on the premise that parties within the retail market should conclude bilateral relationships subject to industry codes that will be developed. This could require some negotiation between market participants on service and price. It is this element of negotiation which I believe, if not addressed by us, will lead to the inefficient operation of the marketplace with unintended consequences.
The Bill is about regulated access and should not be blurred by a heavy dose of negotiated access. Allowing parties to negotiate could open the door for a current incumbent to discriminate against new retailers by offering them less preferable terms or poorer service levels or simply by being slow to respond to requests. This would limit the effectiveness of the market and increase costs for new entrants and customers. In my view, the relatively minor clarifications that I propose could usefully be made to the Bill. These are designed to ensure that the market can be opened in a timely way and that, once open, customers will enjoy benefits that are the same as, or greater than, for example, those which have been achieved in Scotland.
Amendments 138, 139, 140, 141, 142, 143 and 144 would ensure that Ofwat’s implementation licence modification powers are fit for purpose. In Scotland, the Water Industry Commission had a power of direction to ensure that activities that needed to be done were completed in time for market opening. For example, WICS was able to say to Business Stream, Scottish Water’s retail subsidiary, that the market would open irrespective of whether it was ready and that its customers would be reallocated to new entrants. I propose that Ofwat’s licence modification powers are made available for at least three years after Royal Assent to ensure that the entire period up to market opening is covered. I also suggest that they are clarified and strengthened, including by referring explicitly to market opening, as proposed in the group of amendments I have mentioned.
Amendment 145 would allow Ofwat to make common licence amendments in a single process. The potential retail market in England is much bigger than in Scotland. There will be more wholesalers and more incumbent retailers. The difference principally relates to the handling of the interests of the incumbent companies. In Scotland, the relevant people now have significant experience of dealing with a large number of—there are 12—active retailers. In their view, it would be sensible to ensure that Ofwat can make licence amendments that cover all companies if that is, in its judgment, the best approach. That has certainly been helpful in Scotland. However, there may also be circumstances where a more targeted approach to an individual company or a small group of companies would be better.
Amendments 115 and 116 would place a clear duty of non-discrimination on the wholesale businesses of the incumbent water suppliers. Clause 23 obligations to ensure no undue preference or discrimination would be carefully extended by these amendments. It seems to me that profit maximisation could be put forward as a reason to discriminate between suppliers. It may be worth looking at placing duties to help facilitate competition directly on incumbent businesses, making them also subject to a duty to ensure no undue preference or discrimination. This would make it easier to enforce competition law provisions, including the prohibition on margin squeeze. That would help ensure that new entrants are generally able to count on there being a level playing field.
As I had the good fortune to be the Minister responsible for taking the original privatisation Bill through the Commons, along with my noble friend Lord Howard of Lympne, I anticipate that the Minister will respond to my amendments by saying that Ofwat already has a duty to promote competition and therefore we do not need another duty. He may also say that Ofwat is the relevant competition authority for the sector and therefore we need to ensure under another piece of legislation that there is no anti-competitive behaviour in the sector, so we do not need another duty. He may have in mind the Competition Act and the Enterprise Act in that regard.
The Earl of Selborne (Con)
My Lords, I support my noble friend Lord Moynihan. Although he described these proposals as modest, they are important in complementing the provisions in the Bill facilitating competition. After all, the Bill introduces a completely new concept of competition at both the wholesale and retail levels. We are right to be extremely suspicious of the attitude that companies will take to try to use their undoubted advantages as incumbents in order to secure their markets, which, at the moment, are unchallenged.
If noble Lords think that I am a bit paranoid about this, let me take an example from outside the water sector, in the field of communications. This morning, on a previous group of amendments, we prayed in aid Ofgem; I should also like to pray in aid Ofcom. Take the example of BT and broadband, which is an area that involves public funds but may perhaps not be an exact analogy with the water sector. BT is able to use public funds in order, as the Public Accounts Committee in another place has demonstrated, to see off new entrants. In a number of cases, a lot of work has been done to bring broadband to remote communities, but there has been a lack of transparency from incumbents until the last possible moment. They come into those areas—surprise, surprise—with a directly competitive service, having identified where the competition is going to come from. Of course, all other areas remain neglected until they attract competition, too. In other words, it is possible, in any number of insidious ways, for an incumbent to retain a competitive advantage. The company can sometimes just be bad at providing the data and not answering communications.
These amendments place a duty on an undertaker to facilitate competition and they strengthen Ofwat’s powers. In ways which we cannot entirely predict, but which we can assume will be used, companies will be rightly keen to retain their share of the market. We should assume that anything done to strengthen the ability of new entrants to operate without discrimination against them must be welcome. Without in any way casting aspersions on the existing undertakers, we should recognise that anything that can be done to demonstrate that they are required to facilitate competition would be well within the spirit of the Bill and complement the existing provisions. I cannot see how these proposals could do anything but help.
Lord Crickhowell (Con)
I rise to make a very brief comment, prompted by the remarks of my noble friend on the likely possibility of incumbents seeking to defend their positions. I seem to recall that, in reply to my noble friend Lord Moynihan in our previous debate, the Minister told us that the water companies had said that they were against what was proposed. I remember thinking, like Mandy Rice-Davies, “Well, they would, wouldn’t they?”. It was just an indication of the kind of attitude that one is likely to get from incumbents—perfectly naturally—in trying to defend their existing position.
Lord Whitty (Lab)
My Lords, last week’s de facto alliance between the noble Lord, Lord Moynihan, and me extends in part to these amendments, in that it would be sensible for the Government to contemplate positively some of the latter amendments in the group, particularly those that inhibit the degree to which incumbents can effectively square the market against new entrants. However, my agreement does not extend all the way, I am afraid, particularly to the earlier amendments in the group. We must remember that the Bill is not quite as radical as all that, and, if it were to be a bit more radical, a lot of other things should follow.
We are, actually, introducing competition immediately only in a narrow part of the market. It is an important part, and there may be subsequent lessons to be learnt, but it is going a bit far to say that Ofwat’s central duty should be extended to promote competition. It already has a duty to look after the interests of consumers, where appropriate through competition, and we are making sense of that in a way that has not been done in the past 20-plus years of privatisation. However, we are not in any way legislating in this Bill for residential properties to be subjected to competition. Some noble Lords may think that we should be doing so, and it may be that I could be persuaded of that, but the fact is that we are not doing so here. If we were, that would raise a whole range of other protections and issues that would have to be considered.
It is also true—the noble Lord, Lord Moynihan, referred to upstream competition—that a number of hesitations were expressed around the Committee last week about triggering the upstream aspect to this, particularly in relation to abstraction reform occurring first. I would not want the noble Lord’s Amendments 115 and 116 about promoting competition to give Ofwat the impression that their provisions would override the need to ensure that abstraction protection was in place before competition in the upstream area was triggered.
Therefore, I cannot support this group of amendments as a whole. The Government may wish to consider one or two of them but, at this point, many of them go too far beyond the scope of the Bill or could be interpreted as doing so.
The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord De Mauley) (Con)
My Lords, my noble friend Lord Moynihan’s Amendments 115 and 116 would introduce a new duty on incumbent water companies to “facilitate competition”. This would sit alongside their primary duties to supply water and provide sewerage services to their appointed areas. Amendments 138 to 145 would change Ofwat’s powers to amend licences to introduce the market reforms set out in the Bill.
One part of the proposed new duty on incumbents would require them to act in a manner that did not “prevent, restrict or distort” competition. I think we can all agree that it is essential that incumbent water companies play by the rules of the market so that customers benefit from competition. That is why the Competition Act 1998 already prohibits business from making agreements that involve the prevention, restriction or distortion of competition, or from abusing a dominant position in the market. Both incumbents and licensees are subject to an overarching competition law regime that deals with the concerns that the amendments seek to address. As my noble friend thought I would say, Ofwat is able to enforce the Competition Act 1998 in the water sector because it has concurrent powers with the Competition and Markets Authority.
In some of our debates on Tuesday, noble Lords made comparisons with Scotland, as did my noble friend today, but I note that a facilitating competition duty was not imposed on Scottish Water, although it, too, is subject to the aforementioned Competition Act. It is worth noting here that WICS does not have the same powers as Ofwat under the Competition Act, which may explain some of the differences in the way Scottish Water is regulated.
Incumbents will be subject to enforceable licence conditions, market codes and charging rules which will ensure that they operate fairly in the competitive markets. I question why the amendments do not require licensees to be under the same or a similar duty because both licensees and incumbents operate within the retail market and some licensees are associates of incumbents.
Lord Moynihan
My Lords, I am deeply grateful to the Minister for his comprehensive response. I have to say that this has been a very friendly Committee stage. Reference was made earlier today by my noble friend to the importance of policy formulation in the Bishops’ Bar. No doubt the noble Lord, Lord Redesdale, and I will continue that discussion in the same venue at a later stage. Then, to top it all, I have to say that I regret the passing of the special relationship with my temporary noble friend the noble Lord, Lord Whitty, and hope that it will return very strongly when it comes to revisiting the question of exit at a later stage in our proceedings.
On a more serious note, I am grateful to my noble friend for his support of my amendments, in particular the importance that he, like me, attaches to facilitating competition. It is absolutely critical that new entrants to the market do not come up against the misplaced use of economic power by the incumbents. That is what we were seeking in these amendments. I did not anticipate that my noble friend would respond quite so quickly to the additional points I raised in that context in the second part of my speech. There were one or two other items I proposed which I hope that he will reflect on, but I would not anticipate that he could do more than that. I hope that, between now and the Report stage, we will have an opportunity to consider them in somewhat greater detail. In the mean time, however, I beg leave to withdraw the amendment.
Baroness Parminter
Baroness Parminter (LD)
My Lords, I welcome the fact that the Water Bill places the Government’s strategic priorities and objectives on a clearer statutory footing and requires Ofwat to carry out its functions in accordance with it. New Section 2A(3) to be inserted by Clause 24 makes it clear that, “In formulating a statement” the Government “must have regard to” Ofwat’s duties, but only,
“may have regard to social and environmental matters”.
The government briefing note on sustainable development and the resilience duty that was issued last month confirms that the Government are strongly committed to sustainable development, balancing the equally important needs of society with those of economic growth and environmental protection. Before lunch we debated how this is articulated in the duties for Ofwat, but it is equally important that it is articulated clearly in the duties placed on future Governments. That is why I believe that the word “may” should be changed to “must”, so that Governments must take into account social and environmental matters when formulating future policy steers.
Statements of strategic priorities will replace the existing social and environmental guidance currently issued to Ofwat. In future, the Secretary of State will issue a single consolidated statement setting out social, environmental and economic policy priorities. My noble friend the Minister kindly confirmed in a letter to me on 17 January that the Government intend to continue to provide guidance on social and environmental matters within that single consolidated policy statement. Given that the Government have said that they will provide guidance on such matters, I feel that the use of the word “may” insufficiently reflects that commitment and the need for future Governments to take account of these matters when formulating the crucial strategic policy that will guide Ofwat. I beg to move.
Lord Whitty
My Lords, I support these amendments. New Section 2A(3) to be inserted by Clause 24 seems to differentiate between Ofwat’s duties regarding strategic priorities and social and environmental matters. We attach “must” to the former and “may” to the latter, but the Secretary of State ought to have regard to both. This is not the usual theological argument between “may” and “must”. Those of us who have been around the block on this legislation have come across that argument a number of times and have completely failed to understand parliamentary counsel’s advice. The provision clearly differentiates the status of the two duties. It does not differentiate and downgrade the social and environmental objectives for Ofwat, which some noble Lords might think would be sensible, as Ofwat is primarily an economic regulator. This is for the Secretary of State. It is the Secretary of State’s duty to balance all these issues out. He should therefore have regard to both duties and if it is “must” for the former it should be “must” for the latter. The provision does not say, “give priority to”; nor does it say, “If you have regard to these duties, you do not necessarily need to carry out exactly what they prescribe”. However, it is the duty of the Minister to balance all these things out. If the legislation gives less status to one than to the other, the outcome of the balancing seems to be predictive.
I do not think that is right. All parts of the policy need to be looked at. I think “must” is probably the appropriate modal verb but both duties need to be in the same form. They are both important and the Secretary of State, whoever that might be, needs to have regard to both. I therefore support the intention of the amendment.
Baroness Northover (LD)
My Lords, I thank my noble friend Lady Parminter for her amendment. She notes that Clause 24 on setting strategic priorities and objectives for Ofwat requires that the Secretary of State “must” have regard to Ofwat’s duties but “may” have regard to social and environmental matters. She would like to change “may” to “must”. I am also familiar with the debates to which the noble Lord, Lord Whitty refers, having delivered a “must” to the noble Lord, Lord Ramsbotham, yesterday at Third Reading of the Children and Families Bill.
The Government are keen to hear and understand my noble friend’s concerns. However, we think that the new power to set strategic priorities and objectives for Ofwat will ensure that social and environmental matters will continue to be addressed. The purpose of Clause 24 is to strengthen and clarify the existing guidance-giving powers. It enables the Secretary of State to issue a single consolidated statement setting out social, environmental and economic policy priorities in the round to help Ofwat to balance all the relevant considerations appropriately when making regulatory decisions.
The Government’s principles of economic regulation require that Ofwat regulates within a clear framework of policies and duties set by the Government. Under the new power, Ofwat must carry out its relevant functions in accordance with the statement. The new powers stipulate that, in issuing the guidance to Ofwat, the Secretary of State must have regard to all Ofwat’s duties. These are set out in Section 2 of the Water Industry Act 1991 and include protecting the interests of consumers, promoting economy and efficiency by companies in their work and, as we have already discussed, contributing to the achievement of sustainable development. These duties encompass the regulator’s essential purposes and it is right that, in giving a steer on policies and objectives, the Government should be bound by them. We note that the duties clearly embrace both social and environmental matters. In addition, the new powers under Clause 24 stipulate that when formulating a statement the Secretary of State may have regard to social and environmental matters. We hope that this serves to provide additional reassurance that such matters will continue to be addressed through the strategic priorities and objectives. As a further check, Clause 24 also requires that we consult widely on the statement of strategic priorities and objectives. Following this, the statement will be subject to parliamentary scrutiny. When we consulted on the existing strategic policy statement last year, the social and environmental content received a warm welcome from both environmental NGOs and consumer groups. I thank my noble friend Lady Parminter for her own tribute to this.
We have great sympathy with my noble friend’s objectives but we are not persuaded that such a change to the Bill is required. I therefore ask her to withdraw her amendment.
Baroness Parminter
I thank my noble friend for her detailed comments on my amendment and for the fact that she noticed that I commented on the consultation last year. I take this issue very seriously. I also thank the Opposition Front Bench for supporting the amendment. It is not a matter of semantics. It might seem to be that, but it is more fundamental to the direction of travel—what we want for the water industry in the future and how we can assist future Governments to deliver the commitments that we all agree on. I will reflect on what the Minister has said, but we may return to this matter in the future. I beg leave to withdraw the amendment.
Lord Grantchester
“Billing information: affordability
Any company providing water services to a residential household must include on its bills—(a) details of any tariffs provided by that company;(b) a recommendation of the lowest possible tariff for each residential household; and(c) information regarding eligibility criteria and how to make an application for assistance under Water Sure.”
Lord Grantchester
My Lords, Amendment 118 is a straightforward requirement on companies to meet what ought to be seen as a basic customer service in the household sector. The amendment would simply require a company to do three things: to give consumers information about tariffs, including any social tariffs; to fit the most appropriate tariff to a household using the information it holds on households; and to provide information where there is a broad social support scheme available—currently Water Sure—clearly setting out the eligibility criteria.
This is basic customer service. The information is useful to everyone but vital to those with affordability issues. Affordability is clearly a problem for many families. Ofwat estimates that 11% of households spend more than 5% of their income on water, which would amount to more than 2 million households in the UK struggling to pay their bills. As the Prime Minister has been heard to say, the Government have not done enough and must do better.
The Water Sure scheme mentioned in the amendment was set up to help in this respect. It applies to low-income, metered households with high water use. Examples include those in receipt of qualifying benefit or tax credit with three or more children under 18 or those who, due to medical conditions, have very high water usage. It takes the step of capping the amount that such a family would have to pay to the average for that operating area.
These households have to apply to be on the tariff. Unfortunately, take-up of this scheme is much lower than it might be. This means that many who may need help are paying more than they need to pay and perhaps find themselves in difficulty as a result. Only a third of households that could benefit are actually using the scheme. In many areas, only a few hundred homes are receiving Water Sure payments. This amendment would go a long way towards ensuring that the necessary help will be more explicitly available. A company will have to put the details of the Water Sure tariff on customers’ bills. That company would also need to provide information that would enable the bill payer to work out whether or not they are eligible and, if they are, clear instructions about how to apply.
This is a simple amendment that will be greatly beneficial to a large number of families struggling to cope with the cost of living crisis. I beg to move.
Viscount Hanworth (Lab)
My Lords, as I had occasion to remark at Second Reading, some water companies have been making exorbitant profits on the back of the rather generous tariffs that have been allowed by Ofwat. Whereas consumers were once able to disregard the cost of their water usage, it can now be a significant item in their budgets, to the extent that those in poverty may struggle to pay their bills. I have also indicated that the revenues of the water companies have often been used by the owners of those companies for purposes quite unrelated to those of the industry, when they should be used to cover operating costs and the costs of investing in capital infrastructure.
This amendment seeks to ensure that consumers will be adequately informed of the details of tariffs and that they will be properly alerted to any schemes that are available for mitigating the costs when they prove hard to bear. The amendment can also be seen in the context of the various schemes that have been proposed that would alert consumers to their current water usage. This amendment and the one that follows it seek to cast further light on the costs and revenues of the water companies, which continue to be opaque, to say the least.
Lord De Mauley
My Lords, I thank the noble Lord, Lord Grantchester, for introducing Amendment 118, which, as he said, would insert a new clause into the Bill to place a legal requirement on water companies to include information on their bills about the Water Sure scheme. The scheme provides a mandatory safety net for low-income customers on a meter who, for reasons of ill health or because they have a large family, use larger than average amounts of water. It caps the bills of these households at the average for their company area.
The eligibility criteria for Water Sure are twofold: the household must be in receipt of a relevant low-income benefit and must have three or more dependent children living at home or someone with an illness that necessitates high water use. It is unfortunately a feature of all means-tested benefits of this sort that take-up, as the noble Lord mentioned, can fail to match eligibility. That is why promotion of the scheme is so important. I am pleased to be able to tell the noble Lord that all water companies already voluntarily provide information about Water Sure on their bills.
In addition, Amendment 118 would require all water companies to provide information about tariff structures and the lowest available tariff. This is not the energy sector—water companies do not have complex tariff structures. In fact, the situation is quite the reverse. The choice for the majority of household customers is between paying according to volume of water used—a metered tariff—or according to the rateable value of their home. All water companies provide information on household customer bills about how to get a meter fitted free of charge. Companies also provide advice to customers on whether or not they might benefit financially from the installation of a meter; a role also performed by the Consumer Council for Water. The cheapest option for each household will depend on the location of the property and the amount of water used by the household. Where a company offers a social tariff, information on whether a household may qualify is provided by the company alongside the customer bill. The Consumer Council for Water works closely with each water company on the information provided on household bills to ensure that customer interests are met. Its very practical advice is that customers are likely to be put off by too much information in their bills.
For these reasons, I cannot agree that customers will be best served by placing an increasing number of legal requirements on water companies to include additional information on customer bills. I believe that the current approach of working in partnership with the body responsible for representing the interests of customers is more likely to be effective. I therefore hope that I can persuade the noble Lord to withdraw his amendment.
Lord Grantchester
I thank the Minister for that reply. I had not heard that all companies were already providing this information. My information was that this was not the case and that only some were. I am encouraged that the reassurance has been provided but, nevertheless, feel that the promotion of the scheme could be improved if it was included in people’s bills when they had to pay them. I am sure we will want to return to this issue because, given that the uptake of Water Sure payments is at a rather low base at the moment, we want to be reassured about what more could be done to bring this to the attention of families.
Thanks largely to the Consumer Council for Water, customer service has been improving in the water industry, dominated as it is, as my noble friend behind me has said, by large regional monopolies. Nevertheless, it is regrettably necessary to spell out these requirements. In the mean time, I beg leave to withdraw the amendment.
Lord Whitty
“National Affordability Scheme
(1) The Secretary of State must, by order, introduce a National Affordability Scheme for water.
(2) The National Affordability Scheme must include an eligibility criteria, determined by the Secretary of State, in consultation with—
(a) the Water Services Regulation Authority; and(b) the Consumer Council for Water.(3) An order under this section—
(a) shall be made by statutory instrument, and(b) may not be made unless a draft of the order has been laid before and approved by a resolution of each House of Parliament.”
Lord Whitty
My Lords, Amendment 119 deals with the affordability question. As my noble friend said on the last amendment, roughly 11% of household consumers of water have problems paying their water bill, amounting to 2 million households. As the Minister said, at present there are two fairly crude systems of pricing water for households. One is based on the seriously outdated—or putative—rateable value of your house and the other is metered by volume. The Minister drew comfort from the fact that this does not lead to complicated tariffs, as there are for the energy sector. To some extent I agree with him—we do not want to overcomplicate this—but in neither the metered nor the non-metered sector for residential consumers is any regard paid to the circumstances of the household or the affordability of the bill. The existing formulae do not allow for that.
Until very recently, and absolutely until the 2010 Act, Ofwat took the view that we should not have varied tariffs, social tariffs or any tariffs that departed from those two basic approaches. It has been very resistant to introducing social tariffs until recently. The 2010 Act provided the option for companies to make social tariffs available to consumers. The Water Sure scheme is a more broadly based scheme, available across companies, for those on benefits with large families and those who have medical needs. The take-up of the option to introduce social tariffs has been hitherto pretty limited—only three companies have so far introduced them. If the Minister has any more recent figures I would be grateful for them, but my understanding is that about 70,000 people have taken up Water Sure and rather fewer have taken up the social tariffs available from individual companies. That is, at best, fewer than 150,000 out of the 2 million potential beneficiaries of a social tariff approach. The Government of course have also recognised the very particular situation with South West Water, but that is based on government expenditure, not on the structure of tariffs.
The industry now tells us that in a couple of years’ time all companies will have social tariffs and that those social tariffs will benefit low-income, vulnerable households. I hope that by the date we stipulate here, 2015, there will be social tariffs right across the board. However, first Ofwat and then the companies have been very slow in pushing this option. The take-up indicates that its availability is not well known and that the ease with which people take up social tariffs is pretty limited. We need to provide an incentive, or a push, on this front over the next year or so in order that all companies take it up and that the take-up among consumers is wide, in order to provide, if you like, a safety net. We recognise the desirability of companies taking notice of the configuration of their own consumers and the particularities of their region, and therefore it is better that companies are left to decide their own schemes which will suit their own circumstances. But they must have widespread eligibility, and be easily taken up and understood. At the present rate of progress it looks unlikely that anything like the potential 2 million households that would be helped by social tariffs will be on them by 2015. We need a national approach to this that will set minimum standards.
Lord De Mauley
My Lords, I thank the noble Lord, Lord Whitty, for Amendment 119, which would insert a new clause into the Bill to place a requirement on the Government to introduce by secondary legislation what is described as a national affordability scheme, with eligibility criteria set by government.
Keeping bills affordable while ensuring continued investment in essential water and sewerage services are the driving principles behind this Bill. I thank the noble Lord for giving us the opportunity to debate these important points. However, while I am in full agreement with him that we must consider the impacts of bills on hard-pressed households, I am not persuaded by his proposal.
First, the concept of a scheme with nationally mandated eligibility criteria simply ignores the reality of the water industry, which is structured on a regional basis. Different water company regions have different customer bases. Average incomes and the cost of living vary substantially from region to region, as do the costs of supplying water and sewerage services. A top-down, centralist approach could take no account of these regional variables. A centrally mandated set of eligibility criteria would have a completely different impact on households living in otherwise identical circumstances, depending on which region they happened to be in.
This is why the Government’s approach is focused on company social tariffs. We have issued statutory guidance that requires the companies to work with their customers to develop local solutions. These must be tailored to local circumstances and acceptable to customers who foot the bill. Companies have been able to introduce social tariffs since April 2013—for slightly less than a year. In the past year, three have done so. The noble Lord, Lord Whitty, feels that the pace of change is too slow, but by 2015-16 the majority of water companies will have a social tariff in place.
Legislating for this change will not make it happen any faster. Given the requirements to develop nationally mandated eligibility criteria, it could actually slow the pace at which social tariffs are rolled out. That could delay the point at which some hard- pressed households receive the help that they need. As the noble Lord said, I have mentioned before that all incumbent water and sewerage companies have already developed packages to help customers with affordability problems. These include customer assistance funds, support tariffs, debt advice and water efficiency measures. Social tariffs have provided a valuable additional tool.
The second important point in relation to this proposal is that it remains far from clear how it is intended to fund this scheme. This is not a minor point of detail; it is the key point, which needs to be addressed. In discussions in another place, there were two suggestions for how such a scheme could be funded. Broadly speaking, these can be characterised as either some form of cross-subsidy from ineligible customers, or some form of tax on profits. These are materially different approaches with very different implications, so it is right to seek to get to the bottom of what is being proposed.
A nationally mandated affordability scheme funded by cross-subsidy would be a tax on all water customers ineligible for help. This would be a very blunt instrument. We must not forget that a great many households that are ineligible for help with their water bills are nevertheless living on very modest incomes. It would be hard on them to argue that they should have to foot the bill without being properly engaged in the development of a locally appropriate scheme.
Alternatively, some have proposed that a national affordability scheme could be funded by some form of windfall tax on company profits. In a price-capped sector such as water, this would be an odd thing to do. The recent publication of water companies’ business plans has demonstrated how the price review can work to claw back benefits for customers. By taking account of lower financing costs, Ofwat estimates that the next price review could significantly reduce pressure on all customers’ bills by between £120 million and £750 million a year. Most water companies are proposing flat or declining customer bills from 2015 to 2020. This is in advance of Ofwat’s efficiency challenge. The spectre of a tax on profits would seriously undermine the regulatory stability on which this system is founded, unnerving investors and pushing up costs for all customers.
I agree with the noble Lord, Lord Whitty, that it is vital that those who are struggling to pay get help. However, I believe that the current approach of regional affordability measures meets the realities of the sector. I therefore ask the noble Lord to consider withdrawing his amendment.
Lord Whitty
My Lords, on this amendment, the noble Lord has misunderstood the nature of the proposition and downplayed the nature of the problem. He says that all companies will have social tariffs in a couple of years. I hope that that is true and that it means that the majority—even pretty well all—of the 2 million people who have affordability problems will have been helped by those schemes.
Lord De Mauley
I ought to interject. I did not say that all companies within a couple of years would have social tariffs. I said that the majority of water companies will have a social tariff in place by 2015-16. All incumbent water and sewerage companies have already developed packages to help customers with affordability problems. I went on to say that these include customer assistance funds, support tariffs, debt advice and water efficiency measures.
Lord Whitty
My Lords, that is even less reassuring than what I thought the Minister said in the first place.
The Minister’s criticisms fall into two categories. The first is that this is a top-down proposition. It is not: it is a framework for companies to introduce social tariffs and other measures that help affordability within their own structures, subject to some minimum standards. It is not an imposition from the centre of exactly how to do that. It is, however, a failsafe if they fail to do it. The reality is that both the regulator and the companies have hitherto been quite resistant to such propositions. The noble Lord is right to say that, strictly speaking, 2013 was the first point at which they could consider them, but that was because of the three-year delay since the 2010 Bill and, before the 2010 Bill, deep resistance within the industry to any such concept. Therefore, we have form here and it is not sensible to be complacent that in 18 months’ time the companies will have sorted all this out. I do not believe they will. That is why they need a push and a framework that sets minimum standards of eligibility and operation.
The Minister’s second criticism concerns the funding of this proposition. He said that it could be funded out of a tax on profits. I have not proposed a tax on profits and I think the noble Lord’s brief misunderstands what was said in another place about this. It is fairly evident to me—and my noble friend Lord Hanworth has pointed this out on many occasions—that actually most water companies could afford to be a bit more generous to their consumers in relation to profits, dividends and the tax that they currently pay, but that is not in any sense an advocacy of a windfall tax, so let us get that out of the way. The other funding proposal is by cross-subsidy. In one sense, social tariffs are by definition a cross-subsidy. Therefore, if the Minister hopes that all companies will come up with social tariffs or equivalent schemes, the objection is just as valid to his proposition as it is to mine. Therefore, there is no additional cross-subsidy compared with the preferred outcome of the Government on this.
Lord De Mauley
I thought I had made the point that we accepted that there will be some sort of cross-subsidy but that, in our view, it would be better if that was organised on a regional basis because one could take into account regional circumstances.
Lord Whitty
Yes, but my proposition allows for that. It gives a push to companies to develop their social tariff schemes on a regional basis provided they meet minimum standards. I am not precisely defining what the national affordability scheme should consist of; it is up to the Minister and his department to come up with the appropriate forms in discussion with the DWP and other government departments and agencies that work in this field with vulnerable and low-income households. I am not attempting to lay that down. Therefore, this is not a top-down approach. It allows for some diversity of delivery.
The Minister’s objections to this proposition really do not stand up on either count. I hear what he says. I suspect that the department is pretty immovable on this but it is certainly an issue to which I intend to return. For the moment, I withdraw my amendment.
Lord Whitty
“Provision of information to water companies
(1) The Water Industry Act 1991 is amended as follows.
(2) After section 207 (provision of false information) there is inserted—
“207A Provision of information to water companies: landlords
Where a water company does not have information about a resident in a property that is using water, if the occupants of that property are tenants, the landlord must, on request, provide to the water company contact details for the tenants.”.”
Lord Whitty
My Lords, Amendment 120 relates to a different issue, that of debt—I think I am on the right one. I am on the right one but I do not have the right notes. However, I know what I am talking about.
Uncollected debt is a serious problem in the water industry. Every water company has a problem with uncollected debt. This arises from two groups: families such as those we were just talking about, who really cannot afford to pay their bills; and individuals and families—and sometimes businesses—who, frankly, will not pay their bills, or cannot be found and made to pay their bills. Both these issues need to be tackled. My previous amendment relates to the former; Amendments 120 and 122 relate to the latter, and the lack of activity on the part of some companies to rectify this position.
There is a disproportionate number of unpaid bills in the private rented sector. Even so, it is noticeable that there is a differential performance by water companies in collecting that debt which is not directly correlated to the level of private rented accommodation in their areas of operation; in other words, some are much better at it than others.
Lord Spicer (Con)
My Lords, I ask the noble Lord whether his amendment covers the reverse—a situation where a customer is owed money through, for example, a standing order. If at the end of the year a customer has not accumulated the same amount of expenses as the standing order, is that covered by the amendment?
Lord Whitty
My Lords, this is an issue, particularly for metered customers who have an estimated bill, for both companies and the residential sector. However, my amendment does not cover that. If the noble Lord wishes to bring forward an amendment, I am sure that the Government would look on it with favour.
Lord Spicer
The noble Lord’s amendment covers the question of debt being carried through the regulatory system of prices. Therefore, does it not affect the reverse: namely, credit?
Baroness Parminter
I rise to support the intention of Amendment 120, if not the intention of Amendment 122, which is grouped with it. The issue of bad debt and the implications of what that means for the affordability of all our bills is an important one.
At Second Reading I asked the Minister why the Government, unlike the Welsh Government, are not implementing the bad debt provisions in the Flood and Water Management Act 2010, alluded to by the noble Lord, Lord Whitty. If they were to do so, it would help company debt recovery and bring down household bills. The response I received was that the Government were wedded to the idea of a voluntary scheme, with a database that the water companies were helping to fund, which would be brought in, probably via regulations, in the next month or so. I may be wrong, but I suspect that, with only an intervening 10 days between Second Reading and now, that is the answer that we will get again and that the Government will not wish to support these amendments.
Therefore I ask the Government, if they are determined to stick with the voluntary approach, whether they will set a reasonable review period to evaluate whether or not the voluntary scheme for landlords is effective. All the evidence to date, from the voluntary schemes of companies such as Northumbrian Water and others, shows that they do not work. It seems to be a reasonable request, if the Government are not prepared to move ahead with a mandatory scheme, for them to give an indication to the House of a reasonable review period, so that if the scheme is found to be ineffective—as most of your Lordships believe it will be—the regulations can be changed to make it compulsory.
The Earl of Selborne
My Lords, I have a lot of sympathy with the thrust behind the attempt of the noble Lord, Lord Whitty, to deal with those who will not pay as opposed to those who cannot pay. Some six or seven years ago I had the privilege of chairing a report of the Science and Technology Select Committee on water management. We were appalled by the number of affluent people in South East Water’s area who had worked out that they could never be deprived of their water supply as it is illegal to turn off the water, so they simply did not pay for it.
The cost of taking someone to a small claims court is a difficulty. Where there is a change in population, such as happens in some areas more than others, the cost of trying to trace defaulters can be more than the cost of the debt. The two amendments proposed by the noble Lord, Lord Whitty, seek to deal with this. I suspect that it would be better to deal with this in secondary rather than primary legislation, as was originally intended. Nevertheless, I believe that my noble friend on the Front Bench should encourage the thrust of these amendments, to make sure that those who can afford their water perfectly well should be induced to pay for it, and that the water companies should be assisted in this, particularly by those with information on who is responsible for paying the bill. Landlords are often in a position to provide that information. All assistance should be given in this case. It is galling to know that people who cannot manage their affairs but are living an affluent lifestyle are advised by debt managers, “Well, don’t bother about the water bill”.
Baroness Byford (Con)
My Lords, over the years that we have been debating water bills, this has been a constant theme. I think that all of us in the Chamber, on whichever side we may have been sitting at a particular time, have agreed that it is a problem that needs to be resolved. What I am not quite clear about is whether Ofwat with its new responsibilities has the power to tackle what is being proposed by the noble Lord, Lord Whitty, and whether that would then make his amendment unnecessary. However, I am still sympathetic to what the noble Lord said about those who can pay and will not pay. I rather gained the impression from Ofwat when it gave a presentation recently that it had the power to make adjustments to individual water companies. I might be wrong, but I would be glad of some clarification.
Lord De Mauley
I thank the noble Lord, Lord Whitty, for his amendments. Amendment 120 would add a new clause to the Bill requiring landlords to provide contact details for their tenants at the request of the water company. Section 45 of the Flood and Water Management Act 2010 already enables Ministers to bring forward secondary legislation that would require landlords to provide water companies with personal details about their tenants—or themselves become liable for paying the bill.
Following extensive consultation in January 2012 with the industry and with landlords’ organisations, the Government took the decision that a voluntary approach would be more suitable. During consultation, landlords argued that the additional regulatory burden on them would be disproportionate, as they are not the source of the problem that we are trying to tackle.
We seek to make decisions based on the evidence. One purpose of the consultation was to invite the water industry to provide evidence of the benefits of the regulatory approach. In particular, neither the companies nor Water UK were able to provide any facts about the proportion of bad debt in rented properties that results from a lack of information about the occupier. This evidence was essential to assessing the benefit of the measure. The evidence provided by the water sector to support the case for additional regulation of millions of small and micro businesses was weak. The Government do not believe that more regulation is always the answer.
The evidence shows that good practice in tackling bad debt is not applied consistently across the water sector—the noble Lord, Lord Whitty, referred to this; that is something that we can agree on. The significant variation in performance between companies tells me that the focus should be on driving better standards across the sector rather than on regulating landlords. I used to run my own business and I know that debt collection, which is a subject that I know quite a lot about, is a matter largely of application and hard work. One reason why we do not propose to bring forward the bad debt regulations on landlords is that we do not wish to endorse the argument that performance on bad debt is outwith the control of the water companies. There is more that the companies can do to collect their debts and we want them to focus on this rather than looking to government to solve the problem for them.
Of course, the real driver of company performance is the incentives and penalties set by the regulator, so I am pleased to be able to report that Ofwat has changed the approach that it takes to bad debt in the methodology that it is using for the 2014 price review. The new approach will enable it more effectively to bear down on the costs of bad debt. It is doing this by insisting that the companies demonstrate that any increase in bad debt is genuinely beyond their control and that they have taken all available steps to control it. Unless they can prove that this is the case, they will not be allowed to include it in customer charges.
We are already seeing our focus on the industry taking responsibility for tackling bad debt bearing fruit. The industry is working with landlords’ organisations to establish a new voluntary scheme—and this answers the point raised by my noble friend Lord Selborne—that will enable landlords to provide information about their tenants directly to water companies swiftly and easily. This approach has the support of both Water UK and the main landlords’ organisations. The new database will launch in March this year. For these reasons, I believe that Amendment 120 is unnecessary.
The new clause proposed by Amendment 122 would provide a new power for both Ministers and Ofwat to disallow companies from recovering the costs of unpaid bills from their paying customers. Ofwat has the power to decide which costs may be recovered through the price review. As I have explained, and I think this answers the point made by my noble friend Lady Byford, Ofwat is already using the price review process to bear down on the costs of bad debt. It is requiring companies to demonstrate high performance in debt collection and to show that any increase in bad debt is genuinely beyond their control before they will be allowed to include it in customer charges. The current price review will challenge the poor performers to raise their game.
Lord Whitty
My Lords, in relation to Amendment 122, the information the Minister has given us and his response to the question from the noble Baroness, Lady Byford, indicate that Ofwat thinks it has the powers already. The power was given to the Secretary of State to stipulate that Ofwat can do that; it was always going to be the regulator who did it, under my amendments. If the regulator thinks that, because of the flexibility provided by the move to totex control—rather than everything being bound up in capital propositions—it can effectively both incentivise and penalise companies with poor debt collection records, then clearly Amendment 122 would not be needed. I think we need to return to this a couple of years down the line. Therefore, I will certainly not press Amendment 122.
On Amendment 120, however, it seems to me that the Government cannot have it both ways. Either there is a problem or there is not. They say that the evidence was weak and they hope that a voluntary approach will work. Certainly informally the companies say that this is a serious problem in the private rented sector. Most literature on the subject says there is a particular problem in the private rented sector and—if memory serves me right—the evidence to the committee chaired by the noble Earl, Lord Selborne, said it was a real problem in the private rented sector. That was seven years ago, so we are not getting very far along the line.
I hope that the Government will at some point revisit the triggering of the powers that they already have to introduce secondary legislation. If they do that, then there is clearly no need for Amendment 120, but I hope they will check fairly quickly whether the voluntary registration in which they are engaged is yielding results, because they have the powers to act and I am still pretty bemused as to why they have not done so. In the mean time, I beg leave to withdraw the amendment.
Baroness Neville-Rolfe
“Duties of the Secretary of State
The Secretary of State shall take such steps as are necessary to—(a) ensure that bodies carrying out—(i) the provisions of this Act;(ii) water and associated environmental regulations under other Acts;(iii) regulations and codes made under sub-paragraphs (i) and (ii) above; and(iv) equivalent regulations and requirements made under European Union legislation,minimise bureaucratic burdens on affected undertakings and others; and(b) reduce bureaucracy, overlap and waste within the various bodies concerned with water and established by statute or by European Union legislation by defining their respective duties clearly and transparently in one place and on one website.”
Baroness Neville-Rolfe (Con)
My Lords, as a new peer—like a new entrant to the water industry—I have been trying to understand this important industry: who does what and where power lies. At Tesco, I was regulated by more than 30 bodies, so I have some experience, but I have found this sector very hard to get my head around. My last job in Whitehall, under my elegant and noble friend Lord Heseltine, was about minimising and improving regulation, occasionally with success. I also worked on land drainage and flood protection in what is now Defra when the Thames Barrier was still being built, so I have great sympathy with my noble friend the Minister today—and for the victims of the floods.
When I look at a regulated area, I always try to think of the impact on business, consumers and others affected, and take a long-term view. From all these perspectives, the scale and complexity of this Bill—all 230 pages of it—worry me. It introduces more competition, which I very much welcome in principle, but we also have a new administrative spoke in the wheel of water management—the market operator, whose role the noble Viscount, Lord Hanworth, sought on Tuesday to bring into the light of day. My amendment would introduce a new clause giving duties to the Secretary of State and seeks to do two things. I will address the second part first because I think no one can object to it. It is about transparency.
I want an explanation and/or map, not on several websites as exist at present, but in one special place that would enable a new entrant, an investor whether in water resources or stocks, to understand the system. I want everyone’s duties set out clearly and transparently in one place. How helpful it would be to find in one place not only the list of bodies that can regulate or affect water and every kind of regulation but also exactly what their powers are and where and when they will be exercised. For example, this explanatory map would explain when the Environment Agency is able to intervene—a concern my noble friend Lady Parminter expressed on Tuesday—or when we can expect the delayed reforms on abstraction to take effect. It would help with the confusion over debt-collection powers, which we have just discussed. That clarity would also reduce overlap and waste. I know from working in business that having clear responsibilities that are well documented and understood cuts waste and improves implementation and compliance. We should of course put the map on the web, perhaps in a special internet app that all of us could download. The web is where enterprising people and new entrants search. It is cheap and easy.
The first part of my amendment is more contentious because it is about changing the way regulators, public servants and their ministerial masters behave. It is a requirement to minimise bureaucracy in every aspect of water, sewerage and abstraction, from negotiating at the highest level in Brussels to creating the humblest code. If lots of agencies and departments operate a cornucopia of rules and regulations, they spend too much time asking undertakers, consumers and each other for the same information, talking to each other and sometimes rowing, writing submissions and guidance, correcting errors and even fighting judicial reviews. Much of that activity is created by confusion and sometimes by inconsistency, which the proposed process would help to prevent. The bureaucratic burdens created cost money. That is not only wasteful but has to be paid for. I suspect that in the water system, with its regulated system of returns through Ofwat, this money often comes from consumers without benefiting anyone else—or it consumes taxpayers’ money, which, with the legacy of the deficit, we cannot afford.
This amendment would require all organisations involved in the governance and administration of water to think in a clearer, simpler way and, I hope, avoid the need for future deregulation and simplification. It should have wide support. I beg to move.
Lord Crickhowell
My Lords, my noble friend made a formidable speech at Second Reading in which she launched her assault on overregulation. Already today, dealing with other amendments, a number of noble Lords spoke about the difficulty of following the details of this legislation. I have explained that despite my experience of trying to regulate part of the water industry, I find the Bill almost totally incomprehensible. At Second Reading, I said that it is the most incomprehensible Bill I have come across in 43 years in both Houses. This is partly because it amends two other major pieces of legislation. Indeed, when I struggled to draft some amendments and decided the task was beyond me, I got down from the shelves in the Library one of those earlier Acts and realised that it was not going to get me much further. We have also been debating a series of regulations, some of them not yet known.
Quite clearly, the subject my noble friend has raised is of great importance. It has already been suggested that following the completion of the passage of the Bill the Government must try to bring together in a simple, co-ordinated way the principal points, clauses and requirements of the Bill. That argument has been strengthened, reinforced and added to by my noble friend. Her idea that the principal matters be brought together on a single website is admirable. I do not know whether anything quite like that has ever been done in government before.
The trouble with government departments is that they tend to be very self-contained and self-sufficient. Getting them to work together in a co-ordinated way is sometimes extremely difficult. That makes the job even more difficult for the consumer because if you do not know what the legislation and regulations are and you do not even know the appropriate department dealing with it, you are likely to be lost. Following the passage of the Bill, the Government must give some very careful thought to how the public, small businesses and those who are being regulated are to be brought to understand exactly what they have to do, what benefits may accrue if they do it and what penalties may accrue if they fail to do it.
There is an urgent requirement here, and it should be a priority, but perhaps not of the Minister’s department. I think it goes wider than that. It is probably an issue for the heart of government to see how this should be done. I hope that even if the Minister cannot give an immediate, clear-cut answer—and I suspect he will not be able to—he will undertake to take this matter away to his colleagues and ask that it is looked at by those who have the authority to see that something is done on this matter.
The Earl of Selborne
My Lords, I want to give the Minister a little encouragement. We all recognise that this is a hopelessly complicated Bill that has been many years in gestation. On a number of occasions, we have complimented Defra, rightly so, on its briefing notes—yet another has come out today. Start putting those on a website, and you will have a work of reference that will be of enormous assistance.
One of the things in previous decades that has led to confusion has been the fact that the three different regulatory authorities—the Environment Agency, Ofwat and the Drinking Water Inspectorate—have different agendas and, before these new duties of resilience came in for Ofwat, there was no reason why Ofwat and the Environment Agency should ever agree. As I said at Second Reading, I never really felt that I was going to feel sorry for the water companies, but on that aspect I did because they were being dragged in two different directions.
If you really want to manage water in an appropriate way, you should do it by catchments, but unfortunately you cannot organise Great Britain, or even England and Wales, by catchments. That is, alas, not the way that local government, or any government, works. In the Bill, we are trying to promote sustainable management of water. That means starting at the estuary and working uphill, and if that can be done by catchment, so much the better. You try and get all the different bodies together, preferably with voluntary agreement—I agree with my noble friend who moved this amendment that, if you can do that without regulation, so much the better—but of course there must of course be a regulatory framework, and no one is disputing that.
The reason that I have some small words of comfort for my noble friend on the Front Bench is that I think that the Bill, complicated though it is, goes a long way towards bringing the two main regulatory authorities—the Environment Agency and Ofwat—to a common agenda. If we asked in Scotland, where there is yet another regulatory authority, I think they would say that their relationships with Ofwat—on roughly the same agenda, but with a completely different competitive background for the past five years—can now only improve. That is important as some catchments straddle the Scottish and English border. If ever there was a case for ensuring that we work to a common agenda, it must be for those people in the catchment area of the River Tweed.
Lord Spicer
My Lords, I am inspired by my noble friend Lord Crickhowell, who said that his worry was that there is a process of intervention, greater control and centralisation taking place on a wider scale, of which the water industry may be part. I do not know much about the water industry, but I do know about the electricity industry—I declare an interest as chair of the trade association for the electricity industry—as I was the Minister who took the electricity privatisation Bill through Parliament some 20 years ago. In that industry, there is certainly increasing intervention by Government and by the regulator. There is a definite trend. What happens eventually we will have to see, but I suspect the same thing is going on with water.
Therefore, my slight reservation with my noble friend’s amendment is whether it would make the process of regulation more efficient, more centralised and more bureaucratic or whether, in some way, it would do the reverse. I hope that it would do the reverse, because that is what we want to see. If she could address that point, it would be very helpful to me in judging what is going on.
Lord Moynihan
My Lords, briefly, I support the amendment proposed, although again I anticipate that the Minister is not going to be able to accept it. I would like to echo the comments made by my noble friend Lord Selborne about the briefing notes, which have been outstandingly helpful. In a latter edition, there was a very helpful road map which draws together some of these key issues. In the spirit of being helpful to my noble friend on the Front Bench, if the Minister is not in a position to accept the amendment on the face of the Bill, I hope that he will encourage his officials to give prominence to that road map on the website, and therefore in part meet the suggestion in my noble friend’s amendment.
My second point is that this is a matter of wider significance in Government. I hope that the Minister agrees that this is a subject that the Cabinet Office should look at carefully, not just in the context of water but in the wider context of the utilities. There is a necessity for clarity for those who do not spend many hours sitting on your Lordships’ Benches going through the detail of these Bills but who nevertheless have an equal, if not a greater, interest in the key elements of the legislation before Parliament.
Lord Whitty
My Lords, I congratulate the noble Baroness on producing such an important amendment. I suspect that it is beyond the Minister’s pay grade to agree that, in accepting the amendment, we would at one and the same time get Parliament to rationalise the way in which we legislate, get Ministers to ensure regulators co-ordinate with each other and get departments to make their activities comprehensible to the public. Nevertheless, these are welcome ambitions. The noble Earl, Lord Selborne, added some rationalisation of the quangos as well. I am afraid that all this is indicative of the way in which we do business. From listening to the noble Lord, Lord Crickhowell, both at an earlier stage and today, I understand that this is not a new problem—I have noticed that the Water Industry Act 1991 is seven pages longer than the Bill we are considering.
However, to be serious about this, one of the great failings of Parliament has been the failure to produce consolidated legislation in any field. After 15 or 16 years in this House, I still fail to understand why Parliament has not devised a procedure for pulling together consolidation of Acts in all areas, so the noble Baroness’s amendment has wider implications. Whether the amendment should sit in the Bill I will leave to the Minister but, much more narrowly, the proposition that for each subject matter there should be a single website address which links to all the different bits of regulation, authorities and other government interventions, is very good. It is one which has been talked about in Whitehall but hardly delivered at all. The one point where Defra could probably take this amendment on board in the context of water is regarding that single website. I think practitioners, companies and consumers would be very pleased to see such a development. I congratulate the noble Baroness, but we will see what the Minister says.
Lord De Mauley
My Lords, I thank my noble friend for her Amendment 122A, which would introduce a new statutory duty on the Secretary of State to ensure that the bodies involved in regulation of the water industry work to minimise bureaucracy. It would also require a definition of all the statutory bodies concerned with water to be published on a single website. I strongly support her in her desire to minimise bureaucracy, duplication of effort and waste. I am quite sure that I railed against it and for the consolidation of legislation when I was in opposition, as the noble Lord, Lord Whitty, is enjoying doing today. These issues are not exclusive to this sector. Indeed, this Government have an energetic and far-reaching programme of reform designed to slash red tape wherever possible. I would argue that we have made some considerable progress with that.
My department has been one of the trailblazers in Whitehall in transforming our approach to regulation. For example, through our Smarter Environmental Regulation Review, in which I have been closely involved, we are attacking unnecessary complexity, inconsistency and duplication of environmental regulation. We are also rationalising environmental guidance and data reporting to make it easier to comply with legal obligations. My department has also carried out a comprehensive assessment of the costs and benefits of all the regulations for which we are responsible. Through the Red Tape Challenge initiative, we have reviewed more than 1,200 regulations and by the end of this Parliament we expect to be delivering savings to business of more than £250 million each year. I hope that this provides my noble friend with some assurance that the Secretary of State already has bureaucracy squarely within his sights.
On the specific changes being made by the Bill, first and foremost I should emphasise that it does not create any new public bodies. The existing regulatory landscape remains unchanged in that regard. I am grateful for this opportunity to clarify the current framework for regulation in the water sector. In England, the water industry is regulated by three separate, independent bodies: Ofwat, the Drinking Water Inspectorate and the Environment Agency. Ofwat is the economic regulator responsible for ensuring that water and sewerage companies provide consumers with a good quality service and value for money. This includes setting price limits to ensure that customers receive a fair deal, while ensuring that the companies are able to attract low-cost investment in our essential services.
The Government commissioned an independent review of Ofwat and consumer representation in the water sector in 2011. Undertaken by experienced regulator David Gray, the review concluded that regulation in the water sector has worked well since privatisation and that major changes to the statutory and institutional framework were not required. The Ofwat review made a range of recommendations about the ways in which the regulator could reduce the regulatory burden it places on the industry. In response, Ofwat put in place a programme of internal reform and substantially reduced reporting and other burdens. It has since revised its approach to the price review—something we talked about earlier today—in order to ensure that companies focus on their customers’ priorities rather than looking to the regulator for guidance.
The Environment Agency regulates the impact of the water industry on our environment and promotes sustainable development. It regulates water abstraction as well as the treatment and discharge of wastewater back into the environment. It also helps water companies with their long-term water resource management and drought-planning functions. The Government have introduced a process whereby all public bodies are subject to triennial review to scrutinise how the Government deliver their objectives as effectively and efficiently as possible, achieving the best possible value for taxpayers and the public. The Environment Agency was reviewed under this process in 2013. The review looked at how it could work in leaner, smarter ways to enable and drive sustainable growth, making best use of the resources available to it.
The Drinking Water Inspectorate is responsible for ensuring that companies provide safe, wholesome drinking water that meets standards set down in law. Although not a regulatory body, the Consumer Council for Water also plays an important role by representing water and sewerage customers.
My noble friend referred to the market operator. In our debates on Tuesday, we clarified that this is neither a public body nor a regulator but a straightforward administrative entity that will be run by the industry for the industry, within the context of the regulations laid down by Ofwat. In fact, the market operator will serve to minimise bureaucracy by providing a single set of administrative systems for switching customers, which would otherwise need to be duplicated by every company operating in the market. In our debates on this matter on Tuesday my noble friend Lord Selborne noted that such bodies are a common feature of regulated utility industries.
I hope that I have gone some way to clarify the roles and responsibilities within the water sector. As with any sector, we are always looking for ways we can do things better and more efficiently. As I have said, we are active in challenging red tape and bureaucracy. We have the Red Tape Challenge process, which has already scrutinised all the regulations affecting the water industry. We have established the principles for economic regulation to guide the high-level institutional design of the regulatory frameworks by the Government. These reinforce the Government’s role in establishing the policy direction and appropriate guidance, leaving regulators to regulate independently. A new regulators’ code also takes effect in April that will apply to non-economic regulators such as the Environment Agency and the Drinking Water Inspectorate. It is the latest step in the Government’s drive to put businesses’ need for clarity, transparency and minimum bureaucracy at the heart of the regulatory system.
There are more examples of the provisions already in place to ensure the roles and responsibilities of regulators and other public bodies are clear, and that unnecessary bureaucratic burdens are identified and removed. One of the more relevant of these is the shared duty of the Secretary of State and Ofwat under Section 2 of the Water Industry Act 1991 to have regard to the principles of best regulatory practice. The Act already specifies that their respective regulatory activities should be undertaken in a way that is transparent, accountable, proportionate, consistent and targeted only at cases in which action is needed.
Lastly, I know that my noble friend is keen to see information about the various bodies concerned with water on a single website. I am therefore pleased to be able to confirm to her that all of Defra’s agencies will move across to the gov.uk website by the end of March this year. I also thank my noble friend Lord Moynihan for his welcome for the notes and the road map, which is indeed on the website. Although I fully concur with the spirit in which my noble friend’s amendment has been tabled, I ask her to withdraw it as it would effectively duplicate existing provisions.
Baroness Neville-Rolfe
My Lords, I am grateful for the trenchant support I have had from this side of the House for my efforts to reduce bureaucracy and promote clarity and transparency, especially from my noble friend Lord Crickhowell. My noble friend Lord Selborne talked about the possibility of the map I proposed being made on a catchment area basis. However, my experience of broadband, where there is a county-by-county map, is that it is not very effective. One of the things I was looking for was to have all the rules, regulations, agencies and requirements in one place on the one website. That can certainly be on the gov.uk website, as the Minister has kindly suggested, but they all need to come together so that a consumer, an investor, or a water undertaker who may be bringing in a new reservoir can see the whole piece. I would find that bottom-up approach hugely valuable. I feel that the documents that have already been made available are a start, but they do not—
Baroness Neville-Rolfe
They are, but I was suggesting that we have a website that brought all the different things together in one place, not just the helpful notes that the Minister has put forward, and which takes people through the rules.
I am extremely grateful for the Minister’s support in reducing bureaucracy and in outlining the different things that have been done to achieve that end. However, it is all the more important to bring the various requirements together to make it clear what is happening. We could bring about a quiet revolution of clarity and transparency and make entry into the industry much less forbidding if we could bring what is being set out in these different laws and by these different agencies into one place. Of course I welcome the idea of putting those on to one website, but I will study what the Minister has said and consider whether further thought needs to be given to how that might be done, to find a way forward. Perhaps we can also do some policy formation in the Bishops’ Bar. I thank my noble friend, and I beg leave to withdraw the amendment.
Lord Whitty
Lord Whitty
My Lords, I will speak also to Amendment 124. These amendments deal with the water resource management plans. Water resource management plans, to colleagues who are not familiar with them, are the 25-year plans which each water company is required to produce, which then have to be approved by the Environment Agency. Those plans are fairly strategic. A lot of thought and work goes into them and there is a lot of consultation on them—but it is not always clear what they are used for thereafter. One presumes that the companies follow them for their own strategic decisions. To a limited extent Ofwat follows them in terms of the allowance for capital expenditure that is required in the price review. However, that covers only five years, and Ofwat, try as it might, cannot always see 25 years ahead as regards the changing capital and management requirements that will be needed.
The legislation on this, which is marginally changed by Clause 27, refers only to those plans being authorised,
“for the supply of water to consumers”,
which is of course the key issue. However, it is also important that the plans allow various regulatory, environmental, water quality and resilience requirements to be met. For example, water framework directive timetables and objectives and various ecological requirements have to be met. Following the Government’s inclusion of resilience as a primary duty of Ofwat, companies will undoubtedly have to meet requirements under the resilience criteria by a certain date. The amendment seeks to broaden what the plans deliver in public policy terms and therefore includes a requirement to meet environmental, quality and resilience standards.
Amendment 124 deals with an issue at which I hinted earlier—namely, that once the relevant plans are in place, the environmental regulator and the economic regulator need to pay attention to them. At the moment, following a change of direction or policy on the part of either Ofwat or the Environment Agency, decisions can be taken which do not accord with the plans. Theoretically, the relevant company then has to change the plans but probably does not do so until it has to revise them in five or six years’ time. Amendment 124 suggests that the Bill requires the relevant regulator to have regard to those plans when conducting price reviews, and that the Environment Agency must do so when conducting its regulatory and enforcement activity. If that is not done, the plans will gather dust on the shelf, will be referred to occasionally by the companies themselves but will be used rarely by those who are supposed to be in charge of regulating the sector.
I may exaggerate the position slightly, in that these are important documents and are regarded as such, but they are not quite given the importance that they deserve at either the company or the regulator end. These amendments seek to change that position. I beg to move.
Baroness Northover
My Lords, I thank the noble Lord, Lord Whitty, for tabling these amendments. As noble Lords know, the noble Lord introduced the Water Act 2003 to Parliament, which made the planning processes a statutory requirement. We recognise that he seeks to ensure that the water resources management framework has greater bite and that the relevant plans will have the desired effect. I hope to show him that these plans are supported by other policy measures.
Water resources management plans must show how incumbent water companies intend to maintain a sustainable water supply demand balance over a period of at least 25 years, as the noble Lord, Lord Whitty, said. They must do this within the framework of environmental protection that is set out in legislation. The noble Lord seems to be concerned that they may not have that necessary effect.
Within this context, new Section 37A allows the Secretary of State to issue directions to the incumbent water companies on any relevant matter for which they must plan. In addition to this, water resources management planning guidance sets out the expectations of government and the regulators in relation to the water environment—for example, that the options chosen must not lead to any deterioration in the status of the water environment.
The companies have their own statutory environmental duties. For example, when exercising their functions, companies must have regard to the environmental sites protected by the habitats regulations. They must also have regard to the Environment Agency’s relevant river basin management plans. In addition, both the Environment Agency and Natural England are statutory consultees on the draft plans, and the Environment Agency provides the Secretary of State with technical advice on the plans. Following consultation on the plans, the Secretary of State has power to direct an incumbent water company to change its plan if he is not satisfied—
Lord Spicer
I am most grateful to my noble friend for giving way. Is she not a little concerned that all this is renationalisation by the back door? One is constantly finding additional powers being given to the regulator, and the current big excuse is the environment. Exactly the same thing is happening in electricity—carbon considerations are resulting in more and more powers being given to the regulator, and it is now happening in respect of all the companies’ plans. Is there not a slight worry, particularly if the Government can move in with policy insistence, that we are renationalising the industry by the back door?
Baroness Northover
I am sure that my noble friend shares everyone’s concern that the Government should take responsibility for ensuring that we do our very best to protect the environment. We need only to look at the challenges that we are facing at the moment to realise the importance of that, and it is in our common interest to do so. Here we have a semi-monopoly in an area that is vital to everyone. It is extremely important, therefore, that we balance all the necessary pressures. However, I am sure that my noble friend Lord De Mauley will be happy to talk further with my noble friend to explain the philosophy behind the Bill.
Coming back to my comments on the amendment of the noble Lord, Lord Whitty, I was setting out the other areas that help support his ultimate aims, which were, as I understood them, that these 25-year plans should have positive environmental effects. I was showing how other measures, too, help underpin and strengthen those plans.
As regards Amendment 124, both Ofwat and the Environment Agency already have general duties regarding incumbent water companies’ maintenance of their water supply systems. Ofwat and the Environment Agency consult extensively with incumbent water companies through the water resources management planning processes. For the current water resources management planning round, joint government, Ofwat and Environment Agency guidance was issued to companies to help them prepare their plans. This guidance also set out the role of each regulator in the process.
The Environment Agency, as well as having responsibilities to protect and improve the environment, and promote sustainable development, also has duties such as those set out in Section 15 of the Water Resources Act 1991 to have particular regard to incumbent water companies’ duties. Ofwat has primary duties to ensure that the companies can both finance and properly carry out their functions. The current round of water resources planning and business planning processes have seen much closer joint working between Ofwat and the Environment Agency than may have occurred in the past. I hope that that point is helpful to the noble Lord. To ensure that the outcomes of the water resources management planning process are reflected through the price review process, the Government have made it clear that they expect Ofwat to use its role as a statutory consultee to identify at an early stage any proposals within a water resource management plan that would be inconsistent with its approach to the price determination process.
I have set out a number of these other areas in order to reassure the noble Lord about how the 25-year plan fits into this issue. I heard his concern about whether these provisions had any effect, but all are consistent with what he has been saying about trying to ensure that the water companies operate within a sustainable framework. I hope that my exposition has reassured him and that he will be happy to withdraw his amendment.
Lord Whitty
My Lords, I am happy with those reassurances, in particular on underlining the need for the regulators to work more closely together and on the plans themselves. I think I am probably the only person alive—I am certainly the only person in this House—who has served on the boards of both Ofwat and the Environment Agency, albeit for only a very short time on the board of Ofwat. Although relations had thawed somewhat by that time, they are actually more constructive today, which is very important when looking at these long-term plans. I thank the noble Baroness for her reassurances.
In a sense, my amendments were provoked by new Section 37AA(2) which states that a direction about adjusting the plans or addressing them can be given,
“only where the Secretary of State considers it appropriate”,
in relation to the supply of water. However, there are other outcomes, and the noble Baroness has given me a reassurance that they will be dealt with elsewhere. I beg leave to withdraw the amendment.
Lord De Mauley
“(7) For the purposes of section 63AC, premises which are outside a water undertaker’s area are to be treated as being within that area if they are supplied with water using the undertaker’s supply system.
(8) In subsection (7), the reference to the undertaker’s supply system is to be construed in accordance with section 17B.”
Baroness Northover
Baroness Northover
My Lords, Amendments 126, 130 and 148 to 152 are minor and technical amendments to ensure consistency and to correct drafting errors, or provide consequential provisions to the Bill. For example, Amendments 126 and 130 change the wording in new Sections 63AF(3) and 110O(3) of the Water Industry Act 1991 so that they refer to “a code” rather than “the code”, as is currently the case. This corrects a drafting error and provides consistency in Clauses 31 and 32 respectively. Amendment 149 makes a consequential change in Schedule 7 by changing an incorrect reference to “any licensed water supplier” so that it refers to “any water supply licensee” instead. I beg to move.
Lord De Mauley
(iii) services are provided to the premises by another sewerage undertaker following the service of a notice by the owner or occupier of the premises on the undertaker providing services under subsection (2) specifying the time after which the undertaker will no longer be required to provide sewerage services to the premises (see section 110M(5)),”
“(3) For the purposes of section 110L, premises which are outside a sewerage undertaker’s area are to be treated as being within that area if they are provided with sewerage services using the undertaker’s sewerage system.
(4) In subsection (3), the reference to the undertaker’s sewerage system is to be construed in accordance with section 17BA(7).
(5) Section 110K(2) and (3) apply to a notice served under section 110L(6)(b)(iii) as they apply to a notice served under section 110K.”
Lord Whitty
Lord Whitty
My Lords, Amendment 134 and the other two amendments in this group deal with the issue of collective consumer rights. We are now into the consumer field. The water industry or service has pretty standard terms. Tariffs, whether by volume in the metered sector, or by rateable value in the non-metered sector, are pretty standard. Charging schemes and means of payment are also usually pretty standard. The nature of the service—the supply of water—is fairly straightforward. However, there are wider services in terms of advice, and emergency services when a customer is cut off or there are leakages. If something goes wrong on all these fronts, more than one consumer is likely to be affected.
The Bill introduces a degree of choice, but only in a relatively limited field. It leads to the possibility of switching, but in general people will be faced with standard terms and a standard service. Failure to provide the service or the misallocation of costs or mis-selling of prices is likely to affect a significant number of people. However, the consumer rights in this field and the procedures which are written into this and more general legislation are almost entirely written in terms of individuals.
Amendment 134 allows group complaints. If a whole village complains about the way its water has been cut off, the complaint would not need to be dealt with property by property. If a whole tranche of customers feels aggrieved by the prices they are being charged or the overcharging of prices, the amendment allows them all, either on an opt-in or opt-out basis, to bring complaints. The noble Lord, Lord Spicer, raised an example a few minutes ago in relation to the overcharging of people who have agreed to pay by direct debit in advance on a metered tariff.
The Government have recently introduced the Consumer Rights Bill in the other place. That legislation does something that I have been advocating for a considerable time—it introduces a degree of collective rights and collective redress generally across the consumer field. However, it only relates to abuse of competition law; it does not relate to mis-selling or unfair contract terms. But it is at least a start. I have argued on most Bills, whether on banking services, the energy industry or more generally, that we should have more collective provision in terms of enforcement rights. That should also be recognised in this legislation as regards water.
Amendments 134 and 135 provide the basis for dealing with such a complaint in the first instance and for redress to be granted on a collective basis. In other words, everybody who suffers from unfair treatment should be allowed to have equivalent redress, however many pounds that would be in compensation. Noble Lords will be aware of how this has got out of hand in another sector, where every PPI claim has had to be pursued by individuals or claims companies. We know the effects of that. Had the complainants woken up to this a lot earlier, they could have proposed a collective redress system. This is less likely to arise in water because it is a less complex industry, but, by definition, that means that where it does go wrong more people are likely to be involved. It is therefore important that this is written into the Bill.
My third amendment in this group deals with the Consumer Council for Water, whose role is written into various parts of the Bill and preceding legislation, but not in the context of being consulted on water charging systems. The 1991 Act preceded the creation of CCWater—which was created by the 2003 Act—and provided a number of consumer rights or protections. Most subsequent legislation has adjusted to the fact that CCWater now exists, but not in relation to the provisions on charging schemes. I am therefore suggesting, in Amendment 136, that CCW should be specifically consulted on charging schemes. The amendment would correct the omission.
It is important that we upgrade the ability of consumers in this field, which is still a regionally monopolistic one. Where there is monopoly, there is often abuse of consumers; the possibilities are there in this field, and sometimes they are a reality. I therefore think we should provide both for a role for CCWater and for consumers in general to be able to act on a collective basis. I beg to move.
Lord Spicer
My Lords, this is pretty standard stuff: first you legislate to weaken competition, which is the true protector of the consumer; then you legislate for consumer rights. That way lies socialism.
Baroness Neville-Rolfe
My Lords, perhaps I could seek clarification about the effect of the amendment, which it seems concerns individual complaints as well as collective ones. As I see it, having been in business, complaints are normally dealt with by the business or authority to which they come. You do not want to have special schemes unless there is something pretty serious and bad. I want to understand the purport of this amendment—if it is actually bringing in a whole load of new things that are going to be done by an authority or statute rather than by the company that is meant to be doing the right thing for the consumer, I am concerned.
Baroness Northover
My Lords, I thank the noble Lord, Lord Whitty, for his amendments, which, as he laid out, relate to the vital question of consumer protection. Most noble Lords, bar one, seemed to be supportive of his emphasis. We all wish to see an increasingly consumer-focused water industry and we welcome the opportunity to debate these matters.
The noble Lord thinks that, at the moment, this provision applies only to a single claimant. I will address whether the consumer redress scheme includes complaints made by groups of customers as well as complaints made by individual ones. I can clarify that the ability to address consumer complaints, whether they relate to a single customer or to a group of customers, is already reflected in this clause, which is drafted in such a way as to be inclusive rather than exclusive. To be clear, it covers complaints by both individual customers and groups of customers collectively—I want to put that very clearly on the record. The noble Lord might like to know that CCWater has already successfully taken up complaints on behalf of groups of customers, for example in a conurbation where a number of neighbours wished to challenge their surface water drainage charges. I hope, therefore, that he is reassured on the first area that he flagged up here.
On Amendment 136, we agree that consumer protection is an important matter in the context of the Bill. I also put on record and inform noble Lords that this is an area where action is already being taken. The industry, Ofwat and the Consumer Council for Water are working together to improve their collective approach to consumer redress. An independent dispute-resolution scheme is being established to give all customers an independent route for resolving their complaints without having to go to court. The new scheme aims to provide a transparent mechanism for resolving complaints that have reached a deadlock under current arrangements. Work on this scheme is already well advanced, with all the water companies having signalled their support, and I note what my noble friend Lady Neville-Rolfe said about the industry being central to this.
Lord Whitty
My Lords, I am grateful to the noble Baroness for spelling that out. I should explain to the noble Lord, Lord Spicer, that we are discussing a consumer redress scheme that is being proposed for the first time by this Government. I suspect that they did not have in mind that they were setting off down the road to socialism, but there we are.
I was suggesting that we need to make it explicit that there is collective ability here, because there are a lot of these schemes where there is no such collective ability. Certainly, the complaint goes first to the company. If there is a failure to resolve that at company level, there are systems involving CCWater for taking it further. Ultimately it could appear either through the new ADR system that the Government intend to develop, which is not yet a full ombudsman, or it could still end up in the courts. In the courts, it would still have to be an individual system.
I may not need to specify it in relation to the redress system, but there remains an issue in relation to potential collective claims. However, it was very helpful that the noble Baroness put on the record that under the scheme that is envisaged and being consulted on now, collective claims, collective complaints and collective redress could all apply; I am very grateful for that.
My second amendment concerns the role of CCWater. I should point out that we are not actually asking CCWater to be an adjudicator. The amendment is supported by CCWater, as I understand it. It is just that in this particular area of charging schemes, it is not written in as a consultee, whereas in other areas it is. It is true that in practice most companies—the noble Baroness says all; I will take her word for it—consult CCWater. It would have been quite useful for that to have been in the Bill. However, for the moment, I will withdraw the amendment.
Lord Whitty
“General duties with respect to water industry
In pursuit of its duty under section 2 of the Water Industry Act 1991 (general duties with respect to water industry) the Authority must take into account all information provided by section (Duties of undertakers to furnish the Secretary of State with information: annual review); and may consider such information when determining whether reopening a review of prices would further the consumer objective, set out in section 2(2A)(a) of the 1991 Act.”
Lord Whitty
My Lords, rather late in the day we are approaching a rather important issue, which concerns the powers of Ofwat to reopen a price review within five years if circumstances change or if information received from companies on their performance raises serious issues. Considering Ofwat’s role in a more dynamic market, this seems very important.
At present, we set the price maxima for five years. Companies can reopen the five-year settlement if circumstances change; for example, if they need to expend more capital than was allowed for in the price review, they can go back in. Thames Water went back in to see Ofwat about additional money for the super-sewer. It was knocked back by Ofwat but it had the right to ask. I imagine that companies do not do it more often because if the company reopens the price settlement, Ofwat has the right to reopen it as well. It is not a big feature but I am arguing that there should be an equivalence.
Ofwat does not have the power to initiate a reopening. It uses informal powers, and has been quite successful in negotiating with some companies over the current five-year period for reductions in prices because of changed circumstances—mainly reflecting the fact that the cost of capital was significantly less in practice than had been allowed for when the price review was concluded. In reality, as my noble friend Lord Hanworth has pointed out more than once, that allowance for capital has permitted a significant degree of profit enhancement and dividend enhancement by companies, and it is important that Ofwat keeps an eye on this.
Amendment 137 would allow Ofwat to reopen the settlement if it thought that the way in which it was operating was no long appropriate to the economic circumstances, or that the company’s own behaviour gave it cause to reopen it because the terms of the settlement were no longer appropriate. Amendment 146 would provide some background for this. It would require water undertakers to provide information to Ofwat on a regular, annual basis on their financial affairs. This could be dealt with separately from the other amendment, but we have grouped them together for these purposes and there is an interrelationship. If this is a different provision from the very detailed cost breakdown that Ofwat now requires from companies in advance of the price review every five years, and if we move to a more competitive market, the details of that form of regulation may not have to be so onerous over time.
This amendment looks at how companies perform during the price period. It will provide a big picture of how the financial operation as a whole is working out. As we have constantly reiterated, there is a problem in this industry of a vertically integrated regional monopoly, with higher levels of gearing, dividends—they have been at over 90% of income over the past few years—and rates of return on assets, in a relatively low-risk industry, paying relatively low levels of taxation. There are issues about the totality of the finances of the sector that a regulator ought to be free to query. It certainly should have information on it. Your Lordships may have heard a recent programme about this on the BBC’s “File on 4”. I did not agree with all of it, but it pointed out, for example, that some of these companies have at least seven levels of executive decisions before reaching the real decision-makers at ownership level. That applied to Thames Water in particular.
It is important that Ofwat can challenge the way in which these companies conduct their financial affairs. Amendment 146 would provide it with the information for doing so and Amendment 137 would allow it to reopen the price settlement if it saw that there were serious and endemic concerns about the way in which a company was operating, or about changes in the cost of capital or the level of corporate internal transfer pricing and so forth. It is important that Ofwat understands the total system and it is important that it has the ability to reopen the settlement. Of late, water companies have received fairly bad publicity because of their overall financial structure. At the moment, the regulatory system cannot really address that and does not have the information needed in order to address it. This is a gap in Ofwat’s powers that needs to be filled. I beg to move.
Baroness Neville-Rolfe
My Lords, we should look very carefully at this proposal for an increase in regulation. Water and sewerage are long-term matters and the great need is to have investment in resilience, with the right and proper regulatory framework. Ofwat seems to have got tougher in recent times. It is right to have a five-year timescale or we will not get the investment that is needed for resilience. The entrepreneurs involved will assume that if profits go up, perhaps because they have improved efficiency, they will immediately get a call from Ofwat reopening the five-year settlement, triggered perhaps by articles in tabloid newspapers—the sort of thing that will not be good for investment in this vital industry.
Lord Moynihan
I support that view. I completely understand where the noble Lord, Lord Whitty, is coming from, but there is a serious potential risk here to the confidence of the investment community in the water market. I hope that my noble friend takes that into account when considering extending the reasons for opening up price reviews.
Lord De Mauley
I thank the noble Lord, Lord Whitty, for his amendments. I shall deal with the amendments in reverse order, Amendment 146 followed by Amendment 137, as to some extent the latter builds on the former.
The new clause introduced by Amendment 146 would give water companies a duty to report every year to Ofwat and the Secretary of State about their performance, investment, tax, corporate structure and dividends. If obtaining these data is the noble Lord’s concern, I can confirm that all this information is already freely available in the public domain. The effect of the amendment would be simply to duplicate existing reporting requirements. The cost of the additional administrative burden on water companies would ultimately be met by customers. All companies—not just water companies—are already required to report on many of these matters in their annual reports and accounts. Any additional water sector-specific reporting requirements are a matter for the regulator, which is ardent in pursuing them.
The noble Lord raises some important issues about the way in which the sector is run, regulated and structured. I believe that the regulator is already taking action to address these issues. Let us be clear about the direction of regulation in the water sector. Ofwat is already taking vigorous action to improve standards of corporate governance across the sector. It is putting pressure on water companies to strengthen audit arrangements, board member appointments and governance generally. Ofwat recently published the outcome of a consultation on principles relating to board leadership, transparency and corporate governance. The principles set out clear standards for what the sector must do and set a clear timetable for their introduction across the sector. The response from water companies has been positive and I welcome that.
Ofwat has also launched a similar consultation relating to holding companies, seeking to apply basic principles to holding company boards across the sector on issues such as risk, transparency and long-term planning. I believe that the proposed annual review would place an additional burden on companies for very little gain, so I share the concerns about it expressed by my noble friends Lady Neville-Rolfe and Lord Moynihan.
Amendment 137 builds on the clause which would be inserted by Amendment 146. It would place a new duty on Ofwat to take into account the proposed annual report by water companies to the Secretary of State. It would then give Ofwat a further power to consider this information when determining whether to reopen a price review. Ofwat already has the power to reopen a price review under the substantial beneficial effects clause of the water company’s licence or by making an interim determination. If a water company is profiting from factors outside its immediate management control that were not anticipated at the time of the price determination, Ofwat can reopen its five-year price settlement. So Ofwat has the powers necessary to revisit price determinations. However, given the importance of regulatory stability in keeping prices down for customers, it rightly utilises these with caution and considers carefully whether there would be benefit to customers.
We are at risk of talking about things as they were, not things as they are or will be. Ofwat is changing the way in which it regulates. It is seeking to change the culture of the water sector and to facilitate companies taking greater ownership of and accountability for delivery to customers, now and in the long term. Therefore, I am not persuaded that these further powers and duties are necessary and I hope that I can persuade the noble Lord to withdraw his amendment.
Lord Whitty
My Lords, I would not disagree with the Minister and the noble Baroness that Ofwat is toughening up its stance, including on issues of governance within the sector. I think that I am at one with the Government in hoping that we move away from the detailed, costs-checking form of regulation of the industry towards a more broad-based one which will be helped by a degree of competition within the industry.
The Minister is right that Ofwat has emergency or overriding powers. The fact of the matter is that it has not used them and would have to meet some fairly stringent criteria so to do.
The Minister rightly admonishes me for looking backwards rather than forwards, but we have to look backwards to the immediate past. We have had two five-year price reviews. At the beginning of those reviews, the cost of capital, which is a huge part of the actual expenditure of the industry, was seriously overestimated over a period of 10 years, and prices set accordingly. During that period, the capital value of water companies went up substantially; the dividend payments went up substantially and a number of them were taken over, sometimes two or three times. Somebody made a significant amount of money out of that; it was not because of the increased efficiency of the industry, although the industry did make some efficiencies. It was a fortuitousness similar to when Ofwat, with what it thought was the best information at the time, set the allowance for capital; that allowed a much bigger profit than one had assumed at that time.
Under its existing powers, Ofwat did not judge, nor did successive Secretaries of State seek to nudge them to intervene. If the public knew that the system of regulation did not allow them to do so, they would be pretty appalled. I therefore think we need to do something. The Minister might not like my particular proposals—and they certainly are not perfect—but Ofwat needs to know what the unforeseen financial consequences are of the companies’ operations. It needs to have some ability to intervene on behalf of consumers—business as well as individual consumers—if it thinks that something has gone seriously wrong. At the moment, those powers are not sufficient.
I would like to see a measure like this on the statute book; I would not envisage that Ofwat would very often use it, but the experience of the past 10 years—it may well be exactly the opposite experience in the next 10 years as far as the cost of capital is concerned—leads me to think that there is a gap somewhere in Ofwat’s powers. We need to address that somewhere in this Bill and I am sorry that the Minister is not prepared to take it away and look at it in this context. I will withdraw the amendment, but this is something to which we might need to return in a slightly different form. I beg leave to withdraw the amendment.
Lord De Mauley
“3A In section 2A (strategic priorities and objectives: England) (inserted by section 24), in subsection (4)(d), for “licensed water suppliers” there is substituted “water supply licensees and sewerage licensees”.
3B In section 2B (strategic priorities and objectives: Wales) (inserted by section 24), in subsection (4)(d), for “licensed water suppliers” there is substituted “water supply licensees”.”
“4A (1) Section 10 (transitional provision with respect to replacement appointments) is amended as follows.
(2) In subsection (2), for “and (4)” there is substituted “to (4)”.
(3) After subsection (3) there is inserted—
“(3A) To the extent that charging rules issued under section 144ZA relate to charges imposed or security required by a relevant undertaker under section 185, those rules are to apply in relation to the new undertaker as if the appointment or variation had come into force.”.”
( ) in the opening words, for “the licensed water supplier” there is substituted “the water supply licensee”;”
Lord Whitty
Lord Whitty
My Lords, I will not detain the Committee too long on this one. When I saw this provision, it jumped out of the page at me because the Bill seems to delete the requirement to provide mapping of flood vulnerability. Having now checked the impact assessment and checked with the Environment Agency, I see that it is clear that the particular clause is not inappropriate in the circumstances, but I thought I would use this opportunity to ask the Minister to tell us, perhaps in writing, what maps are now statutorily required for flood risks.
This issue will arise significantly when we come to discuss, as we will do in the next day of Committee, Flood Re and the properties that are to be covered by that system. The issue also arises in terms of resilience and, for other bodies, in terms of planning decisions, as well as in issues for the insurance industry that go wider than the Flood Re system. While the section that is to be deleted may be redundant, it is important that we ensure that the resources that the Government give the Environment Agency and other bodies are sufficient to provide detailed, robust and accessible maps defining the flood risk around the country.
There is some urgency to the issue because I know that there are, to put it neutrally, constraints on the Environment Agency’s resources in this area. The agency is, probably rightly, trying to focus what resources it has on front-line services. However, if you focus on front-line services in a diminishing budget, you inevitably cut backroom services, some of which are in this area of mapping and prediction—which is done by the Environment Agency but often in conjunction with the Met Office—of where flood risk is likely to arise in future. As I said, I do not expect a detailed argument from tonight’s discussion, but I would like, before we proceed further with the Bill, an indication of what mapping is required and what resources are there to carry it out. I beg to move.
Lord Knight of Weymouth (Lab)
My Lords, briefly, I support my noble friend Lord Whitty in his challenge to the Government and, to some extent, the Environment Agency. At the moment, my home down in Dorset is technically under a flood alert. I can look at maps on the Environment Agency’s website and the detailed data on river levels at the station near to my home which, during this sort of scenario, are updated every few hours. In conjunction with looking at the Met Office website—because I am an experienced watcher of these things—I can predict pretty accurately whether we will flood. I am willing to put on record that I do not think we will flood over the next 24 hours. We put our floodgates up—some of them, but not all of them—but that is mostly because we could not be bothered to take them down from the last time.
This whole business is obviously very worrying for householders. I pay tribute to the Environment Agency for making all the data available so that people like me can, assuming we are online and confident enough to use those tools, make that judgment. However, it is really important that those resources are sustained and, as technology and resource allows, are improved as more and more householders, given climate change, worry more and more about their resilience for flooding.
Baroness Northover
My Lords, when I heard the earlier debate about consolidation and clarifying legislation, I thought that this was a case in point. The noble Lord, Lord Whitty, rightly spotted that, too. This amendment allows me to put something on record. The issue is about duplicate records. Our plan is to repeal Section 195 on the basis that a single record is all that is required. The Environment Agency is not aware of any request having been made for the inspection of the duplicate record required by Section 195. Of course, it will continue to maintain its primary and comprehensive sets of data, including maps. I can assure the noble Lord, Lord Knight, that public access to this information can be obtained under the Environmental Information Regulations 2004, or for that matter under the Freedom of Information Act 2000. This is a small efficiency and cost saving to the Environment Agency, without detriment to necessary data collection, maintenance or public access. I will write to the noble Lord, Lord Whitty, with details of the data held by the Environment Agency. On that basis, I hope he will be happy to withdraw his amendment.
Lord Whitty
I thank the noble Baroness for that and her determination to write to me setting it out. The importance of this is that these maps are there but will change. They will change as a result of development activities, because of climate change and our experience of floods that are supposed to happen once in every 200 years in the Somerset Levels—to return to that topic—but have happened in two years. It is vital that mapping resources are there and accessible to everybody, as they clearly already are to my noble friend Lord Knight. Not everybody has that level of accessibility. We need it, and we need to be assured that the resources can be updated and improved as information changes.
I thank the noble Baroness and the Minister for their patience this afternoon. We will meet again shortly, dealing with floods, in particular. I beg leave to withdraw the amendment.