Grand Committee
(10 years, 10 months ago)
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Defence Reform Bill
(10 years, 10 months ago)
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The Deputy Chairman of Committees (Baroness Harris of Richmond) (LD)
My Lords, if there is a Division in the Chamber while we are sitting, this Committee will adjourn as soon as the Division Bells are rung and resume after 10 minutes.
Lord Rosser
“(5A) Regulations under this section may provide for variation in payment size on the basis of the recipient company, specifically including provision for larger payments to be provided to companies defined as “small” or “medium” under sections 382 and 465 of the Companies Act 2006 or individuals who are self-employed.”
Lord Rosser (Lab)
Clause 46 deals with the issue of additional payments to employers of members of the Reserve Forces. This amendment would enable regulations to provide for a variation in the size of the payment made by specifically including provision for larger payments to be provided to small and medium-sized companies.
An Answer to a Parliamentary Question in 2010 revealed that at that time 15% of current TA members came from large organisations employing 500 people or more, 17% came from medium-sized organisations employing between 50 and 499 people, and 17% came from small organisations with between one and 49 employees. Self-employed people made up 5%, with unemployed people, including students, making up 42%, and the mobilised TA making up the remaining 4%.
When the Minister responds, perhaps he could say whether the percentages that I have just quoted are basically the same today, some four years later, in respect of where current TA members come from. If that is the case, are the Government looking to change that breakdown by employment of sources of Reserve Forces recruitment, bearing in mind that one of the key roles of the reserves in future will be to provide key specialist skills needed to support our Regular Forces to a greater extent than today?
I should like to raise a question about reservists who are unemployed—in particular, to ask the Minister how Jobcentre Plus views unemployed potential reservists going off for extended periods, in light of the requirement that they should sign on and apply for jobs on a regular basis. Presumably we should be encouraging the unemployed to consider reservist occupations; so the question of how that fits in with the requirement to sign on for benefits is of some importance.
The figures given in the Parliamentary Answer to which I referred indicate the importance of small and medium-sized firms as a source of reservists. The additional payment proposed over and above the current arrangements is, I believe, £500 a month for each month in which a reservist is mobilised. The question is: will that prove to be a sufficient incentive for smaller firms, bearing in mind that the impact on them of one or more of their employees being reservists, and away from the workplace for periods of time, could be greater than for a large firm that has more resources, both human and financial, at its disposal to cover for employees away on Reserve Forces commitments?
I appreciate that we want to draw the attention of employers to the benefits to them of their employees being reservists and the positive impact that this can have on career development, but that may not necessarily be the first point that will strike a small employer when faced with the potential problem of covering for an employee away on reserve duties; there are many small employers in the IT field, which is a skill that we look to reservists to provide. A survey by the Federation of Small Businesses in 2012 suggested that this might be an issue, but I hope the Minister will say whether that is proving to be the case in respect of small and medium-sized firms.
We believe that there is a case for flexibility over the size of the additional payment in relation to small and medium-sized businesses, but we want to hear what the Government’s intentions are on the points I have raised, including how specific or otherwise the regulations relating to these payments are likely to be. I beg to move.
Lord Palmer of Childs Hill (LD)
My Lords, I am not happy with this amendment. Having listened to the explanation by the noble Lord, Lord Rosser, I shall explain why. Small and medium-sized enterprises—I was the director of one for many years—are concerned not so much with the money but with replacing the person. The noble Lord, Lord Rosser, touched upon that. I do not think that money is the problem. Giving SMEs a bit more money does not solve the problem that a key person in a very small organisation is not there. The argument for larger payments to smaller companies will only annoy larger companies which are the source of reservists—or territorials, at the moment.
The amendment in the name of the noble Lords, Lord Rosser and Lord Tunnicliffe, also mentions the self-employed. The idea of the self-employed going into the reserves under the new arrangements is that they will receive £500 a month, or whatever it is, to substitute for their self-employed earnings. That is a decision that they would need to make, and I hope they will make it positively; but the self-employed person is not so much worried about the £500 per month substitute for earnings from their customers or their clients as about keeping their customers and their clients while they are away, and money does not solve that.
I was interested in the comment made by the noble Lord, Lord Rosser, about the unemployed. It was a point that I had not thought about, and I, too, would welcome the Minister’s reply on that point.
The Parliamentary Under-Secretary of State, Ministry of Defence (Lord Astor of Hever) (Con)
My Lords, the Bill proposes granting the Secretary of State a power, by regulations, to make payments to the employers of reservists over and above those which may currently be made. The current scheme allows employers to recover costs incurred in covering the work of employees who are mobilised. Those costs may include the hiring of temporary staff or the payment of overtime.
The new power is intended to allow the Secretary of State some flexibility as to the provision to be made in regulations made under it—for example, as to which employers may receive a payment and which Reserve Forces activities trigger entitlement to a payment. However, the current intention is that the regulations will authorise the making of payments only to employers in small and medium-sized enterprises whose reservist employees are mobilised. The Secretary of State will be required to consult various bodies before making the regulations, including the Reserve Forces and cadet associations and a body representing the interests of employers.
I welcome the noble Lord’s desire to recognise that while all employers may feel some impact from the medium or long-term absence of staff, it is small and medium-sized enterprises that are likely to feel the greatest effects. We listened to employers during the Green Paper consultation and seek to reflect this concern in the regulations.
Amendment 17A would allow the regulations to make provision in such a way that the sums payable could vary depending on the size of the employer’s business. In particular, it would allow larger payments to be made to small and medium-sized businesses and to employers who are self-employed. The effect that this amendment seeks to achieve is already achieved by new Section 84A, taken together with the amendments made to Section 85(1) of the Reserve Forces Act 1996. Sections 84A and 85(1) already give the Secretary of State the flexibility to provide in the regulations so that the sums payable vary depending on the size of the employer’s business. The current intention is that the regulations will authorise the making of payments to employers in SMEs only. This is because larger companies are more likely to be able to absorb the costs and disruptions associated with absences from work to undertake Reserve Forces activities.
We have not made provision for the making of payments to the self-employed in respect of their own Reserve Forces activities, as such payments are made in recognition of the impact placed on employers. The self-employed reservist has elected to become a reservist and so accepted the risk of being mobilised themselves. Were we to pay them, we would, in effect, be handing the self-employed reservist a pay rise of up to £500 per month when mobilised. I do not believe that that would be a good use of taxpayers’ money, or would be well received by those reservists who are not self-employed, or by regulars.
I would like briefly to highlight what current payments we make to both the reservist and their employer when we mobilise a reservist. Reservists are entitled to claim for a “reservist award” and to make an allowable expenses claim. The reservist award consists of a salary top-up—a payment made to reservists whose military salary, when called out for operations, is less than their civilian earnings. Reservists can also claim for benefits in kind—benefits that have been suspended or withdrawn by their employers while the reservist is mobilised. The benefits covered include, but are not limited to, health or medical insurance, life insurance, accommodation, education fees for dependent children and the loss of a company car used by the reservist’s dependants. The resulting payment for all these elements of the reservist’s award, taken together, is subject to an upper limit or cap—less their service pay—of £548 per day, or £822 per day for certain medical officers. When, in connection with their mobilised service, a reservist chooses to remain in his occupational pension scheme and continues to make his employee pension payments, any contributions withdrawn by his employer will be paid by the MoD.
The allowable expenses claim consists of additional payments for the care of a dependent child or relative, additional expenses for the care of a pet, additional home insurance premiums and payments for the essential maintenance of the reservist’s main residence and garden for security purposes to ensure that the property looks lived-in. The resulting allowable expenses claim is without limit, but is subject to providing clear documentation of claims.
Employers are entitled to claim certain costs related to the mobilisation of an employee. The “employer’s award” consists of up to £110 per day—in other words, approximately £40,000 per year—which is the amount by which the following “replacement costs” incurred by the employer exceed the reservist’s earnings. These replacement costs are limited to pay for, if appropriate, the replacement of the reservist, and, if relevant, any overtime payments to existing employees and an increase in salary for an existing employee, as well as certain non-recurring or one-off agency fees and advertising costs—VAT exclusive only, where the employer’s business is registered for VAT purposes. An employer may claim the cost of retraining a reservist on return to work, where needed, for the reservist’s re-employment. There is no provision for additional administration costs and the extra costs of training an external replacement for the reservist or, indeed, one of his colleagues now doing his work. The capped amount—that is, £110 per day—is intended to represent the quantifiable extra costs, above the reservist’s normal pay, of employing a temporary replacement. The employer is not, of course, paying the reservist during their mobilisation.
Depending on their personal circumstances, a self-employed reservist may claim under SI 2005/859 as a reservist, as an employer, or both. However, such a reservist cannot make a claim for an award to recover the same cost as a part of the reservist’s or employer’s award.
We recognise the importance of reserve service and have sought to address the financial issues for both reservists and employers that mobilisation brings. In relation to the power to make further payments that we are bringing in with Clause 46, I can assure noble Lords that we will keep the payments under review and, if we need to make alterations and adjustments in future, we will have the flexibility to do so.
I am grateful to my noble friend Lord Palmer for his support, and I very much agree with the points that he made. I will try to answer his question along with the answer I will give to the noble Lord, Lord Rosser.
The noble Lord asked whether percentages were still the same, and broadly the answer is yes. He asked about the Jobcentre view of reservist training; it is provided for and is counted as being available for work. He asked whether financial assistance at £500 would be enough for small businesses. The Federation of Small Businesses said that it was more than it expected. It is always a judgment and if we need to be flexible, we can be.
Lord Rosser
Before I withdraw my amendment, can I clarify what I think has been said? We are talking about the additional payments to the employer, over and above what has already been paid—and I thank the Minister for setting out what the current arrangements are. On the additional payment, which is one of £500 a month for each month that a reservist is mobilised, can I confirm that the intention is that that will be paid only to small and medium-sized businesses? I think that he then said that there would be flexibility over the level of the payment. Does that flexibility mean that it could exceed that £500?
Lord Astor of Hever
The answer to the noble Lord’s first question is definitely yes—it is just for the SMEs. I shall need to get back to the noble Lord on the second question.
Lord Rosser
I thank the Minister for his reply and the noble Lord, Lord Palmer of Childs Hill, for his contribution. I am grateful to the Minister for setting out on the record what the current situation is and what the Government’s intentions are as regards this additional payment. In the light of the reply, I beg leave to withdraw the amendment.
Lord Astor of Hever
“Report on volunteer reserve forces
In Part 11 of the Reserve Forces Act 1996 (reserve associations), after section 113 insert—“113A Duty to prepare report on volunteer reserve forces
(1) An association must prepare an annual report on the state of the volunteer reserve forces so far as concerns the area for which the association is established.
(2) A report on the state of the volunteer reserve forces is a report that sets out the association’s assessment of the capabilities of the volunteer reserve forces, having regard to the duties that may be imposed on members of those forces by or under this Act or any other enactment.
(3) The assessment referred to in subsection (2) must, in particular, include the association’s views on the effect of each of the following matters on the capabilities of the volunteer reserve forces—
(a) the recruiting of members for the volunteer reserve forces;(b) the retention of members of those forces;(c) the provision of training for those forces;(d) the upkeep of land and buildings for whose management and maintenance the association is responsible.(4) A report under subsection (1) must also set out the association’s assessment of the provision that is made as regards the mental welfare of members and former members of the volunteer reserve forces.
(5) An association must send a report under subsection (1) to the Secretary of State—
(a) in the case of the first report, before the first anniversary of the day on which the last Future Reserves 2020 report prepared before the coming into force of this section was presented to the Secretary of State, and(b) in the case of subsequent reports, before the anniversary of the day on which the first report was laid before Parliament under subsection (6).(6) On receiving a report under subsection (1), the Secretary of State must lay a copy of it before Parliament.
(7) The duties under this section may, instead of being performed by an association, be performed by a joint committee appointed under section 116 by two or more associations in relation to their combined areas.
(8) Where by virtue of subsection (7) a joint committee has the duty to prepare a report—
(a) references in subsections (1) to (5) to an association are to be read as if they were to the joint committee, and(b) section 117(1)(a) (power to regulate manner in which functions are exercised) has effect as if the reference to associations were to the joint committee.(9) In subsection (5)(a), “Future Reserves 2020 report” means a report prepared by the External Scrutiny Group on the Future Reserves 2020 programme.””
Lord Astor of Hever
My Lords, during consideration of this Bill in the House of Commons, the Secretary of State made a commitment to introduce in this House a government amendment on Reserve Forces that would reflect an amendment tabled by Julian Brazier and 37 other Members of Parliament. Amendment 18 is that amendment, inserting a new clause into the Bill. It amends the Reserve Forces Act 1996 to place reserve associations, also known as Reserve Forces and cadets associations, under a statutory duty to report annually to the Secretary of State for Defence on the state of the volunteer Reserve Forces. The new clause requires the Secretary of State to lay a copy of any such report before Parliament.
Reserve associations are community-facing organisations which provide an essential bridge between our Armed Forces and the civilian population. An association exists for each of 13 administrative areas of the United Kingdom. They provide advice and support on behalf of our volunteer Reserve Forces and cadets, work with the chains of command of the Royal Navy, the Army and the Royal Air Force and establish and maintain links with the community.
The new clause recognises the importance of the receipt of independent reports from reserve associations to ensure programme success in growing and revitalising the Reserve Forces. The reporting requirement that the new clause introduces is working with the grain of what the Government are already doing. It is based on the existing non-statutory arrangement under which a scrutiny group, appointed by the Council of Reserve Forces’ and Cadets’ Associations, reports annually on the Future Reserves 2020 programme and overall health of the Reserve Forces.
Under our plans for the whole force concept, the reserves will become an integral part of our future force structure, charged with delivering vital capability for the Armed Forces and providing resilience and reinforcement. However, we must not forget the unique and distinct nature of our reserves. They are civilians who have also elected to serve their country in uniform. That tens of thousands have volunteered to serve their country as a reservist, with some 25,000 serving in Iraq and Afghanistan in recent years, is humbling, but also a true reminder of the volunteer and community ethos across this nation, something of which we can be very proud.
In revitalising the Reserve Forces, we have been careful to recognise, and put in place measures to address, the extra challenges that reservists face in balancing their military service with their civilian employment and, in many cases, family responsibilities. That is why, when the Government undertook to revitalise the Reserve Forces through the Future Reserves 2020 programme, we focused on measures to make reserve service more attractive to reservists and their employers and put in place support measures for the reservist and their families.
The performance of defence as a whole is already subject to considerable external scrutiny, be that by the National Audit Office or the House of Commons Defence Committee—and, of course, by the many MPs and noble Lords with considerable defence interests and experience. All have shown themselves to be very proficient at examining the performance of defence in its entirety and on specific issues, programmes or projects.
I should also point out that the Ministry of Defence already provides a considerable amount of information of its own volition. The quarterly personnel report published in November 2013 gave the numbers of trained and untrained reservists and movements into and out of the reserve population. The next publication is scheduled for 13 February. On 19 December last year, the Secretary of State also published the indicative target figures for the future growth of the reserves in order to reach the identified trained strength target.
However, as I have made clear, the reserves are unique and, because of that, and the importance of the Future Reserves 2020 programme success, it is right that we should put in place a system for independent scrutiny of the state of the reserves as a specific entity. The new section which this new clause seeks to insert into the Reserve Forces Act 1996 requires an annual report to set out an assessment of the capabilities of the volunteer Reserve Forces, having regard to the duties that may be imposed on members of those forces, which include mobilised service under a call-out order.
Reports must, in particular, cover the effect of the following four matters on the capabilities of the volunteer Reserve Forces: first, the recruiting of members for the volunteer Reserve Forces; secondly, the retention of members of those forces; thirdly, the provision of training for those forces; and, fourthly, the upkeep of land and buildings for whose management and maintenance the reserve associations are responsible. Reports must also contain an assessment of the provision that is made as regards the mental welfare of members and former members of the volunteer Reserve Forces. This follows a further commitment made by the Secretary of State in the House of Commons.
This brings me neatly to Amendment 18C. The Government are absolutely committed to improving the mental health of serving and former members of both the Regular Forces and Reserve Forces. Noble Lords will be aware that my colleague, Dr Andrew Murrison, carried out a review of mental health provision within the Armed Forces. We have worked closely with the UK Department of Health, the NHS and third sector organisations to implement the recommendations from his Fighting Fit report. This has been backed by £7.4 million of government money.
Defence is already very open about the mental health of the Armed Forces population and the provisions we make to address issues. A great deal of this information is already published in the public domain. This includes the covenant annual report, which contains a specific healthcare chapter, and official defence statistics, such as those pertaining to the Veterans and Reserves Mental Health Programme. Defence is of course also engaged with and supports ongoing independent research programmes in the health arena, which are publicly available. For example, the King’s Centre for Military Health Research has been commissioned to undertake a further phase of its longitudinal cohort study, which includes reservists.
The Secretary of State made a commitment to bring forward an amendment in this House to require reserve associations to report annually on the state of the Reserve Forces. Recognising the importance of the issue of mental health, he undertook to include mental welfare provision in the list of matters that those annual reports must cover. Amendment 18 makes provision for this. Accordingly, I do not believe that subsection (1) of the new clause proposed in Amendment 18C is necessary.
In terms of annual spend on mental health provision for serving and former members of the Reserve Forces, it would not be practicable to produce meaningful financial data. In part, this is because it would be difficult to separate this cost from the cost of provision for regulars. Also, much of the provision for serving and former reservists is provided by the NHS at the local level, and extracting these financial data would be a real problem.
With regard to medical records, once demobilised, it is a long-established tradition that Reserve Forces’ medical care becomes the responsibility of their local NHS services, and the majority of their physical and mental health needs are met by this provision.
On the specifics of the current process for those leaving the Armed Forces or the Reserve Forces, when registering with their GP the veteran’s NHS record will be sent to the GP with a letter included in it that will inform the GP that they have been under the care of the Defence Medical Services and detailing how the GP can get the full record. Work is being carried out to further develop our systems in the future to allow for a summary of in-service care to be included with the NHS record when it is sent to the civilian GP. These proposed modifications will in future ensure that the NHS GP knows that they are dealing with a veteran and that the veteran is automatically given a copy of the full Defence Medical Services medical history if they decide that they require it.
As well as engaging with reservists, we have worked with the Department of Health to provide an electronic training package for GPs. This will help GPs to be more familiar with both the Reserve Forces’ and veterans’ community, and allow them to better recognise and monitor the needs of their patients.
In addition, current and former members of the Reserve Forces are entitled to attend the Veterans and Reserves Mental Health Programme. That programme is open to any current or former member of the UK volunteer reserve and regular reserve who has been demobilised since 1 January 2003 following an overseas operational deployment as a reservist and who believes that the deployment may have adversely affected their mental health. Under the programme, we liaise with the individual’s GP and offer a mental health assessment. If diagnosed to have a combat-related mental health condition, we then offer out-patient treatment via one of the MoD’s departments of community mental health. If more acute cases present themselves, the Defence Medical Services will assist access to NHS in-patient treatment.
Therefore, I believe that we are taking mental health seriously. We are working with reservists, former reservists, the medical community and other interested parties to ensure that everything that should be done is being done. However, I of course will welcome the view of the Reserve Forces and cadets associations as they report in due course on this issue.
I turn to Amendment 18F, the last amendment in this group, which seeks a report on the cost-effectiveness and viability of the Future Reserves 2020 programme. I would like to remind the Committee why we are making these changes. There are two strands to why we are doing this.
Lord Astor of Hever
I shall read that again. I refer to the period immediately after we come out of Afghanistan and finish combat operation there at the end of this year. So this is all absolutely in accordance with a strategic design that flows through the National Security Strategy.
We would all agree, I am sure, that this programme should be subject to proper and effective scrutiny. We have put forward a government amendment to do precisely that, with a report put to Parliament where it will be for the business managers to decide in the normal way what to do with that report. Leaving that report aside, the performance of defence as a whole is already subject to considerable external scrutiny, be that the National Audit Office, the House of Commons Defence Committee, or in defence Questions from MPs or Peers. Furthermore, as the Secretary of State said during an evidence session with the Defence Committee on 5 November, the strategic defence and security review 2015,
“will certainly want to look at the Future Force 2020 construct and decide whether it needs to evolve further to 2025 in response to a changing environment”.
The next strategic defence and security review will take place at a time when the programme has had some time to develop and demonstrate maturity.
Lord Robertson of Port Ellen
The Minister mentions the SDSR of 2015. That is presumably ongoing at the moment as 2015 is, after all, next year. What consultations has the department had with the various stakeholders in defence, such as Her Majesty’s Opposition, the trade unions, the press, the diplomatic corps, the think tanks and the academics who will be involved? Is there any outside involvement whatever in achieving a degree of consensus on what will be published around the time of the next general election?
Lord Astor of Hever
My Lords, I will try to answer the noble Lord’s question when I respond to other noble Lords’ questions. I repeat that the next SDSR, which will take place at a time when the programme has had some time to develop and demonstrate maturity, would be the right time to scrutinise the force structure and whether it needs to adapt to reflect new threats, opportunities or other such variables. I beg to move.
Lord Rosser
One of the joys of having amendments in a group where the Government have the first amendment is that you get the Government’s response before being able to explain the reasons for your own amendments. However, I would not wish the Minister to take that in any way as a criticism because we are always extremely grateful for the thoroughness with which he replies to amendments and for the extent of the information he provides to us. I will be as interested as my noble friend Lord Robertson of Port Ellen in the answer to the question he raised about the amount of discussion that is or is not currently going on in relation to the SDSR due in 2015.
Government Amendment 18 and my Amendments 18C and 18F have one thing in common; namely, they all provide for reports of one form or another. The Minister has explained the thinking behind the Government’s amendment, which, as he said, has arisen from a commitment given when the Bill was being considered in the other place. We have no issues with the Government’s Amendment 18. Our Amendment 18C calls on the Secretary of State to publish annually an analysis of the mental health provision for members and former members of the Reserve Forces and to report on the annual spend on such services. On that latter point, I note that the Minister said, in effect—I appreciate these were not his exact words—that this information could not be provided.
The amendment also makes provision for the transfer of medical records belonging to former members of the Reserve Forces to the National Health Service and for the monitoring of the health needs of former members of the Reserve Forces. Without such an arrangement working effectively, there is a distinct possibility of reservists going to their GP and their full medical history not being available. I appreciate what the Minister has already said in that context, but the reason for putting down the amendment with this requirement is because of claims that this is not what happens on occasions.
Mental health provision is, if anything, even more of an issue for reservists than for members of our Regular Forces as reservists after deployment go back into the civilian world rather than back to their units and can undoubtedly feel isolated on occasion. Hence the importance of the Ministry of Defence and the National Health Service knowing where reservists can be contacted and ensuring that they get the support they need.
A study published in 2012 showed a significantly higher rate of common mental health disorders and post-traumatic stress disorder among reservists, with the incidence of other types of mental illness being greater than that of PTSD, as it also is for regulars. The study also drew attention to the fact that reservists have much more difficulty with post-deployment social functioning and that such difficulties appear important not only to mental health but to fitting back into the family.
In future, we will be expecting a greater and different kind of commitment from our reserves and we need to ensure more than ever that the advances we have made with the Regular Forces with regard to mental illness, to which the Minister has already referred, are also achieved for our Reserve Forces. Government Amendment 18 provides for the annual report from reserve associations to include that association’s assessment of the provision that is made regarding the mental welfare of members and former members of the volunteer Reserve Forces but, apart from the issue of the extent to which reserve associations would be qualified to make such a full assessment, the Government’s amendment does not lay any requirement on the Secretary of State to make such an assessment or to address the issue of the transfer of medical records.
We believe it is important that there is such a requirement on the Secretary of State as well, particularly in relation to making the assessment. Making the provision set out in Amendment 18C and putting it in the Bill would help to ensure that mental health provision for members and former members of the Reserve Forces was regarded with the importance that it deserves.
Lord Dannatt (CB)
My Lords, I generally support the intention behind Amendments 18 and 18C but I draw attention to two underlying concerns that I have with regard to the overall policy that the amendments refer to.
The noble Lord, Lord Astor, in proposing Amendment 18, made reference to the fact that the Reserve Forces of the future will look very different from the Reserve Forces of the past, and that, by design, is absolutely right. However, we have to remember why we have deployed so many members of the Reserve Forces over the past 10 years. Following the defence review of 1997-98 led by the noble Lord, Lord Robertson of Port Ellen, a certain amount of work was allocated to the Army, Navy and Air Force. In the case of our land forces, we would be involved in one medium-scale ongoing operation and another medium-scale operation of six months’ duration. As we all know perfectly well, from 2003 to the present date, and particularly in that very intense period from about 2006 to 2009, we were committed to two considerable-sized—I do not use the words “large” or “medium” because the definition does not fit either—operations in Iraq and Afghanistan concurrently, well over and above the planning assumptions that were put in place in the defence review of 1997-98. Therefore, it was inevitable that we were going to have to draw heavily on our Reserve Forces in order just to be able to do what we were going to do. It was not by design; it was by consequence.
Now, in the consequences of the 2010 SDSR, we have decided to reduce significantly—and I speak particularly in terms of the land forces—the size of our Regular Army, and we are going to compensate for that loss of capability by having a large reserve training force. I understand that, and in theory I could see it working, but I have two concerns.
First—I have to choose my words carefully because I do not want to appear more critical than I intend—I challenge the transparency and perhaps honesty of some aspects of that policy. What the Ministry of Defence has done in its very constrained cash situation is effectively to move off balance sheet some of the liability of our land forces and put them back in the Treasury. We will deploy large numbers of these Reserve Forces only in a future considerable-sized operation such as that of Iraq or Afghanistan of the past 10 years. It is when we deploy those large numbers of reservists that they have to be paid for. They are not going to be paid for by the Ministry of Defence because they will come from the contingency fund held by the Treasury. So the Ministry of Defence has solved a large chunk of its problem but has not necessarily solved our national problem. I merely raise question marks about whether we are being completely transparent about its shift in policy.
My second concern, which we have already alluded to today, is to do with the provision of mental health support. We know that reservists when demobilised are in a more difficult situation than regulars when they return from operations—the facts prove that—and therefore we are taking measures to alleviate the potential situation that some of the demobilised reservists will find themselves in. I question the fundamental morality of taking a policy decision that we will use more reservists on difficult deployed operations knowing that it will place them in an adverse mental health position. I wonder whether that is right. I raise those two points as underlying concerns, albeit these amendments, at least in part, speak to them.
My third and final point, which has been mentioned already today by the noble Lord, Lord Astor, is that we know we will have a gap between 2015 and 2017-18, the regulars having been reduced and our not being able, according to current plans, to increase the number of reservists. As recently as 2011 it was still government policy that we would not reduce the Regular Forces until we had built up the reservists. We have changed that policy and so we are accepting risk. That risk could be reduced by slowing down the rundown of the Regular Forces at the moment, but I presume that the Government would say that, looking beyond Afghanistan, from the end of this year onwards they cannot see the prospect of another major operation and so it is a risk worth carrying.
Many noble Lords have mentioned the issue of risk in the past and I simply point to this as another risk that we are taking. We have Armed Forces that are less capable than they were and, certainly in terms of our land forces, they are smaller than they were, and we are willingly taking on additional risk. I raise those three points as concerns about the underlying policy, although I agree that Amendment 18C attends, at least in part, to the mental health issue.
Baroness Garden of Frognal (LD)
My Lords, we, too, welcome the Minister’s Amendment 18. As he said, there was broad support for this when it was debated in the House of Commons. It is therefore appreciated that the Government have brought forward this amendment and accepted the principle of the new clause to be agreed in this House.
Amendment 18F calls for a report within one year of enactment. Its wording is too restrictive to reflect accurately issues as they may arise around viability and cost-effectiveness and we would not wish to support that proposed clause.
Providing an annual report to the Secretary of State, which must also be laid before Parliament, provides reassurance that the position will be kept under review for all three services. We have quite naturally concentrated more on the Army than the Royal Navy and the Royal Air Force, partly because of the numbers involved and partly because the Reserves are integrated already, in a different way, with the Royal Air Force. Obviously within the annual report it will be helpful to identify where there are differences between the three services and to identify examples of best practice which might cross-refer between them.
As the noble Lord, Lord Dannatt, said in his remarks about mental health, there is a general agreement that this is an important issue. We agree with the Minister that this is covered within Amendment 18 and we do not see the need for additional medical detail, particularly in the Bill. There may well be a case for having guidance which sets this out more clearly, but not in the Bill.
It is timely that today sees the publication of the Veterans’ Transition Review of the noble Lord, Lord Ashcroft. Almost certainly within that there will be recommendations which will help to influence the response to or implementation of what is happening to the reserves under this Bill. Will there be a government response to that review? It would be helpful to have a debate on it in the light of the recommendations of the noble Lord, Lord Ashcroft.
In summary, we support Amendment 18, and while seeing value in the proposed two new clauses of the noble Lord, Lord Rosser, we do not see them as essential to the Bill.
Lord Robertson of Port Ellen
I would like to say a few words in relation to some of the more general issues concerned here. I return to the question I asked about SDSR 2015 because it concerns me that we might be going through exactly the same kind of exercise as we did for the SDSR that was done previously in six months. I do not want to draw any comparisons with the one that I supervised in 1998; it lasted a lot longer than it should have. It still managed to do so but it was affected by the circumstances which came after it, as the noble Lord, Lord Dannatt, said. However, it did not become outdated as quickly as the SDSR that the new Government brought in, which quickly came face to face with the reality of Libya after it was put in place. It focused on 2020 but was then faced with the situation in Libya as well.
Importantly, the defence review that we did in 1998 established a consensus. Perhaps for the first time in military history, the review was accepted by all the defence chiefs both in public, as one might have expected, and in private because it represented a view that was consensual. After the new Government came into place, we embarked upon a consultation exercise that made sure that all the stakeholders had an opportunity to express a view. The Ministers, Robin Cook and myself, and the Permanent Secretaries in the Ministry of Defence, the Foreign and Commonwealth Office and the Department for International Development did a roadshow that went round the country, and which also embraced pretty much every stakeholder in the business. When it came out, it was therefore a genuine security and defence review.
The failure of the last SDSR was, essentially, that it was a Treasury-led exercise, done far too quickly and involving far too few elements. I fear that that is precisely what is happening at this stage. I have consulted the Opposition to see whether anybody has bothered to ask them about the initial preparation or any of the discussions taking place at present, and the shadow Defence Secretary assures me that no such approaches have been made. We look as though we are again getting ourselves into the trap of something being prepared at or around the next election campaign, which will essentially be based on a Treasury view about what the country can afford and how the rest of it fits into that.
Lord Davies of Stamford (Lab)
My noble friend is saying some important things but does he agree that if the Government are serious about producing or drafting an SDSR, they ought at an early stage to be consulting not merely with the list of people who he quite rightly set out—the academics, think tanks and other stakeholders in this country—but with our allies, particularly the United States and our EU allies? If they do not consult them, the review that comes out may be inconsistent with the strategic intentions and plans of our key allies. Opportunities for fruitful collaboration or for the division of labour will be lost and it may well be that unfortunate misunderstandings will be sown.
Lord Robertson of Port Ellen
Indeed, my noble friend makes an extremely good point. In many ways, it goes without saying. It may well be that there are some discussions going on with our allies and inside NATO about it. I would hope so, although I am a bit pessimistic about most of these things since it becomes opaque. Part of the dispiriting nature of the way in which the British political system works is that you go from everything to zero quickly, as my noble friend will know only too well from being in government. In government, you know everything and then when you are in opposition you are allowed access to pretty much nothing at all. Therefore, having been Secretary-General of NATO and knowing everything that was going on inside that organisation, it was a grim experience to then dredge the newspapers and the occasional website to try to find out what was actually going on. The point that is being made is that the widest possible consultation is required, so that, at the end of the day, the review is fixed, has traction and makes sense in the light of the international circumstances as well as of domestic public opinion. Without that, it will fall apart, and fall apart quite quickly.
Lord Astor of Hever
My Lords, first, the noble Lord, Lord Robertson, asked in some detail about the next SDSR. I assure him that there is a lot of activity in the Ministry of Defence on this subject. I will write to him about this in some detail. The noble Lord has a great deal of experience and wisdom on this subject, and my door in the Ministry of Defence is always open to him. He has met the Secretary of State in the past and I am happy to facilitate further meetings for the noble Lord to pass on his wisdom at any time.
Secondly, the noble Lord asked me if this is a Treasury-led exercise. We do consult other departments and external shareholders, but we must be aware of the resources available. We have seen the result of not doing so in the past. In support of the Cabinet-led process, the MoD is undertaking a well defined programme of research and activity to understand the future strategic content, examine policy options and test the continued validity of Future Force 2020.
The noble Lord, Lord Davies, asked about our allies. I, as well as other Minsters and senior officials in the MoD, constantly meet our allies. I have absolutely no doubt that they are feeding their requirements and wishes into the SDSR, as they did with the last one and, I am sure, with the one that the noble Lord mentioned earlier.
The noble Lord, Lord Dannatt, was concerned about the reserves. It is not true that we are planning to use more reserves than in the past. As I said, we are trying to build up our niche skill supply of cyber and medics. The reserves will not be less capable; they will be better equipped, trained and paid, with pensions, and be given the same equipment as the regulars. I am trying to organise a day out for noble Lords who are interested in this subject to a reserve unit close to London that is paired with a regular unit. Noble Lords and noble and gallant Lords will be able to talk with the reserves and the regulars over any concerns. However, all the reserve officers and soldiers to whom I have spoken recently are very happy with the equipment that they are getting.
The noble Lord, Lord Rosser, was concerned about veterans once they leave the services. Work is being carried out further to develop our systems to allow for a summary of in-service care to be included with the NHS record when it is sent to a civilian GP. These proposed modifications will ensure that an NHS GP will know that they are dealing with a veteran and automatically give them a copy of the full Defence Medical Services medical history if they decide that they need it.
The noble Lord asked about cost and viability. This is a tier 1 programme that will be subject to the usual scrutiny by Her Majesty’s Treasury on cost. Parliament has the ability to scrutinise the issues and has done so, but this has been a military-led programme that is six months old. We should seek to implement the plan and support the reserves, not seek to unpick this.
The noble Lord, Lord Dannatt, asked whether payment for a large number of reserves was transparent. We have been clear that we are reducing the regulars and investing in the reserves. It is true that large-scale use of the reserves could fall to the Treasury reserve; the noble Lord is correct on that. He asked whether there was a draw-down gap. It is a risk, but a manageable one. We cannot retain the Regular Forces on the scale of today on the existing budget. We have to make the best use of our resources, and the reserves allow us to do that.
Is it morally right to place reserves in greater front- line roles? The reserves have served with distinction— 25,000 have been on recent operations. They themselves certainly want a greater role. We recognise a slight increase in PTSD in the reserves, which is why we have put in place the measures that I outlined earlier.
The noble Lord, Lord Robertson, asked about the veterans’ review by my noble friend Lord Ashcroft, which I understand was announced this morning. Just as I was leaving my office in the Ministry of Defence, I received a copy and have not had a chance to look at it but will write in detail to the noble Lord about it.
Finally, he asked about the role of the reserves and our reliance on them. Reserves will have a range of roles in supporting the regulars in high-intensity conflict, leading low-intensity operations—for instance, Cyprus peacekeeping—and providing capability that we cannot retain in the regulars, including cyber and medical. This is not a like-for-like replacement of regulars with reserves. Also, as the noble Lord will know from his NATO days, the United States relies far more heavily on reserves than we do, yet the US is the most capable of NATO members.
In conclusion, I must resist Amendments 18C and 18F on the basis that what they are intended to achieve is covered by Amendment 18.
Lord Davies of Stamford (Lab)
My Lords, the Minister made a full and comprehensive speech under Amendment 18. It was a very good speech and set off a kind of Second Reading debate, which was quite interesting. I broadly agree with him. As he knows, I utterly deprecate the reduction in our Regular Forces and our equipment capability, which this Government have brought in, but it is even more vital in that light that we make a success of our campaign to recruit more reservists and to train and equip them properly. Nobody on this side of the House in any way disagrees with the Government in that respect or does not want to do everything possible to make sure that that effort is a success.
However, I want to make one comment. There is a lack of clarity and frankness still about how we are planning to deploy our reserves under the new system. I am very glad that the Minister did not say, although I have heard it—and, evidently, from his speech the noble Lord, Lord Dannatt, has also heard—from government Ministers in the past few years that, “We’re reducing the regulars but we’re compensating by increasing the reserves”. That would be utterly irresponsible. There is no doubt at all that in certain areas such as those the Minister mentioned, including medics and signals experts, reservists may well play the majority part in future combat operations. But when it comes to the infantry it is extremely difficult—with the best will in the world and with motivation and discipline and morale being entirely equivalent, which is the most that one can hope for—to train up reservists to exactly the same level of confidence and alertness that the regulars have. It is therefore very difficult to avoid feeling that, if you deploy large numbers of reservists on combat operations, you will not have a higher casualty rate, which would be very irresponsible.
We have successfully deployed on an embedded basis individuals who have been chosen for that in Iraq and Iran, with front-line troops going on patrol and so forth and fighting intensive warfare. The Government need to be clear about this because reservists need to know whether under the new regime they still have a chance of that kind of experience. As I have said to the Minister privately, if they do not you may not succeed in attracting the same calibre of people into the reserves. On the other hand, with the numbers going in both directions—the decline in the regulars and increase in the reserves—it is not going to be possible to deploy large numbers of reservists, because the success of employing them on an embedded basis depends on selecting individuals and making sure that the number of reservists is relatively small in relation to the regulars, who are committed to a particular intensive operation.
I want the Government to be absolutely clear about this. There should be no beating about the bush at all. It is perfectly respectable to say that those with medical and signal skills will not be needed the whole time on a contingency basis in the regular forces but we will need to draw on them—and, in any case, we need those people to be able to exercise their own professional activities and gain skills in the civilian sector when they are not being deployed on operations, so they will be deployed on the front line, as they have been up to now. We have to be absolutely clear about our intentions for reservists, and it is really that they should not be deployed in high-intensity warfare. When the Minister said—slightly vaguely, I thought, avoiding this issue—that they would be in supporting roles, which essentially means that they would be behind the wire rather than outside it. We should be clear about that, but it is probably the right solution in all the circumstances. We need clarity, and we have not had it on that point.
Apart from that, I agreed very much with the Minister’s speech, which I thought was good. This Bill is rightly generous—I do not complain about that—to employers and reservists in the financial incentives and protections that it sets out. However, my reason for speaking on this clause is that I am slightly worried. This is not a vastly or historically momentous point—far from it—and it is not one on which I have put an amendment down, although I suppose I could table one at Report, if needed.
A potential loophole is provided by Clause 47—almost a manhole in our path that some people might fall down. Therefore, I want to raise this whole matter, and I hope that I get some reassurance. The object of Clause 47 is to provide protection for reservists who have been less than two years in employment and who then face the sack wholly or partially because of their membership of the reserve. Beyond two years, they have the protections that everyone has under the Employment Rights Act and a section—I cannot remember the number—of the Reserve Forces Act that makes it clear that people cannot be sacked when they are deployed, at risk of being deployed or about to be deployed.
Lord Astor of Hever
My Lords, I apologise to the noble Lord for the length of my speech on the last clause. It contains important issues and I wanted to cover them in some detail.
Lord Davies of Stamford
My Lords, I must have given the wrong impression. In no sense was I complaining about the length of the Minister’s speech. I thought I had congratulated him on a comprehensive speech, which had started an interesting debate.
Lord Astor of Hever
I apologise. Perhaps I misunderstood when the noble Lord referred to Second Reading speeches. Anyway, I hope that I answered all the important points.
The noble Lord referred to the lack of clarity in deploying the reserves, especially the infantry. The pairing of regulars and reserves on high-intensity combat will include individuals and up to sub-unit level. We are changing the mobilisation limits to 12 months to enable greater pre-deployment training. I mentioned earlier—I am sure the noble Lord will welcome this—that we must get more of the niche skills in the cyber field and in the medics, who we do not need the whole time.
On talking to the reserves—I am sure the noble Lord has also done so—I found that a number of them want to deploy. When the noble Lord was a Defence Minister, I went to Afghanistan on a couple of occasions and I met a number of reserves, who were very well trained. All the regulars to whom I spoke were very impressed by the reserves and how well they trained and fitted into the Regular Army. I do not think that there is any pressure on them being embedded with the regulars, and it is our plan that they train together and use the same equipment. I should like to organise for noble and gallant Lords a visit to a reserve unit paired with a regular unit to talk to the soldiers.
Lord Davies of Stamford
I thank the noble Lord and totally agree about this. The reserves have done a wonderful job. I pay tribute to them. We have all paid tribute to them. I used to go to Afghanistan and Iraq every six months when I was in the MoD, and I saw them on the front line in exactly the way the Minister describes. As he knows, reservists take it as a matter of enormous professional pride—it is a thing they really want—when their regular colleagues forget that they are reservists. That does happen. You hear that from both sides. That is a tremendously high standard to achieve. People go into the Reserve Forces because they are prepared to put themselves through the hell of training up to that level and to risk their lives when they are deployed. That is the military experience they want. If they are going to have that on offer in future, they must be honestly told that. If they are just going to be deployed behind the wire or on UN peace-keeping operations, they need to be told that too.
Lord Astor of Hever
The noble Lord makes a very good point. I will take away the points he made earlier about Clause 47 and write to him on them. The noble Lord, Lord Robertson, mentioned the Ashcroft report. If there is an appetite for it, I am very happy to organise a Peers’ brief on it. Perhaps noble Lords will get back to me on that.
Lord Rosser
“Reserve forces: publication of recruitment figures
The Secretary of State shall publish quarterly recruitment figures and trained strength numbers for reserve forces against adjusted quarterly targets.”
Lord Rosser
I almost feel as if I am once again moving an amendment after the debate on it has already taken place. Amendment 18A provides for the Secretary of State to publish quarterly recruitment figures and trained strength numbers for Reserve Forces against adjusted quarterly targets. I certainly do not wish to speak at any great length on this amendment but, as has already been said, there has been a significant change in approach by the Government to the role of the reserves since the increase in reserve strength was first announced alongside further reductions in the size of our Regular Forces. At that time, the previous Secretary of State made it clear that the reduction in the size of the Regular Forces would take place only as and when the reserves had been increased.
That is not now the Government’s stance, which has changed to saying that the reduction in the size of the Regular Forces and the Army, in particular, is not dependent on first delivering the increase in the size of our Reserve Forces. However, the increase in the size of our Reserve Forces must be for a purpose and, presumably, if we do not achieve the target that has been set within the period set, the capability of our Armed Forces as a whole will be less than it would otherwise have been. If that is not the case, it begs the question of why we are increasing the strength of our reserves.
If we can accept that our Reserve Forces will have an even more important role to play in the future, the question of whether recruitment targets will be achieved is a matter of some importance. Last autumn, there were reports in the press of the Army failing to attract and recruit sufficient Army Reserve personnel, and as a result it was claimed that the Army faced an increased risk to its structure and operational capability. If we are falling behind in recruitment, it may take time to recover lost ground since it is not simply a case of recruiting people. The people recruited have to be trained before they can become fully effective members of the reserves, and that takes time.
We are talking about ensuring the overall effectiveness of our Armed Forces and thus about our nation’s security. Our reserves are not simply something that is nice to have if people can be recruited; they will have an important and enhanced role to play in the future as part of our overall Armed Forces strength. In view of that, it does not seem unreasonable to provide in this Bill for not only the current Secretary of State but future Secretaries of State to publish the figure that will enable us all to know whether the targets for increasing the size of the our reserves are being achieved and thus that the future intended capability of our Armed Forces is being delivered in full. The fact that this information will have to be published may also help concentrate the minds of all those directly concerned in ensuring that targets set prove to be targets achieved. I beg to move.
Lord Astor of Hever
My Lords, reserves have always made an essential contribution to national security and that contribution is set to increase, with exciting opportunities being offered not just for individuals but for formed units. Reserves will be an integrated part of the whole force required for almost all operations, both at home and abroad. To do this, we are growing our reserves to 34,900 across all three services by 2018 and investing an additional £1.8 billion over 10 years. The Army will grow its reserves to a trained strength of 30,000, the Royal Air Force to 1,800 and the Royal Navy to 3,100. This is a challenging target but one that we are committed to achieving.
These requirements are challenging, but the planned overall numbers of trained reservists are well within historic levels. In 1997, the Territorial Army was more than 50,000 strong; it was reduced to around 40,000 by 2000 and, by 2009, it was down to just 26,000. We now have about 19,090 trained reserves. We should not be surprised if growth is neither uniform nor smooth. Given the time that it takes to train reservists, trained strength improvement will lag behind recruitment. Reservists will be an integral and integrated part of the whole force alongside their regular counterparts. The Committee will no doubt be aware that, recognising the interest in the progress of reserves recruitment, the MoD publishes the trained and untrained strength data for the reserves quarterly. The last figures were released on 14 November and the next set of data is due to be released in the next few days. I am sure that noble Lords would agree that, with such a commitment, there is no need to enact legislation.
The Army is undertaking a significant number of surge activities alongside recruit partnering projects to boost reserve recruiting and grow the reserve force. The initial response to the new recruiting campaign is encouraging and a number of new initiatives have been introduced. These include the revised medical process, introduced in January, and the new online application forms introduced this month. Both these new major initiatives will simplify the process and are aimed at improving the candidates’ journey into and through the application process. I must point out that the programme is still in its early stages. The White Paper was published only in July, and it is true there have been some administrative issues in the process. However, we are working with Capita and the senior Army leadership actively to address these issues. I believe that we can work them through. Adjustments have been made to the application process to ensure that we can continue to progress new recruits. Marketing campaigns based on the new White Paper proposition have just got under way; the latest marketing campaign for the reserves started in early January.
Maritime Reserves has stabilised its numbers and is working to ensure the retention of trained personnel already in the reserve and reduce wastage during the training programme by tailoring the training methods to better suit the reservist experience. Although there is a slight reduction in the Royal Auxiliary Air Force’s trained strength, the number in training is the highest since April 2012. The force looks likely to meet its end-of-year target and is seeking authority to allocate extra resources to marketing in order to improve further its recruitment rate. Recruiting activity itself is better co-ordinated across the three services than in the past; this should ensure a much more joined-up approach to recruiting. The new recruiting campaigns are delivered at a regional level, following planning and guidance from a national level. We are working hard to deliver the message through internal communications within other government departments that the reserves are recruiting and to demonstrate that the Civil Service is taking the lead in the public sector.
The additional costs of recruitment associated with growth of the reserves are all factored into the Future Reserves 2020 programme. Should recruitment be slower than planned, some funding earmarked for paying personnel who were not in fact recruited could be switched to increase the recruiting effort.
Lord Rosser
Once again, I thank the Minister for that comprehensive reply and for the information that he has provided on the progress being made with Reserve Forces recruitment. I certainly would like to have a copy of the information to which he referred during his reply.
The only comment I would make is that, while it is good to hear that the figures are being published and that it is the intention to keep providing that information, putting it in the Bill would ensure that that continued to be the case in the future. Sometimes attitudes change, and it is possible that we will find that the information is no longer being provided.
However, I will leave it at that. I thank the Minister once again for his reply and I beg leave to withdraw the amendment.
Lord Rosser
“Treatment of reservists
(1) Section 39 of the Equality Act 2010 (employees and applicants) shall apply to serving and former members of the Reserve Forces as if membership of such forces were a protected characteristic under section 4 (the protected characteristics) of that Act.
(2) Members of the Reserve Forces are required to disclose their membership to potential employers upon application for employment.
(3) The Secretary of State shall within one year of this Act coming into force establish an employer engagement committee to act as an advisory body on the recruitment and retention of members of the reserve forces.
(4) The Secretary of State shall lay before Parliament an annual Report of the Employer Engagement Committee detailing its activities and recommendations for the Government.”
Lord Rosser
Amendment 18B seeks to amend the Equality Act 2010 to prevent discrimination against reservists in employment and in seeking employment by adding membership of the Reserve Forces to the list of protected characteristics under the Act. The potential concerns are fairly obvious and, if they materialised, would constitute a serious impediment to people joining the reserves or remaining in them.
A clause in the Bill refers to the qualifying period of employment for unfair dismissal related to an employee’s membership of a reserve force, so there is obviously recognition that being unfairly penalised or discriminated against for this reason is a real possibility. That discrimination could also take place when being considered for a job, since some prospective employers might take the view that they did not wish to recruit someone purely or largely because they would be away from their job for periods of time to fulfil their commitments as a member of the reserves. Discrimination could also take place against someone in the reserves already working for the company in question, since membership of the reserves and being away from the job for a period as a result might be the sole or major factor in denying them promotion to a higher-level post. The purpose of this amendment is to reduce the likelihood of this happening but it will also give the Government, through the Minister, the opportunity to place on the record how they intend to address the potential problems that I have identified if they feel unable to accept the amendment.
Amendment 18D seeks to support recruitment to and retention in our reserves by ensuring that a reservist is entitled to be permitted by his or her employer to take time off during their working hours in order to undertake training activities connected to the reserve force, subject to the provisions laid down in the amendment, and if that does not happen to be able to present a complaint to an employment tribunal. It will be no help in encouraging recruitment or assisting retention if there are doubts about whether leave for training activities during working hours will be given by the reservist’s employer or, indeed, if it is to be given only grudgingly. Once again, if the Government feel unable to accept this amendment, I hope that the Minister will be able to indicate how they see the concerns I have raised being addressed and satisfactorily resolved from the point of view of the actual or potential member of our future Reserve Forces. I beg to move.
Baroness Garden of Frognal
My Lords, I have considerable sympathy for the spirit of the amendments spoken to by the noble Lord, Lord Rosser. There was a deal of concern expressed at Second Reading over the impact on civilian employment of the additional levels of readiness and the additional time involved in the new recruit programme. Trying to safeguard both sides was discussed then.
I picked up a leaflet at the MoD a few days ago which under “The Employer Proposition” states:
“We will develop an open and predictable relationship by: ensuring that reservists notify employers of their reserve status”,
with a rider that it is “subject to security considerations”. That part of the concerns of the noble Lord, Lord Rosser, is already being dealt with. Another paragraph of the leaflet states:
“We will introduce a new National Relationship Management scheme to establish strategic personnel relationships with major employer organisations, relevant trade bodies and the largest employers”.
It is essential for the success of this scheme that the Government have an ongoing dialogue with employers to make quite sure that their concerns are met, as well as making sure that the rights of reservists in connection with their employment are met. I hope that the Minister will be able to reassure us that the concerns which the noble Lord, Lord Rosser, has raised are already being dealt with and considered, and that safeguards have been put in place by the Government.
Lord Davies of Stamford
My noble friend’s amendment is testimony to what I spoke about earlier—the complete commitment on this side of the Committee to try to ensure that we successfully recruit and train the projected number of reservists. It would be intolerable if people who had signed up to fight for their country were subject in some way to discrimination in the employment and labour markets. Discrimination because of their sex, colour and so on is now regarded as utterly intolerable. My noble friend’s amendment is therefore absolutely appropriate.
I should make one final point. I think that I am right—the Minister will know the details—in saying that similar protections are available to members of the National Guard in the United States. We all know that the National Guard is extremely successful at recruiting and that it has enormous public support, including among employers, so I do not see any difficulty of the kind suggested by the noble Baroness whereby employers might reasonably resent such a provision. We all know that the National Guard in the United States plays a key role in the defence capability of that nation and is regularly deployed on operations. We should be encouraged by the experience of the United States to pursue the line adopted in my noble friend’s amendment.
Lord Astor of Hever
My Lords, we recognise and value the contribution of reservists and need to be sure that their interests are properly protected. Part of this is making sure that their reserve service does not negatively affect their employment prospects. That is why Clause 47 amends the Employment Rights Act 1996 to remove the current two-year qualifying period for claims of unfair dismissal where the reason for dismissal is, or is primarily because, the individual is a reservist.
I should emphasise that protection is already in place to ensure that reservists are not dismissed as a result of any duties or liabilities that they have to undertake, for example as a result of being mobilised. This protection is provided by the Reserve Forces (Safeguard of Employment) Act 1985, Section 1 of which gives a reservist who is called out for reserve service the right to apply to his or her former employer to be reinstated after they return from mobilised service. In addition, Section 17 of the 1985 Act makes it a criminal offence for an employer to dismiss an employee solely or mainly by reason of any duties or liabilities that may arise as a result of being called out.
One key strand of the White Paper was to foster an open and honest relationship with employers. Employers of reservists make a greater contribution to national security than others. We understand and value the commitment that employers make. We have seen from some of the evidence submitted—I am thinking particularly of that from the Confederation of British Industry—that employers are wary of the introduction of discrimination-type legislation, and that such an approach would run counter to the partnership approach that is needed between employers and defence. CBI members were particularly concerned that such an approach could strain working relationships between employers and reservists.
As part of this partnership approach we will: provide employers with greater awareness and predictability of training and mobilisation commitments; streamline the administrative arrangements to receive financial assistance when a reservist is mobilised; introduce additional financial incentive payments to micro, small and medium-sized enterprises; and provide appropriate recognition of the contribution that these employers make by enhancing our existing recognition schemes.
Subsection (1) of the proposed new clause in Amendment 18B would mean that Section 39(4) of the Equality Act 2010 would apply “as if membership” of the Reserve Forces “were a protected characteristic”. Surely, membership either is or is not a protected characteristic. The advice from the Government Equalities Office is that being a reservist would not count as a protected characteristic as defined in the 2010 Act—in other words, age, disability, gender reassignment, marriage and civil partnership, pregnancy and maternity, race, religion or belief, and sex or sexual orientation.
There have been occasional calls for various characteristics to be given protected status, particularly during the preparations for the Equality Act. These were mostly in relation to some form of physical appearance, ranging from extremes in individuals’ height and weight to the way in which people may choose to dress. However, after full consideration, the list of protected characteristics was set as already outlined. Including reserves as a protected characteristic in the Equality Act would be a disproportionate tool to tackle the problem and could give rise to the same argument being deployed successfully in relation to a number of the physical characteristics that I mentioned. This could have the result of doubling the number of characteristics, which would have an increased on-cost to businesses, public authorities and the courts.
Lord Davies of Stamford
Would the noble Lord be kind enough to address my point about the National Guard in relation to Amendment 18B? We should bear in mind that any employers’ organisation—like any other trade association or representative body—is always likely, when a new idea is put to it, to adopt a defensive, cautious position and focus on the difficulties. Good government surely does not consist of abandoning a good idea at the first hurdle. Has the MoD explored the experience of the National Guard in this context in the United States and, if so, could the Minister let us know the conclusions of that study?
Lord Astor of Hever
The noble Lord makes a very good point about the National Guard, and I apologise if I did not refer to it in my response. This is quite a detailed subject. I will write to the noble Lord and copy my letter to the other noble Lords who have taken part in this debate.
Lord Rosser
I thank the Minister for his comprehensive reply and I thank the noble Baroness, Lady Garden, for her comments. I also thank the Minister for setting out the statutory safeguards, as well as the non-statutory measures that have been, and are being, taken to address the issues that I have raised. If the Government find that working with employers and not going down the statutory route does not work, I hope that they will reflect again on providing legislation to protect the position of employees who are members of the reserves, who could find themselves in a vulnerable position.
Having said that, I appreciate that this is a difficult area. It can be very difficult to prove discrimination against somebody on the basis of membership of the Reserve Forces, particularly if one had to seek to prove that there had been discrimination through, for example, denying someone a promotion or giving them a lower salary increase or some other act of that kind. I also accept that proving discrimination on these grounds could be difficult.
I conclude by thanking the Minister for his comprehensive reply, and I beg leave to withdraw the amendment.
Lord Rosser
“Amendment of Criminal Justice Act 2003: service persons
In section 146 of the Criminal Justice Act 2003 (increase in sentences for aggravation related to disability or sexual orientation, sexual orientation or transgender identity)—(a) in the title of the section, add at the end “or status as a service person”;(b) after subsection (2)(a)(iii) insert “or (iv) the victim being, or being presumed to be, a service person.”;(c) after subsection (2)(b)(iii) insert “or(iv) by hostility towards service people.”; and(d) after subsection (6) insert—“(7) In this section “service person” means member of the reserve forces and any relative of a member of the reserve forces”.”.
Lord Rosser
Amendment 18E seeks to amend the Criminal Justice Act 2003 so that physical or verbal assault upon a member of the Reserve Forces or a member of their family would be classed as an aggravating feature of the crime and should be reflected in the sentence handed down where the prosecution could establish that service in the Reserve Forces was the motive for the assault. We know from surveys of Armed Forces personnel that physical and verbal assaults on them motivated simply by the fact that they are service personnel run at a surprisingly high rate. On a much more severe scale, we have had a recent example of a member of our Armed Forces being murdered on our streets simply because he was a member of our Armed Forces.
Attacks on service personnel, whether physical or verbal, are totally unacceptable, do nothing to assist recruitment and retention, and run contrary to the esteem in which members of our Armed Forces are held by the overwhelming majority of the population, who recognise that they are willing to put their lives on the line in defence of our country’s people and interests. We need to do as much as we can to reduce the incidence of assaults, particularly at a time when we are seeking to recruit substantial additional numbers into our reserves. I say once again that if the Government do not believe that this amendment is the best way to achieve that objective, I hope that the Minister will indicate in his reply whether they regard the issue that I have raised as a real problem and, if so, what courses of action they are taking or intend to take to address it. I beg to move.
Lord Palmer of Childs Hill
My Lords, I hope that the Minister will include in his reply what instances there have been of confusion about what a “service person” should be. I would have thought that under existing legislation “service person” would include all the things that are included in proposed new subsection (7) in the amendment. Has there been any experience that “service person” has not been taken to include the people mentioned here? It seems a rather worthy thing to protect people even more and make sure that they are included in the criminal justice legislation, but I wonder whether there is reason to believe that any of this has been necessary in the past.
Lord Davies of Stamford
My Lords, when in 2007 I chaired the national inquiry into the national recognition of the Armed Forces, this was one of the recommendations that we made. We made 40 recommendations, 38 of which, including Armed Forces Day, automatic parades for units returning from combat missions and so forth, were accepted. Two were not, and this was one of them. The other one was having an officer of the Armed Forces permanently available in the House of Commons, probably in the Library, to inform people about any military matters that they might have questions about. In that report, to which I refer the noble Lord, Lord Palmer, we cited a number of cases of grievous assaults perpetrated on members of the Armed Forces, and I am afraid that the problem has not gone away. Over the past six years or so, there have been other incidents which the Committee will know about. I retain my support for this amendment.
It has one curious feature but I think I know the explanation. It is that the protection seems to be designed merely for members of the Reserve Forces but does not currently exist for members of the Regular Forces. I imagine that it is because including all members of the Armed Forces could have been outside the scope of the Bill. I therefore imagine that my noble friend, with whom I have not discussed this matter, had this in mind as a probing amendment to try to push the way forward to achieve what we really need, which is the kind of legal protection for all members of the Armed Forces—all those who wear the Queen’s uniform—who are prepared to lay down their lives for the rest of us. The least we can do is to make sure that they do not suffer discrimination or, in this case, violence, potentially, when they are in their home country.
Lord Palmer of Childs Hill
My Lords, perhaps I may ask for some elucidation. I accept all the points that the noble Lord has made about his time in the MoD and his knowledge of this subject. Obviously these incidents have happened, but do we need legislation such as this to identify it or were the perpetrators of these actions against the service people he mentioned dealt with by the law at the time?
Lord Davies of Stamford
My Lords, I do not know that I should get into the habit of answering questions across the Floor. I would love to be a Minister again but that has not happened to me so far. I shall have to wait a bit longer. However, I shall of course respond to the noble Lord. There are the normal legal protections against assault from which he and I and every other citizen benefit. Clearly, it is a criminal offence. However, the purpose of this amendment, as I understand my noble friend, is to make it an exacerbating factor if the reason for the assault is that the victim is a member of the Armed Forces. That provides a special protection for those who might otherwise be especially vulnerable to this kind of attack. It is similar to the exacerbating factor that we already have of the motive, or part of the motive, for an assault being racial. We introduced that for a section of the community whose members might be innocent victims of gratuitous attacks which otherwise would not occur. Therefore, there is a complete analogy there and I think it was the analogy which, rightly, inspired my noble friend—if I may be so bold as to presume to answer for him—to conceive this amendment.
Lord Astor of Hever
My Lords, I am sure that I speak for all of us in saying that we hold the same view about discrimination against members of the Armed Forces. It is a completely unacceptable form of behaviour towards the men and women who have committed themselves to defending this country, its people and its way of life, and to making sacrifices that others perhaps sometimes take for granted. Those who discriminate against service personnel, or against the wider Armed Forces community, succeed only in diminishing themselves.
Discrimination can take many forms. Some of it is thoughtless or uninformed—for example, when public services fail to take account of the special circumstances in which Armed Forces personnel find themselves. Some of it is based on myth and prejudice—a view that soldiers create trouble or are unreliable customers is a misperception that we must challenge. However, some discrimination or abuse stems from genuine hostility to members of the Armed Forces, motivated by politics or perhaps by some unfortunate personal experience. It is on that narrow part of the spectrum that this amendment focuses.
The amendment would have the effect of amending Section 146 of the Criminal Justice Act 2003, which lays down circumstances in which the seriousness of a criminal offence, and thus the severity of the resulting sentence, is increased. It provides for increased sentences where an offender demonstrated hostility based on the victim’s sexual orientation, disability or transgender status, or where the offence was motivated by hostility towards persons of a particular sexual orientation, persons who have a disability or persons who are transgender. Section 145 of that Act makes similar provision in respect of “racially or religiously aggravated” offences.
The amendment would provide for increased sentences where an offender demonstrated hostility based on the victim being a,
“member of the reserve forces”,
or indeed,
“any relative of a member of the reserve forces”.
It would also provide for increased sentences where an offence was motivated by hostility towards members of the Reserve Forces.
It is important that we are clear about what the amendment would not do. It would not cover situations such as a refusal to admit members of the Armed Forces to a hotel or bar. Such situations have led to widespread public indignation but they generally do not involve a criminal offence.
The Government’s view is that there is no need for a change in the law on these lines. The courts already have a wide power in sentencing to take into account factors that make conduct more serious. Criminal acts based on irrational hostility to a person because he or she is in the Reserve Forces may lead to a higher sentence in any event. I am not aware of any evidence of courts finding that they have insufficient powers to give an appropriate sentence to an offender in such circumstances, or that we have received representations from the courts asking us to amend the law in this way.
In contrast, converting the flexibility that the courts currently have into a mandatory requirement, as the amendment proposes, may present practical difficulties. For example, demonstrating to a court that the aggravating factor was present and should be taken into consideration could be relatively straightforward in some cases, such as where a victim was in uniform, but far from straightforward in other cases, such as those in which the victim was a relative of a member of the Reserve Forces. How are the courts to deal with a situation where an offence is motivated by excessive rivalry between different sections of the Armed Forces or, perhaps, a domestic dispute? A mandatory requirement for a higher sentence reduces the court’s ability to take a sensible, common-sense approach to what is really going on in the circumstances it is examining.
There is a fundamental difference between offences provoked by hostility to the work of the victim and offences motivated by prejudice against inherent characteristics, such as homophobic crime. Section 146 of the 2003 Act is designed to help to change deep-rooted prejudices. It would be quite wrong to suggest that such provisions were necessary in relation to the Armed Forces. However, the most telling argument against this amendment is the views of the intended beneficiaries. I am not aware of any general desire in the Armed Forces community for legislation of this type. The service men and women who wear their uniforms with pride want to be respected in and considered part of their communities, and rightly so. We should not put them in a position where they are forced to explain why they require protection in law in a way not enjoyed by, for example, firemen or ambulance staff. Indeed, the amendment deals only with members of the Reserve Forces, as the noble Lord pointed out. It would not extend to members of the Regular Forces, meaning that rather than helping create the whole force which we seek the amendment would separate out members of the Reserve Forces for different treatment in law. I am not sure whether they would wish to see that in this context.
None of this means that the Government are complacent about discrimination against service personnel: quite the opposite. The Armed Forces covenant has a high profile across the whole of Whitehall and beyond. The first principle, that members of the Armed Forces community should not suffer disadvantage as a result of that membership, has given rise to many initiatives which are making a real, practical difference. In the first statutory annual report on the Armed Forces covenant, published in December 2012, we described what we were doing to make these principles a reality. We are working to remove the disadvantage that the children of service personnel can face in the schools system as a result of their mobility through the admissions code and the service pupil premium. We are ensuring that service personnel and leavers encounter a level playing field in access to social housing or Government-funded home ownership schemes.
At the same time, we are working to build the links between the Armed Forces community and the wider community to improve the knowledge and understanding that must be at the centre of that relationship. From knowledge flows the esteem for our service men and women that is ultimately the most powerful way to counter discrimination. The community covenant has now been signed in nearly 400 local authority areas, from Cornwall to the north of Scotland, and around 60 companies have signed up to the new corporate covenant, signifying a real determination to strengthen ties with the Armed Forces. I am confident that it will continue to gain further support. The grant scheme linked to the community covenant has allowed us to back a range of schemes that will help to put these declarations into practice. To that, we can now add the £35 million fund created as a result of the LIBOR fines, which will support charities with projects to help the Armed Forces and their families.
This is not an entirely new proposal. Thomas Docherty MP previously raised this issue in a Private Member’s Bill and has another for consideration this year, with its Second Reading having been scheduled for 24 January. The debate was adjourned and is expected to resume on 28 February. The previous Government, in response to a similar recommendation in the 2008 report from the then Member for Grantham and Stamford, now the noble Lord, Lord Davies of Stamford, said,
“we do not think that a change in the law is necessary or appropriate.”
As a result of the Armed Forces Act 2011, we have a new vehicle at our disposal in the form of an annual report to Parliament—effectively a report on the state of the Armed Forces covenant. In February of last year, my right honourable friend, the member for Rayleigh and Wickford, the Minister of State for the Armed Forces, indicated that the question of discrimination would be a legitimate issue for the next report at the end of 2013. The report, published on 16 December 2013, said:
“Our view is that, in the last year or so, the extent of public knowledge and sympathy for the Armed Forces has continued to grow—aided by the Community Covenant and the new Corporate Covenant. We therefore continue to believe that education, rather than legislation, is the key to eradicating the kind of behaviour that we all abhor”.
In answer to the question from my noble friend Lord Palmer about what instances there have been of service personnel not taken to include those in the amendment, we recognise a service person as a regular or reserve member of the Armed Forces. Proposed subsection (7) in the amendment seems to be drafted to enable debate in this Committee otherwise it would be out of scope, as it was judged to be in the House of Commons. The noble Lord, Lord Davies, asked about legal protection. Legal protection for all Armed Forces personnel would be out of scope of this Bill.
I hope that I have answered all the noble Lord’s concerns and I urge him to withdraw his amendment.
Lord Rosser
I thank my noble friend Lord Davies for his contribution and support and also the noble Lord, Lord Palmer of Childs Hill for his contribution. The Minister has once again done us the courtesy of giving us a very full and comprehensive response to the amendment, setting out the Government’s position. I am slightly disappointed with the reply, although I do not want to suggest that I had imagined the Minister would say that the Government would accept the amendment.
The Minister made reference to ambulance staff not having this kind of protection. That may be true in England and Wales, but I do not think that it is true in Scotland, where I believe it is offered to members of the emergency services. If I am proved wrong in saying that, I shall of course apologise. However, I think there is a wider scope in Scotland which goes beyond the police. In England and Wales, that kind of protection is there in respect of the police but does not extend beyond that.
I would like to reflect on what the Minister has said before deciding whether to pursue this at a further stage and in discussions on the Bill. In the meantime, I thank him again for his comprehensive reply, which I appreciate, and I beg leave to withdraw the amendment.
House of Lords
(10 years, 10 months ago)
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Legal Aid
(10 years, 10 months ago)
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The Minister of State, Ministry of Justice (Lord Faulks) (Con)
My Lords, the Government consider that the exceptional funding scheme is working effectively. We are monitoring its operation and will continue to do so.
Lord Bach (Lab)
My Lords, I thank the Minister for his Answer as far as it goes. Parliament and the public were told time after time to believe that Section 10 would act as a safety net for those cases where it was manifestly unfair that the citizen should not have access to civil legal aid. However, the application forms are impossible for a non-lawyer to complete and a lawyer will not get paid a penny if the claim for legal aid is unsuccessful. Even worse is the fact that only in 3% of claims has legal aid ever been granted. The noble Lord was a member of the JCHR which, along with the Low Commission and many others, has recently criticised the working of this provision. Now that he is a distinguished member of Her Majesty’s Government, will he act to make this vital provision fit for purpose?
Lord Faulks
The provisions contained in Section 10 of the LASPO Act make it perfectly clear that it is there for exceptional cases where, in the absence of legal aid, there would be a violation of Article 6 of the European Convention on Human Rights or possibly of the provisions of the European Union. It is not about whether a case may be deserving; it has to fall specifically within the confines of the section. As to the application form, it was consulted on regularly and in detail before it became part of the process. I am surprised that solicitors are having difficulty in filling it in. It is possible for someone to fill in the form on their own and they can then have a preliminary view given to them by the Legal Aid Agency as to the prospects of success. It is true that the number of applications has been much lower than expected and it is also true that very few have been granted, but we are satisfied that the system is working in accordance with the section.
Lord Thomas of Gresford (LD)
My Lords, before the Bill was introduced, the Government said that they were expecting 5,000 to 7,000 applications a year. In fact, in the first year there were 893, of which only 23 were granted, which represents 1%. Is it not nonsense to suggest that this provision is a safety net for those who seek justice?
Lord Faulks
I can update the noble Lord by saying that in fact the total number of applications received is now 1,030, and the number granted is 31. I agree that it is a small percentage. It was difficult for the Government to predict exactly how many applications would be received. In fact, in some areas, including the area in which I practised, that of clinical negligence, there have been virtually none when it was expected that there would be very many. Trying to anticipate what might or might not be considered to be a violation of Article 6 has confounded many courts, not only in this country but also in Strasbourg.
Lord Woolf (CB)
My Lords, perhaps what the Minister has just said indicates that I may have been right when I differed as a judge from my distinguished predecessor, Lord Bingham. He took a narrow view of the word “exceptional” while I took a very broad view of it. I regard it as a word which should be used to ensure justice in all cases where justice is required. Does the noble Lord agree with my approach?
Lord Faulks
The answer to the noble and learned Lord is that it depends very much on the context in which “exceptional” is used. The context in which it is used in this particular section is by specific reference to the European Convention on Human Rights.
Lord Beecham (Lab)
My Lords, in answer to a recent Written Question from me, the Minister said that there had been 1,130 applications, of which 35 were granted, not the figures that he has given today. Be that as it may, what was the Government’s estimate of the number of successful applications and what did they anticipate would be the proportion of successful applications? Given that it has taken 14 months to reach a decision to grant legal aid in an important inquest case in which counsel appeared four times without any certainty of being paid, will the Government publish details of the times taken to determine applications?
Lord Faulks
In answer to the second part of the noble Lord’s question, the Government will be happy to publish the times taken. Indeed, I think that the noble Lord will be pleasantly surprised at how quickly these applications are being processed. In answer to the first part of his question, it was expected that some 3,700 would be funded each year. As I said in answer to an earlier question, it is somewhat mysterious as to why so few have qualified. Each case is considered separately by the Legal Aid Agency in accordance with guidelines given by the Lord Chancellor. All those doing this work are experienced and all of them follow the guidelines.
Lord Pannick (CB)
My Lords, the noble Lord said that Section 10 is working effectively. Will he give further consideration to the recommendation of the Low commission, chaired by the noble Lord, Lord Low of Dalston, that the application process for Section 10 is much in need of simplification? Will the Government act on the concern expressed by the Joint Committee on Human Rights about the lack of training for Legal Aid Agency employees who are responsible for making decisions about Section 10?
Lord Faulks
The Government are aware of the JCHR’s concern about the lack of training. I have been reassured that the employees are appropriately trained and aware of their responsibilities. In terms of the forms, I give the same answer that I gave before, which is that the matter is kept under review. It is believed that the forms are perfectly within the capabilities of solicitors to understand. If one of these forms is inadequately filled in, you are told, whereas with some forms in other contexts you never know which box you failed to tick.
Lord Phillips of Sudbury (LD)
My Lords, can the Minister say whether any research has been done into the number of cases of citizens who would wish to make applications but are unable to find anybody to help them in making those applications?
Lord Faulks
I think it is approximately 61. I will have to write to my noble friend with the precise number who actually made applications. Very often they are given a preliminary view, which they can then take to a solicitor, who will then be able, if he has been given some encouraging words, to take the matter forward.
Baroness McIntosh of Hudnall (Lab)
My Lords, will the noble Lord reassure the House, in view of the very small number of applicants who have been successful, that the Government have no plans to withdraw the funding before people have figured out how to fill in the forms?
Economy: Growth
(10 years, 10 months ago)
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Lord Spicer
To ask Her Majesty’s Government what are their latest projections for the economic growth of (1) the British, and (2) the Scottish, economy in 2014.
Lord Newby (LD)
My Lords, the Office for Budget Responsibility is responsible for producing independent economic and fiscal forecasts for the UK economy. The OBR published a full analysis of the prospects for economic growth, employment and inflation in its forecast at the Autumn Statement. The OBR forecast for the UK is that the UK economy will grow by 2.4% in 2014. The OBR does not make separate forecasts for the countries that make up the UK.
Lord Spicer (Con)
Does my noble friend agree that there is a great difference between the two economies, and that this provides one reason why the Governor of the Bank of England was so right when he said that it would be virtually impossible for an independent Scotland to keep the pound? Indeed, is it not the case that if Scotland does fly the nest, it will not take many eggs with it?
Lord Newby
My Lords, there is increasing evidence from the business community that it believes that its involvement in the Scottish economy would be reduced were Scotland to become independent; for example, in recent weeks, Bob Dudley from BP has said that there would be “big uncertainties” about its continuing investment in Scotland. He is just one of a number of representatives of major firms who have questioned their long-term involvement in the Scottish economy if Scotland became independent.
Lord McFall of Alcluith (Lab)
My Lords, the SNP White Paper said that,
“Scottish taxes will fit our distinctive social context”.
That seems curious and inexplicable, but does the Minister agree that in terms of the social context the single market between Scotland and England is crucial, since more than 70% of Scottish exports go to England and any disruption of that market will result in instability and will not be in the interests of either Scotland or the rest of the United Kingdom?
Lord Newby
My Lords, I absolutely agree with the noble Lord. The Treasury has done some work on the so-called border effect: what happens to growth if the Scottish economy and those of the rest of the UK are separated by a border. Its best estimate was that over a period of several decades, the Scottish economy could be about 4% poorer than would otherwise be the case, compared to a reduction in the rest of the UK economy of 0.2%. There are much bigger risks for the Scottish economy through independence than there are for the rest of the UK, but both sides would suffer.
Baroness Wheatcroft (Con)
My Lords, can my noble friend tell us what would happen to the BBC in the event of Scottish independence?
Lord Newby
My Lords, I am not sure I can, but that demonstrates how difficult it will be to manage the independence process. There are so many parts of what we take for granted in the way that we do things in the UK that would have to be severed; for example, one has only to think about the value of having an integrated BBC to see that if it were severed, how much of a loss that would be to everybody, whether they were in Scotland or the rest of the UK.
Lord West of Spithead (Lab)
My Lords, it is quite clear that the defence of our islands will be considerably weakened if the Scots vote for separation. Does the Minister also agree that there will be a huge economic impact from defence firms inevitably moving south of the border because there will be almost no orders for defence equipment in Scotland?
Lord Newby
My Lords, that just seems one of the many inevitable consequences were independence to take place.
Lord Razzall (LD)
My Lords, going back to the Scottish banking system, does my noble friend believe that Alex Salmond is behind the suggestion that RBS would relocate to England in the event of independence, as had the last taxpayer bailout occurred in an independent Scotland it would clearly have bankrupted the Scottish economy?
Lord Newby
My Lords, the noble Lord may be right. An independent Scotland would have banking assets equivalent to 1,254% of Scottish GDP—more than Ireland, Iceland and Cyprus when they ran into banking difficulties.
Lord Foulkes of Cumnock (Lab)
My Lords, does the Minister recall that Alex Salmond used to be an economist with the RBS? Does that not say everything? Will the Minister confirm that economic growth in Scotland in the third quarter of 2013 was much the same as economic growth in the United Kingdom, which shows that devolution is working, that Scotland is getting the best of both worlds and that we are in fact, to coin a phrase, better together?
Lord Newby
My Lords, I agree. For example, it is very interesting, looking at what has been happening to unemployment not just over the past few months but over the past couple of decades, that in the 1990s unemployment in Scotland was slightly higher than it was here. In recent years, and particularly in the past few quarters, it has been slightly lower. It shows that Scotland, while moving broadly in line with the UK, can do better than the rest of the UK, as it has done in a number of respects. It is quite difficult to see how it could replicate that pattern if it were independent.
Lord Kilclooney (CB)
My Lords, Scotland, like Northern Ireland and Wales, receives an annual block grant. Can the Minister confirm that the block grant to Scotland is now £30 billion per year, and that should Scotland become independent, the people of Scotland would lose that £30 billion?
Lord Newby
My Lords, it is not quite as straightforward as that. There are, for example, great arguments about the division of oil revenues. This has to be set against the block grant that Scotland gets. When looking at the economic consequences of independence, you have to look a long time in the future, not just a year or two. Independence is not for Christmas—it is a long-term business. The question for everyone in Scotland is not whether we are going to be better off in six months or a year or five years, but where we are going to be 10, 20 or 50 years down the line, because once you have done this, you cannot reverse it.
Food and Soft Drink Industry: Sugar
(10 years, 10 months ago)
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Baroness Morgan of Ely
To ask Her Majesty’s Government what representations they have made to the food and drink industry about reducing levels of sugar in processed products in the United Kingdom.
The Parliamentary Under-Secretary of State, Department of Health (Earl Howe) (Con)
My Lords, through the public health responsibility deal calorie reduction pledge, food and soft drink companies are taking a range of actions to reduce calories, including sugar, in their products. Currently 38 businesses are signed up to the pledge. We are working across the industry to encourage further sign-up.
Baroness Morgan of Ely (Lab)
My Lords, five out of eight members of the carbohydrate working group on nutrition which advises the Government have direct links to the food and drink industry. Does that explain why it has taken five years for this group to report? Can the Minister explain why we do not simply follow the position of the World Health Organisation, which is expected to report that people’s energy from added sugar should be reduced from the current recommended level of 10% to 5%?
Earl Howe
My Lords, the reason that we meet the food industry is to ask it to do more than it is doing at the moment. If that is what the noble Baroness means by the Government’s links to the food industry, then I make no apology for them. Our current emphasis is on overall calorie reduction, of which sugar can form a part. The scope for reformulation to reduce sugar levels varies widely depending on the food, and a reduction in sugar levels does not always mean that the overall calorie content is reduced. The Scientific Advisory Committee on Nutrition is currently undertaking a review of carbohydrates, as part of which it is looking at sugar. Its report will inform our future thinking.
Baroness Brinton (LD)
It is shocking that a 375-gram portion of Sharwood’s sweet and sour chicken with rice contains six teaspoons of sugar. Some of our supermarkets, notably Waitrose, are working with their suppliers to reduce the amount of sugar in processed food, but many are not. What steps are the Government taking to ensure that all supermarkets and suppliers follow those setting a good example and reduce the amount of sugar, as well as clearly labelling sugar, in their processed foods?
Earl Howe
My noble friend raises a series of important issues. I can tell her some encouraging news on this front. Sainsbury’s and Tesco, for example, have pledged to reduce the sugar content in their own-brand soft drinks. We are asking other supermarkets to follow suit. I think that the noble Baroness will be aware that Lidl made an encouraging gesture the other day in pledging not to display sweets at till exits. However, we are working across a range of areas, not just reformulation of food but pack size, introducing low-sugar or no-sugar alternatives, and looking at ways in which food is promoted.
Lord Brooke of Alverthorpe (Lab)
Will the Minister please explain why in his first Answer he referred only to the food and soft drinks industry? Why did he not refer to the alcoholic drinks industry? Is it not true that, in the 130 meetings which the Government have had with the drinks industry since 2010, no progress whatever has been made on persuading it voluntarily to show calorific effects and sugar content on the labels of its products?
Earl Howe
No, my Lords, that is not so. Ninety-two producers and retailers committed through the responsibility deal to having 80% of bottles and cans on sale in the UK displaying unit and health information and a pregnancy warning by the end of 2013. The three elements that industry has committed to display on labels are: the drink’s unit content, the Government’s guidelines for lower-risk drinking, and pregnancy warnings. I argue with the noble Lord that this is progress.
The Lord Bishop of St Albans
My Lords, while I support the need to reduce the level of sugar in processed food wherever possible, I am concerned that this alone will do little to improve the nation’s health or deal with the problem of obesity. What progress are the Department for Education and the Department of Health making on reducing the number of calories in meals served in schools, and what progress is being made on increasing the level of physical activities for the pupils in our schools?
Earl Howe
My Lords, tackling obesity calls for action by the widest possible range of partners, including the food industry but also including schools. That is what we are trying to do through the responsibility deal. Our National Child Measurement Programme, the School Food Plan, the School Games and the money that we are putting into school sports funding—£150 million a year—all contribute to the joint effort across government to influence the way in which calories are consumed by children. I have encouraging news on that front, which is that the level of child obesity is now the lowest that it has been since 1998, so we are moving in the right direction.
Lord Ribeiro (Con)
My Lords, I congratulate the noble Earl on leading on the successful amendment in this House which led to the vote going through the other place yesterday on smoking in cars. Can he further protect children by tackling the issues around obesity? What are the Government doing to encourage the soft drinks industry to take action on calorie reduction as part of the responsibility deal?
Earl Howe
My Lords, I think that the compliment should be paid to my noble friend Lord Ribeiro for the part that he played in bringing about the amendment on smoking in cars. A number of soft drinks companies have taken action to reduce calorie content in their drinks. Coca-Cola has reformulated its Sprite product. AG Barr pledged to reduce the average calorific content in its portfolio of drinks. I have mentioned Sainsbury’s and Tesco’s actions on their own brands. Premier Foods has reformulated various products and reduced sugar in those. Therefore, we are making headway and I think that the responsibility deal is proving its worth.
Lord Patel (CB)
Does the Minister think it might be advisable to ask the Government’s Scientific Advisory Committee on Nutrition to define a standard of added sugar that should not be exceeded in 100 millilitres of fluid or 100 grams of food?
Sudan
(10 years, 10 months ago)
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Lord Alton of Liverpool
To ask Her Majesty’s Government what is their assessment of the humanitarian situation in Darfur and other parts of the Republic of Sudan following the decision of the Government of Sudan to suspend the work of the International Committee of the Red Cross.
Baroness Northover (LD)
Around 3.5 million people in Darfur are in need of humanitarian assistance, including around 380,000 people who were displaced in 2013. The suspension of the ICRC’s work therefore comes at a critical time, as it supports more than a million people. We are seriously concerned about the impact of this decision on them.
Lord Alton of Liverpool (CB)
My Lords, I thank the noble Baroness for that reply. Will she confirm that in the 10 years that have elapsed since I described to your Lordships’ House the conditions in the refugee camps in Darfur, some 2 million people have been displaced and between 200,000 and 300,000 people have died there? Some 57 peacekeepers and UNAMID personnel have been murdered, with no consequences for those responsible, while humanitarian agencies are expelled and aerial bombardment continues unabated, both in Darfur and in Kordofan. Why, while these serial violations occur, do we use British resources to pay off Sudan’s debts? Why, as we approach the fifth anniversary of the indictment for crimes against humanity of Field Marshal Omar al-Bashir, the President of Sudan, can he travel abroad with impunity and continue to control vast personal and commercial interests while openly boasting that 2014 will be the year that he will finish off what he began in Darfur 10 years ago?
Baroness Northover
My Lords, I pay tribute to the noble Lord for the spotlight that he has focused on the situation in Sudan. He is right about the dire situation of many of the people there. We have no doubt about the serious shortcomings of the Khartoum Government. The UK Government’s primary and only concern is the welfare of the Sudanese people. Our engagement and support is driven by what will make a difference to them. We cannot walk away and we work at every level to try to secure the kind of humanitarian access that is required, as illustrated by what the noble Lord said. We are not paying off the debt of the Sudanese Government.
Baroness Kinnock of Holyhead (Lab)
My Lords, President al-Bashir has been indicted by the ICC for multiple charges of crimes against humanity and genocide in Darfur, yet this cruel and vicious man is free to enjoy power and wealth while his regime’s oppression, corruption and aerial bombardments continue. Will the Minister give the House a clear undertaking that the UK will not follow the lead of the Netherlands and support calls being made for debt relief for a regime that does not care about the poverty and misery inflicted on Sudanese people?
Baroness Northover
We emphasise all the time that the Government of Sudan are responsible for meeting the needs of their own people. My right honourable friend the Minister for Africa raised a number of key issues relating to the areas the noble Baroness is talking about with the Government of Sudan and key regional figures in a visit last month and at the recent AU summit.
Lord Avebury (LD)
My Lords, will my noble friend acknowledge that the Government of Sudan, led by an alleged war criminal, as has been said, has embarked on the genocidal starvation of the population of South Kordofan and Blue Nile by denying all humanitarian access to these states, and by the systematic destruction from the air of their agriculture? Could fresh charges be laid against al-Bashir at the International Criminal Court in respect of these crimes? Will the Government think of convening an international conference on the means of deterring the bombings, including the use of drones against aircraft used for that purpose?
Baroness Northover
As indicated by the previous question, the Government of Sudan have a clear obligation to co-operate with the International Criminal Court in terms of Security Council Resolution 1593 and have repeatedly failed to do so. We continue to make clear to the Government of Sudan that we expect compliance with the arrest warrants for the ICC indictees. The noble Lord mentioned further challenges and a possible new Security Council resolution. I must tell him that we think it is unlikely that that will be achievable at the moment, but obviously we take very seriously the reports that are coming through to us.
Lord Anderson of Swansea (Lab)
My Lords, will the Government refuse to be part—directly or indirectly —of any debt relief operation?
Baroness Northover
We are not negotiating any debt relief with the Government of Sudan. As the noble Lord probably knows, that has to be achieved through the Heavily Indebted Poor Countries process.
Lord Elton (Con)
My Lords, will my noble friend tell us why it is unlikely that a second resolution could be achieved, what we are doing to change that situation and what other means there are to bring this terrible man to justice?
Baroness Northover
My Lords, if we could deliver what is already there, that would be a signal achievement, and we are doing our best to achieve that. The noble Lord will be aware that the aim to ensure that the dire situation of those in Sudan is addressed means that often one has to negotiate at every level of government to try to ensure that Sudan does not hold its people to ransom as we try to get humanitarian aid in.
Baroness Masham of Ilton (CB)
My Lords, have other aid organisations also been banned? It is most extraordinary that the Red Cross has been banned as it is a non-religious, non-political organisation.
Baroness Northover
We are hoping that the ICRC will be able to deliver the humanitarian relief that it was delivering before. Negotiations are at a delicate stage. A number of other international organisations are working with enormous difficulty in the area, some with greater reach than others. Some are still there, but a number have had to pull back.
Reading Clerk
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The Lord Speaker (Baroness D’Souza)
My Lords, following the announcement of the retirement of the Reading Clerk, Rhodri Walters, at the end of this month, I chaired a board yesterday to select his successor. Three candidates were interviewed, and the successful candidate was Simon Burton. At the appropriate time, I shall invite the House to approve his appointment, but I am sure that, meanwhile, your Lordships will wish to join me in congratulating Simon on his new appointment.
Business of the House
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Lord Hill of Oareford
That the Question for Short Debate in the name of Lord Mawson, set down for Wednesday 12 February, be advanced to after that in the name of Baroness Jones of Moulsecoomb.
Refreshment
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The Chairman of Committees
That Lord Fink be appointed a member of the Select Committee in place of Lord Howard of Rising, resigned.
Pensions Bill
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Lord Bates
That the amendments for the Report stage be marshalled and considered in the following order:
Clauses 1 to 5, Schedules 1 and 2, Clauses 6 and 7, Schedules 3 and 4, Clauses 8 and 9, Schedule 5, Clauses 10 and 11, Schedule 6, Clause 12, Schedule 7, Clause 13, Schedules 8 and 9, Clause 14, Schedule 10, Clause 15, Schedule 11, Clauses 16 to 23, Schedule 12, Clause 24, Schedules 13 and 14, Clause 25, Schedule 15, Clauses 26 to 31, Schedule 16, Clauses 32 and 33, Schedule 17, Clauses 34 to 43, Schedule 18, Clauses 44 and 45, Schedule 19, Clauses 46 to 49, Schedule 20, Clauses 50 to 56.
Consumer Credit Act 1974 (Green Deal) (Amendment) Order 2014
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Baroness Verma
That the draft order laid before the House on 9 January be approved.
Relevant document: 18th Report from the Joint Committee on Statutory Instruments, considered in Grand Committee on 4 February.
Localism Act 2011 (Consequential Amendments) Order 2014
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Baroness Stowell of Beeston
That the draft order laid before the House on 7 January be approved.
Relevant document: 17th Report from the Joint Committee on Statutory Instruments, considered in Grand Committee on 4 February.
Water Bill
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Lord Whitty
“Onshore oil or gas activities: effect on water environment
In Part 1 of Schedule 5 to the Environmental Permitting (England and Wales) Regulations 2010 there shall be inserted after paragraph 13—“Onshore oil or gas activities—effect on water environment13A (1) Without prejudice to the operation of Regulation 35(2) and paragraph 5(1)(d) of Schedule 10 and of Regulation 35(2) and paragraph 7(j) of Schedule 20, the regulator shall refuse an application for the grant or variation of an environmental permit or for the transfer in whole or in part of an environmental permit if—
(a) the regulated facility to which the application for or transfer of the environmental permit relates is to be carried on as part of an onshore oil or gas activity; and(b) the regulator is not satisfied that the applicant or the proposed transferee has made or will make adequate financial provision for preventing or mitigating pollution of the water environment, by ensuring all of the following—(i) operation of the regulated facility in accordance with the environmental permit;(ii) compliance with any enforcement notice or suspension notice or prohibition notice or mining waste facility closure notice or landfill closure notice which may be served on the applicant or transferee by the regulator under these Regulations;(iii) compliance with any order of the High Court which may be obtained against the applicant or transferee under Regulation 42 for the purpose of securing compliance with any of the notices listed in sub-paragraph (ii);(iv) compliance with any order of any court issued under Regulation 44 against the applicant or transferee; and(v) recovery by the regulator of its costs upon any exercise of its power against the applicant or transferee under Regulation 57;(c) for the purpose of this paragraph “onshore oil or gas activity” means any activity for the purpose of exploration for or extraction of onshore oil and gas;(d) for the purpose of this paragraph “adequate provision by way of financial security” means financial provision which is sufficient in value, secure and available when required.”.”
Lord Whitty (Lab)
My Lords, before we get on to this afternoon’s main business of flood insurance, I have down one amendment, relating to environmental regulation, which concerns the effect that fracking will have on the water supply system. This has been a major concern in another place for a number of Members of Parliament, who have local problems about the impact that any major expansion of fracking might have on watercourses and water supplies.
I do not intend, this afternoon, to open up the whole debate on the importance or otherwise of fracking, what its effects might be and whether we could repeat, in the UK and Europe, the experience of the United States. For what it is worth, I doubt that it will be transformational, but it will be important and will produce some significant gas and oil in this country. That will need to be tightly regulated by the Environment Agency, the HSE and local planning systems. In particular, water supplies and watercourses will need to be protected and, if anything goes wrong, fracking companies will have to be seen to be clearly liable.
On the relationship between fracking and water supplies, there are three main issues. First, there could be pollutants released, potentially, into water systems and aquifers by the fracking process—that is, the chemicals contained in the fluids that are used in the hydraulic fracturing process. There are also naturally occurring contaminants which could be released from the shale itself, including naturally occurring radioactive contaminants. There could also be fugitive emissions released into ground-water, particularly of methane. All of those could have serious effects on water quality, ecology, habitats and water supply. To a greater or lesser extent, all have been experienced in the United States, although on a limited basis.
Secondly, if the fracking industry develops on any scale, for the purposes of shale extraction fracking will also require major abstraction of water from the system. As we have already stressed in previous days in Committee, the urgency of reform of the abstraction system needs to take into account the impact of mass fracking on abstraction levels and hence on already stressed catchments. This is linked to amendments we discussed the other day. For example, if fracking companies take up the headroom in existing licences in particular catchments, then a lot of catchments could be in serious trouble, if they are not already.
Thirdly, there is the requirement for the cleaning and treatment of the water that has been used in fracking, which will need to be decontaminated.
Amendment 154 really focuses on the first of these effects, and to some extent the third, but all three are important for the water system and need to be taken into account. It is vital that we protect ground and surface water. For example, in the south of England, 70% of the water supply depends on healthy aquifers. This includes drinking water as well as water for industrial and agricultural use. Frankly, the American experience, though variable, is not completely reassuring. In another place, my colleague Joan Walley quoted an example from Pennsylvania, where methane was found in 82% of drinking water samples. We need to be reasonably confident that our regulators, the Environment Agency and the Drinking Water Inspectorate, will operate a much more effective regulatory regime here in the UK than has been operated in certain parts of the United States. Even so, and with a fairly high degree of confidence in our regulators, disasters—or at least leakages—may well happen.
We have a history of earlier energy sources to instruct us: the legacy of coal mining and, in a somewhat different vein, the earlier phases of the nuclear industry. Not only can pollution occur, we have seen the inability of the organisations that produced the pollution to finance the decontamination and the clear-up, which have required very substantial sums. We all support the “polluter pays” principle in theory, but we also have to ensure that the polluter can pay. In both coal and nuclear, it has in effect fallen to the taxpayer to pay for the clear-up over the past few decades, and that is still going on.
Lord Oxburgh (CB)
My Lords, I have a question for the Minister in this general area. Does he feel that this proposed regulatory environment would cover cases in which fracking companies pipe sea-water on to land and then either dispose of it on land or, indeed, discharge it back into the sea? If it does not, it should.
I have a brief comment on what the noble Lord, Lord Whitty, said. To be fair, almost any ground-water or well-water that is drawn in regions that are underlain by coal measures—and this is predominantly the case in Pennsylvania—have some methane in those waters.
Lord Winston (Lab)
Before the noble Lord sits down, does he have any information as to whether sea-water pumped back into the sea after fracking might be hazardous to the environment in the sea-water?
Lord Oxburgh
My Lords, I think that it depends almost exclusively on how that water has been treated by the company that has used it.
The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord De Mauley) (Con)
My Lords, as the noble Lord, Lord Whitty, has explained, Amendment 154 would require onshore oil and gas operators to provide financial security when applying for an environmental permit so that funds would be available to deal with any water pollution incident caused by the operator. The amendment would impact on both the conventional and unconventional oil and gas sectors. It would address any pollution that they caused to the water environment but not any other damage that might be caused by their activities.
We want a successful industry in this country—an aspiration supported at Second Reading—to provide us with an important source of gas for our future, but it is vitally important that it is safe. We already have a well established UK conventional onshore oil and gas industry that has happily coexisted with local communities, in some cases for half a century or more. This has been achieved not least because the industry has maintained a good record of environmental responsibility and competence. The existing controls and the application of good operational practice have served us well to prevent pollution from onshore oil and gas activities and to tackle in an appropriate way any problems that emerge.
The Department of Energy and Climate Change assesses as a matter of course whether a company has sufficient funding for its planned operations prior to awarding any licence. It also checks at the drilling stage and, where relevant, at the production stage that the company has appropriate insurance. Similar financial competence checks are also carried out by the Environment Agency as part of the permitting process. In the event of serious damage to surface or ground-water, the Environment Agency and Natural Resources Wales have powers, under the Environmental Damage (Prevention and Remediation) Regulations 2009 and the equivalent Welsh regulations, to serve a notice requiring that the polluter pays to clear up the pollution. If a significant environmental risk becomes apparent, the Environment Agency has the authority to stop the activity. These powers apply to a wide range of operations and activities undertaken by different industries. I do not think that it would be appropriate to create any specific provisions for the oil and gas industry.
However, the Government are aware that there are widely felt concerns about the capacity of companies exploring for shale gas to tackle any liabilities that might arise. This is the concern that the noble Lord, Lord Whitty, is pointing to. Therefore, I am pleased to inform your Lordships that the Department of Energy and Climate Change and the shale gas industry are working to put in place a robust scheme that would cover liabilities even if the relevant operator is no longer in business. They are also in discussion with leading insurers about proposals to build expertise and capacity in the insurance market to facilitate the development of products specifically appropriate for unconventional operations, which in turn could facilitate the development of an industry-wide scheme. In addition, while we already have a robust regulatory framework in place, I can confirm that it will be reviewed and refined as appropriate as we move towards the production phase. The question of the noble Lord, Lord Oxburgh, will be addressed in that process. This regulatory review will include the question of environmental liabilities in the wider sense, not solely relating to water.
I am sure that noble Lords will agree that these two initiatives, taken together, constitute a sensible approach towards ensuring that liabilities are covered in a comprehensive and proportionate way, rather than taking what might be a rigid legislative approach on a piecemeal basis. I hope that this news provides the reassurance that the noble Lord, Lord Whitty, needs that the Government are taking the right steps to ensure that liabilities are dealt with appropriately, and that he will feel able to withdraw his amendment.
Lord Whitty
My Lords, I thank the Minister for that. It is a degree of reassurance. I thank the noble Lord, Lord Oxburgh, for expanding the area of concern into the issues of the effect that bringing sea-water on land for use may have on watercourses and the possibility of contamination of the sea-water itself.
There is the potential for such a widespread effect on the water system that I feel justified in bringing this amendment before the House. I am pleased to hear the Minister say that the industry, the insurers and the Government are looking at a scheme. This obviously recognises the very widespread concern in the country about the possible impact of fracking which, he is right to say, is wider than the issue of the effect on the water supply system.
I am still slightly concerned that we might get into a situation where, if the industry develops to the degree that many of its advocates suggest is possible, we end up with a substantial problem—a problem that could end up on the taypayer’s desk or bank account. In the nuclear industry we have provided for such a possibility for current operations, although obviously there is a huge legacy that has not been provided for and a huge bill for the taxpayer as a result. We have done the same on a much lesser scale in relation to landfill. We could probably also establish a regime in relation to fracking to ensure that this liability was covered. However, the Minister has indicated that there is some progress. I will watch this space, as I am sure will others. At this time, I beg leave to withdraw the amendment.
Baroness Parminter
Baroness Parminter (LD)
My Lords, in the face of the desperate flooding challenges that many in our country are now facing and look set to face in the future, I strongly welcome the proposals for Flood Re, which we are now coming on to debate and which will provide affordable flood cover for all households. My Amendments 154A, 154B, 156A and 156B give Flood Re, which will be a private company in receipt of public money, a duty to act in the public interest and extend its remit to help deliver a more resilient future in the face of flooding, working with other bodies to achieve that where appropriate.
The Flood Re scheme will benefit householders at risk of flooding. However, if flood risk management is not significantly improved over the lifetime of the scheme, we will be in no better a place after 25 years than we are now. The adaptation sub-committee of the Committee on Climate Change—and I am glad to see the noble Lord, Lord Krebs, in his place today—in its policy note to the Government last month makes it clear that significant increased investment in flood-risk management is required, as well as in flood defences, if the levels of risk are to be maintained, let alone reduced.
Flood Re could raise awareness of flood risk, direct policy holders to advice and support and, crucially, if sufficient reserves are generated, it could support measures that individuals or groups can take to reduce flood risk. Surplus funds could, for example, pay for property-level measures, such as flood gates and air brick covers, which typically cost £5,000 per property. Government grants of between £2,000 and £4,500 are available, so Flood Re could, for example, meet the difference. It would be a sound investment, given that every £1 invested in property-level protection typically achieves a benefit of £5 or more; or it could contribute towards the cost of Environment Agency schemes that do not justify full government grants under the partnership funding approach. Funding from Flood Re could make the difference between a flood defence scheme going ahead or not, which would be worthwhile if it were to protect some of Flood Re’s highest-risk customers.
To determine what Flood Re could do, it is critical to know how any surplus funds will be defined and what will happen to them. The evidence of a Defra stakeholder presentation on Flood Re, in a slide entitled “Flood Re’s exposure to claims”, gives a median-loss scenario of £65 million in claims per year. That means that it could have at least £100 million in reserves at the end of the first year. Defra’s final impact assessment for Flood Re, in table 5 on page 20, states that, over the life of the scheme, it should on average make an annual surplus of £27 million. This calculation is based on Flood Re’s expected loss scenario which takes account of the low-probability/high-cost flooding that could take place during the 25 years for which the scheme is operational.
Either way, Flood Re is likely to hold significant sums of public money that could be used to help manage down flood risk. This would help save everyone money: high-risk households, other policyholders and Flood Re itself. This could be achieved without the main £180 million levy needing to be increased because it could just be pursued if Flood Re were in surplus. Over the 25-year lifetime, this would make a material difference to the number of homes at significant risk while helping those households secure affordable flood insurance on an ongoing basis once Flood Re is withdrawn. It is therefore important to know how the Government expect any surplus to be defined, in order that it might support such an approach. I look forward to hearing more from the Minister on that in his response.
We need legislation that expresses how Flood Re can help to deliver social objectives without claiming that Flood Re can or should solve all flood risk management issues. I hope that I have made clear what I am seeking for Flood Re to achieve, and the wording of these amendments is an attempt to do just that. I beg to move.
Lord Shipley (LD)
My Lords, I support my noble friend Lady Parminter and strongly welcome the Government’s proposals on the Flood Re scheme. Getting insurance in high-risk areas is of fundamental importance to the individuals affected; the outcome of the negotiations and planning that have gone into the scheme is very important. All those who have taken part in that should, in my view, be congratulated.
However—I refer here specifically to Amendments 154A and 154B—Flood Re cannot be just about reinsurance: it also has to be about reducing flood risk over time by getting householders who have been flooded and claimed on their insurance and householders who are at high risk to invest in better flood protection. As my noble friend Lady Parminter said, in 25 years’ time we should not be in a position where we have not made any progress in flood protection and end up simply repeating the process. Therefore, Flood Re should not be seen simply as a financial transaction providing a means of reinsuring properties at risk, or deemed to be at risk. We have to go a step further and provide incentives for people to engage proactively in flood risk management. There are clear benefits in this for the insurance industry: better protection will lead to lower total claims. Householders will gain greater security from flooding.
Amendments 156A and 156B—which are intended to be probing amendments—are about the duty of the Flood Re scheme administrator to co-operate with all those bodies that have an existing duty to co-operate under the 2010 Act. It is very important to put this point in the Bill because, as I said, the scheme should not be seen to have just a financial role: it has to be about resilience as well. The introduction of the FR scheme administrator means that strategic interventions can be undertaken. For example, each household in a given high-risk area might be with a different insurance company, so developing strategic solutions involving the insurance industry, which has not so far been possible, now could be. Examples are in data sharing: competition rules have meant that it is not possible to get access to insurance claims data to identify trends in the scale and frequency of flooding. Having this data available through the scheme administrator, alongside public information held by the public agencies and the water companies, could be crucial in making investment decisions to reduce flood risk and, of course, future claims. The FR scheme gives us an opportunity to enable this information to be made available for high-risk areas and we need to make sure it happens as part of this Bill.
My noble friend Lady Parminter referred to the Committee on Climate Change—and we might hear more about that shortly—but the estimate that there could be up to 190,000 homes that could have their flood risks reduced through measures to protect them is a very important factor. Flood Re could be charged with taking a more proactive approach to encouraging and supporting those people in high-risk areas to protect themselves better. As my noble friend Lady Parminter has made clear, there could be systems of loans and investments as well to assist householders.
There is a danger in the proposals in the Bill that people in high-risk areas will simply be satisfied with having secured reinsurance. They might not fully understand the benefits of actually undertaking flood prevention work. They may simply end up accepting the reinsurance at the price they have to pay. There is a further factor that not everybody, even in a high-band property, is cash rich. It could be that, for some, the flood protection works that they would have to undertake would be too costly.
The benefits to the insurance industry of all four of these amendments are clear. It should reduce the level of claims it receives, and therefore the cost of that. There is a major gain for individual householders in that they will be encouraged—and able—to secure greater investment in flood prevention works to their properties. Therefore, I hope that the Minister understands, when he comes to reply, that these four probing amendments are all very positive in their approach in that they build on the excellent work that the Government have done with the insurance industry. However, let us work out ways in which we could do a little more to encourage flood prevention to be undertaken, and that greater resilience, as part of the Flood Re scheme.
Lord Campbell-Savours (Lab)
My Lords, I, too, am very interested in this amendment, which has been drawn to the attention of people who live in my former constituency, in particular in the town of Keswick, which noble Lords may recall was the victim of substantial flooding a few years back.
I received a letter from Mrs Lynne Jones, the chair of Keswick Flood Action Group, one of the bodies that was established following the floods some years ago. I will read her letter to the House, because it comes from the front of the battle against flooding, from people on the ground who have to deal with this every day. She writes:
“My particular concern has always been that there is no encouragement or independent advice to reinstate properties in a more flood-resistant, resilient manner after a flood. It can be considered as betterment. Insurance companies have to reinstate properties with insulation which satisfies government legislation, whether there was insulation before or not. However, there is no requirement to consider solid waterproof floors as opposed to floorboards or a rewire from the first floor down, or the many other measures which can make flood recovery that bit less stressful, prolonged and expensive should the worst happen”.
In other words, people on the front line in this battle against flooding are now considering to what extent this scheme can be adapted in a way that incentivises investment not just in the solution of the immediate problem but in remedial measures which can affect claims in the future.
Lord Krebs (CB)
My Lords, I support the amendment in the name of the noble Baroness, Lady Parminter. As will be apparent, the amendments that I will bring forward shortly are in the same vein. They reflect the points I made in a letter to the Secretary of State on 22 November 2013, in which I said:
“The Flood Re scheme offers the opportunity to strengthen incentives for the uptake of household flood protection measures but it is currently not designed to do this. The consequence is that Flood Re costs will be higher than they need to be, at the expense of householders funding the programme through the industry levy”.
I declare an interest as the chairman of the adaptation sub-committee of the Committee on Climate Change.
As this discussion has made clear, there is a real opportunity here and this is a helpful and supportive proposal. I will shortly describe my amendment, which would redesign Flood Re to help it, as has been said, to do two things: to provide cover for householders at risk and, at the same time, help to reduce those risks over the years ahead, so that when Flood Re comes to an end householders do not drop off a cliff after 25 years.
Earl Cathcart (Con)
My Lords, I am very nervous about these amendments, probing as they are. Flood Re has one aim: to provide flood insurance for those people who cannot buy it at the moment. The first year or two will be very difficult until it has built up its reserves, provided that there are not too many claims in those early years. However, I am very nervous about the suggestion that Flood Re ought to spend money on flood-resilient activities. What happens in 10 years’ time if we have another horrendous year of rain—floods all over the place—and these households go to Flood Re and say, “I’ve now got a claim, will you pay it?”. What happens if Flood Re replies, “I’m so sorry, I have paid it all out on building a dam here and there”? I do not think it is the right answer to get Flood Re to pay money out other than for genuine flood claims.
The Earl of Lytton (CB)
My Lords, I have a great interest in this group of amendments. I certainly understand the geometry that lies behind it, particularly that outlined by the noble Lord, Lord Campbell-Savours. I probably follow the noble Earl, Lord Cathcart, in this. As I understand it, Flood Re will have significant start-up costs. Also, the Environment Agency’s investigation and collation of information from the hazard risk assessments, which it is charged with carrying out, will be a draw-down on the Flood Re fund. That means that, in the early years, there may be significant sums taken out of the pot. I understand that the intention is that the Government should put in plan B configurations to deal with that eventuality. However, given the sporadic and capricious nature of severe flooding, we do not have any time to waste in putting measures together to improve resilience and protect properties where they can be protected.
I have a technical interest in this: I am a practising chartered surveyor and property valuer. I am also involved in the parish and town council sector, as is well known. I can see the rationale behind an early start for communities and individual property owners coming together to create robust schemes. We need to do that as soon as the present flood waters have died down, as I hope they will. Time is of the essence, because we do not know when the next flood will come. There is a conundrum between the build up of the pot of Flood Re on the one hand and spending funds on resilience and protection on the other. In a later group of amendments, I will say a bit more about Flood Re, which is intended to cover a very limited and narrow range of circumstances. I will explain why I think a larger problem of an entirely different magnitude is lurking here.
We need to make a start. On the basis that the economy is improving, this is exactly the time when these investments need to be made. I will be very interested to hear what the Minister has to say about the pot, how it will be funded and how we get the early years’ work put in place. Like the noble Earl, Lord Cathcart, I obviously would not want to see the pot devoted to one large project to the exclusion of all others. I am sure that would not be the case. If we do not get this right, the credibility of FR is likely to falter. I think that is something on which the Minister can elaborate.
Lord Crickhowell (Con)
My Lords, one of the great advantages of modern technology is that you can discover something you did not know anything about while a debate is taking place. As this debate started, I chose to look at a Defra website on obtaining flood insurance in high-risk areas. At the top of the main page, a number of participants are indicated: BIBA, the Environment Agency, Which?, ABI, the National Flood Forum and Defra. Flood Re does not appear there yet. Can the Minister say how far the department has already gone down the road that is suggested here? This website, which contains a great deal of other valuable information on the steps you could, and should, be taking, already exists. Presumably, at some point Flood Re will be fitted into the whole arrangement. My only anxiety about the Flood Re participation is that indicated by my noble friend—namely, that against the present background, I only hope that there is a surplus in the early years because the fact is that we could have a situation whereby, far from having a surplus in the early years, we have a substantial loss. However, as there is a website and as a good deal of advice is being given by the department—I think it is rather good advice—perhaps my noble friend will indicate what the department’s overall approach is and how he sees Flood Re fitting into what is already going on.
Lord Whitty
My Lords, in her opening remarks, the noble Baroness was correct to set this matter in the broader context of where we are now, and have been in recent years, with instances of serious flooding in Somerset this week, possible serious flooding in Surrey by the end of the day, that which occurred in Keswick not long ago; and the resources that are needed to ameliorate that position in the long term which are, essentially, the resources that the Government are putting in. We will no doubt return to that issue at some stage in these proceedings. However it raises the question of whose responsibility this is. I have slight reservations about these amendments in that regard. The public authorities and the Government have responsibility for ensuring that adequate resources are available for flood defence and catchment management to mitigate the impact of flooding and insurance and reinsurance schemes can help through their normal operations. However, insurers can insist on mitigation or flood recovery measures along the lines mentioned by my noble friend Lord Campbell-Savours as a condition of renewal or extension of policy cover or as a deduction, if you like, from compensation. That is a normal insurance operation.
These amendments seem to be saying that Flood Re would take on some public responsibilities and social objectives and have executive responsibility for delivering flood limitation measures. It is important and right that Flood Re should co-operate with the public authorities, landowners and everybody else in this area, so in that sense I support Amendment 156B. However, it is also important that we do not transfer the risk from public authorities and property owners to an insurance system which, at the end of the day, is viable only if it takes a cut from all policyholders, including those whose properties are not at all at risk of flooding.
This is a difficult issue. The noble Baroness referred to public money. In one sense public money is involved because we are legislating for the system and the Treasury will, therefore, regard the expenditure involved as public money, but it is not really public money—it is the policyholders’ money. At the end of the day, you cannot place too many responsibilities on the Flood Re operation when it is dependent on individual households and businesses paying into it for insurance purposes.
It may well be that a surplus is generated and that the assessment of who pays for flood defence is looked at more broadly. Clearly, there are limitations on public expenditure and expenditure on better flood defence and catchment management could be met by those who are the most direct beneficiaries of it. You could argue that insurance companies themselves benefit from fewer claims as a result of more effective flood defence, but that is a slightly wider argument than placing the statutory responsibilities for which these amendments ask on to Flood Re itself. I think that that is slightly going round the back door.
As I say, I am slightly torn on this issue because I agree with a lot of what the noble Baroness and the noble Lord, Lord Shipley, said. However, I think that we would probably place too much responsibility on Flood Re if we adopted all these amendments.
Lord De Mauley
My Lords, I am grateful to my noble friend Lady Parminter for her amendments regarding flood resilience and Flood Re’s role in that matter, and to all noble Lords who have spoken. Regarding Amendments 154A and 154B, I agree with my noble friend Lord Shipley that we need to tackle the root cause of the difficulties with the availability and affordability of flood insurance—the flood risk that households face. The coverage of the tragic events of the past couple of months, which my noble friend Lady Parminter mentioned, have brought the full impact of this home to us all. I thought that the letter read out by the noble Lord, Lord Campbell-Savours, set out the problem very well.
Households benefiting from Flood Re need to understand both their flood risk and the likely impact of the withdrawal, over time, of the subsidy on their future premiums. I hope that noble Lords will be reassured to hear that we have agreed with the Association of British Insurers the principle that insurers will be required to provide such information to customers when a property is ceded to Flood Re and at the point of a claim. I hope that the statutory requirement for the Flood Re scheme to manage, over the period of the operation of the scheme, the transition to risk-reflective pricing of flood insurance for household premises also offers some reassurance.
The ABI has now come forward with draft proposals for ensuring that the correct incentives are in place to drive uptake of resilient repairs after a flood, particularly for those properties subject to repeat flooding. We are still agreeing the detail of this approach and I hope to have more to say on Report. Encouraging households to become more resilient over the period of the scheme will help to reduce the impacts of subsequent flooding.
Turning to Amendment 156A, the subsection that my noble friends seek to amend has been drafted in such a way to provide firm pointers as to what the Flood Re scheme administrator would need to have regard but is also intended to allow for a degree of flexibility that may be needed as the scheme is finalised. I assure noble Lords, in the strongest terms, that the Government are absolutely committed to taking forward Flood Re, together with the insurance industry, and that both parties are working very hard to achieve this.
We expect the administrator to act responsibly in its management of the scheme throughout its life and we have every intention of ensuring that it discharges its functions in a proper manner, supported by the duties we will place in secondary legislation. The regulations made under Clause 54 will be subject to public consultation and we are currently considering carefully the Delegated Powers Committee’s recommendation that regulations made under this clause should be subject to the affirmative procedure. I trust that this assurance puts on the record our intentions in this regard.
As regards Amendment 156B, my noble friends are right that co-operation between Flood Re and flood risk management authorities will be important, in particular should Flood Re wish in the future to commit any of its resources to supporting flood risk mitigation measures. Clause 54 provides for Flood Re to share information held by it with the Environment Agency, its equivalents in devolved Administrations and any other bodies specified in regulations. It also provides for Flood Re to have a duty to act in the public interest, so where it is in the public interest for Flood Re to co-operate with other risk management authorities, it would be expected to do so.
Under the Flood and Water Management Act 2010, flood risk management authorities have a duty to co-operate with each other in the exercise of their flood and coastal erosion risk management functions. This is because the causes of flooding can cross organisational boundaries and responsibilities. For example, flood risk management schemes to protect one area may make the problem worse elsewhere if there is not a partnership approach to developing solutions. Flood Re will not have an operational role in designing or implementing flood risk management schemes. As I think the noble Lord, Lord Whitty, suggested, that would be beyond the scope of Flood Re and would require different skill sets. Flood Re will therefore not have the same degree of interaction with the risk management authorities that they will have with each other. I am not convinced that there is a need to extend the requirements based upon the Flood Re body.
Perhaps I may say to my noble friend Lord Cathcart that while directly managing flood risk is not the purpose of Flood Re, it is nevertheless vital that Flood Re does not just deliver affordable flood insurance. It should also contain the right incentives for householders and insurers to put in place the necessary measures to become more resilient, since otherwise the effective price limits in Flood Re may remove some of the financial incentive to take such action. He has suggested—the noble Earl, Lord Lytton, also asked about this—that Flood Re will need to build up its reserves, which is of course right, but it will have access to the proceeds of the levy and be able itself to take out reinsurance. Can I offer to meet noble Lords before Report, on which occasion I shall of course be happy to provide an update? Perhaps I could also address the point made by my noble friend Lord Crickhowell at this stage. I shall come back on Report to noble Lords with more details of how those who flood repeatedly might be treated. For the reasons I have outlined, I hope that I can persuade my noble friend to withdraw her amendment.
Baroness Parminter
I thank the Minister for that helpful response and I thank Members around the Committee who have contributed to this debate. It has helped to spell out in more detail what we are all hoping to achieve for Flood Re. We do not expect it to be able to answer all the social objectives in terms of flood risk management, but we should accept that it is not just a flood insurance vehicle, important and critical though that is. It will also need to provide the necessary incentives to transition to a stronger place in the future. The wording of the amendment may not be ideal, but at least it has facilitated this debate. I hope that noble Lords are not disappointed in my having brought it forward in that light.
I thank the Minister for agreeing to meet noble Lords between now and Report. That will be helpful because there are still questions about the surplus and how it will be defined. The comments made by my noble friend Lord Cathcart and others remind me that we are not guaranteed surpluses with Flood Re; this is only what we are saying if those surpluses are achieved. I am happy to learn that the Minister intends to say more on this issue at the next stage. On that basis, I beg leave to withdraw the amendment.
Lord Moynihan
“( ) Within 12 months of this Act coming into force, the Secretary of State must publish and lay before both Houses of Parliament a report on the ability of businesses in areas of high flood risk to secure affordable insurance cover.”
Lord Moynihan (Con)
My Lords, I shall start by echoing the view that Flood Re is a welcome scheme, and I congratulate the Minister, his colleagues and the industry on introducing it. The scheme is to be supported in principle, but the devil may be in the detail. Other amendments grouped with mine allow the Committee to consider those who will be excluded from Flood Re, their ability to get insurance, and the costs of such insurance. Mine is a probing amendment but, that said, it is important in that it focuses on the significant absence of much-needed support to SMEs in the proposed Flood Re scheme.
Under the current provisions, small businesses of up to 49 employees are covered under the statement of principles. The Bill before the Committee proposes a new scheme, Flood Re, which is substantially built on the statement of principles. However, Flood Re provisions extend only to domestic properties and offer no protection at all to any businesses except a category called “micro-businesses” at risk of flooding. This is a really important distinction between SMEs and micro-businesses. My noble friend the Minister may be able to clear up exactly what that distinction is when he comes to sum up.
Lord Sheikh (Con)
My Lords, at Second Reading I welcomed the Bill but outlined some concerns. I am extremely grateful to my noble friend the Minister both for the remarks he made during that debate and for the correspondence I have received since then. Indeed, he was able to alleviate a number of my concerns. However, there is one area where I still have a slight concern, which relates to the effect this legislation will have on small businesses.
At Second Reading I said that since small businesses will be ineligible for Flood Re, they will therefore be afforded less protection than in the statement of principles by which they are covered. In his correspondence to me, my noble friend the Minister said that it was the belief of the Government that there was not sufficient evidence to justify intervention in relation to small businesses. However, I believe that more should be done to protect our valued SMEs, many of which operate under tight budgets and may be unable to obtain affordable flood insurance. My noble friend the Minister has also said that it was his belief that SMEs were more able to protect themselves from flooding. Again, I point to the issue of cost here. Just as many SMEs struggle with the cost of insurance, they also struggle to afford to put in place measures to protect their businesses and livelihoods.
I welcome the Minister’s remarks that this issue will remain under review but I feel that this does not go far enough. If nothing further can be done to assist SMEs as part of the Bill, the amendment tabled by my noble friend Lord Moynihan could at least assist them in the future. In fact, it would benefit both the Government and SMEs because of the extra clarity it would bring. It would provide a mechanism to formally review the ability of businesses to take action to reduce flood risk and access flood insurance.
The conciliatory manner in which this Bill has progressed is most welcome and I would welcome anything further the Minister has to say on this issue. Again, I support the Bill and would like it to succeed, but suitable measures must be put in place in order that everybody gets the benefit of what we propose to do.
Lord Campbell-Savours
My Lords, I will speak to Amendment 160, in the name of my noble friends Lord Whitty and Lord Grantchester. I intend to speak on a number of amendments so I must declare an interest. I have a leasehold interest, with my wife, in a band G home on the Thames built on the flood plain. My flat is not threatened by flooding. My home has therefore never been evacuated and I have never made an insurance claim on a property I own. Nevertheless, I feel that I have an interest to declare while speaking on an issue that affects tens of thousands of home owners who similarly live in the vicinity of the Thames, many of whom are now being evacuated.
I start by congratulating the Government on introducing this scheme, which I understand was the subject of some very difficult negotiations with the insurance industry. I want to refer to a particular group of home owners, of which I am not one, who come under council tax band H. Council tax band H is pretty expensive property, as we know, and the flooding over the past few days has probably affected thousands of these properties up and down the River Thames between Chertsey and just south of Maidenhead, near Windsor. These home owners will be very worried about what is going to happen. They are excluded from this scheme. Not only do they have the problem of how to resolve their immediate difficulty of dealing with the flooding and the consequences for their homes, but they will also be worried about the longer term financial implications, in the event that their premiums are substantially increased—which they will be. I know that from my own experience in the Lake District, which I mentioned during my previous intervention. For most of my life, I lived there in the town of Keswick, which was subject to flooding. Many people there found it impossible to get insurance from insurance companies following the floods that took place some years ago.
There is going to be a real problem for these people. Many in the Thames Valley are not included in this scheme because their properties fall into band H. It is not that the Government need to interfere with this scheme. I understand its merits and it has been very sensitively negotiated. We very much support it. However, heads have got to be banged together to find a way of resolving the problem of many of these people who live in band H property.
People may ask what I am doing defending people living in band H properties from the Labour Benches. The reason is simple: many people who live in band H properties did not buy them as band H properties. They bought them when they were much cheaper, and when their incomes may well have been quite modest. Property price inflation in London and in the south of England has placed many people in this position. Even the way that the mansion tax is being construed may affect people who have quite small incomes. I am in favour of the mansion tax, but maybe the way that it is to be calibrated raises the same questions. People on low incomes who find themselves living in expensive properties—I am not one of them, as I said—have to be considered in these matters. I hope that the Government, even as late as this in the Bill, might on Third Reading at least make some statement as to what provision might be made for them, notwithstanding what the Bill provides on Flood Re.
The Earl of Lytton
My Lords, it is probably appropriate that I follow the noble Lord, Lord Campbell-Savours. I have to admit that I live in a band H property, but it is not in London and I am glad to say that it is built on a hill. My Amendments 160ZA and 161D are in this group. I shall be brief, because there is another larger issue that I want to address.
I tabled Amendment 160ZA to see whether I could flush out the rationale behind the exclusion of certain categories of property from FR, but also because there seemed to be a reluctance to consider both sides of the coin in terms of what is in and what is out of the safety net. What is in identifies and underlines what is out. It cannot be otherwise. The fact of exclusion does not mean that other insurers will not provide some cover, but it does, as the noble Lord, Lord Campbell-Savours, said, have consequences. I have certainly received correspondence suggesting some very significant rises in free market premiums based not so much on the immediate severe risk but on that broader category of material risk that will be flagged up and will lie between those that have no risk whatsoever and those that are protected by the FR safety net. It is in the public interest that any scheme report under Amendment 160 should look beyond the narrow scope of FR inclusions and also look at wider exclusions.
Baroness Parminter (LD)
My Lords, I put my name to my noble friend Lord Moynihan’s amendment and I shall speak briefly in support of it.
The Government’s impact assessment on managing the future financial risk of flooding states that there is insufficient evidence of a problem for businesses to get insurance and that there are other market mechanisms for them to get cover. However, the impact assessment focuses on the national impact, whereas flooding affects localities, so it is perhaps no surprise that it did not find that much evidence.
Further, the Government’s position is driven by their recent consultation on the issue, which asked for evidence of a need for a mechanism for small businesses and received a few responses from small businesses, which may well have had other priorities. The ABI has given the Government assurances that the broker community is doing,
“a good job working directly with business customers in getting a good deal for them”.
I contend that it is the Government’s job to insist that there be firm evidence of that, which is what the amendment is intended to deliver.
There are few studies of the impact of flooding incidents in general on business, apart from some by AXA, and they focus on the impact on individual businesses rather than the broader economic resilience of communities in the face of flooding. I could not find any research which looks at the significant impact of flooding on small businesses, which often make up the backbone of the rural economy. It is here that flooding has a huge impact not just on individual families and their businesses but on the complex web of supply and demand chains in the local economy. Ensuring adequate flood cover for small businesses, including farm businesses, is as important as supporting households if we are to protect the overall community resilience of rural areas.
As my noble friend Lord Moynihan said, small businesses were covered by the statement of principles and they were able to get flood risk insurance in the same way as households. Given that Flood Re does not guarantee them that insurance, we certainly need reassurance from the Government that they are mindful of the need for cover for businesses, particularly small businesses, and of their important role in rural communities.
Lord Ashton of Hyde (Con)
My Lords, I should declare an interest that I declared on Second Reading, which is that, until June, I was the chief executive of two insurance companies, and I still labour under some residual contract limitations.
There is an overriding need to put in place a workable solution that will, first, solve the most pressing need, which is to address the availability and cost of flood insurance and, secondly, do so in a way that is timely, affordable to the insurance industry, secured in co-operation with it and that does not allow government subsidy to create a huge deficit in the scheme over time.
Addressing the issue of small businesses raised by the amendment of the noble Lord, Lord Moynihan, we ought to remind ourselves that the statement of principles only covers the availability, not the affordability, of insurance for those small businesses. It covers only renewal policies, so the policyholder at risk of flooding cannot change insurer, and it does not cover the cost of the policy.
There is also the question of practicality. The introduction of businesses into Flood Re would dramatically complicate the pricing of the scheme, the availability of Flood Re as crucial reinsurance—on which the scheme depends—and, by no means least, the complexity of the internal model, which will have to be approved by the PRA. All the different coverage afforded by business policies, such as business interruption, contingent business interruption and loss of profits, will make the internal model much more complicated compared to what are fairly homogenous homeowners’ policies.
To address the most pressing need as soon as possible in a way that is acceptable to as many people as possible, we should concentrate on the most important issues and leave the Flood Re design as it is.
Baroness Bakewell of Hardington Mandeville (LD)
My Lords, I speak to Amendments 161B and 161C in this group. Although welcoming the introduction of Flood Re and accepting that it is essentially a scheme for domestic premises, I remain concerned about the exclusion of small businesses, especially in very rural areas. I refer specifically to those which are mixed hereditaments. The key question appears to be: what happens to mixed hereditaments in terms of qualifying for inclusion in Flood Re?
There are two scenarios for mixed hereditaments. The first is where the business element is deemed by the valuation to be de minimis. This means it forms such a small part of the overall hereditament that it appears only in a domestic list for council tax. The second is where the business element is more significant, and is therefore liable to both council tax and business rates. If the property does not appear in the waiting list for business rates as well as for council tax, the liable party may qualify for business rate relief. This could be small business rate relief, where it is their only business premises.
I understand that, currently, if the rateable value is less than £6,000 the relief received would be 100%. Rateable values between £6,000 and £12,000 receive relief on a sliding scale. This enhanced small business rate relief scheme has been extended until 31 March 2015, and not beyond that at the moment. The standard scheme allows a relief of 50%. In a rural settlement it might be the case that a village shop or post office is part of a mixed hereditament. In this case it would qualify for rural rate relief. Also, in a rural settlement, a pub with living accommodation above could qualify for rural rate relief on the pub element.
I am extremely concerned about excluding mixed hereditaments from access to Flood Re. This could have a dramatic impact, not just on the business owner but on those residents who use the business. If that business cannot get flood insurance it may remain unviable and may be forced to close prematurely if flooded. Where, for example, this is the last shop or post office in the village this could have a significant impact on the villagers.
Earl Cathcart (Con)
My Lords, I congratulate my noble friends Lord Moynihan and Lady Parminter on tabling Amendment 155, as it has given us a good chance to debate flood insurance for businesses, whether in Flood Re or in another mutual set up specifically. We are all under pressure to include small businesses under the Flood Re scheme. That is quite understandable. If I had a business in a flood risk area, I would want to insure it under the Flood Re scheme. I know that the Association of British Insurers and the Government looked at whether businesses could be included within the Flood Re scheme, but found that it threw up more problems than it solved. This is best illustrated with an example.
I am a free range egg producer on my farm in Norfolk, and when it came to buying insurance for the business, I was presented with a long shopping list of types of cover relevant to my business: property; business interruption; loss of profits; contractors “all risks”; terrorism and malicious attack; livestock, including theft, worrying, death after straying, accidental or malicious death; deterioration of stock, in my case probably due to bad feed or electrical failure; perils and fatal injury; livestock in transit; disease, in my case probably something like bird flu or salmonella; goods in transit; motor, for lorries, trucks, vans or cars; employers’ liability; public liability; product liability or environmental liability; legal and professional expenses.
The list goes on, but I hope that gives your Lordships a flavour of the range of commercial insurance on offer. I, of course, had to cherry pick the cover that was most relevant to me. For instance, I did not buy livestock or goods in transit cover, because this is the responsibility of third parties with whom I have a contract. Also, I have no vehicles in that business, so motor insurance was not an issue. However, salmonella is an issue for my business, but because the insurance is so costly I chose not buy it. I hope that I got that one right. I have to choose not only the type of cover that I think is appropriate to my business but how much cover to buy for each category, the cost and the level of excess necessary to reduce that cost. The excess across my shopping list varies from £100 to £20,000.
Although there are hundreds of egg producers up and down the country with identical businesses to mine, I very much doubt that there is another that has commercial insurance exactly the same as mine. They will all be different, and that is the problem: all businesses, whether a corner shop, a pub, a guest house, a property investment company, a hotel or guest house, a manufacturing company or an engineering firm, will buy commercial insurance to suit their particular circumstances. The whole point of a mutual, whether Flood Re or one geared specifically to small businesses, is that the conditions are common to all. The price, the excess, the cover and the conditions must be standardised. This can be done for homeowner insurance—it is pretty bog-standard—but sadly, as I have tried to illustrate, not for commercial insurance. You just cannot standardise it. If it were standardised, virtually all commercial members of that mutual would end up with a policy that did not give them the cover that they wanted.
It would be good if everything could be included in Flood Re, whether owner-occupied houses, rented homes or small businesses, but the line must be drawn somewhere. It has been agreed that those with homeowner insurance, buildings and contents, will be included and that commercial insurance will not be. If I had a property in a flood-risk zone that was deemed to have commercial insurance with it and was therefore excluded from the mutual, I would ask my broker to split my insurance cover into two separate policies: one for the bog-standard homeowner cover, buildings and contents, to ensure inclusion within the Flood Re scheme, and the other to include all elements that made my cover commercial, such as owner’s liability or public liability cover. That might be a way forward for many of those finding themselves excluded from the Flood Re scheme because of the commercial element of their policy.
Flood Re will help up to 500,000 homeowners who cannot currently buy flood cover, but I am sure that with a little bit of inventiveness, many, although I am afraid not all, small businesses, including buy-to-let and leasehold properties, can buy their insurance in such a way as to be included in the scheme.
Lord Whitty
My Lords, my noble friend and I have two amendments in this rather complicated group. The group as a whole is beginning to get us into the area of who should be in and who is out of Flood Re, and we have some groups of amendments later that touch on the same issue. Before the Bill leaves this House, we must be clear who is in, who is out, and why.
My Amendment 160 would require the Secretary of State to report on the numbers of properties in flood-risk areas that were eligible, and those that were not, for inclusion in Flood Re. It would include looking at the specific exclusion as it stands of council tax band H and post-2009 new build. The report would look at how much it would cost to bring them in and who would bear the cost if they were brought into Flood Re, in terms of both premiums and the effect on the non-risky properties’ cross-subsidy.
We all have some sympathy with those groups that are excluded. However, we must be careful, as this is a delicate arithmetic deal between the Government and the ABI. I understand that negotiations were hard and long. As far as businesses are concerned, it is obvious that this must be addressed somehow. We have all seen the effects of flooding in recent weeks and the past few years, on small businesses and farms, on the Cockermouth high street a year ago and on the seafronts at Dawlish and Aberystwyth in recent weeks. We also know that the businesses that are hit—the shops, boarding houses and small businesses—are key to the prosperity of those local economies. It must be frustrating for small businesses, and those advocating their case, like the federation, because they were covered in some way under the statement of principles under the old scheme. However, the old scheme was a different sort of scheme. It was a deal struck by the ABI, agreeing that it would continue to cover—even then, it was not offering new cover—small businesses as well as households if the Government committed themselves to a certain level of expenditure on flood defence.
This is a different sort of deal; it is actuarially based. While we have all received representations on behalf of businesses, the approach now has a different basis. Even so, it is complicated. Some micro-businesses operated out of the owner’s house could be covered because they pay council tax rather than business tax. However, others will not. There are good reasons for this. The noble Earl, Lord Cathcart, described the bespoke way in which businesses negotiate their insurance as distinct from the more generalised way in which households are covered. It is difficult to see how businesses could be included in Flood Re as it stands without serious reconfiguration of the whole arithmetic. Therefore, while I have sympathy, I would not go so far as to press the Government on this front. However, I am in favour of knowing more about this. Therefore I support the proposition of the noble Lord, Lord Moynihan, that we look at this and report on it and see whether that might lead us to some other form of provision in parallel with Flood Re.
Some of the other boundary issues are even more complicated, particularly in relation to leasehold properties and the issue of whether landlords and tenants are included. The noble Earl, Lord Lytton, has dealt with one element of this and others are dealt with later on. Some of the government literature refers to leasehold properties. However, in general, the ABI and the Government do not think that leasehold properties are included. The situation with single landlords and tenants is not clear, although commercial providers of leasehold property are not included. The differentiation here is more the nature of the insurance than the nature of the property. While the property may be defined as being in risk or not, in a landlord/tenant situation, the tenant probably takes out the contents insurance, which is covered, whereas building insurance, which is the landlord’s responsibility, is not covered. That is quite a complex position, and it would also be true for multiple leasehold property. A future mortgage on such property is dependent to some extent, as the noble Earl, Lord Lytton, said, on there being ongoing insurance on the property. Leaseholders and the owners of the property may be faced with a double whammy if they are not careful.
As I said, I am not in favour of widening the group at this time because of the delicate arithmetic involved. We must address some of these issues in the Bill but for the moment I cannot support the amendments proposed by the noble Earl, Lord Lytton, nor the proposals of the noble Baroness, Lady Bakewell of Hardington Mandeville, on mixed hereditaments. I am not sure whether Amendment 160A in the name of the noble Lord, Lord Shipley, which would effectively delete the exclusion of post-2009 properties, is in this group. That is in a rather different category because people have been building in high-risk areas when they have known that they were going to be excluded under the old agreement, let alone the new one. I therefore have less sympathy for that group than I might have for the others.
Lord De Mauley
My Lords, I recognise the high degree of interest in the policies that will be covered by our proposals, and those which will be out of scope. I hope that I can provide some clarity today on what is intended and the reasons for this.
The Flood Re proposition we are debating today was carefully designed to address specific, medium-term issues in the domestic insurance market. It was not, of course, designed in light of the immediate crisis that we are facing. I heard the passion and concern from your Lordships last week, yesterday and, indeed, today, about the specific, frustrating issues affecting the broader community, including small businesses and the farming industry. It is clearly a distressing time for many, and I know that they are in all our thoughts. Again, I pass on my thanks to the Environment Agency, the emergency services and the many volunteers, including the churches, who are working tirelessly to help.
However, it is not immediately apparent that there is an insurance angle to the current situation. Those who have insurance will be covered by their insurer. I am grateful, too, for the efforts of the insurance industry, which has been working hard in communities to ensure that damage is assessed and that claims are paid quickly. Until Flood Re is in place, insurers will continue to provide insurance cover. We have no understanding with the industry about expanding the scope of the scheme. I therefore ask that your Lordships forgive me if I combine my response to this debate to the specific proposition before your Lordships today.
I turn first to Amendment 155 of my noble friend Lord Moynihan, which would require the Secretary of State to publish a report on the ability of businesses in high flood-risk areas to secure flood insurance. I emphasise that decisions about the scope of Flood Re have been evidence-based. Compared to the household sector, there is not the same evidence of market failure in the commercial sector, where the insurance market is different. Bespoke policies are more routine—as my noble friend Lord Cathcart so eloquently explained—and they are already priced to risk. I listened with interest to what he, my noble friend Lord Ashton, and the noble Lord, Lord Whitty, had to say.
Businesses, unlike households, have a de facto income stream to cover their costs and can offset the cost of their insurance for tax purposes, so they are different. Flood Re, I emphasise, is concerned with helping to protect those relatively few low-income households from high insurance premia. My noble friend Lady Parminter was, perhaps, sceptical of the suggestion of a lack of evidence. A government survey of more than 9,000 businesses in England estimated that fewer than 1% of businesses had experienced difficulty obtaining property insurance in the last year due to the risk of flooding, and that no businesses had been refused insurance cover due to the risk of flooding.
For these reasons, we do not think that Flood Re would be the right solution for this diverse sector. While there does not appear to be a systemic problem with small businesses being able to obtain flood insurance—and our public consultation endorsed our approach—I recognise that some in areas of high flood risk may face specific issues. As my honourable friend, the Parliamentary Under-Secretary of State for Water, Dan Rogerson, said in Committee in the other place, the Government and the Association of British Insurers have both committed to monitoring the market for flood insurance, including that for small businesses. If sufficient evidence emerges of a problem for businesses, then we have both agreed to look at possible solutions. This research will be published and I will be happy to place a copy of that report in the Library when it is published.
Amendments 160 in the name of the noble Lord, Lord Whitty, and Amendment 160ZA in the name of the noble Earl, Lord Lytton, seek to require the Secretary of State to prepare and publish reports on the numbers of properties which would be out of the scope of Flood Re, including properties built after 1 January 2009, band H properties, leasehold properties and private rented properties. It is very clear from his amendment that the noble Lord, Lord Whitty, has clearly understood that any increase in the amount of policies ceded to Flood Re would need to be funded by others. Indeed, he explained that in his speech on the amendments. It is important that helping households at high risk does not lead to price rises for others.
My honourable friend the Parliamentary Under-Secretary of State for Water set out indicative numbers and costs for including in Flood Re band H and equivalent properties and properties built after 1 January 2009 in a letter to the Committee examining this Bill in the other place. I would be happy to ensure that this letter is made available to noble Lords who have participated in this debate today. However, I would not want noble Lords to think that the impact on the levy is the only reason for post-January 2009 and band H or equivalent properties being ineligible. As I noted, we were very clear in designing Flood Re that we wanted to target the benefits where they were most needed, while not increasing the cost of living for those not at flood risk. That is the basis on which we made the decision that it would not be justified for band H and equivalent properties to be included.
According to the 2011 living costs and food survey published by the Office for National Statistics, 85% of those who live in band H properties and hold a combined insurance policy are in the top 30% of earners, with 48% in the top 10%. More significantly perhaps—and this is in response to the noble Lord, Lord Campbell-Savours—only 0.5% of such households are in the five lowest income deciles, which translates to roughly 45 properties in flood risk areas.
The 2009 cut-off date recognises that new housing developments should be located to avoid flood risk; or where development in a flood-risk area is necessary, they should be designed to be safe and appropriately resilient to flooding and not to increase flood risk elsewhere, in line with the national planning policies in place. This date therefore reflects the fact that homes built since then should already be insurable at affordable prices.
As noble Lords may know, when the agreement between government and the insurance industry, known as the statement of principles, was signed in 2008, it was agreed that there should be a cut-off date, which was set at 1 January 2009. That marker has been in operation for several years and has been maintained under Flood Re proposals. To be clear, there has been no change in policy. Therefore for the reasons that I have set out, we believe that the proposed exclusion of properties built after January 2009 and band H properties is fair and in line with the Government’s objective.
Lord Campbell-Savours
I just want to press the noble Lord on band H. As I said, I myself have no interest in it. However, in light of what has happened in the Thames Valley, is there not an argument for reviewing those figures that the Minister has just given to the House, particularly as regards the percentage of people on lower incomes who by chance happen to live in those rather expensive properties?
Lord De Mauley
I am of course quite happy to review the figures and to write to the noble Lord on that.
On Amendment 160ZA on reporting on leasehold and private rented sector policies, I see that we will also discuss the proposals in this regard on Flood Re later on today. However, before I come on to the specific subject of reporting, I remind noble Lords that the key issue in determining the scope of Flood Re is whether the policy for a particular property is treated as commercial or residential by the industry. Commercial policies are out of scope of Flood Re, which is designed to support households. We believe this approach is fair and practical, and it was supported in the public consultation. However, we recognise that the leasehold sector presents a more complex situation, where the contents policy is classified as domestic but the buildings policy could be classified as either commercial or domestic and could cover multiple dwellings.
I have listened to representatives of the property sector who have come forward with concerns about the impact of the proposed approach on the leasehold sector. They highlighted in particular that those in a smaller building might find it difficult to afford cover in the open market. The ABI has assured me that there is no evidence of a systemic problem with freeholders being able to obtain insurance for their leasehold properties, which I am sure noble Lords will agree is very welcome. However, given the strength of feeling on the matter, particularly in light of the ongoing extreme weather conditions, we need to take time to consider it in more detail, although without evidence of market failure it will be difficult to justify action. We will examine the evidence further with the ABI and hope to provide an update on Report. We will also continue to monitor this sector over time, as a part of the commercial insurance market.
I will focus briefly on the subject of the private rented sector. I take this opportunity to explain that it is proposed that buildings insurance cover for landlords would be out of scope for Flood Re, although contents cover for tenants would be eligible. At this stage I reiterate my declaration of an interest as owner of a property that flooded in 2007. The reason that landlords’ policies are out of scope is primarily because insurers classify all types of landlord insurance as commercial business, while Flood Re is designed for the domestic market. However, it is also important to recognise that the inclusion of landlords would effectively mean that people who do not own their own home could, through their contents premium, subsidise people who own several.
Flood Re targets support towards those least able to pay, through council tax bands. A landlord’s ability to pay cannot be judged against the council tax band of the property he lets. For example, the landlord of a council tax band A property could receive the maximum support if landlords were to be included, even if they were perfectly able to pay. Landlords already benefit from tax relief on the cost of their buildings insurance policy. They can offset many of their costs through taxable allowances which can significantly reduce their tax bill.
Lord Oxburgh
Before the Minister sits down, I hope he can help me with a small matter, which nevertheless would be significant for a minority. Given the duration of the scheme, there is likely to be a rebanding of council tax during that time. Somewhere it needs to be made explicit what will happen to people who move up into, for example, band H during that time.
Lord De Mauley
I can count on the noble Lord to think of something that I did not arrive in the Committee equipped to answer. If I may, I will write to him.
Lord Moynihan
My Lords, I am very grateful to noble Lords on all sides of the Committee for the interest they have shown in this issue. Their contributions have demonstrated how critical it is and what should be in and what is out. I place on record my thanks to my noble friend the Minister for a very comprehensive reply on a lot of issues that have been raised on all sides of the Committee. The noble Lord, Lord Campbell-Savours, is a noble friend on this issue since I am in complete agreement with him. I do not agree with him on every occasion but I certainly do on this one. I say to him that it is not just that some householders did not buy their properties as band H properties; it is that there is no absolute correlation between personal wealth and band H occupancy, a point that I sought to demonstrate at Second Reading. If you accept that principle, surely it is wrong that band H should be automatically excluded. Indeed, the Minister, in his reply, mentioned the 45 properties that were in need of support; that is, owned by people who were not wealthy but would be automatically excluded as the Bill is drafted.
My noble friends Lord Ashton of Hyde and Lord Cathcart mentioned how complicated it would be to change the Bill to take appropriate care of small businesses. I agree that the Bill is complicated; it is complicated throughout. However, surely the thoughts of this House are with the SMEs, the pubs, the guest houses and the farms that have been devastated by the recent floods and cannot now secure affordable insurance provision. They have been hit incredibly hard. If it is not through Flood Re, surely we should be looking to deliver support for SMEs through an appropriate provision. I argue that the Bill is the right vehicle to do that.
I appreciate that my noble friend Lord Cathcart was eloquent in the detail he went into to secure his insurance for his egg business—or “an” egg business, to be fair to him. Such expertise cannot be expected to reside with every publican or small business at the centre of communities serving important commercial and social roles. We should look very carefully at this matter at a later stage.
My amendment simply allows us to study that in detail. I am very grateful to the noble Lord, Lord Whitty, for his support. I am also grateful to my noble friend Lord Campbell-Savours for highlighting the fact that this market will have markedly changed in the past three months. Of that, there is no doubt whatever. It is incumbent on your Lordships’ House and the Government to look at the extent to which that market has changed and to which we need to respond to those market changes.
While I hope that further consideration will be given to these issues—I, for one, will seek to bring them back for further consideration—for the time being, I place on record again my thanks to the Minister for his answer and beg leave to withdraw the amendment.
Lord Shipley
“( ) Within 24 months of this Act coming into force, the Secretary of State must review the effectiveness of the delivery of planning policy in achieving low levels of flood risk for new developments by examining—
(a) the system of planning policy delivery,(b) the role and effectiveness in reducing flood risk of those organisations with a duty to cooperate under the Flood and Water Management Act 2010, or their equivalents in the devolved administrations, and(c) the effectiveness of the delivery of the National Flood Management Strategy.”
Lord Shipley
My Lords, in 2008 when serious flooding hit Northumberland, parts of Newcastle and several parts of the north, and 1,000 people had to be moved out of their homes in Morpeth, it was a major learning exercise for the statutory authorities; that is, the Environment Agency, Northumbrian Water, the local councils and the emergency services in particular. It was a major learning exercise because they had to respond properly and to work well together in the public interest.
In the years leading up to the 2010 Act, I wondered how much of a help that would be in defining the duty to co-operate to make sure that all the agencies involved in dealing with flood and flood risk would manage to work effectively together. In the main, that has happened, although in Somerset it has become unclear whether that duty has worked effectively, given the Environment Agency’s statement that it offered to dredge on the Somerset Levels if other partners joined it. I do not have all the details but I raise the point simply to demonstrate that the duty to co-operate between the agencies matters very much.
This amendment asks for a review within 24 months. Given the changes in flooding patterns around us, we need to be clearer about how the planning and risk management systems are working in practice. The amendment would enable a review of the effectiveness of the delivery of planning policy in achieving lower levels of flood risk for new developments by examining,
“(a) the system of planning policy delivery,
(b) the role and effectiveness in reducing flood risk of those organisations with a duty to co-operate … and
(c) the effectiveness of the delivery of the National Flood Management Strategy”.
It means that we have to confirm, and regularly reconfirm, the capacity and performance of all the organisations involved in reducing flood risk. These will include developers, local government officers and their planning committees, building contractors and building inspectors. We should also look at how national organisations, which have a tendency to be centralised, work effectively with local knowledge, and how that local knowledge is incorporated into the decision-making processes of the national agencies.
I understand that there have been instances where properties built since 2009 have flooded or caused other properties to flood. We need to know better than we do how big a problem this is, how often the flooding was due to flood waters exceeding the risk anticipated, and how often it was due to poor design or poor construction.
I was somewhat concerned to discover that the Environment Agency comments only on larger developments. It is understandable why that is the case, but in 2012-13—here I am quoting from DCLG statistics—local planning authorities received 455,500 planning applications and the Environment Agency provided responses to 30,251 of them; that is, 6.6% of the total. Obviously, most planning applications are small ones in which the Environment Agency need not have a role. However, we need to be clear whether the Environment Agency should have a formal, statutory consultation role in more planning applications than is currently the case. The current position is that the bulk of applications, including those for high surface water flood risk areas, are being dealt with entirely by planning committees and their officers, who follow national guidance. One assumes that they follow that guidance, but it also means that the cumulative impact of many small developments is not commented on and may not be taken into account. There is a further issue. At a time of reducing resources in local government, is everyone confident that all councils have the technical expertise to handle the complex drainage issues that arise? The Government need to be certain that they have all of the evidence they need, and therefore a review within 24 months should be undertaken.
I want to make a last point. I am concerned that we may be being too ambitious for sustainable urban drainage systems schemes. I understand from a press report I read a couple of days ago that 10% of the homes now being built are on flood plains. Of those, 1% to 2% are in high-risk areas. If the right preventive measures are put in place, which can include such schemes, it is not necessarily a problem that 10% of new homes are being built on flood plains. However, an important statement of the obvious is this: SUDS do not work on flood plains when there is substantial flooding. I guess we all know this, but I am concerned that there is a cumulative impact on planning permission for small developments; or, rather, I would like to be convinced that that is not the case. I would like to be certain as well that there is not an overdependence on SUDS schemes being seen as a solution to the problem when they may well not be.
This is a probing amendment, and I hope that the Minister will agree that it is important that, within 24 months, there should be a review of planning policy and flood risk management and delivery, and that two years is really the maximum period within which that should be undertaken, particularly in view of current circumstances. I beg to move.
Lord Campbell-Savours (Lab)
My Lords, I intend to use Amendment 155A as a peg for discussing what is described—in paragraph (c) of the new subsection that the amendment would insert into Clause 51—as,
“the effectiveness of the delivery of the National Flood Management Strategy”.
In particular, I want to highlight limitations on the current arrangement under that strategy and how those could be modified. I shall draw on a particular example by praying in aid a particular case.
In 1990, Thames Water proposed a reservoir in Oxfordshire. Its plan set out how the company could meet demand up to the year 2015 for water supply in the south-east of England. Its proposal was for a reservoir on land south-west of Abingdon in the Vale of White Horse. In 2008, some 18 years later, Thames Water held a consultation on its draft water resource management plan for meeting water demand up to 2032. The draft plan again included a proposal for the Abingdon reservoir. If it appears that I am speaking slightly obliquely to the amendment, I am sure that noble Lords will soon recognise the relationship between what I have to say and the amendment on the Marshalled List. In 2009, following a process of consultation, the management plan from Thames Water was amended and the reservoir reduced in size, and in 2010 there was a public inquiry. In March 2011, the Secretary of State, Caroline Spelman, announced her decision to remove the proposal for a reservoir at Abingdon from the management plan. The reasons were, primarily, that Thames Water could not prove a risk to current water supplies and, secondly, that insufficient consideration had been given to transfer and reuse schemes.
It was argued that water available in other parts of the United Kingdom could be transferred to the south-west of England, although when I was doing a little research on this last week I could not understand how it was impossible to prove that there was not a risk to the water supply in the south-west of England when over a number of years, certainly in the early 2000s, we were being told that reservoirs were empty almost throughout the United Kingdom. There were blocks on the use of water for gardening, and I understand that in some areas there was even talk of introducing standpipes for the water supply. Nevertheless, that was the decision taken at that time by the Secretary of State. I suspect that there was more nimby in the decision than a proper evaluation of water supply and demand. I understand that the next review is due in 2018-19.
Why is all this relevant? To answer that question, we have to move north to Cumbria, to Thirlmere. Thirlmere supplies water to Manchester. Thirlmere is a reservoir above the town of Keswick—where I have lived most of my life—which feeds water from the dam down the Greta river through Keswick, down through Bassenthwaite Lake, down the Derwent and on to Workington, which was the subject of substantial flooding some years ago. After that flood event some years ago, I was asked to set up a group in Keswick to hold discussions with the Environment Agency and United Utilities on what action could be taken to reduce the incidence of flooding in Keswick. Our group’s case was simple: Thirlmere could be used for flood alleviation purposes as well as for water storage. If we retained within Thirlmere sufficient unused water storage capacity, in times of predicted heavy rainfall we could use the reservoir to control the flow of water into the Greta through Keswick and substantially reduce the incidence of flooding in the Keswick area.
In the beginning, United Utilities resisted because it meant the release of its valuable asset—water. However, over time it adopted a more reasonable approach and agreed to reduce the level of the reservoir in the months of high rainfall, primarily in the autumn, winter and early spring. We set target water levels for each month in the meters below the spillover at the head of the reservoir and the dam head. When the reservoir is too full, water is released. Many people in the town believe it has served the town well and avoided substantial flooding over recent years, despite the fact that on occasions they have had trouble releasing sufficient water due to mechanical release valve difficulties.
Let us return to Abingdon and what has happened over the past week in the Thames Valley. I refer again to the interest I declared earlier. Why can we not have a similar arrangement for Abingdon? Why can we not bring back the proposal for a reservoir on the Abingdon site with a dual purpose? The first would be water storage to meet increased demand in the south, and with the proposed development of new towns in the south that is part of the Government’s housing strategy, there will be increased demand—indeed, at the moment demand in drought periods is not being sufficiently met. Secondly, the reservoir could be used for flood alleviation purposes, with target storage levels providing for controlled releases into the River Thames.
Let us go back to the Thames Valley. The communities that have suffered over the past week know that there is no way of resolving their problem in the long term. You cannot build defences along the Thames on the scale necessary to protect the towns and villages—Wraysbury, Datchet, Chertsey, Staines, Sunbury and all those towns; it is impossible. We have to find a solution further up the system. I have raised this in relation to this amendment because I believe that the solution is to create large areas that can be pooled and used for flood alleviation in the future.
It seems to me that to secure that objective, the law needs to be reviewed. We need to strengthen the hand of those who wish to use reservoirs in this way. As I understand the current statute, there is no statutory requirement—a power available to the Environment Agency or to the Government—placed on water companies to use their assets in the way that I suggest. I hope that what I am suggesting today is followed up in the communities that have been affected over the past week by this vast, insuperable problem of flooding, because they need to look long-term as to what the solution is, and the solution is not in flood defences. The solution is upstream. I hope that they follow up my suggestions. In Abingdon there will no doubt be some difficulty over the proposal, but we all have to stand together to find ways to resolve the problem. Unless it is dealt with soon, it will have calamitous implications for the future.
Baroness Parminter
My Lords, briefly, I support my noble friend Lord Shipley on this important amendment. We are rightly spending the majority of our time today discussing a financial vehicle to deliver affordable flood insurance, but the planning system has a vital role in making our country more resilient for the future. On the potential effects of cuts in local authority budgets on their ability to undertake their important planning functions, which my noble friend mentioned, I add that a review in 24 months’ time is sensible, given that in the intervening 24 months there will be further significant cuts to the Environment Agency’s budget, with an expected cut of more than 550 staff.
Given the scenes we have seen in recent days, it would be only too easy for people, rightly, to make the case that we must protect front-line staff in the Environment Agency. However, it is equally important to look appropriately at people in the back room who are working hard on the consultations on significant planning applications for developments of more than 10 houses or one hectare. Equally, it is important that the national flood management strategy, which the EA devised in 2011, is carried forward.
I add my support. The timeline that my noble friend Lord Shipley has suggested of 24 months is apposite given the need to review some of the resource constraints that both local authorities and the Environment Agency will face in the forthcoming months.
Lord Krebs
My Lords, I too support the amendment of the noble Lord, Lord Shipley. I have already declared an interest as the chairman of the adaptation sub-committee of the Committee on Climate Change. The sub-committee has a useful data set that could be brought to bear were this review to happen. It has developed a set of indicators, which are published, for the resilience of planning decisions in relation to present and future risks from flooding, particularly from future impacts of climate change. For example, it has looked at the implementation of SUDS, at the implementation of household measures that could provide protection at the individual property level and at planning decisions to develop in the flood plain. As has already been said by the noble Lord, development in the flood plain has been going ahead faster than development elsewhere, but this is not necessarily a bad thing. If the properties are appropriately protected, either by community-level measures or by individual household measures, the risks can be managed. The sub-committee has a data set and a set of indicators that could be useful were the Government minded to accept the amendment moved by the noble Lord, Lord Shipley.
The Earl of Lytton
My Lords, I welcome the opportunity to debate this important point. I declare a professional interest in aspects of planning. The question of planning policy and its co-runner, which it informs, development control, raises some important issues on the ground. These need to go beyond the question of new-build developments alone. I do not know whether the noble Lord, Lord Shipley, intended to address just new-build developments but if he did, perhaps I could digress into the area of what we do about some of the existing building stock, which I flagged up at Second Reading. I alluded then to the desirability of making conditions concerning the containing of surface water run-off within existing individual properties, as opposed to just allowing each to discharge it on to the next property downstream.
I wondered whether this might be made retroactive to a degree, perhaps by requiring extensions and alterations to existing properties to incorporate, in appropriate circumstances, a surface water attenuation scheme. I do not believe that this is a general requirement but there are precedents. For instance, if you renew the roof covering of your house, you are often obliged to upgrade the insulation of the roof of your property. There is an analogy there. Surface water attenuation on a per property basis could also be combined not only with water conservation, but with habitat-friendly outcomes. The same thing could apply to the principle of reducing vulnerability of the property itself—a point made earlier by the noble Baroness, Lady Parminter—in connection with quite ordinary adaptations that can be put in place to prevent properties being so severely affected by flooding, should it happen. There is also the question of community-based schemes to protect groups of buildings. I referred to the Lower Don Valley scheme, but there are others.
One of the things that has come out—sorry, that is probably a bad term—or rather, has arisen recently is the question of making foul drainage systems safer, so that if flooding does happen, flood water does not turn into a solution of dilute sewage, adding health hazards to all the other problems of clean-up. That requires special measures, not least because shared sewer pipes that are on private property but are ultimately connected to a public sewer are now the responsibility of the statutory sewage undertaker. I have this terrible feeling that they have no idea of the routes, the condition or the materials of half of these pipes for which they have now inherited responsibility. They have my sympathy in that respect.
The noble Lord, Lord Krebs, referred to building on flood plains. My only point there is that protecting properties so that they are themselves secure against flooding is one thing. Transferring risks to properties elsewhere is self-defeating. My difficulty is that I am not sure that a holistic approach is taken to dealing with the totality of flood plains. Often, these may be in more than one local planning authority area, so there may be problems of co-ordination. With regard to that, the noble Lord, Lord Shipley, referred to the competence and capacity of local government and the noble Baroness, Lady Parminter, referred to reductions in Environment Agency budgets that might affect its ability to have this overarching, integrated view. I worry about that. It is vital that the sort of report that the noble Lord, Lord Shipley, has in mind covers all these aspects. If we start leaving bits out, we shall be no further forward in a few years’ time than we are now.
I draw attention to the catchment area management plan referred to by the noble Lord, Lord Campbell-Savours. I have some experience of this, not all of it edifying. In at least one instance, I found that half the catchment area concerned, the upstream half, was missing from the plan. The only fact that I could ascertain was that the owner of the missing part was the National Trust. I am unsure what conclusions I should draw from that, but if you have a catchment management plan, the boundary of it has to be drawn along the watershed. No other boundary is possible. The simple arithmetic that was drummed into me, probably from O-level geography onwards, has not escaped me. Making up rules to suit as one goes along will not wash. I am sorry for that terminology as well.
Some time ago, I attended a professional lecture on restoring part of southern Exmoor to a peat bog so that it would hold more water and release it more slowly into the River Barle and the River Exe systems. It had something to do with pumping and repumping water back into Wimbleball reservoir, which I shall not go into. I nicknamed the scheme the “Exmoor sponge”. I do not think anyone else has used that term. There is nothing wrong with such projects, but if they do not have durable management structures that are proof against misuse for commercial objectives, neglect because of spending cuts, simply being forgotten, or participant landowners deciding that there are better land uses that they would rather adopt, they will fail. There need to be more durable ways of dealing with these things. That is the sum total of the points that I wish to make. The last of them probably goes a bit beyond the amendment proposed by the noble Lord, Lord Shipley, but it was worth mentioning in the context of what was said by the noble Lord, Lord Campbell-Savours.
Lord Grantchester (Lab)
My Lords, the amendment would set up a review of recent outcomes of planning policy in terms of flood risk for new developments. It has received widespread support around the Committee.
The noble Lord, Lord Moynihan, has already highlighted how the market will change following recent events. In view of the terrible situation that has resulted from recent weather events in Somerset and the Thames Valley, which may well trigger a wide-ranging review of flood risk policy, it makes sense to ask why there has been more building on low-lying and flood risk areas in the past four years, even allowing for the guidance to which the Minister has already referred today. There has been plenty of notice since 2007 that not all property in areas that might be developed would be eligible for flood insurance. Recent floods have highlighted that there may be errors in the guidance. Nor have successful protection measures been achieved.
Why has planning allowed development to take place against a background of increased perception of flooding potential following the floods in 2007 and in 2012? As the Government, the Environment Agency and planning authorities—indeed, the whole country—will be reassessing flood defences and expenditure, a review of where we are now would make eminent sense.
I was struck by the comments of the noble Lord, Lord Shipley, on the cumulative development effect, which would be worth of the attention of the Environment Agency. The amendment has also prompted some interesting suggestions from my noble friend Lord Campbell-Savours, so it is worthy of further assessment by the Government.
Baroness Northover (LD)
My Lords, we strongly support the intention behind this amendment. The importance of managing the impact of flooding has been brought into very sharp focus recently, and my noble friend has made a cogent case for ensuring that all those involved, whether builders, local councils, inspectors or national organisations, are fulfilling what is required of them in terms of capacity and performance in reducing flood risk.
My noble friends Lord Shipley and Lady Parminter made the case for a review of planning policy delivery. Planning policy for flooding is set out in the National Planning Policy Framework. The framework was published by the Department for Communities and Local Government in March 2012 following extensive public consultation and is supported by practice guidance. It sets strict tests to protect people and property from flooding, which all local councils must follow. We have been very clear that where these tests are not met, new development should not be allowed.
The framework states that councils should plan the location of new development to avoid areas of flood risk where possible. Only if no sites are available in areas of lower risk of flooding can local councils even begin to consider whether to allow development in areas where there is a higher risk. For logical reasons, this is known in planning terminology as the sequential test. Where the sequential test has shown that it is not possible, consistent with wider sustainability objectives, to locate in an area with a lower risk of flooding, then—depending on the flood risk—a second stringent test must be met before a development can go ahead. This is called the exception test, which provides a very strong safeguard. To pass the exception test, you must show that the development provides wider benefits to the community that outweigh the flood risk and that it will be safe for its lifetime without increasing flood risk elsewhere—which was another point that noble Lords flagged up. Where possible, the development will reduce flood risk overall, such as through new flood defences. If there is a risk of flooding, a planning application has to be supported by a site-specific flood risk assessment. This is important because, where there is a risk of flooding, councils should give the go-ahead to new development only where, following the sequential and, if required, the exception tests, it can be demonstrated that what is to be built is flood resilient and resistant, and, as necessary, includes safe access and escape routes. Quite simply, in terms of flood risk, if there are better sites for developments, or developments demonstrated to be necessary are not made safe, they should not be permitted.
Lord Krebs
In the case of the Environment Agency lodging an objection, in what proportion of cases was it informed of the outcome? In the review that the adaptation sub-committee carried out in 2012, we found that in nearly a third of instances where the Environment Agency had been consulted, it did not know the outcome because it had not been informed. Has that figure changed?
Baroness Northover
I hope to get an inspired answer any second in order to be able to tell the noble Lord. If I do not get inspired, I will write to him.
I remind noble Lords that the Environment Agency is already required, under Section 18 of the Flood and Water Management Act, to report on the delivery of the national flood and coastal erosion risk management strategy for England. These reports must include information on all sources of flood risk and coastal erosion, and cover the work of all of the relevant accountable authorities. To reassure the noble Earl, Lord Lytton, the Environment Agency helps to provide the national overview that he seeks.
My noble friend Lord Shipley suggested that we need to know better whether properties built since 2009 are flooding or making others flood. One of the benefits of the memorandum of understanding between the Government and insurers last year, which I will come on to in the next group, is that for the first time we will have access to claims from flooding. This information will be used by the Environment Agency and its equivalents to target flood risk investment and could be used to inform policy development. In this context, I also note what the noble Lord, Lord Krebs, said about his data sets. Clearly, the more information we have, the better. I am sure that those data sets will be of interest both to Defra and to the Environment Agency.
Let me see whether I am inspired by the note I have been handed.
Where the outcome is not known, which is what the noble Lord, Lord Krebs, is talking about, the agency is satisfied that there is no significant difference in the outcomes between those cases reported and those not reported by authorities. I hope that that reassures the noble Lord. It is, of course, important that all these areas continue to be probed, because everybody needs to be reassured that that is, indeed, the case.
Coming back to the assessments that are taking place, high-level reports are produced annually, with more detailed reports provided to coincide with the six-year cycle of the flood risk regulations. Further interim reports may be produced as directed by the Government to support policy decisions such as future government spending reviews. The Government also conduct regular reviews of the effectiveness of policy delivery. For example, a review of the impact of the new partnership approach to flood risk management funding has just concluded. There are also two reviews of flood risk management in progress at the moment and one at a scoping stage. I listened to the comparison by the noble Lord, Lord Campbell-Savours, of the situations in Abingdon and Keswick. My noble friend Lord Younger, who was in his place a moment ago, noted this with interest and passed me a very interesting comment, but I hear what the noble Lord said and I will make sure that his suggestion is fed through to the relevant authorities.
Coming back to the general reviews, in addition to those I mentioned, my right honourable friend Oliver Letwin MP is leading a review of the lessons learned from the recent flooding, particularly the tidal surge, and the other review is looking at the resilience of key infrastructure to major coastal flooding. Both of these are expected to complete in the spring. Defra is also scoping an evaluation of the effectiveness of the Flood and Water Management Act 2010, which I hope will reassure my noble friend and which will initially focus on local flood risk management. Under the Act, lead local flood authorities and other risk management authorities have a duty to co-operate with each other, as he noted, to ensure that constructive and active engagement takes place and helps to build local relationships between relevant authorities within and across operational boundaries. We noted what he said about Northumberland and Somerset. Work on this evaluation is anticipated to start later this year. We therefore feel that proposed new paragraphs (b) and (c) of this amendment would duplicate existing planned work.
I hope that my noble friend is reassured by what I have said and that he will be content to withdraw his amendment.
Lord Shipley
My Lords, I am grateful to all those who have taken part in this debate. I shall just take up one question posed by the noble Earl, Lord Lytton, about whether this concerns only new properties. The amendment refers to new developments but, for the avoidance of any doubt, that includes any building post-2009, not any building purely in the future. I am very grateful for the Minister’s reassurances. We have to think further about what she said, in particular about the role of the Environment Agency as a statutory consultee and the extent to which that might be extended, but I think we could look at that again on Report, when we have had time to consider the points raised in greater detail. I beg leave to withdraw the amendment.
Lord Whitty
“(8) Prior to making any regulations under subsection (5), the Secretary of State shall require the Committee on Climate Change to provide current and projected estimates of the number of properties that would be eligible for—
(a) inclusion in the Flood Reinsurance Scheme;(b) the value of levy required under section 53; and(c) the likelihood of additional levy or contributions being needed from time to time.”
Lord Whitty
My Lords, I shall also speak to Amendment 158. As we have discussed, actuarial calculations for the establishment of Flood Re have had to be pretty robust and tight, reflecting the level of risk assessed by the insurers and by the Government at this time, but we also all know that flood risk will change over time. We cannot, therefore, establish Flood Re on a totally static basis; it needs to be a dynamic process. The reality is that the numbers at high risk of flood damage are likely to increase, particularly, but not solely, because of the effects of climate change. The Committee on Climate Change and its Adaptation Sub-Committee are the key adviser to the Government on the numbers likely to be at risk of flood.
Over the next few years, Flood Re is supposed to operate in an area in which the Committee on Climate Change has already indicated there will be a significant increase in the numbers at significant risk of flood. The definition of “significant” in this context is one in 75 years. At the moment, that relates to about 370,000 properties. The information that Defra put into the basis of the impact assessment derived from the Committee on Climate Change statistics. I am not sure whether it is the database to which the noble Lord, Lord Krebs, referred or some other, but given that we are working on a 25-year timescale it said that this figure will have increased by the 2020s to between 475,000 and 825,000 and by the 2030s to between 525,000 and 1 million. That is a pretty big increase. By the end of the 2030s, the end of the 25-year period, it is potentially three times what we are talking about now.
Obviously, some mitigation will happen, but regrettably the level of flood defence expenditure fell—it is now rising again, but it fell—and the figures that have been used in these calculations show that there is a gap between the required expenditure and what is likely to be needed of about £500 million over the period of 20 years. That means that we have a significant problem in defining what is at risk in 10 or 20 years and therefore where Flood Re has to get to in terms of its financial arithmetic and the number of properties that it is going to cover. The Committee on Climate Change can advise on the likely change in crude numbers—indeed, it already has. It can apply probabilities to that, it can indicate what degree of mitigation, at what likely cost, is likely to offset this and it can look at the change in the nature of the risk and the areas to which it applies. It is important that both the Government and the administrator of Flood Re get strong, independent assessments of this changing and growing risk.
Indeed, this goes beyond climate change; there are the interrelationships between climate change, population growth, distribution of population, development pressures, water resource pressures, ecological consequences and so forth. The Committee on Climate Change and the Adaptation Sub-Committee are the authoritative bodies to do that and their role should be written into the Bill. My Amendment 156 does that and Amendment 158 would then require the Secretary of State to take notice of the advice from the Committee on Climate Change when setting targets under Clause 58 and more broadly. I beg to move.
Lord Krebs
My Lords, I am grateful to the noble Lord, Lord Whitty, for suggesting an additional task for the Adaptation Sub-Committee of the Committee on Climate Change. While recognising that that is a task that we could carry out, I just say that one important corollary would be that the committee would need access to the relevant data from Flood Re, Defra and the insurance industry. Given access to that information, the committee could, as the noble Lord suggests, provide an independent assessment for the Government, which I think would be helpful in seeing how Flood Re is progressing.
Lord Ashton of Hyde
My Lords, perhaps I may ask the noble Lord whether the requirements should be imposed before the regulations that bring the Flood Re scheme into effect, or whether he is talking only about subsequent regulations. If that task has to be undertaken at the beginning, it might imperil the start of Flood Re.
Baroness Northover
My Lords, I am grateful to the noble Lord, Lord Whitty, for drawing attention to his wish to ensure that that the policies set out in the legislation respond to the demands that climate change may bring in future—in particular, by including a formal role for the Committee on Climate Change. I was not entirely sure whether the noble Lord, Lord Krebs, accepted that formal role.
We fully agree that climate change and adaptation to it are vital. The noble Lord, Lord Whitty, added the additional factor of population growth. He rightly challenges us on the uncertainty of the future and we are very much aware of the need to plan for the future in this regard.
The Committee on Climate Change and, in this respect, its Adaptation Sub-Committee play a very important role in providing independent advice to the Government. The information and analysis provided since the committee’s inception have helped to shape the debate on climate change. Although the evidence of climate change is becoming increasingly compelling, it is clear that we need to do more to understand and plan for its impacts. This is a challenging task, given how interrelated and unpredictable those effects are. We have seen how variable the jet stream has been over the past few years, for example, and how it has brought us drought and flood.
Although, clearly, dealing with the current devastating flooding is the immediate absolute priority, we also need to reflect on our management of flood risk and assess our preparedness for climate change. The Government published the UK’s first national adaptation programme report in July 2013, which sets out the action that we propose to take. There is great expertise in this country, not least in your Lordships’ Chamber, which we can access and are accessing, as well as learning lessons from elsewhere.
Specifically in relation to Flood Re, I assure noble Lords that climate change projections were considered alongside other risk factors during the design of the policy and that the effects of climate change will continue to be considered during future levy-setting discussions. I remind your Lordships that in the memorandum of understanding with the industry that has been used to craft the Bill—I mentioned it in relation to a previous group—we have recognised the importance of the programme of flood defence and have committed to a specified amount of expenditure for 2015-16. However, we believe that advising on the scope and financial parameters for the transitional Flood Re scheme is a role for the insurance industry and would be outside the current remit of the Committee on Climate Change.
To clarify, the number of policies that would be eligible for Flood Re is based solely on the cost of the flood risk component of any policy, which is set by the insurers. This assessment of flood risk will indeed change over time, as the noble Lord, Lord Whitty, acknowledged, and it would not be possible for the Committee on Climate Change to provide any estimates without detailed knowledge of industry pricing models. Similarly, the value of the levy required and the likelihood of the need of any additional contribution by insurers is based on a number of financial parameters that could change year on year. Those include the level of premiums received, the cost of reinsurance and the amount of levy collected.
The Government and the Association of British Insurers have worked hard to determine the value of the levy required and the likelihood of the need for additional contributions, based on industry data and assumptions that were subject to independent review by Professor Stephen Diacon. In addition, extensive modelling, using a model that was quality-assured by the Government Actuary’s Department, has been carried out by the Government using there data, as part of both the pre-consultation and post-consultation impact assessments.
Looking forward, the Environment Agency will continue to collect and analyse data on flood risk, which will feed into the Government’s ongoing assessment of the scheme. In addition, as Flood Re is directly accountable to Parliament, detailed audited information about Flood Re’s ongoing operation will be reported to Parliament regularly.
I turn now to the proposed role of the Committee on Climate Change in advising the Secretary of State on setting the target number in relation to the flood insurance obligation. Clause 58 gives the Secretary of State the power periodically to set a target for the proportion of properties on a register of properties at greater flood risk that relevant insurers are collectively required to issue with insurance policies. The register, to be created by the Environment Agency and its counterparts in the devolved Administrations, will be based on the flood risk maps published by those bodies.
The number of properties indicated as subject to flood risk may change with time, as a consequence of climate change or through better information and mapping. The Secretary of State would set an overall target for the number of registered properties that the industry as a whole needs to cover. In setting this target, the Secretary of State would consider evidence on existing take-up rates of insurance and other relevant data. This could include advice from the Committee on Climate Change, should the Secretary of State wish.
The setting of the target number is a decision regarding the appropriate breadth of support that should be given by this financial support mechanism. Again, we believe that advising on the target number would be outside the committee’s current remit and, for reasons discussed in relation to Flood Re, would not be the most appropriate use of its resources or expertise.
Although, for the reasons that I have set out, we do not feel able to accept these specific amendments, I would like to return for a moment to the wider spirit behind them. We absolutely recognise that climate change is a most important consideration for the management of future flood risk and we value the expertise of the Committee on Climate Change. We are pleased that the independent Adaptation Sub-Committee will be publishing a revised climate change risk assessment report in summer 2016. We will consider that evidence and any implications for flood risk management carefully once the report is received.
Noble Lords know about various measures that we are putting in place to reduce the risks of flooding and coastal erosion, so I will not expand on that right now. I hope that the noble Lord will have been reassured by what I have had to say, setting what we are doing here in the context of our deep understanding of the potential implications of climate change and the unpredictability of measuring it into the future. I hope that he will withdraw the amendment.
Lord Whitty
My Lords, I thank the Minister, who clearly recognises the issue. I also thank the noble Lord, Lord Krebs, who, I thought, accepted the additional responsibility—although slightly conditionally. The conditionality was that the financial information, at least in broad terms, would be available to the committee.
I am a bit disappointed by the Minister’s reply. She recognises clearly the importance of climate change in defining the nature and scope of the problem. The Government have an authoritative independent committee available to them to feed into their deliberations, along with the administrator of Flood Re, but she is saying, “Actually, the Minister might or might not take notice of what the Climate Change Committee says, but, in any case, it is not the role of the Climate Change Committee and the Adaptation Sub-Committee to talk about financial risk assessment”. That is not what we are saying, though. To feed in to the risk assessment, you need the most authoritative input that you can get, in order that the financial structure can be changed to reflect those increased risks, changed probabilities or changed distribution of risk. I would have thought that it would be useful to the Government to have it written into the Bill that they have an authoritative input on this from the Committee on Climate Change.
In response to the noble Lord, Lord Ashton, I am not looking for this input before we get Flood Re off the ground. I will be looking for an ongoing input. The administrator of Flood Re, as well as the Government, is going to look increasingly for this kind of authoritative input. At the end of the day Flood Re is—despite its statutory base and its reporting to Parliament—a private body informed by the expertise of the insurance industry, but that expertise is itself informed by the best information that can be got on risk. In my view, the best information that can be got is probably from the noble Lord, Lord Krebs, and the noble Lord, Lord Deben, who is no longer in his place. I would have thought they would be the best and most authoritative sources to be relied on. I am surprised that they are not prepared to get that reflected in the Bill. For the moment, I withdraw my amendment.
Lord Krebs
“(e) the need to build awareness of local flood risk amongst beneficiaries of the FR Scheme,(f) the need to inform beneficiaries of the FR Scheme of the need to achieve transition to risk-reflective prices as mentioned in paragraph (d).”
Lord Krebs
My Lords, in speaking to this amendment I will also speak to the other amendments standing in my name. I can be brief because the issues raised in the first of these amendments, and indeed in the second, have already been thoroughly explored by the noble Baroness, Lady Parminter, in her amendment.
Amendments 156C and 156D are really about information for householders. I find it hard to see why one would object to giving householders information that will help them now and in the future. The first part of Amendment 156C simply asks that Flood Re should build awareness among householders of their own flood risk. Earlier this afternoon we heard the noble Lord, Lord Crickhowell, alluding to a Defra website where information could be garnered, but the fact remains, from surveys of householders, that many of them are unaware that they are living in a flood risk area, and Flood Re has been designed to be invisible to the households concerned. As currently cast it will not give them any source of information. It is important that we incorporate in the Bill the requirement for the Flood Re administrator to give households information about their risk.
The other part of this, in the addition of proposed new paragraph (f) at the end of line 25, is to again alert householders who might be affected to the fact that Flood Re is not a permanent arrangement, and that there will be a transition. The transition is over a long period—over 25 years, as we are now familiar with—but it is important that householders over that 25-year period take action if they are at risk, to reduce their risk. Therefore it is important for households to have transparent information about the nature of the transition to risk-reflective prices that will arise at the end of Flood Re. It is hard to object to giving consumers information.
I now move to Amendment 156D, the second of my amendments. Again, I can be brief about this. It requires Flood Re to be explicit about the plan for transition, and to publish a transition plan so that the householder concerned will know what to expect—otherwise there will not be clarity for households. Difficult decisions to gradually withdraw the benefits of the scheme may continually be postponed, because it is always difficult to tell householders that they are going to lose a certain benefit that would arise through the coverage of Flood Re. In order to avoid confusion it is important that the Bill sets out a requirement to give a plan for the future, and therefore prevent Flood Re becoming a permanent and growing burden on the costs of insurance paid by other policyholders. So the transition must take place at the end of the 25-year period, and my Amendment 156D seeks to ensure that a plan for the transition is published, so that we can have more confidence that it will take place, and when it will take place.
Baroness Parminter
My Lords, I added my name to Amendment 156D of the noble Lord, Lord Krebs, and my related probing Amendment 156E has been grouped with it.
At present, the Bill states that the Secretary of State has the option to bring in a review process for Flood Re, but provides no detail. The first amendment, as the noble Lord pointed out, requires the scheme administrator to publish a plan to achieve a transition to risk-reflective pricing.
My second amendment would require Flood Re to publish the intended framework for reviews, outlining the decisions that needed to be made at each review point. Why is that important? The Government’s consultation document on Flood Re specified that reviews will be held in order that there should be a gradual transition to risk-reflective pricing. Discussions have centred on reviews every five years and the impact assessment for flood risk is based on that hypothesis, but there is nothing in the legislation to confirm that this will be so.
Getting a commitment to a five-yearly review is critical. Flood Re is designed by the Government to expire in 20 to 25 years’ time, with review points where decisions can be taken to reduce the benefit of the pool to claimants and the levy to all policyholders. If a linear approach is taken, this might result in a 20% drop in the levy, and the benefits, every five years. The potential problems are that the reviews could be more frequent, or never. The Treasury could require the transition period to be shortened, thus not allowing the necessary flood risk management investment to take place, or it could set the percentage drop in the levy to be higher in the earlier period. The reason why it might do so would be that under OECD rules the levy is considered to be a tax. Removing it early would reduce the percentage tax burden on the state.
The issue, though, is not just when the reviews take place but what information they provide so that the Government and parliamentarians have the necessary information to make informed decisions. As such, it would seem important to define the critical parameters in the review in some detail at the outset, understanding exactly what areas beyond affordability and accessibility will be judged to see whether or not the scheme is effective. I hope therefore that the Minister will put on record the Government’s intentions in this regard so that we can have reassurances that the scheme will achieve the outcomes that we all want.
The Earl of Lytton
My Lords, I particularly welcome Amendment 156C, moved so eloquently by the noble Lord, Lord Krebs, as it enables me to raise a series of allied issues. The first is that, Flood Re or no Flood Re, we are all on notice that the cross-subsidy of flood risk needs to be replaced by individual risk assessments. The reason for that is our better geographical knowledge and the unsustainability of the continued mutualisation of risk in those circumstances. I have absolutely no argument with that.
One issue of concern is the data produced by the Environment Agency. Obviously, those data are very important for the industry and for consultants, but they are equally important for individuals because, if we are moving to individual assessment, we must have some means of identifying the individual impact on a per property basis. I referred earlier today to my discussions with Philip Wilbourn, a very eminent environmental surveyor and valuer from the north of England. He allowed me to circulate an e-mail to a number of noble Lords setting out his views, which I have done, but there is a particular bit that I would like to repeat. He refers to,
“the data published by the various agencies, including the Environment Agency”.
Bear in mind that this is someone who carries out evaluations and does assessments on individual properties or groups of properties for a variety of different purposes.
In his e-mail, Philip Wilbourn says that he cannot use the data for commercial purposes because he is prohibited from doing so. Then he says that there is no online ordering service to acquire data for reporting purposes, and he is forced to acquire it from GroundSure or Landmark, two of the authorised resellers, at what he describes as high cost. He says:
“The data reported by commercial companies often varies depending upon the royalty return”,
which seems to be quite the wrong trigger for objective data. He tells me that the costs cannot be absorbed by residential valuers and that the banks, for which these valuations are produced, will not allow such data as a disbursement for the reports that are sent to them. His e-mail continues:
“When data is ordered direct from the EA, it can take three weeks to be sent through depending on the region”,
and he says that he has tested that.
The scale of resolution on the Environment Agency website is 1:5,000, which does not enable a particularly accurate identification on a per property basis. The Scottish Environment Protection Agency’s website fares rather worse because the scale there is 1:25,000, so individual property analysis by the home owner is clearly going to be difficult. These are the data that are supplied to insurers to make decisions.
Of course, what happens? It gets boiled down to a postcode approach—the “postcode lottery” of which we constantly hear many examples. He says:
“The problem with postcodes is that many home owners/businesses may be paying more than they should”,
and he gives an example of a postcode—in I do not know what part of the country, but it is obviously an urban area—which is neatly bisected by a blue-ink line of flood risk.
There is a particular issue here as to whether the data that are produced by this public agency, for public consumption and for the benefit of society as a whole, will be available at reasonable cost—let us not say that it should be free—for the home owner and individual consumer. That is the question that I pose in the context of this amendment.
Lord Whitty
My Lords, I broadly support most of these amendments, but I have a few queries. I support the first two amendments, Amendments 156C and 156D, unequivocally. It should be part of the role of Flood Re to help raise awareness, both among policyholders and in the community at large, and it will need to do so in conjunction with the Environment Agency, local authorities and so forth. However, clearly, the insurers also have a responsibility, as is reflected in these amendments. This will help both the beneficiaries and the insurers to move to a more systematic, cost-reflective basis for the whole system over time. It is also true that the administrator should be required to produce a plan for the operation of that scheme, as provided for in Amendment 156D. There must also be an overall longer-term plan for transition over the 25 years of the plan, as is proposed by the noble Lord, Lord Krebs, and the noble Baroness, Lady Parminter.
I am less sure that we should stipulate a five-year review period in legislation. In a sense, the scheme is always under review and will be changed in the light of new advice or new experience of flood conditions. Tying this down to every five years may not be the most sensible thing to do. Part of that assessment would be to indicate what measures would be needed to reduce long-term costs, as provided for in Amendment 156F. Insurers may encourage both individual and collective schemes of mitigation. As I have said before, this may involve mitigation by the policyholders, as a condition of that policy, or as a “cream-off” from compensation received in order to renew the policy. The noble Lord referred to Flood Re’s assessment of the need to invest in order to save in the longer term. I understand all of that. I am, however, a little worried by the term “subsidising”, which is included in Amendment 156E. I am not sure who is subsidising whom in this context. If the noble Lord means measures such as these, I think that is appropriate, but I would not use that term, as it might suggest a cross-subsidy over and above what is already provided for in the scheme.
Even after the noble Lord’s gallant attempt at explaining Amendment 156G, I do not follow it fully. As I understand it, the objective is to keep the levy cost down for those outside the scheme and the means would be some sort of quota-sharing agreement. I bow to the greater expertise of those involved in the insurance industry to tell me whether that will work. Subject to those queries and my slight lack of comprehension on the last amendment, the noble Lord, Lord Krebs, and the noble Baroness are in the right territory with these amendments.
Lord De Mauley
My Lords, I concur with the noble Lord, Lord Krebs, in Amendment 156C that it is important that householders whose policies are ceded to Flood Re are aware both of the flood risk in their vicinity and of the transitional nature of the scheme. Knowing about flood risk is vital so that households can take simple steps, such as signing up to free flood warnings, as well as investigating longer-term options for managing their flood risk, and can understand the likely impact on their future premiums of the withdrawal of the subsidy from which they are benefiting.
We will work with insurers and Flood Re to support people at flood risk to plan for and adjust to risk-based pricing. I hope that noble Lords will be reassured to know that we have agreed with the ABI that insurers will be required to provide information to customers about their flood risk, Flood Re and the actions that they can take to manage this, both when a property is ceded to Flood Re and at the point of a claim. Of course, raising awareness of flood risk remains primarily a matter for risk management authorities, such as the Environment Agency, so it will be important to ensure that any action by insurers on behalf of Flood Re complements their work.
Turning to Amendment 156D, I understand that by changing the phrasing of the power in Clause 54(3) from “may” to “shall”, the notion that Flood Re is a transitional measure is strengthened. I point to the Government’s stated policy objective in the June 2013 public consultation that,
“there should be a gradual transition towards more risk-reflective prices”,
and to the existing provisions in subsection (2) of the clause, which may require the administrator to have regard to the transitional nature of the scheme in discharging its functions. We have been clear that there should be a gradual transition to more risk-reflective prices and that we are committed to ensuring that the scheme retains incentives for flood risk to be managed. The Government will not designate the scheme until we are satisfied with the industry’s proposals. As I have already said today, the regulations designating the scheme will be subject to public consultation and we are currently considering the recommendation of the Delegated Powers Committee that regulations made under this clause should be subject to the affirmative procedure. While I recognise that the shift from a permissive power to a firm expectation could be claimed to underscore Flood Re’s duties in this regard, I believe that there is sufficient clarity in Flood Re’s role to manage the transition to risk-reflective pricing and for that to be achieved through the current drafting of the Bill.
Turning to Amendment 156E, from my noble friend Lady Parminter, I can confirm that it is, as she said, our firm intention that the policy will be reviewed every five years by the Government. This review will assess the level at which the levy and the eligibility thresholds are set to ensure that the policy objectives of Flood Re continue to be delivered, including the transition to risk-reflective pricing. The plan will be a public document and Parliament will be able to use existing powers to call Flood Re’s staff to answer any questions. On the point made by the noble Lord, Lord Whitty, in the case that Flood Re’s finances are out of kilter or the scheme is not operating effectively, that review will be brought forward. We are working with the ABI to define this process. The amount of the levy and the thresholds will be set out in secondary legislation. We intend those instruments to have a review period, always accepting that they might be reviewed early if circumstances require it. In addition, as I have just said, we are taking a power to make Flood Re’s responsible officer directly accountable to Parliament for the scheme’s value for money and for propriety and regularity. There are powers to require Flood Re’s audited accounts to be laid before Parliament and provided to the Comptroller and Auditor-General to examine and compare against Flood Re’s published transition plan.
I now turn to Amendment 156F, which would require the Flood Re scheme administrator to set out how it intends to manage the transition to risk-reflective pricing by investing in flood risk mitigation measures. Actions taken by households, communities, businesses and Government to reduce flood risk are the best and most cost-effective way to secure affordable insurance for households at risk of flooding in the long term, and I recognise the noble Lord’s intention to see this reflected in the Bill. As I said earlier, Flood Re will have a duty to have regard to the need both to act in the public interest and to ensure economy, efficiency and effectiveness in the discharge of its functions. It may well be that the Flood Re administrator decides in due course that investments of the sort that the noble Lord would like to see present an appropriate means of complying with these requirements where there is a clear case for doing so. Nothing in the Bill precludes this. However, we think that it is important for Flood Re to retain flexibility in the way that it discharges its public-interest duty and plans for transition, in order to ensure that it is in a position to balance these requirements against its core obligations as a reinsurer. Accordingly, we do not think that it would be appropriate to mandate Flood Re to subsidise flood risk mitigation measures.
Finally, Amendment 156G would limit the maximum proportion of the cost of a claim that an insurer could reclaim from the Flood Re scheme to a specific amount, as part of the Flood Re scheme’s management of transition to risk-reflective pricing. I understand that the intention is that this would restore an element of risk-reflective pricing to insurance policies in Flood Re. This could create a financial incentive for households and insurers to put in place the necessary measures to manage their flood risk. However, price is one, but not the only, signal to households for achieving that and our proposals for ensuring that households have the necessary information to make informed choices about managing their risk should also act to drive resilient behaviours. While superficially attractive, sharing an element of the risk between Flood Re and households would also have the effect of creating a more complex system to administer, thereby adding to the overall costs of the scheme. Having listened to what I have said, I hope that the noble Lord will be prepared to withdraw his amendment.
Lord Krebs
My Lords, I thank the Minister for those comments in response. Above all, my amendments are about trying to put risk communication and management at the heart of Flood Re; we have heard that in relation to previous amendments earlier this afternoon. I am pleased to hear from the Minister that this is indeed the Government’s intention. I look forward with great interest to seeing how that develops through to the next stage of the Bill.
I also thank other noble Lords who have taken part in discussion of these amendments. On the frank feedback of the noble Lord, Lord Whitty, on my lecturing skills, in Oxford we normally do that anonymously. This was non-anonymous feedback on my lecturing skills in explaining risk sharing; I will take that away and consider it for the future. In the mean time, however, I beg leave to withdraw the amendment.
Lord De Mauley
Lord De Mauley
My Lords, I take this opportunity to draw noble Lords’ attention to government amendments tabled to Clauses 54, 70, 72 and 80. These are generally minor and technical amendments but I draw your Lordships’ attention to two areas which may be of particular interest.
Amendments 162 and 163 concern the winding up of the Flood Re scheme under Clause 70 and the distribution of any reserves. As part of the operation of the Flood Re scheme it is expected that Flood Re will build up capital reserves. These reserves would contribute to the payment of the scheme liabilities including flood insurance claims for those households whose premiums have been ceded. It is expected that these reserves will be reduced over the life of the scheme and taken into account as part of the five-yearly levy-setting discussions. At the end of the scheme, Flood Re will still hold some level of residual capital reserves. Clause 70 allows for an order to be made requiring a specific amount of those reserves to be transferred to the Secretary of State upon closure of the scheme.
These amendments require that, in preparation for closure of the scheme, the Secretary of State must consult the Flood Re scheme administrator in relation to the transfer of any reserves, as defined for these purposes. This consultation must be carried out before an order requiring the transfer of reserves can be made. As drafted, this consultation duty will apply only at the end of the life of the Flood Re scheme and will not extend to any other circumstances. Because of this, I ought to mention that I may need to come forward with a further amendment in relation to reserves on Report.
The other area of interest relates to Clause 72 on internal drainage boards. This clause amends Schedule 3 to the Land Drainage Act 1991 to simplify the process by which internal drainage boards in England may seek to make organisational or structural changes. At the Welsh Government’s request, Amendments 164 and 165 extend Clause 72 to internal drainage boards and internal drainage districts in Wales. This will align the process throughout England and Wales. I beg to move.
Lord Grantchester
“Flood Reinsurance Scheme: commencement
(1) The Secretary of State may by order (the “commencement order”) appoint a day on which section 51 is to come into force.
(2) An order under subsection (1)—
(a) shall be made by statutory instrument; and(b) may not be made unless a draft has been laid before and approved by a resolution of each House of Parliament.(3) The Secretary of State may only make an order under subsection (1) if a Flood Reinsurance Scheme national database has been established.
(4) Any Flood Reinsurance Scheme national database must—
(a) be accessible by the public;(b) outline a property’s risk of flooding; and(c) indicate if the property is covered by the Flood Reinsurance Scheme.”
Lord Grantchester
My Lords, the amendment concerns information on the flood reinsurance scheme and would clarify that regulations will be brought forward to set the date of the commencement, and that Parliament will have approved by affirmative procedure the requirements on insurers of the scheme. Most critically, the proposed new clause would ensure that when these important Flood Re provisions come into effect, the database will have been established, as defined in Clause 61, with the relevant information in the right form as specified in subsection (4) of the proposed new clause. Subsection (4) of the proposed new clause says that the database must be accessible to everyone, and must allow them to check whether or not the property with which they are concerned is covered by the Flood Re scheme, and what the risk of the property flooding is.
I know that all noble Lords in the Chamber today share my heartfelt sympathies for those in Somerset and the Thames Valley who have been struggling to deal with these awful floods, and hope that this Flood Re scheme will make sure that people are able to get affordable and accessible insurance in future. The importance of the amendment is that it would provide information to someone buying a property as to whether their prospective purchase is at risk of flooding and, if so, if they will be able to get insurance under the scheme. It does not make sense that a family looking for a house in Somerset, the Thames Valley or elsewhere would be unaware of whether or not it was covered. It would add particular difficulties for them when it came to budgeting for the years ahead. It would be essential information when it came to looking for a mortgage. Lenders will require insurance on property to be able to advance money for the purchase, and will want to know whether or not the costs associated with the property are going to be high and whether insurance is affordable.
The terrible events of recent weeks show how important it is that the public should have confidence that the database is accessible, and that they will be able to access that part of the database to which insurance companies also have access. While the objective of the amendment is to emphasise transparency of and accessibility to information, including mapping, it also highlights the necessity for clarity on flood risk. The Minister may respond that subsection (4)(c) of the proposed new clause is opaque and refers only to property in the scheme. Yet the scheme must manage the situation and a transition over the period of the scheme. There must be a planned and collaborative withdrawal of the Flood Re scheme, and not a precipitate change into market conditions.
At present, it has been expressed that there is a lack of clarity concerning elements of property tenure and the mapping of risk in relation to the scheme, following changes made by the Environment Agency to information and websites in relation to the proposal of the scheme. The Minister has offered today to meet Members of the Committee concerning properties, and the scheme’s treatment of them following repeated flooding occasions. It is vital that the database is accessible as any updating occurs.
Amendment 161A, in the name of the noble Lord, Lord Oxburgh, also seems to me a good idea: it would bring the flood risks of properties further to the attention of householders. It is vital that clarity on flood insurance on a database is accessible throughout the period and is made a basic principle of the scheme. I beg to move.
Lord Oxburgh
Amendment 161A scarcely needs any detailed discussion: we have spoken this afternoon on a number of occasions of the importance of getting information to people. Certainly, this was a plea that came to us through many of the verbal representations that we had when we saw various interested groups in the lead-up to the discussion of this Bill. I simply offer this proposal to use council tax demands as a simple and almost cost-free way of disseminating information very widely, reminding people on an annual basis of their vulnerability to flood. It could serve as a portal to the various schemes and proposals that we discussed this afternoon.
Baroness Northover
My Lords, I am grateful to the noble Lords for their amendments. We are certainly supportive of their intentions in tabling them. The provision of information to households at risk of flooding is vital for managing the costs and impacts of flooding. We believe that it is essential that households benefiting from Flood Re should know about Flood Re and actions that they could take, for example, to reduce flood risk, allowing them to plan for the future. This was a key issue in the public consultation on flood insurance; some of the issues in these amendments echo some of the issues raised in earlier groups, which my noble friend Lord De Mauley has addressed.
The noble Lord, Lord Grantchester, rightly emphasised transparency; we certainly agree with that. As my noble friend Lord De Mauley has just pointed out, the Government have agreed with the Association of British Insurers the principle that insurers will be required to provide information to customers, both when a property is ceded to Flood Re and at the point of a claim, highlighting their flood risk. We are also keen to ensure that Flood Re plays its part in managing the transition to risk-reflective pricing, which we discussed earlier. We are continuing to develop with the ABI proposals in this area. We strongly believe that it is equally important that households outside Flood Re are aware of their flood risk, and the Government are committed to making this information available to the public. That is why we already have systems in place, through the Environment Agency and its devolved equivalents, to provide this information.
In England, the Environment Agency already makes comprehensive and searchable flood risk data available on its website. This has enabled people to check their flood risk from rivers and the sea and take action to prepare for flooding. The agency provides the same information for insurers to use. In addition, last December, the Environment Agency published surface water maps for all areas of England on its website and will produce a combined map, showing all sources of flooding, by December 2015. This work further helps improve public understanding of their flood risk and I hope noble Lords will be further reassured by that. While this places the onus on home owners to seek the information themselves, it provides clear information to households, is well established and is actively promoted by the agency.
The noble Lord, Lord Grantchester, raised the point about people buying properties. Clearly, anybody purchasing a property should check their flood risk by commissioning property surveys and searches or, alternatively, information on surface water risk that has been available in recent years on request from lead local flood authorities. If they conduct those kinds of searches and surveys, then this kind of information should emerge. Clearly, if, having discovered the flood risk, they discuss it with whomever they are buying their property from, the issue of Flood Re would no doubt enter their discussion.
Since June, we have been working with the insurance industry to go even further to improve the data available on flood risk. We have now agreed that the Environment Agency, and its devolved counterparts, will be able to access Flood Re’s data on where the highest-risk households are. This will help the Environment Agency to improve its own mapping of flood risk and will mean that our record levels of flood investment can be targeted at those areas most at risk.
To add to what I have said to the noble Lord, Lord Grantchester, I also point out that the seller is required to fill in a property information form—he will be aware of that—as part of the conveyancing process. This form asks questions about the flood risk history of the property, and if the seller provided misleading information there would be potential for the buyer to seek damages.
Lord Campbell-Savours
Is it not true that under the process to which the Minister refers, a purchaser would not know until lawyers had been involved and were beginning the exchange of documents? My noble friend’s amendment would mean that the buyer would have access to that information in advance. Is that not the distinction or do I have that wrong?
Baroness Northover
The noble Lord will know that a buyer can access the Environment Agency’s maps and see for themselves. When buyers are seeking to buy in a particular area, they usually check out all sorts of aspects: for example, where the schools are and public transport is. It will increasingly become a concern of people seeking to buy a property, given what has happened in recent weeks, to have a look at what the potential flood risk might be. They have access to those maps before they even start down the road of any potential purchase.
Lord Campbell-Savours
Is it possible that some property might be excluded? It might not necessarily show whether a property was actually subject to Flood Re.
Baroness Northover
Does the noble Lord mean a band H property? I would have thought that it would be fairly obvious if it were a band H property. I am happy to write with any further clarification if that would assist him.
Baroness Northover
Advice on obtaining flood insurance is also readily available. The National Flood Forum offers independent advice and guidance on how to go about getting insurance and how to reduce premiums and excesses. Separately, the Government have published a guide that provides advice on how to obtain affordable cover. We recommend that anyone finding it difficult to obtain insurance should talk to a broker and shop around—this was referred to by the noble Lord, Lord Krebs—as this is the best way to make sure that they get the best price for their insurance. There are a range of organisations that can provide help and advice, such as the British Insurance Brokers’ Association and the National Flood Forum. We hope that this reassures noble Lords and that they therefore will be content not to press their amendments. I am happy to write with further details about those people who are seeking to purchase properties.
Lord Oxburgh
Before the Minister sits down, would she care to comment on Amendment 161A?
Baroness Northover
As the noble Lord said, this creates a duty on bodies that issue demands for council tax,
“in an area designated as liable to flooding to include prominently on or with such demands the information that the relevant property lies within a flood risk area and information on where relevant advice on flood insurance may be found”.
I hope that even though I did not make explicit reference to the noble Lord’s amendment, I have laid out for him where the information is already provided, which is why we do not believe that his explicit reference is required. If the noble Lord looks at what I have said and is not reassured by what I have laid out in terms of addressing the substance of what he seeks, maybe we can have further discussions after Committee.
Lord Oxburgh
I simply say that there is a big difference between having information available—I readily concede that the Government are doing that with their proposals—and ensuring that people know about it and are reminded of its importance.
Baroness Northover
As I said in my response, we are putting the onus on home owners to seek the information—and I have indicated where that can be acquired—rather than to receive the information, as the noble Lord suggests. I appreciate that this may not be quite as strong as he would wish, but nevertheless there are a number of different sources for this information and a number of ways in which property owners, when they are ceded to Flood Re, will be informed as to their status. If they make a claim they will obviously be informed that that is the case. Therefore there are a number of ways in which they will receive information, even if it is not quite as comprehensive as the noble Lord might wish.
Lord Grantchester
My Lords, I recognise the noble Baroness’s comments in welcoming many of my remarks. She maintains that there is a system in place concerning flood risk data, and I do not for a minute doubt that she is correct about that. While I am reassured, nevertheless I am concerned that people should be able to undertake their own research without the cost of expensive searches. My noble friend Lord Campbell-Savours has further argued that case. I suggest that those expensive searches may well occur further along the process of a purchase. Nevertheless, people these days are very much concerned that they are able to undertake easily, quickly and readily their own research. I will consider further what the noble Baroness said, but meanwhile I beg leave to withdraw the amendment.
Lord Shipley
“Flood reinsurance scheme: eligibility
The FR Scheme should be eligible for all houses built and occupied before its introduction.”
Lord Shipley
My Lords, I said earlier this afternoon that I strongly supported the Flood Re scheme. Again, I thank the Association of British Insurers, individual insurance companies, Defra and Ministers, and congratulate them on their achievement, which is a much needed reform that will give comfort to householders at risk.
However, I want to probe in this amendment the issue of the cut-off date of January 2009 and, in particular, those houses bought before the cut-off at the end of 2008 but not built or occupied until 2009 or after. This amendment uses the date later than 2009, which is simply intended to probe the Government’s intentions. I support a cut-off date—there must be one for the scheme to operate effectively—but the question is whether it must be 1 January 2009 or whether it could be later.
The reason why properties have been excluded from Flood Re from January 2009 is that they were excluded from the 2008 statement of principles. However, I read the Defra briefing, which says that,
“2009 is the most appropriate date based on our current understanding of flood risk”.
Does that imply that the understanding might change because of developments since the statement of principles was established in 2008? This doubt is also important because the proposals in the Bill do not take account of surface water flood risk where information was not publicly available until December 2012, or of changing weather patterns that alter our understanding of what “high risk” is.
The essence of this amendment is: given that houses granted planning permission before 2009 but built afterwards would not covered by Flood Re, there is a case for saying that post-2009 households should be allowed to enter Flood Re where flood risk has genuinely changed since 2009 due to changing weather; where developments are affected by surface water but the risk was not taken into account as it was not understood in 2009; or where contracts had been signed before 2009 but the relevant property was not built until 2009 or later. This amendment tries to address those key questions. I very much look forward to hearing the Minister’s reasoning on this in his reply. I beg to move.
The Earl of Lytton
My Lords, we have discussed the substance of Amendment 160B already so I do not propose to move it. However, while I am on my feet, I will comment on Amendment 160A and the terms in which the noble Lord, Lord Shipley, moved it. I received a different narrative on this. The circumstances of the post-2009 cut-off, as explained to me, were that that was the time when Planning Policy Statement 25, in relation to construction on flood risk areas, came into being. As the story went, therefore, everybody was on notice that that was an issue, so that was the cut-off point. However, it occurs to me that the noble Lord, Lord Shipley, has raised rather an interesting issue.
It is fair to say that the end of summer 2008 was when the wheels came off the banking system and, with it, the property development system. If anybody had a planning consent that he was hoping to implement in 2008, he would have found that there was no money or funding to implement it—nothing would be forthcoming. Many of these schemes were put on ice. Indeed, there was a government recommendation—I do not know if you can call it an instruction—to the local planning authorities that they should look favourably on extending the three-year life of these. As I am sure noble Lords are aware, detailed planning consent has a three-year life, so it would have run out and would have had to be reapplied for. Due to the circumstances of having to reapply—maybe there are a new lot of regulations and so on—you can run into a whole raft of cost, time and delay.
The idea was that those things should be perpetuated, and with very good reason. They underpinned balance sheets, loans and all sorts of things. If they were to be effectively prejudiced by the loss of a planning consent, so that you had a property with either no verifiable development value or a lower development value, that had repercussions for precisely the sort of reasons I outlined earlier this afternoon in another context. So it is perfectly possible that a planning consent that was negotiated on the basis of rules in 2006 or 2007 would not have got going by the end of 2008 or 2009, and would have had to be preserved. The houses would not have been constructed until some time later, but the circumstances relating to that consent would have related to the antecedent circumstances at the time of granting of planning consent. I can see that there is an issue here.
I am always a bit frightened by development land values anywhere. I am even more frightened when things go wrong and people start reaching for their lawyers. What are they going to start looking at? Will they say, “The house is now constructed, it was built on what might be called an old technology basis pre-2008, and, lo and behold, it has flooded”? If they are excluded, it may have a material effect on the value. Who will they look to for recompense—the local authority or the fact that Planning Policy Statement 25 did not apply, or should have applied in some other form? This makes me think of the time-honoured American superfund arrangements, where most of the money went not to environmental clean-up but into the pockets of lawyers trying to attach liability. I do not wish to see that sort of thing happening here. Some careful thought has to go into the date and where the cut-off should be. I know it is not easy. I am happy to believe that the account of the reasons and circumstances given by the noble Lord, Lord Shipley, is the correct one, but I am slightly surprised that it seems to be a little at variance with the one that I have. I would be very interested to hear what the Minister has to say about this.
Baroness Bakewell of Hardington Mandeville
We have had a good debate on this issue, so I will be brief. I am concerned, like others, at the exclusions from Flood Re. My concerns are that many households may have no idea that their property is in a high-risk area or that they are excluded from Flood Re. Like the noble Earl, Lord Lytton, I am interested to hear from the Minister how many properties were built before 2008 but were not occupied until 2009 or after. The people living in these properties may well get a nasty shock when they realise that they are not able to do anything about it.
My concern with Amendment 160A is that all classes of people, whether they are freeholders, leaseholders or the owner of a commonhold tenancy, should be treated equally. Other noble Lords have covered this area in detail. If properties are on the flood plain, whether they are 200 or five years old and whether they are owned or rented, they should be able to access affordable flood insurance. Anything less is invidious. There will be households where a newly married couple have taken on the leasehold of a property, raised their children, lived in it all their working life and now seek to retire there. When they first took up occupancy of the dwelling, there would have been no hint of it ever flooding. However, with changes in the jetstream and continuous and persistent rainfall year on year, they now find that they and their neighbours are suffering from flooding. Are these residents now to be excluded from Flood Re? The Bill is not clear on who the person with the “qualifying interest” is. Will the Minister clarify this situation?
Earl Cathcart
My Lords, I will speak to Amendment 160A. I will be interested to hear the Minister’s response to the question asked by the noble Lord, Lord Shipley, but I shall speak to the amendment as it is written. The Flood Re scheme should be eligible for all houses built and occupied before its introduction.
We live in a blame society. Even now, the media are trying to pin the blame for the current flooding on someone. Is the worst rainfall for 200 or 300 years the fault of the Government, the Environment Agency or local government? It must be somebody’s fault.
With Amendment 160A, we are debating whether houses built after 1 January 2009 should be included in the Flood Re scheme. As was said earlier, PPS25 has made it quite clear that development should not take place in flood risk areas, and yet we all know that it still goes on. One has to ask why. Who is responsible for the houses built on flood risk areas when the rules are quite clear? Everyone is trying to pass the blame on to someone else—“It’s not my fault, guv”. Who is at fault? Is it the Government for not ensuring stricter adherence to PPS25? Is it the Environment Agency? That may be the case. Although 97% of applications that it objects to are refused, it looks at only 6.6% of the 450,000 applications, which is quite clearly not enough.
Is it the fault of local government planners? That is probably the case. One has to ask why they continue to pass applications on flood risk areas contrary to PPS25. Is it the fault of the owner for buying a home built after 1 January 2009 on a flood risk area? It probably is. Caveat emptor, or let the buyer beware: he should have known. If he did not, is it the fault of his conveyance lawyer when carrying out the searches? It raises the question of whether lawyers should be required, as a matter of course, to inform buyers if the house is on a flood risk area and, in this case, when it was built.
One can lay the blame on homes being built on flood-prone areas on any or all of the above but, as sure as eggs are eggs, it is not the fault of the insurance industry. Why should insurers pick up the tab? They have been quite clear on this. Indeed, they are the only ones who have drawn a line by saying that, if a home is built in a flood risk zone after 1 January 2009, under the statement of principles, flood cover will not be available and the property will not be eligible for the Flood Re scheme. Underwriters were quite clear that they did not want to encourage unwise and irresponsible development. Why should underwriters or contributors to the scheme pay for other people’s stupidity? The Government must decide whether PPS25 is to be adhered to or not.
Lord Campbell-Savours
My Lords, there is an element of confusion both outside and inside this House as to where the words which define the exclusion of leaseholders are to be found. I understand that Defra put out a notice in which it excluded leaseholders, but can the Minister tell us where this provision is made? The public are confused. The assumption when anyone reads this Bill that freeholders are included will be interpreted by flat-owners who have purchased their freehold but manage their blocks through leasehold companies—companies which have been established to manage the freehold, owned by the residents who have 999-year leases—to mean that they are also included. They will assume that because they are freeholders they are included. My understanding from my reading, although, as I say, I have not found the authoritative piece of literature, is that they are not included. In other words, people out there who believe they are included—freeholders of blocks of flats; not corporate interests but individual share-of-freehold owners—will think that they are included when they are not. That needs to be sorted out.
I cannot understand why they are excluded. Indeed, I would argue that they are probably less of a risk to insurance companies, even though they may well live in buildings on flood plains, because very often you find blocks of flats where no one is living on the bottom floor at all and the first flat in the block is on the first floor, above the area at risk of being flooded. If I am correct in what I am saying, will the Minister tell us why share-of-freehold owners in blocks of flats are being excluded when, in fact, they are freeholders and when, as I say, people reading the Bill will presume that they are included?
Lord Whitty
My Lords, I think my noble friend Lord Campbell-Savours is going back to a point that I raised earlier—namely, that the Flood Re parts of the Bill may have been produced relatively late in the Commons. However, the dividing line between what is included in terms of property and what is not is not as clear as it should be. My noble friend has just identified a group for whom this issue is particularly confusing, but in any case the distinction is not in the text of the Bill. As I said earlier, there is slight confusion about the various bits of paper that Defra has produced on this matter, so we need clarity one way or the other as to which groups are included and which are not. We have heard various bits of clarification from the Minister today. I think that most of those should end up in the Bill before we finalise it and I look to the Government to come forward with amendments on Report or at Third Reading to make sure that the position is clear.
I am afraid that I confused the amendment of the noble Lord, Lord Shipley, in this group with an amendment in an earlier group and commented on it earlier. However, whereas I have great sympathy with a lot of the other excluded groups, I have virtually none with those who built on and developed land in high-risk areas after 2009 because it was already clear from the previous agreement between the Government and the ABI that new insurance would not be given for those developments. Like the noble Earl, Lord Cathcart, I do not think we should give those people leeway retrospectively. If we shift the deadline now, somebody will argue for a deadline at a later stage to allow yet more development in inappropriate places, and that will skew the insurance figures and the whole calculation behind Flood Re. Therefore, I do not support the noble Lord on this occasion.
Lord De Mauley
My Lords, my noble friend’s Amendment 160A seeks to make all houses built and occupied before its introduction eligible for Flood Re. This amendment would move the cut-off date for inclusion of properties in the scheme to the start of Flood Re, rather than from 2009, and would also bring band H households in scope of the scheme.
I apologise to noble Lords as I suspect that I may be repeating what I said earlier today and, indeed, we may repeat it yet again later. First, I reiterate why we intend that properties built before 1 January 2009 and those in council tax band H and the equivalents would not be eligible for the scheme. However, before I do that, I shall respond to my noble friend Lord Shipley and a number of other noble Lords who asked what state the property must have been in at 1 January 2009 in order to qualify. It must have been in possession of a council tax band, which would imply that it was habitable at that date. I hope that is helpful.
The 2009 cut-off date recognises that new housing development should be located to avoid flood risk, or where development in a flood risk area is necessary, it should be designed to be safe, appropriately resilient to flooding and not increase flood risk elsewhere, in line with the national planning policies in place. This date therefore reflects the fact that homes built since 2009 should already be insurable at affordable prices. As the noble Lord, Lord Whitty, said, that marker has been in operation for several years, and it has been maintained under the Flood Re proposals.
The noble Lord, Lord Shipley, asked about surface water mapping. The new mapping has shown that the total number of properties affected by surface water flooding is lower than previously thought.
Band H properties are not included in the scheme because, as I explained in some detail earlier today, Flood Re is designed to target support to those who need it most.
The noble Lord, Lord Campbell-Savours, raised the issue of leasehold properties. As we have discussed, commercial policies are out of scope of Flood Re, which is designed to support households. We believe that this approach is fair and practical, and it was supported in the public consultation. However, the leasehold sector presents a more complex situation, where the contents policy is classified as domestic, but a buildings policy could be classified as either commercial or domestic and could cover multiple dwellings. As I said, I recognise the strength of feeling on this issue, particularly in light of the ongoing extreme weather conditions, and I feel we need to take time to consider it in more detail, although, without evidence of market failure, it would be difficult to justify action. However, we will examine the evidence further with the ABI and I hope to provide an update on Report.
Lord Campbell-Savours
Will the Minister comment on the issue of share of freehold?
Lord De Mauley
If I may, I will include that in that consideration. I hope that my explanations have provided some helpful reassurance. I am happy to ask my officials to work with the ABI to set out the proposed scope of Flood Re in more detail before Report, as that is something noble Lords have asked for. On that basis, I ask my noble friend to withdraw the amendment.
Lord Shipley
My Lords, I thank the Minister for his helpful reply. A Written Statement would also be helpful as we move towards Report. I should like to pursue two points briefly. I say to the noble Earl, Lord Lytton, that there is more than one narrative but the outcome is the same. The issue is whether the understanding of flood risk that was apparently correct in 2008 and 2009 is still correct in 2014. I suspect that it is not, which is why I am concerned. It would be helpful if the Minister’s note that he will send before Report could inform us whether it is still correct.
The noble Lord, Lord Whitty, said that we should not include in the provision those who had continued to build on high-risk flood plains after 2009. I entirely agree with him, but that was not the point I was making. My point was slightly different—namely, that I think the definition of what is high risk is now changing around us. Therefore, people who bought in good faith properties which were not in a high-risk area may now find that they are living in a high-risk area as a consequence of climate change, changing weather patterns and so on.
We have had an interesting debate. The issues have been identified and we can consider them further prior to Report. Therefore, I beg leave to withdraw the amendment.
Chilcot Inquiry
(10 years, 10 months ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Morris of Aberavon
To ask Her Majesty’s Government what are the reasons for the delay in the completion of the Chilcot Inquiry.
Lord Morris of Aberavon (Lab)
My Lords, I welcome the opportunity to debate the reasons for the delay in the completion of the Chilcot report. I will confine myself to some specific questions. Despite repeated requests over the years, I have never commented on the legality of the Iraq war. My duties as Attorney-General during the Kosovo war were difficult enough and many law officers have decisions to make concerning international law which are not easy. My only comments were in my recently published memoirs in which I said:
“The equivocation of the French before the Iraq war is not an argument for the failure to try for a further sustained effort”,
in the Security Council. I added:
“Or was the die already cast? The Chilcot inquiry may tell us”.
My interest in public inquiries goes back a long time. Cabinet Office records show that my name was suggested for the Franks inquiry into the Falklands War. In the event, more experienced colleagues were chosen. The Franks inquiry took six and a half months in all. The Chilcot inquiry was set up in June 2009. Its final public hearings were in February 2011 and we were told that it would deliver its report as soon as possible. In 2009, Mr Gordon Brown told Parliament:
“No British document … will be beyond the scope of the inquiry”,
and that the final report,
“will be able to disclose all but the most sensitive information—that is, all information except that which is essential to our national security”.
As a former Attorney-General, I fully understand those considerations. It is how they are interpreted that matters and whether the correct judgment is made in balancing. Mr Brown added:
“I have accepted the Cabinet Secretary’s advice that the Franks inquiry is the best precedent”.—[Official Report, Commons, 15/6/09; col. 23.]
In the difficulties about publishing Chilcot, has there been any departure from that precedent?
At that time, Mr Cameron made a number of challenges. He said that the Franks committee reported in just six months and suggested that, because of the longer period for Chilcot, people would conclude that the inquiry had been fixed to tide the Government over until after the election. A year seemed too long for Mr Cameron in 2009. Unless progress is made, it will be more than four and a half years in the case of Chilcot.
On 7 November, the Daily Telegraph reported:
“The Cabinet Office is resisting requests to make public ‘more than 130 records of conversations’ between either Mr Brown or Tony Blair … and Mr Bush … There is also a wrangle about making public ‘25 Notes from Mr Blair to President Bush’ and some ‘200 Cabinet-level discussions’”.
First, who is responsible for the delay? Secondly, what precisely are the reasons for it?
Public inquiries are set up to deal with public disquiet, to establish facts and to learn lessons. Not to publish is to undermine the whole object. Delay is unjust and justice to the public is denied. In January, in a Written Answer, Francis Maude said that,
“the completion of its report is a matter for the Inquiry Committee”.—[Official Report, Commons, 6/1/14; col. 1W.]
Later in the month, he said:
“The Iraq Inquiry has been provided with all of the documents it has requested”.—[Official Report, Commons, 20/1/14; col. 32W.]
Your Lordships may consider, from the very tight drafting of both answers, that they are less than frank.
In December, the noble Lord, Lord Hill, said that the Prime Minister had been updated by Sir John Chilcot, who had,
“reported that continuing discussions over certain classified documents had caused a delay to the Maxwellisation process, and hence publication of the report”.—[Official Report, 12/12/13; col. WA 139.]
That was much more transparent. Maxwellisation is the name for the way the common law has developed of providing a person who is criticised in a report with an opportunity to comment. It is nothing more than fairness. If you cannot resolve what should be in the contents of a report, both the inquiry and the criticised are in an intolerable situation. Following freedom of information requests, the Information Commissioner ruled in favour of disclosing the minutes of two Cabinet meetings in 2003 prior to and concerning military action in Iraq. The Cabinet Office—would you believe it?—had curiously argued that the public interest in favour of disclosure diminished with the passage of time. That is risible. It is the original long-grass argument.
The commissioner considered that there was a presumption running through the Freedom of Information Act that openness in itself is to be regarded as something which is in the public interest. The commissioner concluded that, in line with recent legal authority, material which,
“can provide a better understanding of how the decision to go to war was made is subject to an exceptionally strong public interest in disclosure”.
The Library has failed to find any record of an appeal and I am particularly grateful for its help.
On 31 July 2012, the commissioner said that he was disappointed that a ministerial veto, as allowed by the Freedom of Information Act, had been used to override his recent decision on the two Cabinet meetings to which I have referred. Why was the route of a ministerial veto followed rather than an appeal to the court as in the recent case of Plowden—or were the Government, in whatever manifestation, afraid of another adverse finding? Perhaps I may remind the House of the background statement of the policy of the Freedom of Information Act. It states:
“The Government considers that the veto should only be used in exceptional circumstances and only following a collective decision of the Cabinet”.
Has that policy been changed by this Government? Was the Cabinet consulted? If not, who took the decision? Was it the Prime Minister or the Cabinet Secretary?
I surmise that each and every word of Prime Minister Brown’s statement announcing the Chilcot inquiry had the blessing of the then Cabinet Secretary—if indeed he did not draft it. The crucial question is: how much wider is the veto now being used than the actual words used by Mr Brown, to which I have already referred, that restrictions in publication would be limited to that which was essential to national security?
A blanket refusal to disclose Cabinet discussions, especially having regard to the commissioner’s carefully considered and balanced ruling of the need to publish, seems miles wider than Mr Brown’s promise to Parliament. Will the noble Lord give a categorical answer to my question: Has Mr Brown’s promise to Parliament been breached, either in form or in spirit? Parliament was deceived at the time of Suez. It would be most unsatisfactory if any similar allegation over Iraq were not cleared up in this independent inquiry, which Mr Brown promised,
“will receive the full co-operation of the Government”.—[Official Report, Commons, 15/6/09; col. 23.]
Lord Anderson of Swansea (Lab)
My Lords, I am pleased to follow my noble and learned friend and to adopt many of his questions. First, I shall reflect on the precise question in the Motion and then consider whether the inquiry is likely to be judged worth while.
Perhaps the first question can be answered briefly. It is largely contained in Sir John Chilcot’s letters to the Prime Minister of 15 July and 14 November last year. Apparently, only in June last year did the inquiry request that certain documents should be published to give evidential backing to its conclusions. I make two observations on that. First, why was the request made so late in the day? Secondly, surely it was unrealistic of the inquiry to believe that Cabinet Office documents and confidential exchanges between heads of state could be published. By sticking to such a principle, the inquiry ensured further delay for a process that began in June 2009 and was expected by some at the time to last but for a year. The Guardian of 29 December last claimed that a compromise agreement had been reached between Sir John and the Cabinet Secretary that extracts could be published in a redacted form. I pose this question to the Minister: is that so? Was not such a deal in effect inevitable from the start?
Many doubts remain as to whether the length and expense of the inquiry have been worth while. My noble and learned friend referred to the Saville inquiry into Bloody Sunday. However long and expensive that inquiry was, it had the merit of having a cathartic effect on divisions within Ulster. Perhaps the Chilcot inquiry was necessary because of pressures at the time, but many key questions have already been answered. Certainly, every conceivable question was asked of Tony Blair, the Prime Minister at the time. For some the motive was a sort of personal vendetta against Tony Blair—let us remember “Blair liar” and “Blair war criminal”—but they are likely to be disappointed.
I personally had the privilege of an important vantage point. Between 1997 and 2005 I chaired the Foreign Affairs Committee of the other place. I gave evidence to the Hutton inquiry and I visited key figures in the Washington establishment at least twice a year over the period between 1998 and 2005. I had one-to-one meetings with the Prime Minister, Tony Blair, and Sir Richard Dearlove. As a result, I am wholly convinced that Tony Blair acted with total integrity and relayed to Parliament and the public the advice that both he and, indeed, I too had received. There may be criticisms that he did not ask sufficiently searching questions of the intelligence services about their sources. Certainly the US Administration relied excessively on exiles and partisan sources such as Mr Chalabi and the Iraqi taxi driver, Mr Rafid al-Janabi. There was much suspicion that the US Administration was seeking revenge on Iraq for 9/11.
The Prime Minister at the time may be criticised for being insufficiently independent of the United States and having a rather starry-eyed view of President Bush and the special relationship, but again, for example, at Crawford in March 2002 he told the President that he would support military action not come what may, but provided,
“that certain conditions were met”.
He did ensure that the United States took the UN path until thwarted by Monsieur de Villepin and contrary to the neo-cons’ view in Washington. Equally, he avoided the isolation of the US, and in my judgment both of those were the objectives. The inquiry is unlikely to find a smoking gun and it has said in terms that it will not apportion blame.
What about the breaches of international law to which my noble and learned friend alluded? Even if in retrospect we recognise that there was greater weight against intervention among those international lawyers who opposed the intervention, there were respected lawyers on both sides of the argument for pre-emption. The inquiry would be well advised, in spite of its excellent legal adviser, not to seek to give a definitive view in this very uncertain field of international law. What about the role of the security services? Surely that was adequately covered in the Butler report. What about the role of the military? It has had its lessons learnt reviews. There were some concerns about the quality of military equipment, but surely the general, correct view is that it was executed superbly by our Armed Forces.
The follow-up to the Iraq intervention is that there has been much public revulsion against all intervention. There was the Chicago speech by Tony Blair in, I think, 1998. There were successful interventions in Sierra Leone and Kosovo, but following Iraq and Afghanistan, as we have seen in Libya with no boots on the ground and as we have seen in the parliamentary view on intervention in Damascus, there is now a very strong public and parliamentary tide against intervention.
What about the likely conclusion about governance? Was there too much armchair government? Was there a presidential-style Government with the Cabinet sidelined? That may be so, but the memoirs of Robin Cook, no great admirer of the former Prime Minister, suggest otherwise. What about the insights into transatlantic relations? It was the clear strategic priority of the Prime Minister not to keep the United States isolated; that was very much a major factor for him. There was a great deal of evidence of that in the US inquiries. I had a certain personal experience of the somewhat naive views of the neo-cons in Washington when on several occasions I met Mr Richard Perle, whom Denis Healey called the “Prince of Darkness”. He relayed to me his view that come the liberation, while perhaps the bells would not ring in Iraq, there would certainly be great rejoicing and that the ripples of democracy would flow out from Iraq over the whole of the Middle East. That was a view which was in part accepted by the President, and the neo-cons were then very much in a dominant position in Washington.
What about the post-conflict planning? Is the inquiry likely to tell us anything useful about that? The truth is, of course, that we in the UK played a very secondary role in the conflict and certainly a secondary one in the post-conflict planning. I saw that when I went to the green zone in Baghdad and was in the office being occupied by Sir Jeremy Greenstock. I saw the role of Mr Paul Bremer and his large component on the other side. There were two contrasting blueprints for the post conflict. The State Department had Colin Powell and Richard Armitage, who told me that there was more combat experience on his floor in the State Department than on the relevant floor of the Department of Defense. In that department were Mr Donald Rumsfeld and Mr Paul Wolfowitz. They were at the top of the department and said that the Iraqi army was dissolved. As we know, the Chilcot inquiry was unable to interview key people in the US Administration, so it has been given only a partial view of the key players in the post-intervention scene in the United States.
In conclusion, I fear that this long-awaited and long-expected inquiry, long delayed for good or bad reasons, may well prove to be no more than an historic document mainly of interest to students of government. Possibly, after an initial flurry of interest in the press and among the public, the waters will close over it and it will have as little ultimate impact as the Franks committee report on the Falklands, referred to by my noble and learned friend. At least that had a totally UK national perspective. Many expectations have been raised, but it may well be that many expectations will be dashed.
Lord Alderdice (LD)
My Lords, I suppose that if one were to ask many members of the public for their memory of the political story of Iraq, they would probably say, “Well, in the United Kingdom, the governing Labour Party and the Official Opposition, the Conservative Party, supported the invasion, and the Liberal Democrats insisted on a UN resolution, which they did not get and they opposed the war as a result”. On that kind of narrative, one might well expect that I would be standing here wanting to find out the legal background—what really happened in past—in order to produce some kind of simplistic blame. It seems to me that that would be an extremely foolish thing to do.
First of all, as the noble and learned Lord, Lord Morris, said—and we must be grateful to him for securing this debate—it is a lot more complicated than that. Almost exactly 11 years ago to the week, on 15 February 2003, between 1 million and 2 million people came out to protest. They were not all Liberal Democrats or anything like it. There were Conservatives like Ken Clarke. There were Labour people, including Robin Cook, Tony Benn and many others, who had their reservations. Indeed, within the community as a whole, there was a great debate about this question. It was not simple, and I have no doubt that when Sir John Chilcot’s report finally is published it will be a thoughtful, complex and detailed report. I got to know him very well when he was at the Northern Ireland Office and I always admired his acuity of perception and his integrity of conduct, and the same could be said of his distinguished colleagues.
From my point of view, the purpose of this inquiry is something quite different. It is to try to understand how we got ourselves into such a difficulty in order that we can look to the future with better understanding of how to deal with the problems. I will give one example. At the time of the first Gulf War, which was permitted by UN Security Council Resolution 678, there was a great debate as to how far it might be prosecuted. Noble Lords will well recall a lot of discussion as to whether it should actually be prosecuted right through to Baghdad to get rid of Saddam or whether Resolution 678 did not permit it. I had a great argument with my old friend and colleague, now the noble Lord, Lord Ashdown, on exactly this issue. It was my view that, with this particular guy in these circumstances, you needed to go the whole way to Baghdad and get rid of him. It seemed to me that to do anything other was not just a poor reading of Machiavelli but a poor judgment of the psychology of the person one was dealing with and the politics of the region. Paddy said, “No, no, no. That is not possible under UNSC Resolution 678. We cannot do that. We can just remove him from Kuwait”. Well, it is a bit ironic that so many years later it was UNSC Resolution 678 which was prayed in aid actually without a further activating resolution. If I was so hawkish—as I would have been deemed then—in the first Gulf War—why would I have spoken in your Lordships’ House in 2003 saying, “This is not the time to go ahead with it”? It is because situations change. I will come back to that because I believe it is the importance of the urgency of the Chilcot report.
The situation was that in the first Gulf War we had a huge coalition, there had been a clear breach, it obviously required military intervention, and it would have been possible to prosecute it through to the end. In the intermediate years, the Clinton Administration and others had tried to find negotiated ways of moving things forward. Indeed, as I said in your Lordships’ House on the occasion of that debate, there was a suspicion that the weapons inspectors were being put in place simply to try to produce a justification to return to Resolution 678. It seemed to me that it was not going to end well. It was not going to resolve the problems of the region and stabilise Iraq.
How does that relate to the situation now? Noble Lords will recall that Parliament, in debates in the other place and here, made an extraordinary decision that set the Prime Minister and the Government back on their heels on the question of Syria. It was a watershed decision, in my view, in that a Prime Minister and a Government had decided that they wanted to undertake a military intervention, and Parliament, with the overwhelming backing of the people, said, “No. That is not a direction in which we want to go”. It seems to me that this puts up for serious exploration our whole approach to military intervention as to when and how it should be undertaken. Should it always be with military force or are there other ways in which we should intervene? Should we ever be doing it on our own? Should it always require a UN Security Council resolution?
These are very serious questions, but not for the past—of course they are interesting for the past, and, as the noble and learned Lord said, perhaps for some students of history in the future. They are important questions for us in the present and over the next few years, not to apportion blame but to see if mistakes and misjudgments were made, and I think everybody is clear that there were, and to try to prepare ourselves—but not to deal with the last war. One of the mistakes often made by military commanders and politicians is that they prepare themselves better to fight the last war over again. Our job ought to be to become clearer about the changing dynamics of the Middle East and of other regions in order to better make judgments about how we, as a country, play our role in that complicated region and elsewhere in a time when military strength is no longer any guarantee of military success. That is why I believe that we need the report with some urgency. The situation in the Middle East and in other places is developing very quickly. We are uncertain how to proceed and we need to understand whether and how mistakes were made so that we can find a different way of working.
I have no doubt that one problem is civil servants being wary about what things should be redacted and what things should not. I was reading just yesterday a letter by Elizabeth Wilmshurst, the FCO’s deputy legal adviser who resigned; her resignation letter was published some time later. The redaction made at the time by the Foreign Office and later released through the press is quite interesting. I read the redaction and I read what was originally published, and I could not understand why on earth they had bothered to take out what they did, because it did not tell us anything that we did not know. I was not the least bit surprised because my own experience with many security and Civil Service documents is that when there is a great dust-up about what to release and what not to release, more often than not, although not all the time, when you read what is redacted, the fact that it was kept out—and it was clear that it was kept out—actually produced more suspicion that there was something really serious there. When you read it afterwards, you say, “What on earth was all the fuss about?”.
However, perhaps it is not that. Perhaps it is that our friends in the United States are very nervous about some of the conversations between the two Prime Ministers, Mr Brown and Mr Blair, and the President. I am a friend of the United States and I think we have an extremely important relationship, but good friends sometimes disagree honestly. Indeed, we are not good friends if all we ever have to say is that we support the United States. I hear this all the time with the Middle East peace process. What is the British Government’s policy? It is to listen to what the American policy is and agree with it. That is no help to our friends. We need to engage in a proper public debate about these issues and then be supportive.
Therefore, I appeal to my noble friend the Minister to help us understand why there is such a delay and to appreciate on behalf of the Government that early publication is not a matter of the past but an urgent requirement for the present and the future.
Lord Elystan-Morgan (CB)
My Lords, the House is deeply indebted to my friend, the noble and learned Lord, Lord Morris of Aberavon, for initiating this debate.
Of course, it is a very great pity that, whenever the Chilcot inquiry reports, it will be more than 11 years since the military operations occurred in Iraq, but that is not the issue before the House tonight. We are not considering whether Prime Minister Blair involved this kingdom in an illegal war or whether he is as pure as the driven snow as far as that matter is concerned. We are not concerned in any way with the issue of weapons of mass destruction or what was genuinely or not genuinely believed in that regard. We are concerned only with seeking to ask the question: why has the Chilcot inquiry been held up in the way that it has?
The truth is that the Chilcot inquiry has run into a massive roadblock. As described by the noble and learned Lord, Lord Morris, this is the release—not to the members of the Chilcot inquiry because they have seen them already but to the public if the opportunity arises—of three groups of documents: 25 notes passed between Prime Minister Blair and the President of the United States; 200 Cabinet or Cabinet-style discussions relating to the relevant matters; and 130 conversations between either Prime Minister Blair or Prime Minister Brown and the President of the United States. That is the issue.
The relevance of those documents is not that they have been seen by the Chilcot inquiry but that the Chilcot inquiry wants to use them for a very specific and very significant purpose: the so-called Maxwellisation principle, which was established in relation to the inquiry following the death of Sir Robert Maxwell. In other words, a body such as the Chilcot inquiry wants to be able to say, “We have examined all the evidence. We have come to the conclusion that there is a prima facie case against A, B, C and D—the finger of blame appears to point to them as persons who ought to be criticised. But we are not going to do that without giving them the opportunity of replying to that situation and calling evidence if they wish”. That seems an unimpeachable principle of fairness.
However, the Chilcot inquiry goes one step beyond that and says, “It is not enough that we should be able to do that. We should be able to show to the public, if our conclusions remain the same, why we regard those persons as blameworthy; in other words, that they should be condemned not out of the generality of our conclusions but out of the specific evidence that is contained in these particular pieces of documentary evidence. Unless Maxwellisation is made public and those documents are produced and published at the time the report is published, Chilcot will not be regarded as having full validity”. I absolutely say amen to that.
Who is holding up this disclosure, which, in my submission, is utterly essential to the fairness of this inquiry? It is apparently the Cabinet Secretary, Sir Jeremy Heywood. He is saying, “I am opposing this on grounds of sound precedent, a precedent laid by my predecessor” —the noble Lord, Lord O’Donnell—“that is, the law of the Medes and Persians”. I would challenge that completely and make the following submissions. First, it does not matter what the noble Lord, Lord O’Donnell, or any other civil servant in the past 1,000 years has said. It can make no difference whatever. It is not a matter for a civil servant to decide.
Secondly, it is a matter for the Government, as the sovereign and ultimate legal authority, to decide, and nobody else. The Prime Minister, making a statement on this matter last year, said that Government were responsible for disclosure. It does not matter what pressures there might be from the United States or the Civil Service. The Government are legally and morally responsible.
Thirdly, a long, long time ago when I was a law student—it almost seems like 1,000 years ago—the noble and learned Lord, Lord Morris, and I were in the same department at Aberystwyth and we were taught sound principles of equity. One of the principles of equity was: no man shall be a judge in his own suit. In other words, there are certain people who should not adjudicate in this matter. Who would be the last person who should ever be allowed to adjudicate on the question of whether or not these documents should be made public? Clearly, that is either Prime Minister Blair or Prime Minister Brown. Who would be the next? You might say someone who was the alter ego of one of the two persons. Who was the alter ego of Prime Minister Blair? It was Sir Jeremy Heywood—one of the main protagonists in this confused, complicated and altogether very strange story.
I am not saying for a moment that Sir Jeremy is other than a fair, honourable and thoroughly decent man, but there is a principle of law which says that justice must be done and must be manifestly seen to be done. Unless the Government intervene here, as it is their moral and legal responsibility to do, this matter will fester and I think it will contaminate and poison the whole body politic. The confidence that people have in parliamentary democracy, already injured, will be further demeaned.
Lord Liddle (Lab)
My Lords, I suppose I ought to declare an interest in this debate in that I worked at No. 10 at the time of the Iraq war. Indeed, I sat opposite some of the foreign affairs private secretaries whose minutes are now to be found on the Chilcot inquiry website. I saw some of it pretty much at first hand, although I was not directly involved with Iraq. It was not a very easy period, I can tell your Lordships.
I do not think it is right for our debate tonight to get into the substance of the issues that the Chilcot inquiry is addressing. It has been an extremely good debate and the speeches, as usual for the House of Lords, have been of exceptionally high quality, and I thank the noble and learned Lord, Lord Morris of Aberavon, who obviously put an awful lot of thought into what he had to say in opening the debate.
I will confine my remarks from these Benches to the question of delay and the view the Government take of that delay and of the questions relating to the disclosure that are at the heart of that delay. It is important to be clear: as I understand it, it is not that written evidence has been withheld from the inquiry; the inquiry has seen all the relevant papers. The issue at stake is how much of that evidence it can actually quote in its final report. So the question is: does the committee base its conclusions on the public taking it on trust that it has read the material and this is what it concludes, or is it able to quote from the documents?
Everyone will agree that the Chilcot process has been very thorough. If you look at that website, you will see that far more government papers are available than for any precedent that I can recall. The comparison with Suez, where no one was told about the secret deal that was done with the French and the Israelis, is very striking.
However, there are questions about the extent of disclosure. I want to see the Iraq question and as many of these issues as possible put to rest, but even then there are three areas in which questions of disclosure raise awkward issues. These are questions not just for civil servants, but for any responsible Government of any party acting in the national interest.
I think one of these questions has already been sorted out: the question about dealing with the use of intelligence, and the worries as to whether disclosure of anything to do with intelligence compromises sources. I should like the Government to confirm what I think to be the position: that in the case of Iraq those questions were sorted out in the Butler inquiry in 2004, and that there are no new intelligence issues arising in the case of Chilcot. These issues relate to national security. From our Benches, as my party leader said only yesterday, we support greater scrutiny of the way in which intelligence operates. There are obvious limits as well.
The second issue concerns relations with our allies. The committee wants to quote from private correspondence between the Prime Minister and the President of the United States. If we see ourselves as America’s closest ally there is a real question, not just of the past but for the future, as to the obligation that places on us to protect confidences in that relationship. On that point I am sure a lot of people would say, “Damn the Americans”. I do not take that view. If we are serious about our alliances—and the same would be true of our close partners in Europe in other situations—we do have obligations to our allies and partners. How do the Government see that question? Time makes a great difference, but we are talking about something that happened a little over 10 years ago. What view do the Government take of what is a reasonable time to disclose things that affect our closest allies?
Thirdly, there is the issue about freedom of information and what are called Cabinet-level discussions. Whatever decisions the Government make on disclosure as far as the Chilcot inquiry is concerned could have long-term implications for freedom of information more generally. This is a serious issue. My party introduced freedom of information in 1998. We are proud of that achievement, but there were always boundaries that had to be set. I have always thought of freedom of information, in simplistic terms, as meaning that expert advice should be open but confidential discussion should remain confidential. How do the Government see this question about disclosure of discussions right at the centre of government on the basis of papers provided? Much of the content is now available on the website, but how do the Government see this question of disclosure of Cabinet-level decisions? This will have an impact on all future Governments. This is not just about dealing with the Iraq issue. This is about whether disclosure is going to affect the relationship between Ministers and civil servants for decades ahead. We have to get that right.
Lord Elystan-Morgan
Two points arise. First, if it be the case that information of a confidential nature between states is always to be kept in the background, that is an end to any question of transparency. Does the noble Lord accept first of all that many of the thousands of documents that have been disclosed to Chilcot on the basis that they are declassified and therefore open to publication come into that particular area that he mentions?
The other matter is that it appears—if the responsible press is to be believed—that Mr Brown, in so far as his position as Prime Minister or as Chancellor is concerned during the period from 2001 to 2009 that is covered by the inquiry, says that he has no objection to the disclosure of any of the three groups of documents that have been referred to.
Lord Liddle
I am arguing here that these are very difficult decisions and that we have to have a clear view for the future. I am not looking to the past; I am wondering what the impact of this will be on future relations between Ministers and between Ministers and civil servants. I would simply be grateful if the Minister was able to give us an answer.
Lord Wallace of Saltaire (LD)
My Lords, I thank the noble Lord, Lord Liddle, for that extremely constructive and helpful speech, which took a number of themes which I, too, wish to cover.
Perhaps I, like others, should admit that I am not entirely a neutral observer in this. I was my party’s defence spokesman at the time, and I was involved in the development of what was then Liberal Democrat opposition to the war. Part of my reason for being so was that I had been a relatively frequent visitor to Washington both before and after 9/11. I met there people whom I had known when I was a graduate student in the United States in the early 1960s and who had become some of the leading neo-conservatives within the Administration. It was because of what I knew of some of their underlying assumptions and of my participation in two National Intelligence Council-sponsored conferences in Washington, one in the autumn of 2001 and one in the summer of 2002, that I concluded that the Bush Administration were determined to go to war with Iraq against the advice of some of their own intelligence analysts who knew the Middle East well.
Having said that, I should say that this is a very different inquiry from the Franks inquiry. It starts with the examination of the Government’s Iraq policy papers in 2000, before 9/11, and concludes with the withdrawal of British troops from Iraq 10 years later. It therefore covers a much longer period than the short period of the Franks report and deals with a coalition war in which we were only a secondary contender. Franks was concluded in six months, but evidence was taken in private; the report covered only the period before the conflict; it did not publish many of the documents. I again declare an interest: I was one of those who reviewed it very critically on publication because it seemed to me that it had distorted the actual situation. The intelligence community had indeed got it right. The only mistake that it had made was in thinking that the Argentinians would not be unwise enough to try to invade the Falklands before the winter; it thought that it would do it six months later.
I also looked back at the Dardanelles inquiry, and reference has been made to the situation after Suez. What we now have with the Chilcot inquiry is a very much more thorough examination in which we are talking about several thousand documents—I must correct the noble Lord, Lord Elystan-Morgan: they have not been declassified by being released to the Chilcot inquiry. This is an inquiry by privy counsellors; they have access to everything that they wish to see, including intelligence documents et cetera. The question at stake is not access; it is publication.
I am informed that, when we see the eventual publication, a great deal will be published that it has not been the custom of British Governments to publish before. However, as the noble Lord, Lord Liddle, said, when you get into the question of how far you publish Cabinet minutes that appeared less than 20 or 30 years ago, clearly, whatever happens, you will be seen to have been setting a number of precedents. Another question is how far you publish documents which relate to conversations with some of our closest allies, whether or not you have their permission. There are here some very large issues of national policy and national interest which we all have to consider.
Lord Elystan-Morgan
I quote here from the Prime Minister’s letter of 5 November in reply to the letter of the day before from Sir John Chilcot. He states:
“I am aware of the scale of the task declassification has presented to a number of Government departments, and it is good to have the acknowledgement of the work that has been done by the Cabinet Office and other departments to deal with the disclosure requests, involving several thousand documents, including many hundreds since the summer”.
That seems to me to say—I may be wrong and I apologise if I am—that thousands of documents have been declassified, but I will be corrected.
Lord Wallace of Saltaire
My Lords, I would distinguish between access and publication. The delay is very much about working through thousands of documents, many of them very lengthy, and deciding how much can safely be declassified for publication—how much therefore can be published, how much some documents should be redacted in part and whether there are documents which it would be safer not to publish at all. That has taken a good deal longer than was hoped, but it is now well under way and is what we are currently considering.
Lord Anderson of Swansea
Is it true that the request by the inquiry was only made last June?
Lord Anderson of Swansea
The request to publish the documents set out in the letters.
Lord Wallace of Saltaire
I am not informed on that matter. I know that, last July, they hoped to be able to start the process of Maxwellisation within a few months. That has been delayed because what happens in a Maxwellisation process—here again I have to correct the noble Lord, Lord Elystan-Morgan—is that those who are mentioned in the report will be allowed to see in full those elements of the report which carry their evidence and will be published. So they will not see more; they will see what will be published.
This is not, incidentally, a court of law. In no sense is this a legal inquiry. It is not a matter, if I may quote the noble Lord, of people against whom there is a case; it is a matter of those who may see themselves as being criticised in the report being given time ahead of publication to prepare their response to the criticisms. So, if I may say so to the noble Lord, Lord Elystan-Morgan, this is not a roadblock. It is, however, an obstacle course, and that takes a good deal of time and discussion among different government departments, which I regret has taken longer than we hoped. I very much hope that it will be concluded soon. The Maxwellisation letters will then be able to go out and we will proceed at the normal stately but sure pace of government publications to a publication of the final report.
I also raise the role of the Cabinet Secretary because I know that he has been criticised quite substantially in the press. The Cabinet Secretary is entitled to see all the papers of previous Governments. In the final resort, as we all know, the Cabinet Secretary only advises and the Prime Minister can always override, but I am old-fashioned about civil servants. Senior civil servants are servants of the Crown as well as of the Government, and they advise in their perception of the long-term national interest. That is what the Cabinet Secretary is doing and I regret that there has been some rather partisan criticism in the press about his role, criticism which I think is unjustified.
The question was also raised as to whether the Butler report covered intelligence, so that we do not need to take it again. The Butler report covered intelligence leading up to the war. This inquiry, which takes us several years past the war, may well need to address one or two other questions. I should perhaps also mention the Gibson inquiry, which, as noble Lords will know, provided an interim report last December on some of the issues of rendition and alleged ill treatment of British nationals and others. A picture of various different dimensions will come into that.
This does, therefore, take a good deal of time to complete. It has not been helped, sadly, by the illness of one of the five members of the Chilcot inquiry, but the other four are well under way and I stress again that Gordon Brown’s promise at the beginning that:
“No British document and no British witness will be beyond the scope of the inquiry”.—[Official Report, Commons, 15/6/09; col. 23.],
has been carried out for the inquiry. The question that therefore remains, as the noble Lord, Lord Liddle, rightly points out, is how much of this it is wise to publish. That is what has caused the delay and it is what we are currently working through.
So there are questions about how fast we can work towards this conclusion and there are, as the noble Lord, Lord Alderdice, said, questions for the future. I disagree with those who have suggested that the report, when it comes out, will be simply a historical document gathering dust. I think that it will raise precisely the sorts of questions which the noble Lord, Lord Alderdice, has suggested. What should be the conditions for future intervention? How much information should be shared with Parliament and with opposition parties in order to carry Parliament and the public with the Government? How should we handle the coalition aspects of interventions, given that it is highly unlikely that Britain will be involved in any serious military operations abroad in the future which are not in coalitions with others? There, I think, is where the debates will focus.
The Government are well aware of the sensitivity of these issues. I return to the questions raised by the noble Lord, Lord Liddle. What is a reasonable time before we disclose conversations with our closest allies and what precedents do we set if we start to publish Cabinet minutes of the previous Government, when others give their advice in Cabinet and elsewhere on the basis of full confidentiality? These are serious questions with which the Government are currently struggling.
I thank the noble and learned Lord, Lord Morris, for raising this question. I assure the House that a large number of officials are working through those issues. The Chilcot inquiry and its four active members are still at work, and we very much hope to publish the final report within the foreseeable future. I will be pushing for that future to be as foreseeable as it can be.
Water Bill
(10 years, 10 months ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Shipley
“Duties of landlords
(1) In this section—
“landlord” means—
(a) where the relevant premises are occupied under a lease, the person for the time being entitled to the reversion expectant on that lease or who, apart from any statutory tenancy, would be entitled to possession of the premises; and
(b) where the relevant premises are occupied under a licence, the licensor, save that where the licensor is himself a tenant in respect of those premises, it means the person referred to in paragraph (a);
“lease” means—
(a) a lease for a term of less than 7 years; and
(b) a tenancy for a periodic term; and
(c) any statutory tenancy arising out of a lease or tenancy referred to in paragraph (a) or (b),
and in determining whether a lease is one which falls within paragraph (a) above—(a) any part of the term which falls before the grant shall be left out of account and the lease shall be treated as a lease for a term commencing with the grant;
(b) a lease which is determinable at the option of the lessor before the expiration of 7 years from the commencement of the term shall be treated as a lease for a term of less than 7 years;
(c) a lease (other than a lease to which paragraph (b) above applies) shall not be treated as a lease for a term of less than 7 years if it confers on the lessee an option for renewal for a term which, together with the original term, amounts to 7 years or more; and
(d) a “lease” does not include a mortgage term;
“relevant premises” means premises or any part of premises occupied, whether exclusively or not, for residential purposes (such occupation being in consideration of money or money’s worth) under—
(a) a lease; or
(b) a licence;
“statutory tenancy” means a statutory tenancy within the meaning of section 6 of the Rent Act 1977 (dwelling-houses let with other land) and section 7 of the Rent (Agriculture) Act 1976 (discretion of court giving possession);
“tenant” means a person who occupies relevant premises being—
(a) where the relevant premises are so occupied under a lease, the person for the time being entitled to the term of that lease; and
(b) where the relevant premises are so occupied under a licence, the licensee.
(2) Every landlord shall ensure that they hold suitable buildings insurance against damage from flood for the relevant premises.
(3) A landlord shall notify a tenant if the relevant premises appear on the register maintained under section 61.
(4) A record of the insurance held under subsection (2), or a copy thereof, shall be made available upon request and upon reasonable notice for the inspection of any person in lawful occupation of the relevant premises.”
Lord Shipley (LD)
My Lords, this is a probing amendment on the rights of tenants and the problems that can arise if there is no adequate buildings insurance in place. Reputable landlords will take out insurance as a matter of course. However, there is no compulsion for landlords to do that, and tenants can be particularly vulnerable if their landlords do not take out buildings insurance. They may not be covered for the cost of moving out or for temporary accommodation in the case of flood. Of course, it is understood that tenants must provide their own contents insurance. The amendment does not relate to contents insurance.
The amendment would give tenants the right to know all the facts about an insurance policy on the property that they are renting, including whether there is one at all. The solution to this problem is to make it mandatory for landlords to take up buildings insurance that includes flood risk insurance; to require landlords to tell a tenant if a property is on the register of premises subject to greater flood risk as defined in Clause 61; and to show a copy of the insurance policy to a tenant on request.
I fully understand that landlords will not benefit from the FR scheme. However, landlords pay income tax, and I understand that they would be able to offset the cost of insurance against income tax. I should be grateful for the Minister’s confirmation of that and to know whether, therefore, the Government could support an amendment on Report that protects the rights of tenants, as proposed in this amendment. I beg to move.
The Earl of Lytton (CB)
My Lords, I had not intended to make any comment on this, but perhaps I ought to. I have one or two problems with the amendment. First, it appears to refer to any type of property, so it could be residential or non-residential. It appears to cover any type of tenure. The definition of “relevant premises” includes,
“any part of premises occupied”,
which presumably includes the garden. The requirement is for the landlord to hold insurance regardless of risk.
I declare an interest in that I am a landlord of a residential property that is let. It is not itself at risk of flood, but a stream crosses part of the garden. That does not put the property itself at risk, but if it was perceived by an insurer on the basis of the postcode lottery principle that it was somehow at risk and that ratcheted up my insurance premium—which, of course, I should be delighted to cover for all normal risks—I see that there might be a needless requirement to cover for a risk that was not there.
I do not know how that provision sits, because the terminology for “landlord” is wide and the amendment would probably include other properties without any streams in the garden that I might happen to let on a holiday letting, or something like that. I can see that tenants need to be protected in some way, but let us look at what the protection might mean in practice. There is a flooding event; there is insurance cover. Let us say the interior—the inhabitable bit—of the premises is rendered incapable of occupation, not only because of the effect of the flood-water, but also because of the filth and everything else, causing damage to fittings, de-lamination of kitchen units and all the other horrors. It will need a thorough clean-out, with bits replacing, probably a renewed kitchen, and certainly redecoration and drying out. That takes time. The tenant is inevitably going to have to move out. He is going to move to somewhere else. The consequential losses presumably do not cover the loss of the tenants; they only cover the damage to the property. If it needs shoring up then that is a consequential loss.
So with the greatest respect to the noble Lord, Lord Shipley, I am not sure that this amendment achieves what it sets out to do. Maybe I have got hold of the wrong end of the stick, but the landlord’s insurance does not enure for the benefit of the tenant. If you look at a commercial lease, for instance, it normally has a cessor of rent clause which causes the rent to stop being payable at a point where damage occurs beyond a certain level, so the property is no longer fit for occupation. But if it is not reinstated within a certain period of time, the tenant has the option to move out and determine the lease. The tenant, in the mean time, whether it is a business that needs to continue its business occupation, or a tenant in residence who actually needs a roof over his head, is going to have to move, so I am unclear about the mechanics of how this would really work in practice, because I do not see that it protects the tenant.
The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord De Mauley) (Con)
My Lords, Amendment 161ZA from my noble friend Lord Shipley seeks to make it obligatory for landlords to hold buildings insurance, including cover for flood risk. I can confirm to him, in answer to his question, that the cost of insurance premiums can usually be offset against profits for tax purposes. I am sympathetic to the intention behind this amendment although I am not sure that this Bill is the right vehicle for this debate.
I note that while this amendment refers specifically to flood cover, buildings insurance includes protection against a range of perils including, for example, fire and theft. Although there is no legal requirement for property owners to take out insurance for their properties in the UK, owner-occupiers and landlords generally choose to do so in order to benefit from the financial protection that insurance offers. In addition, and importantly, most mortgage lenders specify buildings cover as a mandatory requirement for providing a mortgage on a property.
The Government agree that it is very sensible for landlords to take out insurance, but are conscious that the decision is a matter of individual choice, based on a commercial decision to protect an investment made in property. We are concerned that making insurance compulsory across the board could create a regulatory burden, which could deter investment in the private rented sector. I strongly encourage tenants always to check with a prospective landlord that appropriate cover is provided for the property.
If I might pause specifically on the issue of support for tenants in the event of a flood, we appreciate the concerns raised recently by the National Flood Forum and others that tenants of properties not covered by insurance might be left homeless following a flood. I note that some insurance policies have an “alternative accommodation” provision, but I would also like to assure noble Lords that, even if this is not the case, tenants do have protection. All local authorities are required to provide accommodation for households who are eligible for assistance, homeless through no fault of their own, and have a priority need for accommodation—into which category flood victims would clearly fall.
As part of its role in promoting flood awareness, the Environment Agency strongly encourages landlords to make a flood plan and to make their tenants aware of what to do in a flood. I also remind noble Lords that all residential contents policies will be eligible for cover through Flood Re, including tenants of rental properties, so long as they are not in properties built after 2009 or in band H or their equivalents. I ask that the amendment be withdrawn.
Lord Shipley
My Lords, I am grateful for the two contributions. I am reassured in part by the Minister’s reply. This is about tenants who have an entitlement to know whether or not they are in a high-risk area; indeed, we have already had discussions today about how people find that out. Tenants in private residential properties are often on low incomes, and it is reasonable that they should be told formally if they are renting a property in a high-risk area. That seems to be a basic entitlement if someone signs a lease. It is right that they should know and be given a copy of the buildings insurance with flood cover that the landlord has, so that if the landlord does not have that then the tenant is aware of that fact.
The amendment is not about contents insurance; I fully understand the law in that respect. However, we need to be very careful if there is going to be a rising incidence of flooding that means that some private tenants find themselves flooded but do not have contents insurance because they did not think they were in a high-risk area or were not aware of it, or thought that the landlord would cover it even though the landlord would not be responsible for their contents insurance. With this amendment I am seeking better clarity, given that there have been cases in recent months where flooding has occurred and tenants have in practice had a cost to bear. Of course there are costs involved in moving out that fall on the tenant, not the landlord, unless the tenant is prepared to sue the landlord. They could do that but it is very complicated for a private tenant to do.
I note the Minister’s concern and will think further about this. For the moment, I beg leave to withdraw the amendment.
Lord De Mauley
“(b) the revocation of a scheme’s designation under section 51(1)(b) without a new designation being made under that provision, at any time before sections 51 to 56 are repealed,”
“(4A) Before making an order under subsection (3)(a)(i) or (b) which includes provision for the transfer of an amount of the reserves of the FR Scheme, the Secretary of State must consult the FR Scheme administrator about the amount to be transferred.
(4B) The Secretary of State may by regulations define “reserves” for the purposes of subsection (4A).”
Lord De Mauley
Lord Howard of Rising
“Internal drainage boards: apportionment of drainage expenses
(1) The Land Drainage Act 1991 is amended as follows.
(2) In section 37 (apportionment of drainage expenses), at end insert—
“(f) in the case of—the Secretary of State may by order define an equivalent measure for valuing the land”.”(i) any land to which none of paragraphs (a) to (d) applies and it is not possible to calculate a value under paragraph (e)(ii) as the relevant rating lists no longer exist or cannot be located, or (ii) land to which one of paragraphs (a) to (c) does apply but for which the relevant rating lists no longer exist or cannot be located,the Secretary of State may by order define an equivalent measure for valuing the land”.”
Lord Howard of Rising (Con)
My Lords, before speaking to Amendment 165ZA, I declare interests as a member of the Kings Lynn Internal Drainage Board, a payer of land drainage rates and an owner of riparian rights.
This is a simple amendment so I will not detain your Lordships long. Where an internal drainage board extends its area, it may raise special levies on billing authorities to cover expenditure in that area. This process is based on the valuation of land and is set out in Section 37 of the Land Drainage Act 1991. For one reason or another, the rating lists referred to in the Land Drainage Act no longer exist in certain parts of the country. Where it is not possible to value as set out in the 1991 Act, this amendment seeks to provide for the Secretary of State, by order, to introduce an equivalent method of assessing land. The amendment does not say how this should be achieved but would give the Secretary of State the power to do so where no other method exists. The amendment allows a gap to be plugged. In view of the simple and uncontentious nature of the amendment, I hope that the Government will feel able to support it. I beg to move.
Lord De Mauley
My Lords, I thank my noble friend for raising the issue in Amendment 165ZA. We value and support the work of internal drainage boards and I agree with my noble friend that we should act to remove unnecessary barriers where it is clear that these are preventing boards getting on with their important work. It is for this reason that we have included provisions in the Bill to streamline the legal processes for internal drainage boards, making it easier and quicker for them to amalgamate or to make other structural changes.
My department has a close and constructive working relationship with the Association of Drainage Authorities, which represents internal drainage boards. Officials meet the ADA regularly to discuss a wide range of issues related to the work of IDBs, and the ADA has not highlighted this previously as one of significant concern to it. Until my noble friend’s recent communications with me, which resulted in the tabling of this amendment, we were not aware that this issue had been identified as a potentially widespread problem.
The concern that has been raised is that some internal drainage boards may no longer have access to the rating lists referred to in Section 37(5) of the Land Drainage Act 1991, and that this could present a barrier to boards wishing to extend their boundaries. However, I am concerned that the amendment of my noble friend is a tad premature, given that we have not yet received evidence on how widespread and significant this problem may be. If there is evidence to show that it poses a significant practical problem, we must consider whether it could be addressed through other means, potentially without recourse to legislation.
I am particularly concerned that the amendment has the potential to give rise to significant unintended consequences that might impact adversely on some internal drainage boards and local authority rate payers. For example, if rating lists to be used were revalued, this could have the effect of increasing special levies on some unitary and district authorities and in turn increase council tax in those areas. The amendment also appears to provide for the creation of a two-tier system whereby some internal drainage boards would continue to use existing rating lists for the valuation of urban land while others would potentially use a different measure where those rating lists are unavailable. This could result in different levels of charge being levied on local authorities in different parts of the country. It is important that a transparent and consistent approach to calculating internal drainage board levies and rates is applied across the country.
I hope that my noble friend is prepared to withdraw his amendment. However, I will consider carefully any further evidence brought forward by my noble friend or the Association of Drainage Authorities on this issue.
Lord Howard of Rising
I thank the Minister for his comments. It is interesting that he wants to see the expansion of internal drainage boards, as my amendment is there only to facilitate that. It is very nice that he has been in touch with the association, but it is not all-knowing. Few people are.
I cannot see how there would be unintended consequences. We merely seek to give the Secretary of State the power to take action should it be so needed. If he were to take the wrong action, there might be unintended consequences.
If there are no rating lists available, what are the Government going to do—absolutely nothing? Or will they agree that the Secretary of State can produce a method of valuation that is as close to other people as is possible? The whole point of the amendment is not to tell the Government how to do it; it is merely to give Her Majesty’s Government the power to do it so that there is no blockage on what the Minister has said is their intention.
The Lord Speaker (Baroness D'Souza)
Does the noble Lord wish to withdraw his amendment?
Lord Howard of Rising
I may return to this later. I hoped that the Minister might comment, but perhaps he does not want to. I beg leave to withdraw the amendment.
Baroness Bakewell of Hardington Mandeville (LD)
My Lords, the three amendments in this group deal with a specific area of the Bill, as we have heard: that surrounding the internal drainage boards. IDBs are very local partnerships, including landowners, farmers and local councillors, which work with the Environment Agency and Natural England to draw up plans to keep ditches and rhynes clear so that water can flow freely, thus minimising the impact of flooding. IDBs are well respected by local residents and these residents should be consulted on any impending changes to their local internal drainage board.
Farmers and landowners themselves are supposed to keep their ditches and streams clear for drainage, but this is not always done well. Those with river frontage have the responsibilities of the riparian owner inasmuch as they are responsible for the banks and clear flow of the river on their side for the length that they own. In some cases, this duty is not exercised and is sometimes ignored. A much stronger regime of these duties must be enforced by the IDBs and councils. The IDBs are responsible for the rhynes. There is a clear need for IDBs to be able to access money to keep all these channels open.
While I understand the need to keep council tax down to a reasonable level, if I were to ask the residents of the Somerset Levels whether they would rather have paid a little more council tax which went directly to the IDBs, or whether they wanted to take the risk of being underwater for six weeks, I am not sure what that answer would have been. However, I do not think that it would have been not to have paid more council tax.
IDBs need to have the power to act and to act quickly for the benefit of those in their communities. I am fully sympathetic to speeding up the process for publication of requirements under the Land Drainage Act 1991. However, any proposals for amalgamation or reorganisation of IDBs must be consulted on with those most affected. I agree that taking nine to 12 months for such consultation is neither efficient nor wise and I support reducing that time. I also understand that provincial newspapers have limited circulation. However, it is often the case that the local newspaper might be the only newspaper that some households read. They read it because the articles and news have relevance for them personally. These people will not be reading the London Gazette, however strange your Lordships may find this.
Everything we see on our television screens, read in our newspapers and hear on the radio indicates that these people who have been flooded feel disempowered and disillusioned. It would unwise to do anything in the Bill that might increase that feeling. It is essential that local people are able to have a say in what happens to their IDBs and, to do that, they need to be able to access the consultation when it takes place. Reducing the time during which an advertisement may be placed is reasonable, so long as it is advertised in locally accessible media, and placed in libraries, schools or other public meeting places as well as the local provincial newspapers. There is a financial cost to this, of course, but that is small compared to the value of local people feeling that they are being consulted. I beg to move.
Baroness Northover (LD)
My Lords, I thank my noble friend for her amendment. We agree with her that it is important for the necessary information to go to the relevant people and for the relevant groups to be consulted in the way that she says. I emphasise that we are here retaining all the powers that are already in place; this is just about not having to publish in local newspapers. I will just go through that: I think she has picked up on the key points anyway.
We consider that the requirement for the internal drainage boards and the Environment Agency to advertise a range of notices, procedures and orders in newspapers is inflexible, out of date—given the range of media now available—and often wasteful of public funds. We are therefore introducing more flexibility to the advertising arrangements. This is in line with recent legislation, such as the Marine and Coastal Access Act 2009 and the Flood and Water Management Act 2010, which allows relevant authorities to publish documents without being prescriptive in how they do so.
Internal drainage boards have complained that advertising in local newspapers can be costly and that, in some areas, it does not represent best value for money in reaching out to the relevant communities. We also understand that some local newspapers may not be widely distributed in rural communities, or in some cases may no longer be published. Our changes will allow for both a wider and a more targeted distribution of notices. This could mean, for example, distribution through the use of electronic means, parish notice boards or, in the way that she indicated, school notice boards and so on, while retaining a fair, open and inclusive process.
The Environment Agency and IDBs will still have a requirement to publish notices and bring these notices to the attention of the people who will be affected by the changes; I hope that is the reassurance that the noble Baroness needs. We are, however, keen to take full advantage of the extensive local knowledge and experience of internal drainage boards and the Environment Agency by enabling them to reach out to the communities affected by any changes in the most cost-effective way.
Therefore, I can assure my noble friend that we are not telling internal drainage boards and the Environment Agency not to use local newspapers. If they consider this to be a cost-effective way of getting their information out, they may still do so, as well as making use of other media. We agree that local people should be consulted in the way that my noble friend suggests. I hope that I have reassured my noble friend and that she will be content to withdraw her amendment.
Baroness Bakewell of Hardington Mandeville
I thank the Minister for her comments. I welcome the increased flexibility on advertising that she detailed and accept completely that, if the internal drainage boards are the bodies that decide how to advertise the alterations, then I should be happy with that. It seems that a wider and targeted approach is going to come forward, so I beg leave to withdraw my amendment.
The Earl of Lytton
“Liability in nuisance for a riparian owner
The Secretary of State may by regulations make provision to limit the liability in nuisance for a riparian owner when the Environment Agency or relevant authority withdraws from maintenance of flood defences.”
The Earl of Lytton
My Lords, I tabled this amendment following discussions I had with the Country Land and Business Association, of which I am a long-standing member. It relates to what might be described as a legacy issue, to do with circumstances where infrastructure in relation to flood defence or amelioration, which currently might fall under the auspices of the Environment Agency, might at some juncture, through the operation of this Bill, and the redefinition of the Environment Agency’s functions, cease to be maintained by a government agency.
The question is: what happens with this infrastructure? It has obviously been put in there for the reason of protecting life and property, some of which may be agricultural, and other residential or other property. This amendment intends to probe what the Government’s intentions are in the circumstances in which such a situation might occur. The Minister may say that there is no question of the Environment Agency or the state abandoning those things to an uncertain fate. However, they might say, “It’s going to be down to local communities to deal with it”—and then what? How are these obligations to be transferred?
Lord Grantchester (Lab)
As my noble friend Lord Whitty said in relation to an earlier amendment, it is vital that there is clarity on aspects of the scheme, especially on defining the scheme concerning the inclusions and exclusions of property and responsibilities or liabilities around flood risk.
There appears to be a lack of clarity as regards the situation concerning owners of river banks and whether they are responsible upon the withdrawal of the Environment Agency from funding many aspects of flood prevention and the consequential third-party losses. The amendment seems to assume that the responsibilities of the Environment Agency will be reduced, as well as the funding. While there may be recognition that owners should be responsible for their own situations, it is nevertheless recognised that covering third-party losses could be severely onerous to riparian owners. This amendment seeks to limit their liability. Nevertheless, a limit to their liability begs the question of who would then take it on.
Even at this late hour, perhaps I may tempt the Minister. As regards limiting the liability of riparian owners, could they claim that a flood was an act of God? Is the Minister able to pass judgment on such things? However, this serious situation needs clarity, as landowners, farmers and even boating sports clubs could find themselves in severe difficulty alongside more affluent band H properties.
Baroness Northover
My Lords, far be it from me to judge upon acts of God or even the implications of the Equality Act.
I thank the noble Earl for his amendment, which I will address at a little length, as I think he would probably like to hear my comments. He speaks of instances where the Environment Agency might decide to withdraw from maintaining some flood management assets and suggests that this could create a challenging situation for landowners, residents and others affected. He will probably know that we are discussing those concerns with the Country Land and Business Association, to which he referred, and that my honourable friend the Parliamentary Under-Secretary of State met it on 23 January.
We share the noble Earl’s wish to reduce the possibility of litigation, which is an aspect that is implied by some of the concerns expressed by the noble Earl. That is why we are promoting the asset maintenance protocol published by the Environment Agency. We strongly believe that developing partnerships and working arrangements between local parties to guarantee future maintenance is the best way to prevent problems arising that could lead to claims of liability.
The Environment Agency and other authorities maintain many thousands of flood defence assets. The situation to which the noble Earl refers is not one which is affected by this Bill. He is picking up instances where the Environment Agency may decide that it is no longer going to support certain flood defences and the responsibility for that would fall to others. So I would separate this issue from the Bill, as the noble Lord, Lord Grantchester, sort of did.
The Environment Agency is looking to withdraw maintenance of some of these assets where maintenance is no longer economically justifiable or where the work may not have a high enough priority for central government funding over the longer term. Examples of such assets are embankments in rural areas that protect grazing land or small flow control structures such as gates or penstocks.
Understanding these concerns, the Environment Agency has published, and recently updated, a protocol explaining the processes it will follow. The agency is committed to bringing together landowners and other affected parties to make sure that they are clear on their respective roles and responsibilities and that they understand the range of options that may be available to them for future management of the assets and their likely costs, benefits and impacts. This may include options for continued maintenance of assets by local groups and options involving less or no maintenance. The agency will then work with all the interested parties to help them reach agreement on how the parties involved will take forward maintenance of the asset in the future. It is possible, for example, for the landowner on whose land a defence is situated to enter into an agreement to secure contributions from his neighbours towards the costs of maintenance and repairs.
We understand the noble Earl’s concerns about whether these agreements will be possible. However, it is important to remember that third parties are also expected to play their part. If third parties refuse to make reasonable contributions for the maintenance of a flood defence asset that is protecting their property, they could diminish the success of any future claims against the landowner.
The noble Earl has suggested regulations should be drawn up to set out what actions a landowner should take in order to meet any claims of liability. This would not be the simple clarification that the noble Earl might have been expecting. Such regulations would need to cover many types of assets, the type of location, as well as a list of all possible activities that might be appropriate for their maintenance. The regulations would need to address the range of impacts of flooding, ranging from a garden becoming waterlogged to flooding of many buildings and possible loss of life. Most importantly, the regulations would need to address such complications as a flood asset being owned by one or more landowners or a number of different beneficiaries of different means. Such regulations would be complex and, to be proportionate, would need to have an element of subjectivity to what a landowner would be required to do to avoid liability.
For that reason, we do not believe that such regulations could give significantly more certainty than the current case law. We firmly believe that use of the Environment Agency’s protocol gives all the parties involved a chance to ensure an outcome that reflects the particular situation and circumstances of each individual case, while avoiding the need for litigation between landowners. For these reasons I encourage the noble Earl to withdraw his amendment.
The Earl of Lytton
My Lords, at this hour of the night it is not my intention to press the amendment; as I said at the outset, it is a probing one. I am grateful to the Minister for her explanation. I am aware of the ongoing discussions and I appreciate that this matter sort of sits outside the Bill. I suppose that if I have a hook to hang it on, it is the situation where somebody might be protected by such works and finds they are no longer protected and unable to get full cover insurance. They then go looking for the next deep pocket in order to press a claim, so the geometry of the circumstances might change.
However, it is right that the matter should be discussed by the industries concerned. I would hope that the protocol would at least give some protection in the sense that, if one had done something in accordance with the protocol that was agreed between the parties, that would be a reasonable defence in law. However, I do not think that I can ask the noble Baroness to go into that sort of detail. I would like to reserve my position in case it is necessary for me to come back to this at a later stage of the Bill but, in the mean time, I beg leave to withdraw the amendment.
Baroness Humphreys
“Duty to provide sewers
In section 101A of the Water Industry Act 1991, in subsection (2)(a) for “on which there are buildings” substitute “with permanent use and generating domestic effluent”.”
Baroness Humphreys (LD)
My Lords, I am grateful for the opportunity to move this amendment and, in so doing, refer noble Lords to the interest I have already declared as a trustee of the Crafnant Trust. The trust has responsibility for Lake Crafnant, a small reservoir in north Wales.
The amendment seeks to clarify the definition of duty properties as they appear in Section 101A of the Water Industry Act 1991 where an application is being made to connect premises to sewerage for the first time, and seeks to define “duty properties” as premises,
“with permanent use and generating domestic effluent”.
The Water Industry Act 1991 brought in a duty on water companies to provide a sewerage connection where the current arrangements were causing environmental problems, if that was the cheapest overall solution to the problem. Section 101A(1) of the Act states that,
“it shall be the duty of a sewerage undertaker to provide a public sewer to be used for the drainage for domestic sewerage purposes of premises in a particular locality in its area”.
Section 101A(2)(a) further defines the use of the word “premises” as,
“the premises in question, or any of those premises, are premises on which there are buildings”.
It is the use of the word “buildings” that has become problematic for some local authorities and a strict interpretation of the word has given rise to some environmental problems—problems that have caused conflict with the duties of local authorities under the Government’s own guidance, Planning Policy for Traveller Sites, issued in 2012. Under this guidance, local planning authorities are advised that they must have,
“due regard to the protection of local amenity and local environment”,
and that sites should be,
“sustainable economically, socially and environmentally”.
Chesterton Fen in south Cambridgeshire is a case in point, where conflict has been seen between the 1991 Act and the Government’s planning policy. The Traveller site there has full planning permission and the caravan count in January of this year showed that there were 261 caravans on the Chesterton Fen Road site but, because very few of the premises there are “buildings”, none of these is connected to a main sewer and the owners have each had to make their own arrangements for sewage disposal such as small package treatment plants, cesspits and septic tanks leading to soakaways. The development there is close to the River Cam and, because the development is dense and low, there can be environmental problems. I am told that lagoons close to the banks of the river can become less than sweet smelling at all times of the year.
Local councillors petitioned Anglian Water in September 2007 to investigate whether it had a duty to provide a mains sewerage connection but Anglian Water turned the request down in 2009 and an appeal was lost in June 2011. The judgment hinged on the number of properties in the area for which the water company had a duty to provide this service under the Act. In short, most of the Travellers’ caravans or day rooms did not count, so although there are more than 250 caravan plots in the area, only 30 duty properties—houses and a few substantial mobile homes—were considered, and the economic argument was then that it was cheaper for these 30 to provide cesspits for themselves than to lay on a sewer. If all the caravans had counted as buildings, there is no question but that the water authority would have had to provide a sewer. After all, it is impossible to imagine permission being given for an estate of 250 houses without access to sewerage being part of that permission. Therefore, the whole issue revolves around the use of the word “buildings” and the lack of guidance around its definition. Many applications and appeals have had to resort to the definition provided under building regulations guidance, which is why successive applications and appeals have failed.
Baroness Northover
My Lords, I am grateful to my noble friend for raising an issue which is clearly of no small importance to any community affected. Section 101A relates to a “Further duty to provide sewers” to relieve environmental and amenity issues caused by inadequate sewerage. This section applies to “premises” and “buildings” and the amendment seeks to change that to make the duty apply to structures which may not currently be considered buildings for the purposes of this duty.
In the case of Traveller sites, such as the one she referred to at Chesterton Fen near Cambridge, when considering an appeal in respect of a decision not to provide a sewer under Section 101A, the Environment Agency will look at the case for each individual caravan on the basis of its size, permanence and degree of physical attachment to the land. To vary the definition in this section would potentially have far-ranging and unintended consequences. We feel that the best route is to meet my noble friends to discuss their concerns further. On that basis, I hope that she will be prepared to withdraw her amendment.
Baroness Humphreys
I thank my noble friend for her reply. Given the degree of reassurance she has given me, I beg leave to withdraw the amendment.
Lord De Mauley
“(b) section 76;“(ba) section 77 and Schedule 11;(bb) sections 78 and 79;”
Children and Families Bill
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