Grand Committee
(10 years, 2 months ago)
Grand CommitteeRead Full debate Read Hansard Text
Consumer Rights Bill
(10 years, 2 months ago)
Grand CommitteeRead Full debate Read Hansard Text
The Deputy Chairman of Committees (Baroness Harris of Richmond) (LD)
My Lords, if there is a Division in the Chamber while we are sitting, the Committee will adjourn as soon as the Division Bells are rung and resume after 10 minutes.
Clause 20: Right to reject
Amendment 14
Baroness Jolly
Baroness Jolly (LD)
My Lords, I appreciate that the government amendments are technical in nature, so I would like to take some time to explain what they do.
The Bill sets out key statutory remedies, such as the right to reject substandard goods, which entitle the consumer to reject goods, treat the contract as terminated and get a refund, but there is also court-developed common law regarding contracts for goods, and the Bill is intended to work alongside much of that. Amendments 14, 17 and 18 are to explain how the rights to reject goods under the Bill work, where contracts are severable under contract law. By severable, I mean contracts where parts are intended to be independent of each other, so different parts of the payment can be assigned to different parts of the trader’s performance. For example, it could be a contract for numerous goods where payment is due per item or for building work where payment is due pro rata for work done, regardless of whether all of the work has been done. That is distinct from obligations which are entire, when the consumer has to pay only when all the trader’s obligations have been fulfilled—for example, a building contract under which the trader must carry out all the work before the consumer has to pay a lump sum. It is that existing common-law distinction and principle to which the amendments refer.
Let me state from the outset what the amendments are not about. They are absolutely not about preventing consumers from rejecting faulty goods. Where goods are faulty, the consumer has the right to reject them under the amendments. The amendments clarify that where the contract is severable, the consumer has the right to reject the faulty goods and may also have the right to terminate the whole of the contract. Above all, the amendments provide clarity that the Bill would not override the distinction between severable and entire contract, which currently exists in common law.
The Bill, like the Sale of Goods Act, explains the position for contracts where the parties agree to deliver and pay for goods in instalments. A contract, including a mixed contract, such as one where goods are supplied alongside services, may be considered to be severable in other situations. For example, goods may be delivered in instalments but paid for monthly rather than per instalment. I gave some other examples earlier.
Under the Sale of Goods Act, much of the detail of how the right to reject operates is dealt with by common law, whereas in the Bill we have greater clarity about the right to reject. To provide that greater clarity without cutting across the existing concept of severability, we consider that it would be helpful to include some clarification about how the right to reject operates for severable contracts, other than those for delivery and payment in instalments.
Under current law, if a consumer and a trader make a contract which is severable and an item supplied under the contract is faulty, the consumer may be entitled to compensation in relation to the faulty item, or may be able to terminate the whole contract—it will depend on the nature of the goods, the fault, and the detail of the contract. The amendments are intended to set out the position in the Bill.
If the contract is not severable—for example, if the consumer is required to pay only once and the trader has carried out all of the work—the amendments do not bite. The consumer could terminate the whole of the contract if there is a fault in one of the goods.
I turn to the amendments. First, Amendments 14 and 17 are to clarify that the rights to reject goods take account of this common-law distinction between severable and entire contracts. The Bill provides that a consumer should be able to reject goods, including those supplied as part of a mixed contract, where the goods breach one of the statutory rights in the Bill. However, where the contract is severable, in some cases the faulty goods supplied might represent only a small part of the whole contract. These goods or the fault with them may have little impact on other things which the trader must do or supply under the contract. Of course, in other cases the faulty goods may represent most of what the consumer is paying for under the contract, or the fault in the goods may be representative of an inherent fault in other goods which are to be supplied. That is why the amendments provide that the consumer’s right to reject may apply to a severable part of the contract or that the consumer may also have a right to terminate the wider contract.
Whether the consumer can treat the whole contract “as at an end” may depend on the circumstances and the contract. Under common law, the main tests for deciding whether a consumer may treat the whole contract as being at an end in such cases are the extent of the breach compared to the whole contract and the likelihood of the breach being repeated in the other things that the trader is to supply. Imagine, for instance, that a trader has renovated a bathroom and billed the consumer separately for the different items. There is no issue with the trader’s work or most of the items but there is a fault with the sink. Amendment 17 is to make clear that the consumer’s right to reject would apply to the severable part of the contract and not to the whole contract, unless the circumstances justified this. In my example, therefore, a consumer could reject the part of the trader’s performance which did not meet the consumer’s rights—here, it is the sink—but not necessarily the whole bathroom.
Amendment 18 ensures that the distinction between entire and severable contracts is also reflected in Clause 21, which enables a consumer who has the right to reject goods under a contract to choose to reject only some of the faulty goods. Where a contract is severable, the consumer might have the right to reject goods supplied under part of the contract but not all the goods under it. The amendment therefore makes it clear that in this situation, too, the consumer may choose to reject only some of the faulty goods which they are entitled to reject.
As I said at the start, I appreciate that these are technical amendments and if the noble Baroness, Lady Hayter, would like additional time to consider them more fully, the Government are willing to withdraw and not move them at this time and reintroduce them on Report.
Lord Hodgson of Astley Abbotts (Con)
My Lords, I do not want to run before my horse by talking about an amendment which I shall bring up later but I was listening carefully to what my noble friend was saying about the ability to reject part of a contract. In the case that I shall come to in a minute, which will be about custom-made double-glazed units, will that mean that one window only could be rejected?
Baroness Jolly
My noble friend makes a very good point. I have extensive speaking notes on that part and we will come to it later in the afternoon.
Baroness Hayter of Kentish Town (Lab)
I thank the Minister for that. Perhaps it would be helpful if I put on the record what our questions are. I take very much the offer that she has made to withdraw and not move these amendments so that we can come back to them; with them being tabled at this stage, we obviously have not had all the time that we need. Neither have they been scrutinised by the BIS Select Committee or in the Public Bill Committee in the other place. That would give us a little more time and we are grateful for that.
The real question, which the Minister helpfully set out, is whether it is reasonable for a consumer to reject every part of what they think was bought under a single sales contract or only the faulty parts. With the example given, it may be that an entire bathroom suite has been ordered—all in the same pale blue or whatever one wants for a bathroom suite—but if the sink is faulty, that may have implications on the bundle and on whether the quality of the whole is affected by one part.
Though hearing and understanding the intention, we are worried that this proposal could have consequences for big, very expensive items, particularly whether the amendments would create an incentive for traders to supply related goods under separate orders or contracts to try to make the contract more severable. That could apply to a whole furniture suite, a music centre, a matching table, chairs and cupboards, and so on where the householder thinks that they are buying a complete look. Rather like the Minister, I have focused on kitchen equipment and those sorts of things. However, telecoms and media bundles, which can include phone, broadband and television, are increasingly purchased by consumers. Such purchases raise the same issues as to whether they are a single contract or severable.
I should like to lay two further issues on the table because we will, with the Minister’s generous offer, come back to this. Thinking of the whole area, it will at least be possible for the installer or the retailer to take out insurance against the whole or the parts, whereas an individual consumer cannot at the point of installation. The Minister has kindly offered further discussions on the point at which one pays and whether one simply pays at the end of a contract. If it is for something fairly small, that may be simple, but when I have had building work done, money quite rightly has been wanted up front to buy components. We have tended to pay in bits, which makes it sound as if each bit is separate, although it was really just to help a small trader. Again, we would like the time to look at that. If this amendment really is to clarify current law, we would have fewer worries. For the moment, we are grateful for the time and hope that we will be able to sort this out.
Baroness Jolly
I thank the noble Baroness for her comments and appreciate that she needs more time to consider the amendments more fully in the light of remarks on this issue. I am happy therefore to withdraw the amendment with a view to revisiting it on Report.
“( ) A consumer shall not be obliged to incur any costs when returning rejected goods except those incurred in returning the goods to the place where they acquired physical possession of those goods.”
Lord Stevenson of Balmacara (Lab)
My Lords, Amendment 15 would ensure that a consumer would not have pay to return faulty goods other than any costs incurred in returning them to the place where they originally acquired physical possession of them. It is intended to stop traders charging additional costs, such as large postage costs or costs for delivery of large items. I understand the Government’s view and I expect the response to be along the lines of that raised in the other place when this issue was raised; namely, that the present arrangements under the Sales of Goods Act 1979 should be continued. Basically, what is being said here is that when a consumer exercises a right to reject faulty goods, they are not obliged to return the goods unless they have agreed to. All the consumer needs to do is to make the goods available to the trader. The consumer and trader can arrange for the consumer to return the goods but it would be the consumer’s choice.
Of course, it does not exactly make it the trader’s responsibility in that circumstance to do that. The whole of this appears to be on an edifice of good will and sound trading, which often does occur but, in reality, sometimes does not. Good traders are not the ones we have to worry about: it is the unhelpful, nitpicking, take-it-or-leave-it traders who we have all come across and who may say, “Oh yes, we will give you a refund on your sofa but you have to bring it back to the depot”. You then work out how on earth you are going to do that and probably give up in despair.
It has already come up in our Committee that there is clearly an invisible but rather firm line on the part of the Government regarding where they want to go on some of these issues where they feel that the evidence that comes from the earlier legislation is sufficient. However, times are changing, and the sharp practices and issues that have been raised with us as we have approached the Bill need to be addressed. This very simple amendment would put into the Bill something that we think would be good practice. It would help consumers, particularly vulnerable ones, to deal with poor traders, and would level the playing field between the good and the bad retailers. I beg to move.
Baroness Jolly
The noble Lord has eloquently described how unfair it would be for a consumer to have to pay the cost of returning substandard goods. I have a lot of sympathy for the sentiments that he conveys; to receive substandard goods is disappointing and frustrating in itself, but to have to pay the cost of returning them really would heap insult upon injury. Where I think we differ is that I am not convinced that further protection is required. This is because of the protections already in the Bill and in common law. Moreover, there seems to be little evidence of bad practice from traders insisting that consumers fund the return of shoddy goods. Some large online retailers already cover the cost of returning goods, either by arranging for a courier or by providing a freepost sticky label.
The Bill already provides protection by stating in Clause 27 that there is no need for the consumer to return the goods unless they have specifically agreed to do so. The consumer need only make the goods available to the trader—for example, to facilitate their collection. Furthermore, if the consumer rejects the goods and terminates the contract, he or she can also pursue a damages claim against the trader in order to recover further costs that they have incurred, and these damages could include the cost of returning the goods to the trader if they had been required so to do. So although I am with the noble Lord opposite on the spirit and intention behind the amendment, I question the need for it. I therefore ask him to withdraw the amendment.
Lord Stevenson of Balmacara
My Lords, that was not unexpected, although I noticed, as the Minister was framed by the TV behind her, that Christmas bells were ringing, and I thought my time had come and this was going to be the first crack in the edifice that has been erected between us in this debate, but sadly not.
We are so close on this that I do not understand why the Minister cannot accept the argument. I find it very strange that the Government would be happy to rest on a situation where a poor, vulnerable consumer, with a sofa that is bulky, difficult and unfit for purpose, has to rely on the good will of the trader to send a courier van, as she has described it, or even to send a sticky label—though I do not think that that would be much use—in order to send the sofa back to the warehouse. What happens if the trader does not do that? Are we really saying that everyone in the country has to become expert in raising small claims charges in small claims courts to try to persuade recalcitrant traders to do what is obviously the expected thing? I do not think so. I hear what the Minister says and I understand where she is coming from, but we might wish to return to this. I beg leave to withdraw the amendment.
“( ) The entitlement to reject shall not apply, notwithstanding the right to repair set out in section 23 and the right to a price reduction under section 24, if the contract is for goods that---—
(a) are made to the consumer’s specifications or are clearly personalised, or(b) have been installed following significant alterations to the existing fabric of a building so as to render return of the product impractical.”
Lord Hodgson of Astley Abbotts
My Lords, this amendment appears to be sticking one’s head in the lion’s mouth, in that it appears at first sight to be an amendment in favour of double-glazing salesmen. Like many Members of the Committee, I have seen examples on various consumer protection programmes where the behaviour has been completely unacceptable. Before Members switch off completely, though, I wonder whether they will bear with me while I drill down a bit into the issue. There have been egregious examples of fly-by-night double-glazing operators but equally there are many reputable firms, some of which offer guarantees as long as 10 years for the performance of their products. It is of course also worth being aware that double-glazing plays an important part in improving the insulation of people’s homes and in the fight against global warming. Therefore this industry has an important commercial role to play in our society. However, the nature of its bespoke—I use the word carefully—way of working can make it the victim of the unscrupulous customer. I will explain briefly what I mean.
New double-glazed windows have to be custom-made. They have to be measured individually, and the new window is thereafter made appropriately. Under present regulations—the consumer contracts regulations; I am sure that the Minister will correct me if I have this wrong—if the windows are wrongly installed, the customer has, quite appropriately, the right to repair. If the repairs are unsatisfactory, the customer is entitled in the end to a discount on the price. Those remedies are of course reinforced in Clause 23: the “Right to repair or replacement”, or in Clause 24: the “Right to price reduction or final right to reject”. I think the industry, and others, would say that in so far as the new provisions do not repeal the existing consumer contracts regulations, we need to make sure that they mesh up and match precisely. The industry supports the provisions of Clauses 23 and 24, as my amendment makes clear.
The challenge to the industry comes from the provisions of Clause 20 and the apparent lack—I hope that the Minister will be able to reassure me on this—of any test of proportionality. If I may take an example, a customer might order a dozen windows to double-glaze his or her house. The windows are measured, manufactured, and fitted. At that point, the provisions of Clause 20 appear to give the customer almost any grounds for rejecting the goods and treating the contract as being at an end. There is no requirement, as I read it, to seek any remedial work before ending the contract. At this point, the supplier is of course in a very weak position. The fitted windows have no alternative use, as they have been specifically measured and made. Moreover, they now form part of the structure of the building, which makes their removal even more legally complex. Amendment 16 merely seeks to achieve some equality of arms, that this absolute unproportional right of rejection as in Clause 20 is limited where goods are personalised and have been installed in a building.
To conclude, this Bill is entitled “Consumer Rights Bill”, and I support its principles. However, not all consumers are angels; therefore there is a concern that without some protection of proportionality these firms may find themselves taken advantage of by the unscrupulous. In addition, of course, the better the firm, the greater the risk, because the fly-by-night operators who should be the focus of our regulatory efforts will by then be over the hills and far away. I beg to move.
Lord Clement-Jones (LD)
My Lords, I will briefly support the amendment in the name of the noble Lord, Lord Hodgson. He has made an even better case than the one that was presented to him in the first case. It struck me that in principle, if we set our minds to it, we could probably find quite a number of other areas apart from double-glazing, which was the example that the noble Lord gave, where goods are manufactured, bespoke, to a customer’s requirements. This particular case is very strong because of the construction work that is required to be done, which you cannot undo without serious damage to a property. I therefore hope that the Minister can give either clarification or assurance that something in the Bill deals with these kinds of made-to-measure products. A very valid point has been raised, and the noble Lord, Lord Hodgson, has put the case extremely well.
Baroness Hayter of Kentish Town
My Lords, the amendment as it is written, not necessarily as it is intended, is what concerns us. As written, it would undermine the right to reject. We do not see why a consumer should have any less of a remedy when something has been made to their specification than anything else. In fact, very often if it is made to their specification it may be particularly valuable, desired and even expensive. They certainly should not lose their rights just because of that. To some extent their rights should be stronger. because they have negotiated and explained exactly what it is that they want. As I was saying to the Minister earlier, I am wearing a made-to-measure garment.
Baroness Hayter of Kentish Town
For readers of Hansard, you would love my crimson chiffon, off-the-shoulder, diamante-encrusted gown. However, at that level, yes, I have made-to-measure clothes, but my grandchildren, called Poppy and Isaac, have “Poppy” and “Isaac” embroidered all over their swimming towels and things like that. I had a very nice hand-painted plate made for my godchild’s wedding. What I would not like to see is that, as a consumer of those made-to-measure or personalised goods, I would lose my rights to reject if they were faulty. If they are for a wedding I am afraid that a replacement probably would not arrive in time. I am not convinced that personalised, made-to-measure things should lose their rights. If it is bespoke it is probably something that has been made fairly specifically.
I understand that the wording used has probably been carried across from the distance contracts rules, where if one orders a personalised product then one obviously cannot reject it simply because one has changed one’s mind, because there is nothing else the supplier can do. We understand that completely, but that is obviously not the same as where a personalised product is faulty. Our worry is that the amendment from the noble Lord, Lord Hodgson, as worded would undermine the rights that a personalised order should have.
If we have read this correctly, the amendment would be not a clarification, but a change in the current law. Our understanding is that the current law has not produced any problems in the past. We have certainly heard no catalogue of complaints, although the Minister might know more than we do about that. Our worry therefore is, whether it is simply my dress or a tailor-made kitchen, that we would want consumers to retain their rights if such a kitchen was full of faults or badly installed. It is a bit like what my noble friend Lord Stevenson said on the previous amendment: I do not think good traders have anything to worry about, but it is the others that we are worried about, who would be the ones most likely to misuse something such as this. Many personalised goods are expensive and very much thought about. If they are in one’s own house it is not that easy to keep having them changed: one has to take more days off work to have that done. This is one’s home we are talking about.
We hope that the Government are not going to accept this amendment, which I am sure is well intentioned but perhaps unnecessary.
Baroness Jolly
I thank my noble friend Lord Hodgson of Astley Abbotts for the reasoning behind his amendment. I also welcome his general support for the principle of the Bill. My noble friend Lord Clement-Jones is absolutely correct in pointing out that the amendment’s application would be wider than double-glazing: spectacles are another really good example of something that is personalised. I am grateful to have the support of the noble Baroness opposite.
The Government disagree with the approach that the amendment takes. The rights to reject in the Bill—both the short-term and final right to reject—represent fundamental protections for consumers where goods do not meet the consumer’s rights under the Bill.
Lord Hodgson of Astley Abbotts
I am grateful to the Minister and particularly to my noble friend Lord Clement-Jones for his support. This is a probing amendment and, quite rightly, some of its defects have been pointed out. However, my noble friend did not answer on whether partial rejection could take place. If I may use the example given by the noble Baroness, Lady Hayter, let us suppose that she bought not just an aquamarine off-the-peg but a crushed raspberry and a shocking pink as well, and let us say it turned out that the garment in crushed raspberry was poorly manufactured. Was she entitled to return them all? Is that part of the same contract? The issue for my noble friend is this: if in the example that I have given there are 12 windows and one is faulty, does the right to reject extend to all 12 windows, or is it limited to the specific article about which problems have been found? In the example given by the noble Baroness, of course she can return the one dress, but can she return all the dresses that formed part of a single order? That is what I am not clear about. I do not know whether my noble friend can illuminate me any further now.
Baroness Jolly
Indeed, my Lords. I will try to keep out of people’s wardrobes. Of course we are keen to ensure that rejection is a proportionate remedy. Amendments 14, 17 and 18 on severable contracts, which we have already discussed, were intended to give clarity here. As was explained in that debate, if the contract is severable, the consumer would have the right to reject the affected part, and the circumstances of the case would determine if they could reject the other parts of the contract.
Lord Hodgson of Astley Abbotts
My Lords, we seem to be getting some good clarity there. I will read carefully, take some further advice, thank my noble friend and all noble Lords who have taken part, and beg leave to withdraw the amendment.
Baroness King of Bow
“( ) Where, given the nature of the goods and all the circumstances existing at the time the contract was entered into, it is reasonably foreseeable to the parties that the consumer will not be able to ascertain whether the goods are in conformity with the contract within the time period set down in subsection (3), the time limit for exercising the short-term right to reject in relation to those goods shall end once the consumer has had a reasonable period in which to ascertain whether the goods are in conformity with the contract.”
Baroness King of Bow (Lab)
My Lords, Amendment 19 allows the period within which a consumer can exercise the short-term right to reject to be extended beyond 30 days when necessary to give the consumer sufficient time to assess the goods. In other words, the amendment is about limited flexibility and maintaining rights available to consumers under current law.
When the Law Commission recommended a 30-day period for a consumer to exercise the initial right to reject, it was on the basis that 30 days would be the “normal period” but that there would be flexibility in appropriate circumstances. The Bill recognises that some goods will typically perish within 30 days, and in those cases a 30-day right-to-reject period clearly is not appropriate. However, the Bill does not recognise that a longer period may be needed in some circumstances. Under current law, a consumer has a “reasonable” period within which to exercise the initial right to reject. The Law Commission recognised that for many purchases a court may consider a reasonable time to be longer than 30 days. We have some of the current case law, including the court finding it reasonable for a consumer to reject a new car after seven months. Presumably without this amendment a consumer would not have that protection from the courts. A more obvious example is a pregnant woman buying a pram before her baby’s birth or goods bought out of season—skis during the summer, lawnmowers in the winter, or the obvious Christmas present scenario.
Without the ability to extend the right to reject in such circumstances, consumers might be worse off under the Bill than under the current law, which allows that reasonable period. That is obviously our concern—and not just ours: apart from the Law Commission, the BIS Select Committee recommended that,
“the Government reconsider an exception to the time limit for the early right to reject where it is reasonably foreseeable that the consumer would need a longer period to inspect the goods and to try them out in practice”.
Amendment 19 would implement that recommendation. I beg to move.
Lord Clement-Jones
My Lords, I am intervening rather unfairly on this amendment to say that I do not support it and that, as the Bill’s passage carries on, a number of sectors will have their voices represented. I want to raise issues that have been raised with me by the motor sector, particularly the Finance and Leasing Association, which represents a wide range of those who finance the purchase of motor cars by consumers.
As we heard, Clause 22 introduces this 30-day right to reject goods if they are of unsatisfactory quality, however minor the defect. Sellers are unable to deduct the costs incurred—for example, depreciations—while the goods have been used by the consumer. As a result, the right to reject could have a particular cost implication in the world of motor finance, where 75% of private new car sales are bought on finance. New cars, as my noble friend may know, typically lose 15% to 20% of their value in the first 30 days, and in the event of a defect the car dealer will have to offer to repair the car, although the customer is not obliged to accept that and can simply opt to hand back the vehicle. In a worst-case scenario, as the FLA says, the customer might have had the car for a month and driven it extensively, clocking up thousands of miles, only to hand it back because of a very minor defect—for example, the windscreen wipers failing to work properly. That is the case that the FLA makes.
I am very happy for my noble friend to write, since this is a rather unexpected intervention. There is clearly a balance to be struck between ensuring that customers are able to return faulty goods and preventing potential abuse. I therefore ask my noble friend whether the department will clarify, in the accompanying guidance to the Bill and in any associated publicity, that this new short-term right to reject should be invoked only if the quality of the goods is genuinely unsatisfactory—that is, the defects are not simply minor mechanical or cosmetic ones—and ideally it should be done as soon as possible within the 30-day period.
Secondly, could my noble friend confirm how this new short-term right to reject fits with Section 75 of the Consumer Credit Act, which already allows the customer to make a claim against a supplier or lender for breach of contract? This Consumer Rights Bill gives the consumer a right to challenge the supplier, whereas Section 75 of the CCA establishes an additional right to pursue the creditor for breach by the supplier. Will the Government be making clear in the guidance that the customer must obtain recourse from the supplier first, and that the supplier must not renounce responsibility on the grounds of Section 75?
Baroness Jolly
My Lords, this amendment reflects a recommendation by the Law Commission in its 2009 report, Consumer Remedies for Faulty Goods. Many of the recommendations in that report are implemented in the goods chapter of the Bill. Indeed, a normal period of 30 days was recommended by the Law Commission as giving a reasonable opportunity for a consumer to inspect goods, as well as meeting the expectation of consumers. However, I am concerned that the amendment would undermine the benefits of certainty provided by the 30-day time limit for the short-term right to reject.
Here I am staying with the example of the pregnant lady buying a pram. Let us look at the example of a pregnant woman who buys baby equipment in preparation for the birth of her child. The amendment would allow her to exercise the short-term right to reject potentially months after purchasing the goods, should it transpire that they were faulty. On the face of it, that may seem fair, but I see many issues that could arise to make this impractical. If a friend who was not pregnant bought the same goods for the same unborn baby, it is not clear whether it would be reasonably foreseeable that there might be a delay before they were used. Should all baby-related goods be subject to a longer period for rejection because it is not unreasonable to think that they may be for a baby who has not yet been born? Or would this only be reasonably foreseeable if the consumer said something to indicate it, or had a sign, such as being pregnant?
If it was reasonably foreseeable that there may be a delay before the consumer would use the goods fully, it seems difficult to know what the reasonable period would be. Take the example of a consumer buying skis in the summer. What is the reasonable period for the consumer to be able to test them? A week into the European ski season, or a month? Not until the end of the season? How would the trader know when the consumer came to return the goods whether a delay was reasonably foreseeable when the consumer bought them? Would the trader have to keep a record of who bought what and any relevant circumstances, such as when they said they would start to use it? This would be extremely burdensome on businesses.
Baroness King of Bow
My Lords, I thank the Minister for her response but the key point here is that consumers, in some circumstances, will see a reduction in their rights under the current law. That is what would worry me, if I were one of the Ministers taking the Bill through. It is the Consumer Rights Bill, not a consumer rights reduction Bill. Notwithstanding the examples of pregnant women all over Britain, we want to see those rights upheld. The Minister spoke about the undue burdens on business. In theory, I could have some sympathy with what she was saying but in fact, as things stand, we do not see Britain awash with businesses in disarray as a result of the current law. Given that, it seems strange that we would reduce the rights that consumers currently have.
I thank the noble Lord, Lord Clement-Jones, for raising the issue of balance because that is the key issue here: the balance of rights for both businesses and consumers. So, lastly, we think that this is an important issue. Both sides seem to come back to the pregnant women conversation. On hearing of this debate, should any pregnant women with backache in the middle of the night be reading the Hansard of this Committee, they will no doubt hope that they do not have overdue babies but women who have premature babies may rejoice at the current passage of the Bill. I beg leave to withdraw the amendment but we may well return to it at a future date.
“(a) do so as soon as reasonably practicable and in any event within 14 days, unless the consumer expressly agrees otherwise;(aa) do so without significant inconvenience to the consumer; and”
Baroness Hayter of Kentish Town
Amendment 20, which stands in my name and that of my noble friend Lord Stevenson, aims to provide greater clarity on how long a repair should take and, therefore, how long a consumer must wait before they may be entitled to a refund or a price reduction. At Second Reading, the whole House was very supportive of the aim of the Bill to increase clarity. Under current law, and under the Bill, where a consumer asks for a faulty good to be repaired, the trader has to do so within a “reasonable time”. However, “reasonable” is not specified, which causes uncertainty for the consumer but probably for businesses as well.
We are very keen that the Government’s new remedies should work but they will do so only if customers feel confident about their rights, particularly about when they can exercise those rights. As we have just been discussing, elsewhere in the Bill there is a significant change that we welcome, where the 30 days replaces the reasonable period to reject. The Minister has just emphasised the clarity of that. Our concern is that in this area the word “reasonable” remains as regards how long it takes to complete a repair. Clearly, the range of goods covered goes from yo-yos to the double glazing referred to by the noble Lord, Lord Hodgson. It would apply to an enormous range of goods and therefore it is difficult to have a precise time for all repairs.
Amendment 20 therefore proposes a longstop, coupled with an obligation for traders to effect the repair sooner if possible. For most repairs, 14 days would be absolutely adequate, even if spare parts had to be sourced from overseas. But the amendment also would provide flexibility where the consumer could agree to a longer period where they are happy to do so. This may be in cases such as those raised by the Glass and Glazing Federation where on-site visits will have to take place before any repair could be ordered, let alone fitted. That flexibility obviously would be possible. For other goods, there is no reason why they should not be repaired in less than 14 days. In a Which? survey, more than half of the respondents said that traders should not have more than 14 days to effect a repair. After all, that would leave a customer without the goods for quite a long time.
The clarity that this amendment seeks is to empower consumers to exercise their rights. In other words, they will know that they can ask for a repair to be done in that time. We think that it will reduce unnecessary disputes as to what is reasonable because both sides will know what to expect. It will also deter poor practice. The problem that the consumer has is that, while they are awaiting a repair, they are caught: they do not have the good; they do not have the money, so they cannot replace it at another shop; and they cannot have it repaired by another trader because they would have to pay for it. At that time, they would be very vulnerable. We hope that this amendment will facilitate the clarity that the Government seek in this Bill. I beg to move.
Baroness Jolly
My Lords, first, I acknowledge that a minority of consumers may be frustrated by lengthy waiting times when they have asked for a repair or a replacement. We have found little evidence that the time taken for repairs is a common problem. The Consumer Engagement And Detriment Survey 2014 found that of those consumers who had experienced a problem with goods and services, only 5% had a problem with a failed or delayed repair and, of this group, delayed repair is likely to be a smaller problem.
BIS has considered a time limit with regard to repairs and replacements. There was a consultation in 2012 and we discussed the issue further with stakeholders, consumer organisations and traders. On the basis of that consultation and those discussions, we concluded that the best approach is a simple limit of one repair or replacement of goods that must be provided within a reasonable time and without significant inconvenience to the consumer. I am concerned that setting a longstop date for repairs or replacements lacks the necessary flexibility to deal with all types of goods in all circumstances. Attempting to apply such a broad rule would at the least be burdensome to some businesses, but may also lead to unwanted consequences.
The Bill provides flexibility because the time needed to carry out a repair will depend on the goods and the circumstances. In most cases of repairs there are a number of factors beyond the control of the trader, so a backstop period may impose a burden. If goods are faulty and the consumer wishes to reject them under the short-term right to reject, this is a simple process. The consumer need only notify the trader that they wish to do so. On the other hand, repair or replacement of goods is a more involved process which will vary according to the goods in question and the type of fault. The application of a specific time period for repair work cannot effectively take account of all the relevant factors that affect the trader’s ability to provide a repair or replacement.
Repairs are often not carried out by the trader themselves, so the goods may need to be transported to and from the repairer. Further time is added if parts need to be ordered. For complex goods, time-consuming processes of diagnosing the fault and testing the repair may also be needed. The amount of control that the trader has over those factors is proportionate to the size of the trader. Small businesses have relatively little or no control over their suppliers and so would bear a larger burden. The British Retail Consortium gave the following evidence when this issue was discussed in the other place. It said that for small and medium businesses, setting a deadline for repairs is,
“more difficult … because they cannot have control over third parties that are perhaps coming in to do the repair … If that was regulated, clearly that would be one-size-fits-all, and would, I fear, penalise small, medium-sized and micro-businesses”.—[Official Report, Commons, Consumer Rights Bill Committee, 11/2/14; col. 33.]
The amendment would enable the consumer to agree to an alternative timescale. While this goes some way to providing flexibility we do not believe that it does enough, for two reasons. First, it opens up the possibility of the consumer simply refusing to agree an alternative timescale where it is impossible for the trader to provide a repair or replacement within 14 days. This creates an opportunity for the consumer to circumvent the first-tier remedies altogether, to the cost of the trader. Secondly, the amendment suggests that the alternative timescale should be agreed in advance. In many cases it will only become clear in the course of carrying out the repair that a longer period is necessary. If a repair takes a long time, of course, the consumer may well suffer inconvenience from being without the goods. The Bill already allows the consumer to move to the second-tier remedy if that happens. That protects the consumer, while still allowing the flexibility needed for the rules to work for different goods and circumstances.
The second main concern we have about this amendment is the risk of unwanted consequences. I underline the fact that we believe that repair is a vital remedy; it provides the trader with the opportunity to put right what has gone wrong, while enabling the consumer to have the goods they wanted. If done properly, it meets the needs of the consumer while reducing the burden on the trader and is more environmentally friendly as it is less wasteful than rejection. We are therefore concerned about any amendment, such as this one, that could shift the balance and lead to more rejections over repairs.
Imposing a backstop date may lead to a reduction in the quality of repairs. The trader may feel pressured to do a “rush job” to get it back in time rather than having the time needed to get it right. If consumers begin to lose faith in repairs, this could lead to an increase in rejected goods, which would be wasteful and costly. This is not just limited to repairs. Flexibility is also needed where a trader is to provide a replacement, as the necessary time will depend on factors such as stock, their source, and whether the goods were bespoke. Bespoke goods are a good example of where the amendment could be problematic. Many bespoke goods will take longer than 14 days to make, in the case of a replacement, or to repair.
Creating a backstop 14-day period, and requiring the consumer’s agreement for a longer period, means that the consumer would always have an automatic right to veto the repair or replacement and move directly to rejection or money off for these types of goods. This would be hugely detrimental to the whole industry, which is especially concerning when you consider that many of the businesses offering bespoke goods are small, specialist traders that would be hit hard by these costs. I therefore ask the noble Baroness to withdraw the amendment.
Baroness Hayter of Kentish Town
I thank the Minister for that thoughtful reply. Maybe we should revert to day one of Committee, though: if the Minister is going to help micro-businesses, we should make them consumers under the Bill. However, we decided that on an earlier day. I want to put on record that we welcome the main point about having one repair before rejection; we do not in any way question that.
I have only one comment. Which?, representing consumers, is very much in favour of this, and although I said its research showed that half its respondents said that 14 days was the right limit, one in five of them actually said that it ought to be seven days. I did not use that figure before. It is interesting that that group of consumers want quick repairs whereas the Minister quoted the British Retail Consortium, which clearly represents a different interest, and to some extent this is a balance between the two. I thank her for her comments and beg leave to withdraw the amendment.
Lord Clement-Jones
(a) ”
Lord Clement-Jones
My Lords, I shall speak also to Amendment 20B. I am afraid that I am going to do exactly what the noble Baroness, Lady Hayter, did not want to do, which is to question the “one repair” point. I return to some of the concerns of the motor industry. The Society of Motor Manufacturers and Traders and the National Franchised Dealers Association have raised significant concerns over the wording of Clause 24 regarding “one repair” and the right to reject the product and demand a refund. These concerns are centred not on the principle of the right to repair or replacement itself but rather specifically on what “one repair” entails. This issue is of course particularly pertinent to the final right to reject in Clause 24.
At present the Bill does not specify what “one repair” would entail but the draft guidance states that one repair means a single attempt at repair and that the trader can offer further repairs and replacements, but only if the consumer agrees. Members of the motor industry and the trade seek clarity over the definition of “one repair”, and do not accept that the current status of the draft guidance provides a fair interpretation of what is really needed to give clarity. They point out that the notion of a single attempt at repair, as set out in the draft guidance, is problematic for highly complex consumer goods such as motor vehicles. They say that these complex products may show a fault that requires more than one repair, involving a series of visits to the garage so that the fault can be diagnosed and tested, and have causes ruled out. In addition, a repair may appear complete but the fault may reappear, as can be the case with electrical faults, and a second or subsequent repair may fix the problem. These issues are likely to become increasingly apparent as motor vehicles become even more technologically complex, as they have done over the past few years.
The amendment seeks to include a definition of “one repair” to permit a process of repair and provide traders and dealers with a fair opportunity to fix these complex goods. It is worth noting that the consumer will still be fully protected by the right to repair or replacement under the amendment, as the process of repair would still need to be completed within a reasonable time and without significant inconvenience to the consumer. I hope that at least meets the interest of my noble friend, as this is a matter of considerable concern. On the previous amendment to which I spoke while seeking further clarification on the guidance, I note that my noble friend answered the second point about the CCA but not the first: what clarification the guidance would give for minor defects. Perhaps my noble friend can write to me on that matter. In the mean time, I beg to move.
Baroness Hayter of Kentish Town
We think that the noble Lord has brought an interesting issue to the Committee; I do not know whether the Government find it such. However, we are unconvinced that this needs to be detailed in the Bill as suggested. The Bill simply states that repair means making the goods conform to the contract, which means making them deliver what was promised. I do not think that it says “at one go”. Obviously, we look forward to hearing what the Minister will say on that.
However, the Committee will not be surprised that our worry is that the danger of the new wording is to allow a trader to make more than one repair and then claim that it was simply different stages of the same job, whereas actually they may have tried this, that and then something else—and want another go if they did not do it at first. I recognise that that is not what the noble Lord, Lord Clement-Jones, is aiming at, but the wording might allow for that. It is exactly to avoid such situations where consumers are fobbed off by a number of unsuccessful repairs before they can move to the next stage that we like the clarity of the Bill and would not want it jeopardised by these amendments, no matter how well-intentioned they might be.
As we are into personal stories, such as my clothes, let us take my new car. Of course, it got a great big problem and I took it back to Nick but rather than opening the bonnet all he did was to put a computer on top of the car, which seemed to tell him what was wrong. I do not know how that worked but 55 minutes later it was completely mended. Cars, which I no longer understand even if I once did, may be more complex but one does not want to have to keep going back to the trader. We worry that the amendment would lose the clarity that there is in the Bill.
Lord Borwick (Con)
My Lords, Clauses 23 and 24 as they stand seem to state that a consumer can have their money back if one repair does not fix the problem. That is reasonable for a product such as a television but it may cause problems where the fault is less obvious. Some products are incredibly complex; just as complex as consumers.
While we are telling personal histories, from my time in the London taxi industry I know that the clause would cause huge problems for car repairs. We had a customer bring in a taxi for repairs to his rear axle. My mechanics could not find anything wrong with it, and they therefore stupidly said that they had mended any problem that existed. However, the customer brought the car back, insisting that he was hearing dreadful noises from the back of the car. It turned out that the customer had spanners stored in the boot of his taxi that were slipping around. He removed them to bring the car to the garage, which is why no fault could be found. He then put the items back into the boot and so began hearing strange noises again as things slipped around, so he brought the taxi back in. Would the clause as drafted mean that we would have had to refund him because we did not fix the problem the first time around? You can have two problems—one masking the other—and you may need a process, as suggested in the amendment, to resolve some problems.
Baroness Jolly
I thank my noble friend Lord Clement-Jones for his clear explanation of the purpose of these amendments, and other Peers who have added their thoughts. The amendments reflect concerns that the motor industry in particular has about a single repair or replacement. Officials have engaged with the industry on this throughout the Bill process—I do not think that spanners came into the conversation. If it will help to allay the noble Lord’s fears, my noble friend Lady Neville-Rolfe or I will be happy to meet with representatives of the motor industry to discuss their concerns.
I am concerned, however, that these amendments would undermine the clarity of the Bill and the consumer protection that it provides. When the Law Commission consulted in 2008 on clarifying when consumers can move to a second-tier remedy, it concluded that the best and simplest way to make the law on repairs and replacements an effective protection for consumers was to create a cut-off so that after one failed repair or replacement the consumer was entitled to a second-tier remedy. In 2012 BIS consulted again on this matter and reached the same conclusion.
In both consultations, evidence was given by Which? and Citizens Advice of consumers becoming trapped in a cycle of repairs or replacements that failed to fix the problem but where it was not clear whether the existing triggers for the second-tier remedies were met. In fact, one of the examples given was that of a car. The limit of one mandatory repair or replacement before the consumer is entitled to money back mitigates this risk. The consumer should never find themselves without a clear route to a satisfactory outcome for them.
These amendments would entirely undermine that certainty. For complex goods, they would allow a single repair to be extended indefinitely over a number of attempts. The intention in the Bill is that after a single repair attempt, the consumer is entitled to a second-tier remedy if the goods are still faulty. Under the amendments, while the consumer would not be trapped in a series of failed repairs, they could easily become trapped in one ongoing repair without an end in sight. Just to be clear, the effect on the consumer would be the same, and I am sure that noble Lords can see that.
The noble Baroness, Lady Hayter, talked about one repair and there have been some comments about what “one repair” means. The Bill is clear that a repair is an attempt to bring the goods into compliance with the Bill’s requirements. One repair is complete once the trader returns the goods to the consumer in response to the consumer’s request for a repair.
Of course, it is also important to remember that the Bill does not prevent the consumer from agreeing to further repairs. If goods do not conform to the contract after a single repair attempt and the consumer would prefer the trader to carry out a further repair rather than rejecting the goods, they are entitled to choose that.
I know that the motor industry has an excellent track record in providing good service to consumers, and that rejection is rarely resorted to by consumers because of the warranties supplied for motor vehicles and the repairs that they provide. There is no reason to believe that consumers will change this behaviour under the Bill; they already have the right to reject under the current legislation but choose not to do so in many cases.
If noble Lords consider the consumer’s position when a fault occurs with a vehicle, they will see that a repair, rather than rejection, is often in the consumer’s interest. It makes sense that consumers take time to choose expensive items. It also makes sense that it is not very appealing to give up on something that one has spent a lot of time and money considering and selecting. Presumably, the consumer has the car for practical reasons such as going to work, the school run, or doing the shopping. If the consumer rejects the vehicle, they will have the inconvenience of getting another one to carry out these normal day-to-day activities. However, the industry says that repairs are generally completed quickly, and where there could be a delay a courtesy car is often provided to mitigate any inconvenience to the consumer.
I believe that repair will remain a crucial remedy that consumers want so long as business, such as the motor industry, continues to provide effective, convenient repair. Crucially, the consumer is protected in the Bill in the worst-case scenario of a series of repairs failing to bring the vehicle up to standard. These amendments would remove that protection.
Where the faith of the consumer in the trader is eroded following a repair, the consumer should have the right to exit the contract or get some money back. They should not be trapped without further recourse. On the basis that the amendments undermine a key consumer protection that the Bill establishes, I must ask my noble friend to withdraw the amendment.
Lord Clement-Jones
My Lords, I thank my noble friend for her response, rather negative though it was. I suspect that to some degree we are victims of our own personal experiences in this respect. The noble Lord, Lord Borwick, whose support I am grateful for, has had some unfortunate experiences from a business point of view; on the other hand, the noble Baroness, Lady Hayter, looks at this through rose-tinted glasses, having had her car repaired in a trice. It therefore depends on where you stand on this. I do not accept the Minister’s point that the amendment would have the effect of extending the repair indefinitely or undermining, which was the word that she used, the whole edifice that has been established here—that is a rather an extreme view about this.
The Minister’s statement about what “one repair” constitutes may go further than the wording of the guidance, some of elements of which I found quite helpful. That may horrify her, but she may have gone further than guidance, in which case I would ask that the guidance is looked at in the light of what has been constructed as a response today. That would be helpful.
I suspect that the industry will continue to kick the tyres of these clauses, to coin a phrase. It is still concerned about them. It may be that some tweaking could be done without opening the door in the way that the Minister thinks we have done in these amendments. I think that there will be some further discussions and I welcome in particular her offer, and indeed on behalf of her noble friend Lady Neville-Rolfe as well, to continue those discussions with the industry, which after all is an extremely important sector for us. In the mean time, I beg leave to withdraw the amendment.
Baroness Hayter of Kentish Town
My Lords, we now move to a tricky and, from our point of view, rather serious amendment. The other amendments have been serious, but this is a significant amendment that we wish now to move. Amendment 21 stands in my name and that of my noble friend. I shall speak also to Amendment 22.
Clause 24 deals with the right of the consumer to receive a refund for faulty goods. It allows the seller to make a deduction from that refund to reflect the use that the consumer has had of the goods if it has been over some time. For example, if a sofa falls apart after a year—and, no, I do not have such a sofa—the seller can deduct a proportion of the price which reflects the use that has been made of it at that time. However, if the refund is sought within six months, there should be a full refund with no deduction for use.
However, the Bill creates an exception to that full refund within six months for items that it describes as having an “active second-hand market”. Our fear is that this could undermine the otherwise clear and final right to reject. Our amendment would remove that exception and retain the principle of a full refund in the first six months for all goods.
Our understanding of the background to the introduction of the “active second-hand market” let-out is that it addresses the particular issues of new cars, which it is estimated lose 40% of their value in their first year, about 10% in their first couple of yards as they are driven off the forecourt and up to 20% in the first 30 days. The argument is that a car dealer should not be required to provide a full refund in the first six months when, simply because of the way the car market works, the car has lost a significant amount of its value.
However, it seems to us that if the consumer, wanting a new car, has bought a faulty one, they should get a full refund. Otherwise they cannot replace what they thought they were buying—a new car—with another new car, because there will have been this deduction in value. They will not be put back in the position where they can buy a car and be the first registered owner, which is what makes it especially expensive to be the first owner of a car. The sums involved are quite considerable. I have it on good advice—since I have not bought a new car but, rather, have a newly bought car—that a new car could cost £35,000 but, if it was faulty, the dealer could reduce what they got back by £5,000. That leaves the consumer without a new car but with only £30,000 instead of £35,000 in their bank, and perhaps only 500 miles on the clock.
The other issue about the drafting of this clause is that it does not restrict the exemption from the deduction for use only to cars but covers every other sale of goods where the trader can demonstrate that there is an active second-hand market. The Government have argued that they have carefully drafted to cover only second-hand markets for sale “by traders to consumers”, to exclude the general eBay type of second-hand markets of individuals selling to individuals. There are a lot of other second-hand markets of traders to consumers, both online and on the high street, of furniture, second-hand clothing, vintage jewellery and—as I know better—bicycles, and so on, but if you buy a new one and that turns out to be faulty, you want the money back to buy another new product.
We are therefore worried that consumers will be denied a full refund for new furniture that collapses, clothing that is so damaged that you cannot even wear it, or broken jewellery, simply because there is an “active second-hand market” for these and the trader says, “I’ll deduct it for use because you had some use of it”, even if they could not wear it or carry it, or whatever the case may be. Another problem is that, as the clause currently stands, the seller determines how much should be deducted for use; it is not a negotiable price. That creates quite an escape clause for dodgy traders, who have the freedom to set that reduction-for-use amount without it being reviewable as an unfair term because it would count as priced.
The then Office of Fair Trading and the Law Commission have both opposed this exception. The OFT thought that the drafting on “trader to consumer” did not exclude eBay-type comparisons, as many traders operate on eBay. The Law Commission opposed the deduction for use for the first six months and has urged us in Parliament to consider removing it, citing how much ill-feeling was caused by such deductions. As it said:
“Consumers felt that where they had paid for new goods, they wanted new goods. If the first goods were faulty, they wanted to be able to start again, with enough money to buy other new goods, not second hand ones”.
Which? worries that the let-out,
“could leave consumers out of pocket”,
and,
“does not give consumers the certainty and protection they need”.
I understand that the Government have been focused on this let-out being for these very high-value goods, which lose their value very rapidly. The Minister in the other House said that the drafting had followed the recommendations of the BIS Select Committee. However, the Select Committee was critical of the drafting, pointing out that the lack of a definition of an “active second hand market” had been criticised in many submissions that it received. It also said that it would apply to most goods, which rather contradicts what the Government said about there “normally” being no deduction for use. The committee felt that the drafting would cover a lot of goods, and pointed again to the advice of the Law Commission that the deduction for use was “inflammatory” for consumers. According to the Select Committee, the Law Commission also said that it was rarely employed, so it may be an unnecessary complication.
The Select Committee concluded that,
“neither the policy … nor the drafting … on deduction for use is clear”.
It did not believe that the exemption from the six-month refund rule was workable, and recommended the deduction-for-use clause. It said that, should the provision be retained, the reference to a second-hand market comparison should be removed, with any deduction for use being based on the lifespan of the goods. In the case of the car I assume that this means that, if you had it for five months, the deduction would be based on five months’ use rather than on whether you could actually buy a five month-old car.
The clause may again be well intentioned and aimed at a particular problem with a particular product, but the catch-all is so wide now that it is probably misguided. It certainly seems unworkable, could be unfair and could undermine consumers’ rights on a much wider range of goods.
The British Vehicle Rental and Leasing Association supports our amendment. It pointed out that in certain industries, particularly electric cars, there has not yet been enough time to develop a second-hand market, which might make it less likely that people would buy a new type of car. They would know that if anything went wrong with it they might lose their rights and be less likely to get their money back, the second-hand market not being a deep one.
I urge the Government to rethink the clause. If it really is simply cars that they have in mind, it might be better to deal with them in a different way rather than risk a much wider range of goods being caught by this provision. I beg to move.
Baroness Jolly
I thank the noble Baroness for outlining the reasoning behind her amendments, and will look first at Amendment 21. The principle of deduction for use is fair. Where the consumer has enjoyed uninterrupted use of the goods, the consumer should be accountable for that use. For example, if a consumer has been driving a car around for three years of normal use and then a fault manifests, the trader should be able to reduce the refund to take account of those three years of unaffected use. Of course it is right that consumers should be able to exit the contract at that point, but it is unfair to require the trader to bear the costs of that use.
When the Government consulted on the issue, only a very small minority of respondents to BIS’s consultation favoured scrapping the deduction for use, and two-thirds of online respondents agreed that it was right to allow a deduction to be applied in some instances. However, it is frustrating for consumers to get a partial refund even though they have had little use of the goods. The irritation of having to deal with a fault often eclipses what little enjoyment the consumer may have had from the goods, so the Bill includes a new protection that prevents, in most cases, a deduction from being applied within the first six months. There is a limited exception to this rule and it is this exception that Amendment 21 would remove.
Baroness Hayter of Kentish Town
I thank the Minister for that. Unfortunately what she said—that this is aimed at complex and high-value goods, which I absolutely understand—is not stated in the Bill, so it will not just cover those goods. It will cover things where there is a make and model, but that does not necessarily make them complex or high-value. We can perhaps come on to whether or not it affects cars, but we have a real concern that this will go far further than complex and high-value goods: it may cover yachts, helicopters, jets, planes and cars, but it will include anything else where a make and model can be covered. We continue to have worries on that. This will therefore be something we will need to come back to, but for the moment I beg leave to withdraw the amendment.
Baroness Howe of Idlicote
“Right to redress
(1) Where the consumer does not believe that remedies offered adequately resolve the original problem, the consumer has a right to seek redress from an alternative dispute resolution scheme, as provided for in statute or as approved by the competent authority.
(2) The Secretary of State must appoint a single competent authority.
(3) For areas not covered by an approved or statutory alternative dispute resolution scheme, the Secretary of State must appoint a residual body to provide this service.
(4) The Secretary of State must ensure that consumers have a single point of contact to identify the relevant alternative dispute resolution scheme.”
Baroness Howe of Idlicote (CB)
My Lords, the Bill offers an excellent opportunity to simplify and improve the consumer rights and redress landscape across the UK. Much of the Bill is certainly to be welcomed, consolidating and simplifying the existing landscape surrounding consumer redress as it does. However, it is notable that reference to alternative dispute resolution —ADR—as provided by ombudsman schemes and strongly backed by Which?, is absent from the Bill.
ADR provides benefits to both customers and businesses. For consumers, it offers free, fast and effective redress when things go wrong. For businesses, it provides a cost-effective way of improving the trust in and performance of their organisation. However, the current landscape surrounding ADR is complex and confused. ADR is available in some sectors but not others. In some sectors, ADR schemes cover only part of the market; in others, multiple ombudsman schemes exist. This patchwork of provision means that consumers face a complicated and confusing landscape and are often unaware of what support is available to them. I believe that my amendment would help to improve the situation.
In keeping with the ethos of the Bill, the amendment would simplify the ADR landscape and, importantly, strengthen access to redress for consumers across all sectors. Importantly, too, the new clause would formally set out the existing rights to redress that consumers have and ensure that all ADR schemes are consistent in standards and quality of services, improving the support and protection available to consumers. It would also ensure that the Bill complements work currently being undertaken as part of the transposition of the EU directive on ADR. The directive, to be transposed by spring 2015, requires businesses across all sectors to offer redress via an ADR scheme, either as a specific scheme or as part of a wider residual scheme. Lastly, and equally importantly, it would provide for a single point of contact for consumers, who could then be directed to the relevant ADR scheme depending on the nature of their problem.
The amendment would materially benefit consumers across all sectors by formally establishing the right to redress through ADR, paving the way for wider coverage of ADR schemes and achieving simplification in the system. I beg to move, and would welcome the views of the Government and others on the amendment.
Baroness Drake (Lab)
I support the noble Baroness, Lady Howe, on Amendment 23. At the moment, in so many areas of retail, the primary route to a remedy if there is a dispute is to go to the courts, but going to a court is far too daunting and complicated for many people. The paperwork may well put them off. The court fees may act as a disincentive, especially if the goods purchased are modest in monetary value. Even if a consumer wishes to begin by going to the small claims court, if a case is considered complex by the judge, it may be transferred to the normal county court list, which would definitely deter and daunt most people.
I realise that mediation has been introduced in small claims cases, but the psychological impact of going to court—its legalistic aura, the language of the courts and dealing with the necessary paperwork—can all still be off-putting and a deterrent. The behavioural response of consumers to alternative dispute resolution and the courts is very different. The court system is not really fit for purpose for many ordinary consumers, certainly in respect of smaller consumer rights claims. As the noble Baroness put it so compellingly, alternative dispute resolution is essential, otherwise consumers will have their rights enshrined in a new Bill but many will be deterred from exercising them. Consumer inertia in pursuing rights and securing remedies will remain strong—an assumption, unfortunately, that some traders build into their responses and their market behaviour.
Consumer rights and access to an effective means of enforcing them need to be inseparable. You can give consumers all the rights in the world, but if they are deterred from exercising them because the process is off-putting, complicated, disparate or whatever, as was clearly set out by the noble Baroness, their rights will not be effective and the market will remain dysfunctional in part.
The Bill has several clauses that relate to redress, but it does not lock into an alternative dispute resolution scheme. It seems extraordinary that a Bill so focused on securing and improving the position of consumer rights does not seize the opportunity to lock into ADR. I know that the Government are consulting on the details of such a scheme in the light of the EU directive, but that in itself is not a reason for missing the opportunity to use the Bill to place a duty on the Secretary of State to implement such an alternative dispute resolution scheme. As the noble Baroness pointed out, a key purpose of the Bill is to consolidate, simplify and strengthen consumer law.
The Government agree—it was confirmed by the Minister, Jenny Willott—that if we are to have a consumer rights system that works, ombudsmen and alternative dispute resolution will be critical parts of it. Having conceded that fundamental analysis and intellectual point, we have this big omission in the Bill. Although the Government are working on implementing the EU directive and looking at the different options, the amendment does not inhibit or undermine that detailed work. It does not prescribe exactly how the directive will be implemented; rather, it makes clear in the Bill that the right to redress for consumers must include access to an effective, independent alternative dispute resolution regime and that the duty is on the Secretary of State to ensure that that happens. The amendment would not prejudice the outcome of the consultation on the implementation of the ADR directive but would clearly place the duty on the Secretary of State. Having followed the debate on this in the Commons, it would appear that the only argument mobilised by the Government is that somehow it would prejudice the outcome of consultation. I do not think that it does, because it enshrines a fundamental principle which the Government concede is essential to an effective system of consumer rights. The detail of implementing that principle can be left to the outcome of consultation and subsequent regulation.
Baroness Crawley (Lab)
My Lords, I, too, support the amendment in the name of the noble Baroness, Lady Howe of Idlicote, and, in doing so, refer noble Lords to my consumer interests in the register.
As we know, the alternative dispute resolution directive requires the existence of simple, efficient, fast and low-cost ways of resolving domestic and cross-border consumer complaints—without the need to go to court, as my noble friend Lady Drake just said. It also assists business, as the noble Baroness said. ADR should have expertise; it should be independent; it should be impartial. The process should be transparent, effective, fair and legal. Member states are required, as the noble Baroness, Lady Howe, said, to identify competent authorities to ensure that ADR entities are competent to deliver the directive’s requirements. That process is ongoing.
The important point to keep in front of us today is the need to keep the environment as simple and as accessible as possible for the consumer. Although there is a need for sectoral expertise in transposing the directive, it is also important to have a low number of brands involved and a common front end or entry point, as both noble Baronesses have referred to, for the consumer to access a resolution to their complaint, be it a low-level complaint or a highly complex one.
The amendment in the name of the noble Baroness, Lady Howe, backed as it is by respected consumer bodies, will give consumers the confidence of legislative heft when it comes to this important new aspect of justice for consumers, which has attached to it a date of spring 2015.
Accepting the noble Baroness’s amendment is not gold-plating in any way; it is ensuring that the Government’s implementation of the ADR directive is a feasible process in the first place. I hope that he ramendment is given the serious consideration that it deserves.
Baroness Hayter of Kentish Town
My Lords, as has been clearly stated, the proposed new clause addresses what my noble friend Lady Drake says is the extraordinary absence from the Bill of any mention of the EU directive on ADR, the absence of any right to go to independent redress, and indeed the absence of any reference to what has just been mentioned—the competent authority to be set up to approve such schemes according to the EU directive.
The amendment would also add a very welcome missing element from the directive: the right for a consumer to have their complaint heard by such an alternative dispute scheme. Without such a scheme, we wonder what will happen to consumers when they cannot agree on the remedies set out in the Bill. Elsewhere, the Government have said, “They should go to Citizens Advice”, which I hope will be well funded to do all this. However, even if they do so, Citizens Advice cannot adjudicate; nor can it enforce any remedy. As has been said, the only alternative then is for the consumer to go to court for damages, and the reality is that that will not happen. At the moment, legal and financial clients, social housing tenants and patients can all go to an ombudsman; there are statutory ombudsmen for all those. The Government are in due course going to implement the directive, so they agree with us that consumers should have access to ombudsmen across the whole market.
The BIS Select Committee asked the Government why on earth the EU directive had not been included in the Bill. Which? regretted that it was omitted, and the OFT, as it was at the time, asked for the incorporation of the directive into the Bill. Two really quite good things are happening. I know that I am not allowed to say that the Government are doing good things—but they are with the Bill. Some people would not like me to say that the EU was doing good things, but I am happy to say that it is with its directive. So we have two good initiatives coming along, but would you know it? They are being handled in different ways with different legislative processes and on different timing.
It is not as if this is a difficult issue. The British Retail Consortium and the Federation of Small Businesses welcome the alternative dispute approach to dealing with problems, rather than going to court. As Martin Lewis commented when he was giving oral evidence to the Public Bill Committee, unless the Bill and the directive are joined up,
“you are going to have a wonderful Bill that gives people many new rights”—
he went further than I would about the Bill—
“that they are never going to be able to use”,—[Official Report, Commons, Consumer Rights Bill Committee, 11/2/14; col. 55.]
because they will be without redress. The Government have assured us that the new directive will be implemented by spring. However, we still await their response to the submissions that BIS got to its consultation, which I think finished five months ago. The clock may be slow in this Room today, but it is ticking. We may have no chance to debate BIS’s response to the consultation because it may not be dealt with in primary legislation, which also seems a shame.
Most importantly, the two items are two sides of the same coin, so we hope very much that the noble Baroness the Minister will accept the amendment today. Whether or not the exact words please her we understand, but if she could accept that there should be reference to and embedding of the ADR in the Bill, that would be to the credit of the Government. We will then try to seek credit for it, but we will give it to the noble Baroness, Lady Howe, instead. It would be a wise Government who did this and took the full credit for it.
Baroness Oppenheim-Barnes (Con)
Could I just highlight one of the main points? The noble Baroness mentioned the AER. One of the directives that she has mentioned as dealing with the way in which payday loan information is given by the providers is that it is still given in the old form, with the AER only, with no written amount. The noble Baroness might recall that we had an amendment to the Financial Services Act, during which we were told that the Government at that time—this is some time ago—were busily discussing that directive and would be wanting to implement it as soon as possible. It seems to me that the request from the EU about AER was a very small, perfectly justified and overdue one, and it is particularly disappointing if the Bill becomes law before that amendment has been made by the Government.
The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Baroness Neville-Rolfe) (Con)
My Lords, I thank the noble Baroness, Lady Howe, for raising this very important issue. Her interest and expertise in consumer problems was demonstrated at Second Reading, which I missed, so it is very good to have her engaged on this important subject. The noble Baroness, Lady Drake, also rightly underlined the value and importance of ADR and of ombudsmen and ombudswomen.
I want to make it clear that the Government are very supportive of alternative dispute resolution, which provides a more accessible route than the courts for consumers to obtain redress. Accessibility was a point well made and emphasised by the noble Baroness, Lady Crawley, and, as the noble Baroness, Lady Howe, said, it is also good for business. The noble Baroness, Lady Hayter, described the advantage of wider ADR and talked—rightly, I think—of the benefits of both this Bill and the ADR directive, so I thank her for that.
Before I address the specific amendment, I shall take a moment to reflect on what the Bill seeks to achieve. The Consumer Rights Bill sets out a simple and modern framework of consumer rights and, where appropriate, enhances measures to protect consumers. Clearer rights and remedies mean that both consumers and businesses will be better equipped to resolve any issues at an early stage. Having said that, we recognise that there will be occasions when problems arise that cannot be so easily resolved between the parties. In these instances, access to alternative dispute resolution can prove invaluable.
I am glad to say that the Government will be strengthening the framework for alternative dispute resolution when it implements the European directive on ADR in July 2015, to which I think all the noble Baronesses referred. Currently there are well established mandatory ADR schemes in sectors with a high risk of consumer detriment. It is worth remembering that. One example is financial services, and I was interested to read that the largest ADR provider in Europe is the UK’s financial ombudsman, and that last year it resolved 500,000 cases. Another example is energy, but in other sectors access to ADR is limited. The directive requires us to address these gaps and ensure that ADR is widely available.
We recently undertook a consultation exercise, which has been referred to, on the best way to implement the ADR directive. Stakeholders were asked for their views on the issues covered in this amendment, and we addressed several other issues in our consultation. We proposed that the compulsory use of ADR should continue to be targeted at sectors where consumers most need it. We said that our preferred option was not to gold-plate the directive by introducing a blanket compulsory requirement for all businesses to use ADR; that would come at significant cost to businesses, which pay for the provision of ADR through a mixture of annual fees and case fees. However, we expect the directive’s requirement for businesses to inform consumers with complaints about ADR and to encourage much greater participation in ADR schemes. We will very shortly be publishing our consultation response document, which will outline the Government’s proposals for implementing the ADR directive and improving and simplifying access to redress for consumers, a point raised by the noble Baroness, Lady Crawley.
Baroness Hayter of Kentish Town
Can the noble Baroness tell us when the consultation will be published?
Baroness Neville-Rolfe
All I can say is that the consultation will be published shortly. I confirmed that the implementation date for the directive is 2015. The noble Baroness anticipates what I was going to say at the end, which I will say now. I assure your Lordships that our implementation plans for the Bill, which we discussed on Monday, will also advise businesses of their forthcoming responsibilities under the ADR regulations. Similarly, information to consumers will be available in one place—to meet the point that we will be joined up.
If I may elaborate, our response will explain how we intend to make ADR widely available and accessible for consumer disputes and our plans for competent authorities to monitor the provision of ADR. I hope that noble Lords will understand that I cannot set out the full detail of the Government’s response before publication. We consulted on whether a consumer complaint helpdesk would be useful to help consumers and business to access ADR, which was a point made by the noble Baroness, Lady Drake.
We will publish our intentions in our consultation response document. Once we have published our response, we will work with partner bodies to prepare for implementation. We will then publish draft regulations to transpose the ADR directive by spring 2015.
I would not want to affect the ongoing work to implement the ADR directive in regulations by amending the Bill. The noble Baroness, Lady Howe, said that her amendments would achieve consistency and simplification. However, the ADR directive contains many provisions, several of which are linked. That is why we feel that it is far better and more straightforward for businesses to implement the ADR directive in one package. Our consultation response document will set out our plans for doing so. We certainly want to avoid any unhelpful confusion that could be caused by implementing the directive partly through the Bill and partly through regulation.
The noble Baroness, Lady Drake, raised an important point about the need for the implementation of the ADR directive to complement consumer rights. I am glad to say that the changes that we will make to implement the ADR directive will complement the reforms in the Bill and improve access to and awareness of the ADR. We want to take the same comprehensive approach to ensure that we deliver the best possible ADR framework. Our plans for implementation allow us to do so. I therefore ask the noble Baroness to withdraw her amendment.
Baroness Oppenheim-Barnes
Before my noble friend sits down, can she tell the Committee what AER stands for?
Baroness Neville-Rolfe
ADR stands for alternative dispute resolution. I thank the noble Baroness for her intervention, which I did not think called for comment but I am happy to discuss it with her on another occasion.
Baroness Howe of Idlicote
My Lords, first, I thank the Minister for putting so explicitly the Government’s position of where they intend to be going with ADR—now we all know what the initials stand for. She has raised a lot of expectations and some hope. We are all concerned to ensure that it is kept on the agenda. We would not want it to be as slow as she has in mind. It is clear that those of us who feel similarly will need to table another amendment, which may be rather different, at Report to see how things are progressing.
Once again, I thank all my colleagues for so kindly joining in to support the amendment from their professional background, and I beg leave to withdraw the amendment.
“Product safety and recall
(1) The General Product Safety Regulations 2005 (SI 2005/1803) are amended as specified in the following subsections.
(2) In regulation 9 (obligations of producers and distributors), after paragraph (3)(d) insert—
“(e) a summary of what the producer or distributor suspects, or has reasonable grounds to suspect, is the number of consumers affected and the type of personal injuries and property damage which the risk associated to the product has caused”.(3) In regulation 32 (reports), after paragraph (5), insert—
“(6) Before completing any report under this regulation, the Secretary of State shall consult the enforcement authorities, such bodies representative of producers and distributors, such bodies representative of consumers and such other persons as he thinks fit.”
(4) In regulation 33(3) (duty to notify Secretary of State and Commission)—
(a) after “specifying the reason for taking it” insert “, and shall publish such measure, and the reasons for taking it, on his department’s website”,(b) after “of any modification or lifting of such a measure” insert “and shall publish any such modification or lifting immediately on his department’s website”.(5) In regulation 33(5)—
(a) after “the Secretary of State shall immediately” insert “publish such measure or action on his department’s website and”,(b) after “of any modification or withdrawal of any such measure or action” insert “and shall publish any such modification or withdrawal immediately on his department’s website”.(6) In regulation 39 (information)—
(a) in paragraph (1), for “shall in general make available to the public such information as is available to it on the following matters relating to the risks to consumer health and safety posed by a product” substitute “which has received a notification under regulation 9(1) shall immediately publish on its website in respect of the product”.(b) after paragraph (1)(b), insert—“(c) a summary of the number of people reasonably suspected of being affected, and the type of personal injuries and property damage reasonably suspected of being caused by the risk”. (c) in paragraph (1), for “and the measures taken” substitute “and the measures or action taken, whether on a compulsory or voluntary basis,”.”
Baroness Hayter of Kentish Town
My Lords, Amendment 24, which stands in my name and that of my noble friend Lord Stevenson, addresses a very serious and sometimes fatal weakness in consumer protection for electricity safety: when there is a generic and dangerous fault in a particular model of electrical goods. There is no adequate mechanism whereby other owners of the same make and model are notified of the need to stop using it and exchange it.
The amendment therefore requires manufacturers to inform enforcement agencies of the number of consumers affected, and of the extent and type of damage and injuries that have been caused. It also requires the Secretary of State to publish information on dangerous products and to consult consumer groups when publishing their five-yearly report on consumer protection regulations.
This is an issue of great sadness, because it is very much about deaths and injuries. There are probably 40 or 45 deaths a year in domestic fires that have been caused by faulty appliances. Although there is a system for manufacturers to recall faulty products, it is very flawed because of the difficulties of alerting customers who have unwittingly bought such faulty products. It has also been undermined by unjustifiable delays on the part of some manufacturers in recalling products, even once they know them to be unsafe. Such cases relate to potentially fatal faults, such as risks of fire, electrocution or carbon monoxide poisoning.
It has been estimated that there are up to 2 million unsafe products in people’s homes. Manufacturers currently have no obligation to declare how many of those dangerous appliances are in circulation. Once manufacturers become aware of faults in their goods there is no specific timeframe in which they have to take action. In several instances, manufacturers have taken years to take action after a fatal accident caused by one of their appliances. Current BIS guidelines say that a recall is expected,
“as soon as the manufacturer becomes aware of a problem”.
That is not specific—more than that, it is not mandatory.
The Government do not feel that this should be mandatory; they want to continue with the voluntary approach. In the Commons, the Minister said that most—I emphasise, most—businesses take their customers’ safety seriously. I do not think that is good enough: “most industries” is not “all industries”. We have to safeguard consumers not from the good businesses but from those which do not take safety seriously.
Electrical Safety First detailed a particularly sad case of a preventable death that happened because of failures in the recall system—I am sure other noble Lords have received the same information. Mr Santosh Benjamin-Muthiah, a 36 year-old father of two, died in 2010 because of a fire in his home caused by a recalled fridge-freezer. The manufacturer had been aware of a fault with the defrost timer on that defective fridge-freezer three years before 2010, but did not issue a safety notice until 2011, by which time as many as half a million had been sold. In 2013—two years after the recall had started—the manufacturer estimated that, although 190,000 had been repaired and 186,000 were scrapped, about 114,000 were still unidentified and still in someone’s home. The coroner at the quite recent inquest on Mr Benjamin will, I think, have written to the Chief Coroner rather than to the Government. However, he has written through his official channels calling for the creation of a simple, easy-to-use and government-funded all-national website where all products can be registered and accessed by consumers and retailers. He also called for increasing fines for manufacturers who fail to notify and for the creation of a code of practice on product recalls. The Chief Fire Officers Association has also called for manufacturers to take legal responsibility for eradicating risks caused by faulty appliances. Peter Dartford of the Chief Fire Officers Association has said:
“The reality is that it is the manufacturers who have created these risks and it is their moral and legal responsibility to ensure that these risks are eradicated from homes”.
Our amendment would strengthen consumer protection in line with the coroner’s recommendation and the fire officers’ views. Perhaps even more importantly, our amendment is in line with the views of the families, who have been quite needlessly bereaved of their loved ones. I beg to move.
Baroness Bakewell of Hardington Mandeville (LD)
My Lords, I support this amendment and I thank the noble Baroness, Lady Hayter, for her example of Mr Benjamin, as it saves me the trouble of giving that same very tragic example. It seems not unreasonable for the trader to record the consumer’s details at the point of sale and return the guarantee card to the manufacturer. This would seem a more efficient way of dealing with it than the present, somewhat haphazard system of leaving it to the consumer to fill in and return the guarantee—a document which is often at the bottom of the packaging and sometimes overlooked. If such a system were in existence, it would be much simpler to compile a register of consumers and contact them individually when and if a product recall is necessary. This would ensure that all those affected by product recalls were aware, rather than some being left in the dark about the risks they run by continuing to use the product.
Consumers, once they are aware of a product recall, are generally assiduous in returning their products to the relevant trader for repair or replacement. This is particularly important, as we have heard, where the product has an electrical fault which could lead to damaging and life-threatening domestic fires. The fire service, as we also heard, is able to produce quite frightening statistics on domestic fires caused by electrical faults, some of which tragically involve death. It is really important that we do all we can to protect consumers from this fate and I am pleased to support this amendment.
Baroness Neville-Rolfe
My Lords, there is already robust legislation on product safety that is based in large part on an EU-wide regime. I have listened to the debate and I would like to address the general, because I think the amendment is a general one, and then look at the electrical issues that have been raised.
The General Product Safety Regulations 2005 place strict duties on producers and distributors to ensure that only safe products are supplied. Importantly, these duties are backed by criminal penalties. However, there will unfortunately be occasions when things go wrong and a product needs to be recalled. I very much share the concerns of the noble Baroness, Lady Hayter, about accidents, especially fatal accidents. We need to learn all the time from such experiences. When a recall is necessary, producers and distributors are legally obliged to notify and collaborate with trading standards to ensure that all reasonable measures are taken so that unsafe products are swiftly removed from the market and the risks to consumers are addressed.
Baroness Crawley
The Minister has reiterated a number of times the role of trading standards in crucial product recalls. However, does she agree that the serious cuts to the trading standards departments across the country and throughout local government over the last number of years have impaired the effectiveness that she talks about?
Baroness Neville-Rolfe
My Lords, I am grateful to the noble Baroness for giving me the opportunity to say what a good job I think trading standards do in many of those very difficult cases, having worked with them for many years. It is true that many government services have suffered from cuts as a result of the need to get the economy back on track and deal with the deficit problems that we inherited.
As noble Lords know, spending and resourcing decisions about local trading standards are made by the individual local authorities. They, rather than central government, are best placed to make decisions about the enforcement needs of their local communities. However, I have talked to them about how you can focus and get local authorities to focus on the real areas of importance, and they are trying to do that in often deeply difficult circumstances. BIS greatly values their work protecting consumers from everything from rogue traders to scammers and so on. That is one of the reasons why we have set up the National Trading Standards Board and work with the Local Government Association on trying to improve enforcement in local authority areas in important areas. Of course, product safety and risk of death always come very high on their agenda.
Baroness Hayter of Kentish Town
My Lords, I thank the noble Baroness, Lady Bakewell of Hardington Mandeville, for her support for this amendment.
The Minister’s response will be deeply disappointing to the fire officers and Electrical Safety First, who worked on this and who have earned this amendment. They are the stakeholders who are referred to, and they do not feel that what the Government are doing is enough, which is why they have called for this amendment. The Minister said that the legislation is robust, but it is not working. We are having a death a week because of faulty appliances, so that is not working. I do not ask for the information now, but it would be helpful if she could write and say how many prosecutions there were in the last five years of companies for not having reported and taken necessary action.
However, my noble friend Lady Crawley raised an extraordinarily important point. It is also a surprise to find that this Government are saying that on this issue they want the public sector—that is, trading standards—to deal with it, rather than the people who done wrong—the manufacturers—who acted unwittingly to begin with, but who made a faulty product that is leading to carbon monoxide poisoning, electrocution, or death by fire. It is interesting that the Minister wants not to absolve them of that but to say that the major responsibility is to tell trading standards—that is, the public sector—which will do something about it. Other things that come from the Government are all about the public sector doing less and all of us, whether it is the big society or manufacturers, doing more. Therefore I am surprised but also disappointed that the Minister does not want to put more of an obligation on to the manufacturers who have made these fire traps. However, she will understand from what I am saying that we feel very strongly about this, and we will come back to it. It certainly does not seem to be good consumer protection when once a week somebody dies when they do not have to. However, for the moment I beg leave to withdraw the amendment.
“Secondary ticketing platforms: ticket information
(1) Where a ticket is sold through a secondary ticketing platform—
(a) the seller must provide all relevant information about the ticket, and(b) the secondary ticketing platform must publish all the information about a ticket provided by the seller in a prominent and clear way.(2) Information to be requested by the secondary ticketing platform and provided by the seller for the purposes of subsection (1) should include, but is not limited to—
(a) the name of the seller of the ticket;(b) the face value of the ticket;(c) any age or other restrictions on the user of the ticket; and(d) the designated block and row and the seat or ticket number, where applicable. (3) Where tickets are being resold in contravention of the terms and conditions agreed to by the original purchaser, this must be stated prominently by the secondary ticketing platform at every stage of the purchasing process.
(4) Information provided by virtue of this section must be—
(a) accurate; and(b) prominently displayed before a buyer is able to complete their purchase.”
Lord Stevenson of Balmacara
I shall speak also to Amendments 26 to 31, which I am glad have been grouped, because they deal variously with one or two aspects relating to ticketing, and I think that there is a great deal to be taken from the fact that an all-party alliance is putting forward the various points. I hope that the Government are in listening mode, at least on these matters.
What is a ticket? That is definitely not a rhetorical question. We have a real problem about what we understand by the word “ticket”. What does purchasing a ticket confer on the purchaser in terms of rights and responsibilities? I would be very grateful if the Minister, when she replies, would spend some time explaining what the Government think a ticket is, because I would be illuminated by that.
There are two strands of thought. The promoters of many of our larger sporting and entertainment events feel that a ticket is an intangible right to attend an event or performance, a personal licence for the person who bought the ticket—and, presumably, those for whom he or she has bought the ticket—to attend a specific event, occupying a designated seat. That is not what is believed by the secondary ticket companies, who take the view that a ticket is real property and, once bought, is available to the original purchaser to sell and resell to any third party willing to pay a market price for it.
The problem is that there is no real accommodation between those two approaches. On the one hand, the promoters of events feel that tickets which have not been released are being advertised and sold, which means that the seller cannot guarantee that they will ever be able to honour that transaction. Tickets are being sold at prices well above their face value and the purchasers have no idea that that has taken place. Fans can end up buying tickets which do not guarantee them entry even to the event to which they think that they have bought a ticket, because there may be terms and conditions for the sale that have not been disclosed to them, which prevent them being transferred. I was at an event last weekend where I had a ticket issued by a reputable national theatre company which said clearly on its face that it was not valid if sold at a premium price. Of course, I knew that, because I could read it; but others may not have spotted that. In general, the view taken by many promoters is that consumers are being priced out, mis-sold or even defrauded when tickets are resold on the secondary market.
Two principles underlie that. The first is that promoters should make tickets available to people at affordable prices and that that should be protected; but also that consumers should be provided with more information about what they are buying when purchasing tickets through secondary outlets.
The secondary ticket market takes the view that people should have the right to buy surplus or unwanted tickets, and argues that by providing a platform for buyers and sellers, it offers an excellent service. In many cases, that is true. It also thinks that the traditional model means that only a very small number of tickets are made available, with the balance being sold at premium prices to sponsors and corporate hospitality organisations.
It is fair to say that this issue has a long history, with both this Government and the previous one trying to respond to public pressure, which is clearly pulling in two directions. On the one hand, people want access to tickets when they go on sale, but they are also against thousands of tickets being bought by people seeking to make a profit rather than attending the event. Equally—people will say this within a few seconds—they feel that they ought to be able to buy tickets if they decide, perhaps late in the day, that they would like to see the event after all and get very annoyed if they find that there are no tickets available or the price is extraordinary.
Recent technological changes have had an effect on this. We often find computerised botnets—as I think they are called—hoovering up tickets on sale online. What chance have ordinary punters to get tickets in the first place? Most people will either have been or will know of people who were trying desperately to buy tickets for the Olympic Games when they first went on sale, and spent many hours on the phone waiting for someone to respond or online waiting for something to respond. Sometimes you won; sometimes you did not. Obviously, with very popular events there will be a problem however you do it, but computerisation is both an advantage and a disadvantage.
We are beginning to worry about money-laundering and criminal gangs active in this area. If that is the case, where should the public interest now lie?
There is already a huge amount of legislation. I will not go through it in detail but there is the Civic Government (Scotland) Act, the Criminal Justice and Public Order Act and the London Olympic Games and Paralympic Games Act, and in addition to specific legislation on touting there are legal remedies under existing criminal law relating to theft, deception, obstruction or threatening behaviour. In addition to primary legislation, there is a substantial amount of secondary legislation coming through from the Consumer Protection from Unfair Trading Regulations 2008 and the Price Indications (Resale of Tickets) Regulations 1994, some of which have a direct impact on the way in which people are going to be treated if they are caught transacting secondary sales.
Lord Clement-Jones
My Lords, I shall speak to Amendments 29 to 31. Although I think that I am singing very much from the same hymn sheet as the noble Lord, Lord Stevenson—I apologise if I go over some of the same ground because, as was the case in the Commons, these amendments are in parallel to those of the Labour Front Bench—these amendments follow directly from the conclusions and recommendations of the recent excellent report by the All-Party Group on Ticket Abuse. I happen to be a member of that group but, since I was not able to take part in the inquiry, I cannot claim any credit for it.
The amendments are not an attempt to shackle an important and growing service for consumers or to ban the resale of tickets. While accepting that there is a role for a legitimate secondary ticket market, the all-party group found considerable problems with how this market, which is estimated to be worth about £1 billion a year, works at present.
In particular, it does not adhere to the same principles of transparency and consumer protection to which other markets are held. With internet ticket selling becoming more streamlined, touts are able to use sophisticated computer systems to buy large volumes of tickets automatically, mere seconds or minutes after they are available online. That can often mean that it is practically impossible for genuine fans to access the event, forcing them to rely on an artificially created secondary market and depriving content creators of revenue for their event.
As the noble Lord, Lord Stevenson, mentioned, the Met Police published a comprehensive report on fraudulent ticketing and the dangers it posed to the Olympics. It specifically cited ticket fraud, touting and ticket reselling websites as areas of concern. The report stressed the need for an open and transparent system for ticket reselling, with clear and appropriate regulations. The new clauses address those shortcomings and would increase consumer confidence in the secondary market.
The first two new clauses address the lack of transparency, which the noble Lord, Lord Stevenson, emphasised. Amendment 28 is about who is selling the ticket. It would place a duty on secondary ticketing platforms to provide basic identifying information about the individual or business offering a particular ticket or set of tickets for sale. It would allow consumers to say how prolific and reliable a particular seller was; that would make the secondary ticketing platforms much more transparent. Importantly, it would also require secondary ticketing platforms to be transparent in cases where the seller was also the event holder. The practice of events organisers secretly allocating whole blocks of tickets directly to the secondary market has been on the rise. It was the subject of the Channel 4 “Dispatches” programme broadcast in 2012, entitled “The Great Ticket Scandal”. There is also a dishonest practice whereby a secondary ticketing platform, or rather its employees or shareholders, buy and sell tickets themselves, as the “Dispatches” programme also exposed.
Amendment 29 relates to the transparency of the ticket itself. I was very interested in the introduction of the noble Lord, Lord Stevenson, when he talked about the ticket itself; in many cases, knowing the characteristics of a ticket would make a material difference to a buying decision, particularly in the case of seated events, in which a person’s position in the venue can make a significant difference to their enjoyment of the performance or experience. Providing that information would also give consumers the confidence that the individual or company selling the ticket actually had tickets in hand and was not just speculating that it would be able to provide them at a later date. Making sure that consumers are made aware of the original price of the ticket that they are buying at the earliest opportunity gives them another piece of the information that they need to make an informed choice about whether to enter into such a purchase. Any genuine fans who need to sell on their tickets should not have a problem providing the basic information about the product that they are selling; nor should any professional reseller. The secondary ticketing platforms which claim to have higher standards should therefore have no problem adapting to the new provisions.
Amendment 30 concerns the recourse available to consumers. There have been numerous reports of event-goers being turned away with counterfeit or invalid tickets that they have bought via the big four secondary ticketing websites, all of which heavily promote their reliability and guarantee that their tickets are genuine. Of course those websites offer refunds, but people who come to venues with unusable tickets have all incurred at least some travel cost getting there. In some cases, they have come from abroad for the express purpose of using the ticket. For such people, a full refund on the ticket, while welcome, will still leave them out of pocket. The new clause would therefore allow those consumers to claim back the extra cost associated with attending an event, up to a reasonable level.
In practice, some resellers already offer reimbursement of travel costs. The new clause would place primary responsibility for that initial payback on the secondary ticketing platforms because they offer guarantees which, they say, consumers pay for in their significant service charges. However, having paid out that money, the new clause makes clear that the secondary ticketing platform may recover it from the seller of the ticket. The only individuals or businesses that the new clause would hurt, therefore, are those who have sold fake or invalid tickets and consequently caused financial loss to the consumer. The new clause would have the positive benefit of giving consumers the confidence that they would not be left out of pocket when they purchased tickets through the secondary market.
Baroness Heyhoe Flint (Con)
My Lords, I wish to speak specifically to Amendment 28, which, as my noble friend Lord Clement-Jones has so eloquently put, is inextricably linked to Amendments 26, 27, 29 and 31. I am pleased to have the opportunity to return to the subject I raised at Second Reading. I am delighted that, in doing so, I am joined by colleagues from all sides, made up of many distinguished people—all finely tuned athletes, of course—who have been campaigning for many years to promote the interests of British sport.
The support for Amendment 28 demonstrates the need for specific action to protect the interests of sports fans when they purchase tickets to sporting events. I apologise if I am repeating what has also been stated so clearly by the noble Lord, Lord Stevenson, but just because we call them fans does not mean we should forget that they are consumers. I identify to the House that I am on the Board of the England and Wales Cricket Board, which is one of many sporting organisations that have expressed support for these amendments, such as the RFU, Wimbledon and the Ryder Cup, to name but three global event presentation organisations.
I thank the Minister for taking the time recently to meet with sports delegations on this issue. I shall reflect on that meeting in my comments and touch on the examples she requested. She asked for more feedback and we too would like more feedback.
First, I will address whether, as was suggested to us, the amendment would place too many restrictions into the market place and act as a burden on the buyer and the seller. I cannot see how the amendment can place any unnecessary burdens on the ticket buyer. It is in their interests to be told the face-value price of the ticket they are buying; its location in terms of block, row and seat number, so that they understand where they will be sitting; and, most crucially of all, whether that ticket is rendered invalid if it is transferred. These facts are material to making an informed decision about whether to purchase the ticket.
As for the seller, I do not see that having to provide this information is a restrictive burden. All the major sites that sell tickets already have online forms that people have to fill in with their ticket details. It will take just a few seconds more to add this additional information. Indeed, I tested it myself. I think it takes about 20 seconds to provide this information, which is nothing in the context of having to log in and enter other information. Alternatively, in this modern age people have the option of taking a picture of the ticket with their phone and uploading it, but I have not currently conquered that art of IT communication.
The Government already require information to be provided through the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 —I almost ran out of breath there. That is a very minor step, due to the lack of information and transparency to the buyer. My first question to the Minister is whether she accepts that the amendment places very little burden on the seller and that it is merely an extension to the existing regulations her department introduced this summer. I am sure that the Minister will respond to this short debate by referring to those regulations. They are of course welcome and a step in the right direction. Indeed, they show me that the amendment is in line with the Government’s existing policy approach. However, these regulations, as has already been pointed out, have certain flaws. The main one is that they apply only to sellers who are defined as “traders” and do not apply to consumers selling to other consumers, as happens so often and is the business model for secondary ticket sites.
Let me give an example. Last year one of our major venues, Durham County Cricket Club, managed to uncover the activities of Nicholas Hubscher—this in the public domain—a British Airways pilot who was found to be,
“touting on an industrial scale”,
as a sideline from his main occupation. I have a six-page selection of the cuttings and e-mail reports officially identifying the 800 tickets that Hubscher touted, with a face value of between £50 and £100, during the tests at the Oval, Old Trafford and Durham. These tickets were partially sold for hugely inflated prices on third-party ticketing websites such as Viagogo and Seatwave. The tickets were obtained not though sophisticated software but through using multiple credit cards and names. The England and Wales Cricket Board, in conjunction with the venues, successfully brought a civil action against him in the High Court but it was a stroke of luck that they found him. It had nothing to do with the regulatory regime that the Government have in place. Yet in this case, despite selling hundreds of tickets, Hubscher would not be caught under the existing regulations as he would not come under the definition of a trader.
Even when the sales are placed on secondary sites deliberately to make a profit—which is surely acting as a trader in any other sense—it circumvents the regulations that the Minister says will assist us. Can she therefore confirm that, at present, the application of the regulations only to traders allows for organised touts and others to evade the new regulations?
I am sad to tell the Committee that so many people are doing this. Just yesterday, I went online again to research the issue. On the Viagogo sites, I found scores of tickets for the opening Ashes match at the SWALEC stadium in Cardiff next July—tickets, incidentally, which were only recently put on sale. Those tickets have not even been sent to purchasers yet. Perhaps I may cite an e-mail sent to the England and Wales Cricket Board from a frustrated and angry consumer:
“Dear Sir/Madam, I have tried and been unsuccessful in obtaining three tickets for day three of next year’s test match at Edgbaston in the Ashes. Just by looking online for tickets, I have come across this advert”—
this relates to an eBay advert. The consumer went on:
“Can you please explain to me how these companies get all these tickets and sell them at extortionate prices when genuine fans cannot get them?”
In one instance, four tickets are listed at hugely inflated prices but nowhere does the post tell me the face value of the tickets. Nor does it tell me the exact seating location or whether Glamorgan County Cricket Club, which is the host of the event, is permitting that ticket to be transferred. This advert—there are many more like it on this and other sites—demonstrates the flaws in the existing regulations. Will the Minister look at these ads on sites such as Seatwave, Get Me In! and Viagogo? Perhaps she has already, because I know that my noble friend the Minister is a keen cricket fan. Can she confirm that they are currently in breach of existing regulations and that consumers are not getting the protection we would all wish to see?
I have also seen example after example from Wimbledon of consumers from around the world purchasing tickets at inflated prices and not receiving what was advertised. There are examples referring to debenture tickets which were bought in good faith yet were not debenture tickets, which classify which rather exclusive zone you sit in at Wimbledon. There are complaints from members of the ticket fraternity or the supporters and fans of Wimbledon from the USA about tickets which they did not receive or with which they were refused entry. There were tickets that were not even for the original place that they had booked and paid for. There were also tickets that had previously been stolen from another source. There are these fears in the background, which have alarmed all the people who have spoken so far.
This amendment will make it a specific requirement that the fan buying the ticket must be told what the terms and conditions of the transfer of that seat to them are. Many sporting events do not allow seats to be transferred above face value or without prior approval. As the noble Lord, Lord Clement-Jones, pointed out, we are talking about a £1 billion worldwide “business”. I hope that the Minister will review carefully the case for this amendment, work with those Peers and sporting organisations who have called for change and consider whether this amendment or a revised version of it is the right approach, ahead of Report and Third Reading in this House.
Lord Pendry (Lab)
My Lords, I will talk to this clutch of amendments, but specifically to Amendments 26 and 27.
Protecting sports fans from ticket touts and being ripped off when buying tickets for leading sporting events is an issue that I and others have been working on for over 20 years. At that time the focus was of course mainly on disorder issues in football, which were highlighted by Lord Justice Taylor and his report after the tragic events at Hillsborough stadium in 1989. Way back in 1994 I led from the Labour Benches in the other place a campaign to have the then Government extend the provisions they were introducing to ban ticket touting at football events to other sports, in the Criminal Justice and Public Order Act 1994. We were partly successful in that we obtained reserve powers to be added to that Bill to allow a Home Secretary to designate other sporting events. The amendment to that Bill was added in this place—just to show that we often have greater wisdom here than in the other place—but sadly, the measure has not yet been used, by successive Governments.
Back then I was working with the noble Lord, Lord Moynihan, on this issue, and here we are today still battling away to protect sport and its fans. I hope that today we will be successful, as the amendments before us have the support of the Opposition Front Benches and eminent Peers with a long-standing interest in sport, including the noble Baronesses, Lady Heyhoe Flint—as we have just heard—Lady Grey-Thompson, and others. They know well the issues that arise from certain individuals and companies who try to rip off genuine sports fans.
Of course, the Government acted to ban ticket touting at the London Olympics—at the behest of the IOC—and clearly the noble Lord, Lord Moynihan, must have had a major say in that decision. It is a great shame that we did not learn from that experience. Everyone agrees that one of the joys of the Olympics was the ambiance and general good will of the Games. That was aided by the fact that the approach to sporting venues was not inundated with shady touts doing their business and adding the air of menace they often bring. Instead, we had smiling volunteers and a general ambiance as real fans entered the various venues.
We also saw the wonderful atmosphere that it generated at the sporting events, as the legislation restricted the secondary market and helped more fans to get tickets. What a shame that we did not learn directly from that experience and create a positive legacy for all sporting events. I know that we often hear about the legacy benefits that the Games created, but in that area we certainly have yet to learn from that past experience. Today, we have an opportunity to make a difference. The amendments before us would not criminalise ticket touting. That is a debate for another day, although I hope it comes pretty soon. Instead, we can today provide more protection for fans who buy tickets and introduce more transparency into the arrangements. As others have said, it is an extension of measures that the Government already have and, for that reason, I am hoping that the Minister will accept the amendment.
The proposed new clause builds on existing government regulations by making requirements of certain ticket details that must be provided. To my mind, this is sensible. It will enable a sports fan to know the exact location of the seat that they are purchasing, its original cost and whether or not it is in the terms and conditions for that ticket to be transferred. This is important, as we know that fans are often grossly overcharged for tickets with no awareness that this is happening. In the most serious cases, the fan may not even get into the event they have bought the ticket for. If it is against those terms and conditions for the ticket to be resold, they find it invalid.
Will the Minister address this particular question when she replies? Can she explain why it is not in the interests of the consumer for them to be made aware whether it is within the terms and conditions of a ticket for that ticket to be transferred? Clearly, the basic principle is that to sell something that does not actually exist is wrong. This proposal would place no extra burden on consumers. For the seller, it would probably add seconds for the information that they have to provide when listing a ticket for sale—or if they have the technical ability, which I certainly do not, to take a snap of it on their smartphone and upload that picture to the online sales process.
Finally, as we have heard from the noble Lord, Lord Stevenson, the amendments have the support of sporting organisations including the British Horseracing Board, the England and Wales Cricket Board, the Rugby Football Union and Wimbledon tennis. All of them have contacted me—and others, I am sure—to say how it would help them to meet their objectives of protecting their sporting events for the many and not the few. I urge the Minister to accept the amendments before her. In future all sports fans could have greater protection to see their favourite sporting events not being marred by the unscrupulous, who currently are content to see genuine sporting fans being ripped off.
Lord Borwick
My Lords, very few secondary markets are perfect but they are certainly welcome in that they provide liquidity to the primary market. These amendments on secondary ticketing platforms would get in the way of the primary market. When somebody buys a ticket for an event, they are investing in something that is often way into the future. Tickets for big shows are often released a year in advance or more, so buying tickets to such events strikes me as a rather entrepreneurial activity. It is risk-taking: you cannot know whether you will enjoy the show or event and there are no reviews to read or critics to listen to. Yet if you decide that you cannot go to the event or change your mind, it is a good thing that there are proper secondary platforms developing to sell those tickets. These amendments would mean that people would think twice about that risk of buying tickets in the first place. They would be distortionary.
The noble Lord, Lord Stevenson, mentioned botnets. I think they were also mentioned by the noble Lord, Lord Clement-Jones, with whom I entirely agreed on his earlier amendment. I am afraid that I disagree with him now because surely there are very good pieces of software that can stop the purchasing where computers buy automatically. Those aggravating things where you have to fill in a distorted word to prove that you are human can stop the botnets.
The noble Baroness, Lady Heyhoe Flint, talked about her aggravation that somebody was paying £4,000 for a ticket to a cricket match. I am aggravated that that £4,000 is not going to the cricket club but rather to somebody else. If somebody is prepared to pay £4,000 for a ticket to a cricket match, why is the cricket club not charging that figure? That money would then go to the sport rather than to somebody else. Of course, the real problem is the ticket touts outside railway stations or on street corners who are selling outright fake tickets or perhaps their electronic equivalents. Selling electronic tickets or trading on the street without a licence is illegal; there is already legislation to deal with this problem. The secondary platforms are already ensuring that resold tickets are valid. They usually insist that the face value of the original ticket is stated during the transaction. The market is providing solutions. We do not need new legislation and new burdens. In any case, these amendments would hit the good guys instead of the bad guys.
Lord Moynihan (Con)
My Lords, I shall speak to Amendments 28 to 31, standing in the name of my noble friends Lady Heyhoe Flint and Lord Clement-Jones. I see significant merits in Amendments 26 and 27, which I would support had we not tabled our own amendments to effectively the same objective.
In the spirit of the noble Lord, Lord Stevenson, and my noble friend Lady Heyhoe Flint, I begin with the question: what is a consumer? In the context of the amendments before us, the answer is a sports fan.
It is a rare occasion for the title of a Bill fully and concisely to reflect its intentions. On this occasion, the Consumer Rights Bill achieves that objective: it is a Bill about consumers and it rightly seeks to protect and, where appropriate, strengthen consumer rights. It is a Bill that addresses inadequacies in consumer protection and derives its strength from addressing malpractice against consumers, who can be exploited by loopholes in the law or interpretations of it which, without legal backing, can lead to the exploitation of consumer interests for commercial gain. It is therefore important in the context of these amendments to recognise that, in every sense, consumers are sports fans.
The amendments should be seen as a constructive step towards protecting the interests of fans. As my noble friend has said, they would make it a specific requirement that a fan buying a ticket must be informed of the terms and conditions of the transfer of the seat to them.
This was a key issue for us when hosting the Olympic Games. The subject of ticketing gained prominence for two reasons. The first was a decision made by the International Olympic Committee not to provide a ticketing platform, a platform that incrementally built on the experience of previous Games. The IOC Games department took the view that each host city should start from scratch and that the role of the IOC in this context would be purely advisory. I made my view very clear at the time: that ticketing each and every event at an Olympic and Paralympic Games, while taking into account the myriad contractual requirements of the IOC and the Olympic family for free tickets, required a platform built on experience and expertise that should be refined and improved by each host city, not one that is reinvented every four years. A pattern will emerge of the demand by the world’s athletes for free tickets, greatest—not surprisingly—after they have completed their events. I believe that, had that been in place, we would not have faced at the beginning of the Games the issue of empty seats in areas allocated for the Olympic family.
The second reason emanated from the legal framework for the Games and is directly relevant to these amendments. The Olympic legislation was introduced by this Government specifically to protect fans who sought to buy tickets for the Olympic and Paralympic Games. The Government were initially nervous about addressing this issue at the time. Historically, they had consistently taken a position that the resolution of any problems through voluntary action by the market participants was strongly to be preferred; that new regulation would be considered only as a last resort, even for the Olympics, and only where there was clear evidence that it was in the public interest; and that new regulation and the associated cost of enforcement were likely to impose greater burdens and restrictions of consumer choice as compared to market-led solutions.
However, the Government, along with the police, the fans and the organisers of the Olympic Games, collectively took a very different view after the Olympic Games were over and they had time to reflect on the effectiveness or otherwise of the legislation that had been put in place. In that context, I say to my noble friend in sport, the noble Lord, Lord Pendry, that I believe the Government learnt a lesson that I hope they will not go back on as a result of the experience that was derived from those Games.
Lord Addington (LD)
My Lords, I was debating whether or not I should speak but, having been told that I am expected to, I think that I probably have to. I should declare a couple of interests. Probably the most important one is that I am a lifelong rugby player. Even now at this advancing age I still occasionally don a jersey and wander around the pitch—I would say “run” but wandering is a bit closer to it now.
One of the first points made by the noble Lord, Lord Stevenson, was that if you are generating income from these major events, at least some of it—as much of it as possible—should go to the grass roots, and many of the events that we are talking about do that.
Then there was the other major point about the fact that by touting in this way you are devaluing the event for the fan, the people who often actually make it a special event. To talk about Rugby Union, and I thank the RFU for once or twice giving me tickets, I would say that makes those games so special is the fans, so you are actually damaging your base if you allow these things to happen. These people do not go to an “event”; they are going to watch a sport and give some enthusiasm. That will be helped by this amendment; you will help to build it up and layer it through. Please pay attention to this.
The Government have been given—what shall we say?—a very moderate set of proposals. Any one of these amendments, or any combination of them, could probably achieve a great deal to make the situation slightly better. That is all we are asking for—to try to make it slightly better and preserve what is important. That is about all that we can hope for. As my noble friend Lord Moynihan has pointed out, we have tried and succeeded with a more draconian system for an event that was at the top of sporting demand, the Olympics, so surely having something here that at least gave greater certainty could not hurt.
Lord Stoneham of Droxford (LD)
My Lords, I am somewhat reluctant to go slightly against the tide in the face of noble Lords who I greatly admire in the sporting world speaking here today. I have great sympathy with what my noble friends Lord Clement-Jones and Lord Moynihan, the noble Lord, Lord Hendry, and my noble friend Lady Heyhoe Flint said about the war on ticket touts; I support that, and I support the values in it. However, we have to ask a number of specific questions about these amendments and what this legislation can actually do.
Most authorised resale ticket sites give guarantees on the validity of tickets or provide a value back if the tickets are not valid. One of the issues is how we get people to use those sites more. We do not want to upset anyone to move away from them, which would be into the hands of people who are fraudulent and are trying to break the system.
The other thing that is very important is that the public want the opportunity to resell and buy in the secondary market. This is particularly important when tickets are being sold a year ahead of the event. Another problem is that often the tickets are not issued until six weeks or so before the event, so some of the information that might be required in the resale market might not be available.
There is already considerable legislation against fraud and against competition and there are issues of restraint of trade, all of which need to be taken into account. We also have to ask ourselves why this primary legislation is being asked to make specific requirements in one sector. Should it be doing that? Should we not have more embracing legislation that deals with this issue? All the recognised operators have an interest in preventing fraud; that is what actually protects their brand, as any fraud inevitably undermines their genuine business.
There is an issue with sellers providing information, particularly individual consumers. I am not sure that I want my name going on a ticket that I might have had if it has gone through a recognised secondary provider—in fact, I certainly would not want that. So the guarantee is the key, as is establishing that the tickets are valid.
Baroness Neville-Rolfe
My Lords, we have heard a range of detailed and informed comments during this debate and I thank all noble Lords for their contributions, to which I have listened very carefully; it was good to have a variety of points made, and I am grateful to all noble Lords who have spoken. I am also grateful to the various sports, music and ticketing businesses that have spent time briefing me and the Government on these issues. In fact I should probably declare an interest as a big sports fan and a mother of cricketers.
Given the breadth of this issue and the different angles that people are coming from, I will divide my response into the two main types of sales in this market: sales from a trader to a consumer, and sales between consumers. I will then touch on the issue in Amendment 30 concerning refunds and compensation.
Before I do that, I shall briefly address the philosophical question posed by the noble Lord, Lord Stevenson, of whether a ticket—because it is either a goods item or an intangible legal right—is even capable of being sold on or transferred. The answer is that it is possible for a ticket to be defined either way. However, I am advised that this is ultimately a matter for judicial consideration, so it is not appropriate to attempt a determination in this Bill, or indeed for the Government to state publicly how we think a court would or should determine that question.
I turn to Amendments 26, 28 and 29 on business-to-consumer sales. I reassure the Committee that when traders sell to consumers there are already rules in place to ensure that consumers are aware who they are buying from and what they are buying. My noble friend Lord Clement-Jones said that the market was not subject to the same rules on transparency as other sectors, but this is simply not the case. The ticketing market is subject to consumer laws, including information requirements, to the same extent as any other retail sector.
The Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013, to which my noble friend Lady Heyhoe Flint referred, set out clearly in list form what information must be provided. For distance and online sales, such as ticket sales, that includes the price, the identity of the trader, contact details for the trader and the main characteristics of the ticket. In fact, there are no fewer than 24 information requirements on that list covering all the information that the consumer needs to make an informed decision.
In guidance on the regulations, we have included a specific paragraph on how the information requirements apply to tickets. I can quote directly from the guidance to reassure your Lordships that much of the information listed in the amendment is already required. The guidance states:
“Information on the main characteristics of the tickets and their total price (including delivery costs and other charges) must be given to the consumer in a clear and comprehensible way before the consumer purchases the ticket … For a ticket associated with a particular reserved seat (e.g. Seat 1, Row A) the seat number is a main characteristic”.
The regulations build on existing consumer law. The Consumer Protection from Unfair Trading Regulations 2008 protect consumers from being misled into a purchase by a trader.
The noble Lord, Lord Clement-Jones, asked about the October regulations. They are the Consumer Protection (Amendment) Regulations 2014; is that right?
Lord Clement-Jones
I did, but before my noble friend moves on to that, I quoted from the guidance and pointed out that, effectively, this is voluntary. The guidance states:
“Main characteristics include (if known to you)”.
I directly quoted from the regulations, as well. My noble friend has cited other parts of the guidance, but that is the crucial part.
Baroness Neville-Rolfe
I thank the noble Lord for that clarification. Perhaps I can continue to address the trader side. Where a consumer is sold a ticket that is claimed to be on the front row, for example, which turns out to be on the back row, that would breach the 2008 regulations. Advertising for sale a ticket that a trader is not in a position to sell because the ticket is either not available through the primary outlet yet or because the trader is awaiting the outcome of a ballot would also be a breach of the regulations, as well as a potential Fraud Act offence. Criminal penalties reinforce the legislation. A trader or a marketplace can be subject to a fine or even imprisonment if these regulations are breached. In conclusion, we believe that there is already sufficient law in place to ensure that consumers have all the information they need about what they are buying before they buy from a trader.
The noble Lord, Lord Stevenson, asked about botnets. A range of offences is available to law enforcement to tackle the fraudulent sale of tickets and the criminal harvesting of tickets from online ticket sales. The Computer Misuse Act 1990 sets out the framework of offences associated with interfering with a computer, including the criminal use of tools or articles to commit a computer misuse offence, such as a botnet. It was good to hear from my noble friend Lord Borwick that he believes that we are on the way to solving the botnet problem.
The noble Lord, Lord Stevenson, also asserted that there is evidence of large-scale criminal activity. We disagree. Europe Economics found that 90% of sales are by consumers such as you or me. There is already a strong framework to deal with criminality, such as fraud and money-laundering laws, which the noble Lord mentioned, that might take place in a market. Additional legislation for ticket marketing would not address such criminal activity. Obviously it is important to work with the police and other enforcement authorities, and we will review the data that the noble Lord asked for to see what up-to-date data we have. I will write to him on that point.
My noble friend Lady Heyhoe Flint said, “Will the Minister look at the websites?”. I will, but the enforcement of the law is for the CMA and trading standards. We have done some research. These sites already require key information to be given. All these sites have money-back guarantees. Most ticket transactions pass without problem—it is over 90%—so I think progress has been made there.
My noble friend Lord Moynihan gave us a very interesting summary of his experience with the Olympics—that wonderful summer which we all enjoyed in the brilliant sunshine, and the success of the Games. Indeed, as he described, it was very successful in terms of ticket sales, although of course there were some gaps in the audience, which was a sadness for consumers who would have liked to have been sitting in those seats. A ticket resale regime was a condition for hosting the Olympic Games. We brought that in and said at the time that such cases have to be considered on a case-by-case basis. I do not think that my noble friend was suggesting that this should be extended widely but he was asking us to consider that issue.
My noble friend Lord Moynihan also asserted that other countries had found a good way to regulate ticket sales. Our finding is that the evidence is mixed. New South Wales has a draft Fair Trading Amendment (Ticket Reselling) Bill restricting ticket resales, and we do not yet know its impact. As we understand it, these new restrictions are not the same as those in one of the amendments under discussion today. We have also seen press reports arguing that Queensland’s anti-scalping laws, as I think they call them, have had little effect. However, obviously we will keep those under review.
I have tried to talk about traders. I should now like to turn to the subject of Amendments 26, 28 and 29, which is consumer-to-consumer sales. We want consumers to be active and empowered in the market as buyers and sellers. It is a fact of life that sometimes consumers have a ticket that they cannot use. At this time of year I might buy tickets for my husband, a son and myself for a classical concert in the Royal Parks next summer. If my husband is taken ill six months later and cannot attend, I need to resell the ticket. That means that I can get my money back and it gives other consumers the chance to attend the sold-out event. We see no need to restrict this. Consumers should be able to freely and easily resell in this way tickets that they cannot use; my noble friend Lord Borwick made this point very well. The OFT has said that secondary agents can,
“provide a useful function for consumers who need tickets for events and are willing and able to pay premium prices”.
My noble friend Lady Heyhoe Flint asked about the impact of her amendment and how to build on the 2013 regulations. I shall try to answer. We know that over 70% of consumers think that they should be able to resell their tickets. Not only is it the right thing to do to allow this market to operate, but that statistic also indicates that if we restricted the legitimate resale market, consumers would find other ways to sell on the black or grey markets. We also know that consumers care about protecting their data and identity online. The Communications Consumer Panel reports that nearly two-thirds of social network users said that they had a high level of concern about the use of information from profiles by companies. In that same survey, the largest top-of-mind concern related to the safety of personal details or ID theft, with just over one-quarter of internet users spontaneously mentioning it.
Most consumers would not be comfortable having their contact details prominently displayed on a website. I am not sure I would like that—but I am sure I am not the only one who already receives too much junk mail. Consumers want to sell online and to protect their personal data. The current regulatory system allows that, while protecting consumers when they buy from traders.
Lord Clement-Jones
Before the noble Lord, Lord Stevenson, responds, I want to make just a couple of comments. I, of course, also will read Hansard carefully. I am somewhat disappointed because I am not sure that the voices in the debate have been heard clearly. I feel that somewhat of the straw man or Aunt Sally is being erected here as if the proponents of these amendments are trying to restrict the secondary market and prevent resale. My noble friend Lord Stoneham talked about restraint of trade. I thought that that was quite extraordinary and that we were almost in the realms of the EU or something. That is not the intention; nor is it the intention to drive people away from the event organisers to the secondary market. I do not believe that that would be the impact of what we are talking about here; that is, to get the benefit of a guarantee delivered by a secondary market in the possible event that a ticket is invalid or fraudulent. Surely, when you buy it from the event organiser, you know that it jolly well is not fraudulent or invalid. I am not really sure about that argument.
I could say many other things. As to the whole notion of the secondary market being entrepreneurial, if you know that a major sporting event is coming down the track, I do not know how entrepreneurial you have to be to reckon that a ticket for the World Cup is worth money and will be worth a great deal more money the nearer the time. I am sure that the noble Lord, Lord Borwick, is a great friend of entrepreneurs but there is entrepreneurialism and entrepreneurialism, in my view, in all of this. I think that a little bit of a splendid smokescreen is being erected around this issue. However, I take it from what my noble friend has said that there is an issue about the information given about an ordinary seller who is an ordinary consumer who has bought a ticket and wants to resell it, and the whole of their history is revealed for all to see on the secondary market. That is a perfectly valid objection and it may be a bridge too far. But there are many other aspects of these amendments which are extremely important.
My noble friend prayed in aid the regulations. The fact is that they are there but they are not adequate. I am grateful to the noble Lord, Lord Moynihan, for using the word “forensic”. If you look at the impact of these consumer regulations, you see that they are not sufficient to drive good behaviour, which is all that we are talking about in these circumstances. The main four resellers in the secondary market may well do what they can. They do not always publicise exactly what the tickets relate to. There may be merit in considering some sort of regulation where consumers do not have to pay for their tickets until the identity is known. It may be that you need a condition precedent: for example, having made the reservation, the consumer perhaps should not have to pay until the seat number can be stated. It is perfectly possible to think of a situation where that would be a valid way of behaving.
I will chew over what my noble friend has said but we have quite a bit more discussion to take place. Clearly, she recognises the strength of feeling in Committee. I think that this is a matter that we will take further during the course of the Bill.
Lord Stevenson of Balmacara
My Lords, I share the disappointment that the noble Lord, Lord Clement-Jones, expressed at the response to the debate. It was a very high-quality debate with some very important and influential speakers with track records and experience. It is not so much that their points were rebutted—that is what Governments do—but to have them rebutted in such an inventive way seems to me to trivialise what is an important point. We need to think very hard about what the next steps in this should be. For example, the Government do not seem to have a view on my genuine question of what a ticket is, yet they are regulating out of their ears—or that is what they say they are doing. To do so on the basis of not knowing what the central point is seems to be specious in the extreme. If they do not know what a ticket is, is it any wonder that the regulations do not do the trick?
It is absolutely clear from what has been said today and from the evidence that we have received that the current regulatory structure is a bit of a joke. It does not do what it is required to do: to make an efficient market for those who are trying to sell tickets for events they are running and for those who wish to attend them in a genuine capacity. It is not catching all the activity that is going through. The Government say that it is designed for traders, but somehow consumers are in a different category. I do not think that distinction stands up in what we are doing.
The guidance that has been issued has been tried and tested already and is clearly failing. It does not work. We need to do something about that. Under the regulations that have been in force since June 2014, I have been told by several sports bodies that no tickets that they can find on sale have the seat numbers or seller details provided. Are we to believe that no tickets at all are being sold by these traders? I do not think so.
Also, what exactly is a trader? During her response the Minister seemed to imply that there would be a case for arguing that people who bought tickets in excess of their personal demand could be treated as traders. If that is the situation, why do we not say that in regulatory form so that it is clear? It is currently up to the seller to define whether they are a trader or a consumer. In the example given by the noble Baroness, Lady Heyhoe Flint, the BA pilot who was caught selling several hundred Ashes tickets would definitely have been a trader by any definition yet was not prosecuted in that way. This is largely about consumer protection. Consumers are not going to be concerned about whether their ticket is coming from a trader or a consumer. They should have the right to know what they are buying. That is the basis of all the consumer discussions we have had on the Bill so far. It seems odd to carve this out in a different way.
I take the view that, if the Government are not going to outlaw secondary ticketing—I do not think they should—they must regulate properly for what they want: the desirable things, the things that will help the sports and help consumers. That will help to create a proper and open arrangement that is not susceptible to criminal activity of the type that we heard about from the noble Lord, Lord Moynihan, but which seemed to be rebutted by the Minister when she responded. The noble Lord, Lord Moynihan, said that there were about 1,000 people involved in criminal activity from known facts as a result of the Government’s investigations into the Olympic and Paralympic Games. What exactly is she saying if she says that some economists say that there is not any criminal activity because it was consumers who were buying the tickets? Of course it was consumers who were buying them, but if they were arriving through some form of criminal gang activity, that is not a very satisfactory situation.
As was made very clear in the debates, the amendments taken together give a range of options for the Government to look at. That is a rich opportunity for the Government to come back with something sensible at later stages in the Bill. We are not saying that there is a particular solution to this; there is a range of things that the Government could do. We are tending not to be draconian. We are not insisting on banning secondary ticketing; we are trying to say that there is a gap here in expectation. The genuine fan, the keen person who wishes to go to an activity but cannot access tickets at the beginning of the process and has to pay over the odds for them, is not well served by the information requirements. This simply is not working well. It could be changed through very minor regulatory change. It should be in the Bill because it is clear that the secondary legislation is not working. I really cannot understand why the Government are happy to be accused of standing by while consumers are being exploited.
We will undoubtedly return to this. I hope that between now and when this matter comes back on Report there may be an opportunity to have a further, more in-depth discussion with the Minister where we might get further down the line on this. In the interim, I beg leave to withdraw my amendment.
Baroness Neville-Rolfe
My Lords, this may be a convenient moment for the Committee to adjourn.
The Deputy Chairman of Committees (Baroness Pitkeathley) (Lab)
The Committee stands adjourned.
House of Lords
(10 years, 2 months ago)
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Introduction: Lord Farmer
(10 years, 2 months ago)
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Health: Ebola
(10 years, 2 months ago)
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Lord Giddens
To ask Her Majesty’s Government what is their assessment of the progress of international efforts to contain the spread of the Ebola virus.
Baroness Northover (LD)
My Lords, the UK is playing a leading role in response to the Ebola outbreak in west Africa, having already committed £125 million to it. We are also mobilising our Armed Forces in the effort to defeat the disease, but the scale of the outbreak is unprecedented, and more needs to be done. We are very actively encouraging other countries to join the international response.
Lord Giddens (Lab)
I thank the Minister for that response. I put down this Starred Question a month ago. Since that time, the situation with Ebola in west Africa has deteriorated markedly to become a tragedy of horrible proportions whose tipping point could become a catastrophe. That catastrophe could have global implications far beyond those we have seen so far. As Anthony Banbury, the head of the UN Mission for Ebola, said yesterday, major changes and major transformational policy on a global level are necessary by 1 December,
“or we face an entirely unprecedented situation”.
How is it possible to make these changes in such a short period of time? There are only six weeks in which we have to get a radical uplift in global policy.
Baroness Northover
The noble Lord is absolutely right; he was absolutely right to put down this Question. The situation has indeed got a lot worse since he did so. If this does not make the case for aid in terms of our own self-interest, as well as a moral case, I do not know what does. The epidemic is moving rapidly ahead of us in west Africa, as he points out, and he talks about a tipping point. The United Kingdom is leading a major effort to tackle the disease in Sierra Leone; the United States is doing that in Liberia and Guinea, and France is doing that in Guinea. However, a lot more needs to be done internationally and the UN is absolutely right about the need for unprecedented global action. The noble Lord is right about that.
Lord Alton of Liverpool (CB)
My Lords, has the Minister seen the comments of the director-general of the World Health Organisation, Dr Margaret Chan? She said that this is,
“unquestionably the most severe acute public health emergency in modern times … I have never seen a health event threaten the very survival of societies and governments … I have never seen an infectious disease contribute so strongly to potential state failure”,
and that,
“the whole world is put at risk”.
Will the Minister detail to the House the ways in which this country, admirable though our efforts in Sierra Leone are with the provision of 700 beds, is bringing together the international community to fight a disease that is already predicted to take the lives of 1 million people in west Africa?
Baroness Northover
The noble Lord is right, and so is Margaret Chan. The noble Lord will no doubt be reassured to know that the Foreign Secretary is chairing a COBRA meeting on EU co-operation this afternoon—in fact, as we speak. It is extremely important to get that international engagement. The Prime Minister will chair another meeting of COBRA tomorrow at 3 pm. We have sought to galvanise international reaction to this. As the noble Lord said, it is absolutely critical that we do so.
Viscount Ridley (Con)
My Lords, will the Minister congratulate those who are volunteering to go and work on this problem in west Africa for their courage, skill and generosity? Does she also agree that this will be defeated by on-the-ground, low-tech action but that, if it does not happen that way, we have a really serious problem because it will be a long time before vaccination and cure can help?
Baroness Northover
I am more than ready to endorse that view. It is astonishing to see the number of volunteers who have decided that they wish to go out to this extremely challenged region. We are humbled before that effort. My noble friend is right that we have to tackle this as a public health crisis but it is also encouraging to see the amount of effort now going into developing potential treatments and vaccines. It may come to nothing but I am extremely pleased that the United Kingdom is again leading in terms of the trials of the vaccine at the Jenner Institute in Oxford. If that works out, those vaccines should be available by the end of the year.
Baroness Kinnock of Holyhead (Lab)
My Lords, does the Minister agree with President Kim of the World Bank that the world community has “failed miserably” in its response to Ebola? Dr Chan, head of the WHO, who was mentioned earlier, drew attention to the appalling neglect of the pharmaceutical companies, saying that, after 40 years of Ebola, there are still no vaccines or medicines. She said:
“The rich get the best care. The poor are left to die”.
Baroness Northover
We can see how we are all interlinked—something that happens in one part of the world may very well affect another. It is encouraging to see that the pharmaceutical industry is now picking up speed. However, the noble Baroness is quite right: that has not been its history.
Lord Steel of Aikwood (LD)
Will my noble friend be kind enough to have a word with the Home Secretary because there is a problem that doctors from west Africa working in this country who go to help in this crisis might run foul of the visa restrictions? It is very important that that sort of bureaucracy does not get in the way of sending the most valuable doctors—those who know the area and can speak the languages.
Baroness Northover
I am very happy to reassure my noble friend that the Home Secretary is looking at this at the moment. Tier 2 skilled workers can indeed return to their home country for short periods to provide support and can take their annual leave to volunteer. However, the Home Secretary is looking at this.
Baroness Hayman (CB)
My Lords, alongside the need for developing vaccines and cures for the diseases of the poor that the noble Baroness, Lady Kinnock, described, is there not also a tremendous need to develop public health and basic health systems in the developing world in the future? On the Ebola crisis, does the Minister agree that, alongside our assistance on medical treatment services, it is very important that we also help on the prevention side by stopping transmission, getting good public information and sensitising communities? In that respect, will she endorse the work of the British NGO Restless Development—I declare a family interest—which has already sent 200 young Sierra Leonean volunteers to work in their own communities?
Baroness Northover
The noble Baroness is quite right about the importance of public health in strengthening health systems and changing various cultural practices. I again pay tribute to those who are working there at the moment.
Lord Collins of Highbury (Lab)
Universal health coverage is an essential element. Will the Minister explain why the Government oppose that at the UN in terms of post-2015 objectives?
Baroness Northover
The United Kingdom supports the development of health systems in developing countries, and health is part of the approach to the new MDGs.
Schools: Class Sizes
(10 years, 2 months ago)
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Baroness McIntosh of Hudnall
To ask Her Majesty’s Government what action they are taking to reduce class sizes, particularly in primary schools.
The Parliamentary Under-Secretary of State for Schools (Lord Nash) (Con)
My Lords, we are making every effort and are investing heavily to address the unprecedented increase in pupil numbers. The average class size remains below the statutory limit, despite a massive population increase. We are investing £5 billion of capital funding, which has already enabled local authorities to create 260,000 additional pupil places between May 2010 and May 2013. This includes 212,000 primary places. There are 300,000 more places in the pipeline for September 2015.
Baroness McIntosh of Hudnall (Lab)
My Lords, I thank the Minister for that reply which, although welcome, strikes me as just a tiny bit complacent when we see that the figures for primary school children being taught in classes of more than 30 have gone up more than 200% between 2010 and 2014. Does he agree that most educationalists and teachers consider that, generally speaking, children do better in small classes? Indeed, that is what people who can afford to pay for their education are generally looking for. Will he say what he and the Government regard as the optimum primary school class size and on what evidence he bases his view?
Lord Nash
I would be interested in the noble Baroness’s definition of complacency because, despite the massive population increase, the previous Government cut the number of primary school places by 200,000 and the money by 26%. We have more than doubled the amount of money invested in class sizes. The relevant figures are that the class size in key stage 1 is 27.4 this year as opposed to 27.3 last year, a tiny increase. The pupil-teacher ratio is 21 in primary schools. Of course we would all like smaller class sizes, although the OECD and the EEF toolkit tell us that a reduction in class size gives a very poor return on investment and that increasing teacher quality and training is much better. It is true that some private schools have very low class sizes, but generally they are not as low as people think.
Lord Storey (LD)
My Lords, my noble friend the Minister will be aware that the UK has bigger class sizes than most of its overseas competitors. He is also right to point out that the £5 billion being spent to reduce class sizes is more than the previous Government were able to provide. However, those resources take a long time to work through. Does he think that where class sizes exceed the so-called legal limit schools should be allowed to put extra resources in, or perhaps be given extra resources in terms of an extra teacher or a classroom assistant, or perhaps be able use the pupil premium in such cases?
Lord Nash
In fact, the OECD tells us that our secondary class sizes are quite a bit below the average international size although our primaries are somewhat higher. However, we have no evidence for the high numbers in class sizes that some people refer to—I saw 70 in the paper the other day which is clearly misreporting. The statistics I have given give us great comfort that we have the right amount of investment in the sector.
Lord Lexden (Con)
How does this Government’s record in building new schools compare with that of their predecessor?
Lord Nash
We are spending £18 billion on school buildings in this Parliament, which is more than the previous Government spent in their first two terms combined. We are building or improving the condition of 900 schools—double the previous Government’s performance in 13 years.
Baroness Massey of Darwen (Lab)
Does the Minister agree that an absolute priority, as my noble friend said, should be reducing class sizes where possible and not spending money on new free schools set up in areas where excess places exist already?
Lord Nash
I cannot agree that an absolute priority should be reducing class sizes because I have already said that all the evidence is that that was a very poor return on investment. In fact, Andreas Schleicher tells us that there is no relation between class sizes and performance. I entirely agree that we should not be putting up schools in areas where there is no need and I can assure the noble Baroness that since I became a Minister, just over two years ago, virtually all the free schools we have approved have been in places of need.
Lord Tebbit (Con)
My Lords, can my noble friend tell me why it is that when I was at primary school a teacher could teach a class of 48 or 50 pupils to read adequately and in fact rather better than is done in classes of 30 these days? What has changed—the teachers or the children?
Baroness Jones of Whitchurch (Lab)
My Lords, does the noble Lord not accept that all the evidence shows that smaller class sizes make a difference for younger children—for infants in particular—and actually that is one of the key markers of going on to have educational achievement. Does the noble Lord not recognise that the Government have now been missing their target for recruiting new teacher trainers for the last three sessions and that we are heading for the perfect storm where we do not have enough teachers and classes are getting bigger? That is inevitably going to damage children’s education.
Lord Nash
I am not rushing to take lessons from the party opposite on pupil place planning. The ONS data which came out at the beginning of the last decade made it clear that there was a pupil place crisis looming and it was not until 2008 that the previous Government even managed to produce predictions for the size of the school population. As I say, they actually cut the number of primary school places by 200,000 and slashed the funding by 26%. We are the first Government for a long time actually to increase the amount of money available and we have also invested in new free schools in places where they are needed.
ISIS
(10 years, 2 months ago)
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Baroness Falkner of Margravine
To ask Her Majesty’s Government what is their strategy for confronting ISIS.
The Minister of State, Foreign and Commonwealth Office (Baroness Anelay of St Johns) (Con)
My Lords, we aim to degrade and defeat ISIL and reduce the threat to the United Kingdom and our interests. At home, the focus is on preventing attacks and countering ISIL’s ideology; abroad, we work with coalition partners to support moderate forces fighting ISIL and tackle ISIL’s access to funds and fighters. We are pressing for political reform in Iraq and for a political transition in Syria to isolate ISIL politically; and we provide humanitarian aid to those most affected.
Baroness Falkner of Margravine (LD)
My noble friend has mentioned co-operation with partners, so she will undoubtedly be aware that the United States is moving to a strategy—if you can call it that—of using more drones in armed warfare in Syria. Given the experience that it has had with Pakistan, Yemen and several other countries, where more than 60,000 civilians have accidentally been killed as collateral damage, can she tell the House whether the United Kingdom is contemplating such a move? Can she also tell the House whether the Government have had any conversations with the United States about the pursuance of that strategy?
Baroness Anelay of St Johns
My Lords, I hope that my noble friend will understand that I am not in a position, and nor would the House expect me to be, to comment on United States military operations. However, I understand my noble friend’s concern about drones and their use; Members of the House have expressed that concern in relation to other matters previously. I can say that our military efforts are intended to help defeat ISIL on the battlefield. We are going to use our military capabilities in Iraq to achieve that objective while working to support political reform in Baghdad to ensure inclusive governance; while in Syria we are engaged in training and providing non-lethal equipment.
Lord Dannatt (CB)
My Lords, having clarified that the objective of Her Majesty’s Government is to defeat ISIL on the battlefield, can the Minister confirm that they are ruling options neither in nor out, and that all options remain on the table for future engagement if required?
Baroness Anelay of St Johns
My Lords, when we had the recall of Parliament, the Leader of this House and my right honourable friend the Prime Minister made it clear that the security of this country is our first objective; that we had come to Parliament to seek agreement that we should engage in airstrikes in Iraq; and that if there were premeditated action which we needed to take elsewhere because of extreme danger to our humanitarian provision, we would return to seek the approval of Parliament.
Lord Sugar (Lab)
My Lords, does the Minister agree with me that cutting off finance to these people will result in them being less of a danger? Would she care to go on the record in the House and disclose who the financiers of these evil people are? What have the Government—or the American Government—done to discourage those who are financing these people?
Baroness Anelay of St Johns
My Lords, ISIL finance comes from a variety of sources, as the noble Lord will be aware. There are allegations of funding from overseas countries. I do not have proof of that so I am not able to reveal it to the House, because it would not be factual. What is a fact, of course, is that ISIL has been engaged in taking oil production facilities and selling that oil illegally on the black market, and wherever it has rampaged with its evil regime it has seized banks and Iraqi security forces materiel. It has significant amounts of money.
Lord Elystan-Morgan (CB)
My Lords, does the Minister recollect that, some time ago, Her Majesty’s Government gave blanket recognition to all the military forces that were fighting President Assad in Syria? Although ISIS was not specifically mentioned, does it not seem clear that there were kindred military forces, which now form part of ISIS, that were operating at the time? What have we done, if anything, to derecognise those forces?
Baroness Anelay of St Johns
My Lords, there is continuous evaluation of the variety of forces to which the noble Lord refers: how they operate and what they call themselves. The difficulty is that as soon as one lists one, it changes its name and becomes something else. Noble Lords will have watched very carefully over the summer and seen that what can apparently be ISIL or ISIS, and the different ways of referring to that, can suddenly form a breakaway group. We therefore have to refer to all of these groups that are trying to create havoc as ISIL.
Baroness Nicholson of Winterbourne (LD)
I welcome the Foreign Secretary’s recent visit to Baghdad, but can the Minister disclose Her Majesty’s Government’s strategy towards the greater involvement of Turkey, which is, after all, fundamental to the security architecture of the region, of Europe and of the wider NATO circuit? What is happening in our relationship with Turkey? We are primus inter pares in our pressure for Turkey to enter the European Union; surely we have a unique position.
Baroness Anelay of St Johns
My noble friend is right to draw attention to the important role played by Turkey. It is clearly ISIL’s ambition to grab enough land so that it has an enormously long boundary with Turkey. As an important player in the European and east European field, Turkey has a vital role to play. It does that. It plays its role in the coalition effort, particularly through its humanitarian support in the region and through its support to the Syrian moderate opposition. We welcome Turkey’s support for the air strikes in Syria and Iraq and the President’s affirmation that Turkey is willing to play its part in the military campaign. We are now continuing to discuss with them what form that contribution might take.
Baroness Morgan of Ely (Lab)
The Government have already spent around £25 billion training the Iraqi army. Many would question whether that money was well spent. Can the Government explain what further steps can be taken to develop the resilience of the Iraqi army and what the Iraqi army can do to command support from the different communities within Iraq?
Baroness Anelay of St Johns
The noble Baroness draws attention to an important fact—that in the early days of ISIL’s advance, the Iraqi security forces were not able to withstand it. The noble Baroness is alluding to the fact that it was felt that the security forces did not have the support of local communities, and they then fell back. We are engaged—the Foreign Secretary has made it clear on his visit to Iraq this week—in providing support to the Iraqi security forces in the form of training and guidance. I know that they value the surveillance help that we give them; we can give them the confidence, and then the people whom they are trying to protect will have confidence in them.
Palestine: Recognition
(10 years, 2 months ago)
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Baroness Warsi
To ask Her Majesty’s Government what is their position on the recognition of Palestine as a state.
The Minister of State, Foreign and Commonwealth Office (Baroness Anelay of St Johns) (Con)
My Lords, the UK is committed to seeing an independent Palestinian state. We will recognise a Palestinian state at a time of our choosing, when we think it can best bring about peace. A negotiated end to the occupation is the best way to meet Palestinian aspirations on the ground.
Baroness Warsi (Con)
I thank my noble friend for that Answer and I congratulate her on her new job. Could the Minister detail the specific conditions or criteria that would need to be met for this Government to recognise the state of Palestine? What is the Government’s response to the overwhelming vote for recognition that we saw in the House of Commons on Monday?
Baroness Anelay of St Johns
My Lords, first, it would look churlish of me to thank my noble friend for wishing me well, but we both know what we mean. I am delighted that she remains a colleague in this House and a good friend.
My noble friend referred to the debate on Monday which caught the attention not only of this country but of the countries in the Middle East. The vote showed that Parliament considers the resolution of the Israeli-Palestinian conflict urgent. We agree with that. The issue is and will remain a foreign policy priority for the UK, but, as I said, we need to judge when it is right to take that decision. What we need to do is to find a negotiated end to the occupation. That is the most effective way of proceeding. My noble friend asked about criteria. Clearly, you judge criteria on a fluid system. You watch, you wait and you encourage the Middle East process to continue—and one does not give up.
Baroness Ramsay of Cartvale (Lab)
Does the Minister agree with me that a premature and unilateral declaration of recognition would not only not aid the peace process in the Middle East towards a two-state solution but would in fact appear to be rewarding Hamas, which is a terrorist organisation that calls for the destruction of Israel and rains thousands of rockets down on her civilian population?
Baroness Anelay of St Johns
My Lords, I entirely agree with the noble Baroness.
Lord Alderdice (LD)
Do Her Majesty’s Government understand that many people not just in the region but in this country and, increasingly, in Israel itself believe that the only way to save a two-state solution, if it is not already too late, is to recognise a Palestinian state immediately, and that without that Her Majesty’s Government unintentionally may be contributing to the intractability of the problem rather than its resolution by giving a veto to one side through their policy on recognition?
Baroness Anelay of St Johns
My Lords, I understand my noble friend’s strength of feeling. I also understand that there is a lot of public concern and, indeed, more than interest—rather, engagement—in all of this. However, one has to say that the Middle East process itself has not failed; it proceeds. Prime Minister Netanyahu and President Abbas continue to say that they are committed to a two-state solution. That is the way forward, whereas this country recognising Palestine now would not achieve anything. It would not remove the occupation or give everyone the opportunity to do what we need to do now, which is to focus on the people of Gaza and the rebuilding of it.
Baroness Deech
My Lords, does the Minister acknowledge that if a state of Palestine were to be recognised, the Palestinian residents within it would cease to be refugees, that those Palestinians living in other countries would have a right of return and would also cease to be refugees, and that there would be no more call for UNRWA and the refugee problem would be ended?
Baroness Anelay of St Johns
My Lords, the noble Baroness makes an interesting point, but it would depend on the way in which the future state were created, so I think that there is more complexity to the issue than she raised.
The Lord Privy Seal (Baroness Stowell of Beeston) (Con)
My Lords, I am sorry to interrupt from the Dispatch Box again. If noble Lords are very brief, we can hear from the noble Lord on the Labour Benches and then from my noble friend.
Lord Grocott
My Lords, various references to the problem of recognising a Palestinian state indicated that it would somehow inhibit the peace process. I ask: what peace process? What achievements can be chalked up to this alleged peace process? All we have seen from the process over the past 50 years is a continued diminution of the prospect of a Palestinian state because of the constant settlement activity in violation of all international law which the Israeli Government seem to be able to pursue with impunity.
Baroness Anelay of St Johns
My Lords, the developments with regard to settlements clearly have lost Israel many of its friends and it has a duty to rebuild trust by looking again at its policy on settlements. However, I do not agree with the noble Lord that we should give up hope on the Middle East peace process. As I said in answer to another noble Lord, the two main actors in this process wish to be engaged in it and will be engaged in it—and we will encourage them to do that.
Baroness Eaton
Given the fact that Arab citizens, together with members of all religions, are free to live in the state of Israel, does the Minister agree that the same must be the case in a Palestinian state in which all members of society, no matter what their race or religion, should be afforded absolutely equal rights in order to practise their respective faiths without any fear of persecution?
Baroness Anelay of St Johns
My Lords, one of the six priorities of the FCO is to have freedom of religion or belief, so I can say to my noble friend: yes.
Wales Bill
(10 years, 2 months ago)
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Lord Roberts of Llandudno
“Part 1AVoter registration Power of Secretary of State to make regulations for data sharing
(1) The Secretary of State shall by regulations impose a duty on government bodies requiring those bodies to provide specified information to registration officers in Wales for the purposes of electoral registration.
(2) Regulations under subsection (1) must include as government bodies the Driver and Vehicle Licensing Agency, the Department for Work and Pensions, HM Passport Office and the National Health Service.
(3) Regulations made under subsection (1) shall include the provision of data collected by specified government bodies by virtue of specified applications, which must include applications for new or renewed driving licences, Disability Living Allowance, Jobseeker’s Allowance, Employment and Support Allowance, new or renewed passports, and to register with a GP (as applicable to the specified government body).
(4) Registration officers shall use the specified information received in relation to a person—
(a) if the specified information received contains all of the information required, to register that person on the appropriate electoral register or registers; or(b) if the specified information does not contain all of the information required, to make further enquiries of that person to receive the information required to register that person on the appropriate electoral register or registers.(5) For the avoidance of doubt, nothing in this section shall give any government body the power to share any information about a person without that person’s consent.
(6) In this section—
“electoral register or registers” means the registers in section 9 of the Representation of the People Act 1983;
“specified applications” means any applications made by a person potentially eligible to be registered to vote as are specified in regulations made under section 1(1); and
“specified government bodies” means any government bodies specified in regulations made under section (1)(1).”
Lord Roberts of Llandudno (LD)
My Lords, I will also speak to Amendments 20 and 61.
I begin by recalling some friends, who moved to live near Llanuwchllyn in Merionethshire, as it was. At the bottom of a farm field was a swiftly running stream. Glen, the wife, had six children. People said, “You must fence off the stream to safeguard your children”. She said, “No, I will not fence it, I will teach them to swim; by teaching them to swim, they will be able to survive whatever the circumstances”. So it is, I think, with young people today. We cannot safeguard them in every possible way, although we would like to. We would like to save them from every harm, but they must go out into a world that is full of threats and dangers. In this world they must survive—they must swim in the tide of destruction and total despair. They need to feel part of society and committed to its well-being.
Although it is not in this Bill, there was a suggestion on the previous day of this debate that we should think of reducing the voting age from 18 to 16. There was widespread agreement in the Committee that by reducing the age to 16, young people could become more a part of their communities and committed to the well-being of these communities. However, if they are to vote, they must first be registered to vote. Without the most accessible of methods being used, there will be many thousands of them who will not be on those registers. That means that their voices will not be heard. That is why Amendments 19 and 20 are so important.
The Electoral Commission found that only 44% of young people voted in the 2010 election, and only just over 50% were registered. That percentage of registration—just over half—shows that the present registration system is not working and cannot be defended. With an election on the horizon in a matter of months, surely we should move speedily to ensure that as many youngsters as possible are able to vote when that election comes. A maximum registration grant has been offered to some local authorities by the Cabinet Office. There are 22 local authorities in Wales, but I have heard of only one—Ceredigion—that has dealt with this particular grant and the amount was only £1,700. We must find out how it is possible to maximise the number of people on the register.
I am proud to be honorary president of the Bite the Ballot organisation. It is travelling throughout the country, trying to register as many young people as it can. In February of this year, it registered more than 35,000 young people in a matter of days. When they reach the age of 18, they will take their places automatically on the register. We understand that in the Scottish referendum more than 100,000 young people between the ages of 16 and 20 registered. Bite the Ballot’s efforts cost, I am told, 25p per registration. The Electoral Commission’s charge is £25, not 25p, per registration. New ways have been found and trodden, and now we must adopt them ourselves.
The United States enacted its national voter registration legislation in 1993—the “motor voter” initiative. Whenever a person, young or old, signed up for, say, a passport, a driving licence, national insurance or work and pensions, there would be on the form another box asking whether they wished to be included on the voter register. All they had to do was put a tick in that box. It was the simplest thing possible to get them on the register and enable them to vote. We can do it. It can be done. When people sign to donate, say, a kidney, they could place a tick on the forms. It is the easiest thing possible and would be without any great cost. People tell me that it will cost a lot of money, but how much do door-to-door canvassers cost? I suggest that we could even make a profit from this new method of signing up people on the register. In the new Northern Ireland schools initiative, 50% of young people signed up.
If we value the vote, it is our obligation to ensure that the utmost effort is made to make it possible for people to register. Schools and colleges could be visited and, with a person’s consent, the electoral registration officer could be provided with details of pupils to enable them to vote at 18. This would be a step in the right direction to enable a person’s voice to be heard as an elector. As I said earlier, they would be learning to swim and tackle the difficulties that they will face, especially in this world which, as we heard in Question Time today, is causing so much heartache. We can help our young people to face those problems. There is no complication. The Chief Electoral Officer for Northern Ireland says that thousands and thousands of youngsters were able to be signed up without any problem.
A week or two ago, the National Assembly of Wales supported such initiatives and the four party leaders—Carwyn Jones, the First Minister; Andrew RT Davies, who leads the Conservatives; Leanne Wood, leader of Plaid Cymru; and Kirsty Williams, the Liberal Democrat leader—signed up to them. They were united in their support, as was the Presiding Officer. The Assembly overwhelmingly voted in favour of this measure being introduced in this Wales Bill. What right have we, as a Parliament in Westminster, to refuse the request of the Assembly in Wales? It is happy with this new registration initiative and asks for our support. I suggest that it would be very churlish and unwise indeed, at a time when devolution is so much in the headlines, to say, “No, Westminster will not allow what Wales wants”. It therefore gives me the greatest pleasure to propose these amendments. I beg to move.
Baroness Gale (Lab)
My Lords, I support Amendments 19 and 20. It is a great pleasure to follow the noble Lord, Lord Roberts of Llandudno. As he said, in 2010, only 56% of 17 to 24 year-olds were registered to vote, and only 44% of them voted at the general election. In Wales in 2011, 35% of young people voted in the Assembly elections, an even lower number than at the general election. So the current low levels of voter registration in Wales, especially among younger voters, combined with the lower turnout in Welsh elections indicate that, with the general election in seven months’ time and the Assembly elections in 2016, this is the right time to be taking the actions set out in Amendments 19 and 20, which explore ways of developing a system in which government bodies provide information directly to the EROs. The aim is to empower citizens to register to vote when filling in, for example, applications for a new or renewed driving licence. People can apply for a provisional driving licence from the age of 15 years and nine months. Other methods could be through passports and benefits, or when registering with a GP.
The noble Lord, Lord Roberts, mentioned the American “motor voter” Act, which seems to have been very successful in 1993. He also mentioned the initiative taken in Northern Ireland, which has been very successful in improving the rate of registration among young people. Virtually all the young people who remain at school or college to complete A-levels or the equivalent are added to the register and this represents approximately 50% of the total eligible population in that age group. The schools initiative is the most productive aspect of the Chief Electoral Officer’s community engagement programme, with 99% of targeted schools visited, and 11,000 16 to 17 year-olds.
Having just moved to a system of online, individual electoral registration, which, according to the Cabinet Office, appears to be flourishing, we believe that Wales has the technological capacity to make this type of data-sharing system flourish. The Labour Party will make a manifesto commitment at the general election to a policy of school and college registration, as my right honourable friend Sadiq Khan, the shadow Justice Minister, announced recently. He said:
“Too many young people don’t register to vote. If we can’t get young people registered, then it makes the task of getting them to vote even more daunting. We need to do more to turn our young people into habitual voters. Improving citizenship education and getting them registered will be crucial”.
Welsh EROs will be required by this amendment to take active steps to increase the number of people registered from underrepresented groups, including the specific step of organising at least one voter engagement session per year, per school or further education college in their area of responsibility. If action is taken as set out in Amendments 19 and 20, it would mean that young people, people with disabilities and ethnic minority groups—those who have been consistently underrepresented in Wales’s democratic processes and are least likely to be present on the electoral register—could take an active part in democratic life. They could be registered to vote and, through voter engagement sessions, encouraged to use their vote.
I suggest that there is no time to lose in making Wales’s voter registration processes as easy and straightforward as possible. Having just moved to a system of online, individual electoral registration, it is even more important. Sixteen year-olds, depending on when their birthday is, can be registered to vote, and if we move to giving 16 year-olds the vote, it would mean that 14 year-olds would, depending on when their birthday is, be on the register. We are talking about individual registration, so a lot of education will be needed.
As the noble Lord, Lord Roberts, said, the four Welsh party leaders signed a letter to the Prime Minister, the Deputy Prime Minister, the Secretary of State for Wales and the Welsh Office Ministers, expressing support for Amendments 19 and 20. In addition, the Presiding Officer of the Assembly, Dame Rosemary Butler, wishes to offer her full support for this approach. She recently announced her intention to start a national conversation with young people about voting rights, including votes at 16 and the voter registration process, before the end of this year. That is a strong endorsement.
Lord Elis-Thomas (PC)
My Lords, I am very grateful to my colleague in the adjacent barony of Llandudno, along with my colleague in the barony of Llanrwst, for introducing this topic. I speak of course, as the Lord of Nant Conwy—a fine historic barony in the history of Wales—but we will leave that for today. Before the Minister responds to the debate, let me say that I would encourage her to respond positively.
As noble Lords will be aware today, for the feast of St Edward the Confessor holy communion in the abbey close to us occurs at his shrine, which unfortunately also includes the grave of Edward I—a place that I do not normally visit. But having visited that place this lunchtime has enabled me further to consider how appropriate it is that, at this time of the feast of St Edward the Confessor, we should continue our debate on the future of the nations of these islands. Such a debate is stimulated by the whole question of participation.
The Minister will be aware, because she and the noble Lord, Lord Bourne, were there at the time, that the Assembly is already empowered to spend money to promote its activities as a part of democratic participation. We did that alongside the Electoral Commission in the period before the last referendum. But these have been sporadic initiatives. What we want is a systemic way in which to ensure that there is automatic participation by the potential electorate before they get to voting age in democratic elections, by being clearly included and prompted. There is no coercion here; it should be seen as part of citizenship that the opportunity to participate is presented to the potential voter.
I remember an occasion when I took part in one of these promotion things when I visited my native county of Carmarthenshire and spoke to young people in primary school, whereupon we had a real vote in the classroom itself. At the end of the day, apparently, one of the young pupils went home and told her parents, “A man from Cardiff whom I had seen on television came to my school and told me to tell you that you have to come out to vote”. So there are dangers in these things. The more we can make this acceptable as a painless and democratic part of our electoral system, the better. This might be the first opportunity for the Minister to accept an amendment in principle and bring back an even better one on Report.
Lord Tyler (LD)
My Lords, I am delighted to add my signature to this group of amendments. Although I am very proud of my Celtic ancestry in a different part of the United Kingdom, I am not Welsh, not a lawyer and not even a Methodist local preacher. So I can be incredibly succinct in saying that what is so important about this group of amendments is that it is based not on any theory but on practical experience both in Northern Ireland and now in Scotland, as my noble friend Lord Roberts has said. I hope that, in that spirit, the Minister will be able to accept these amendments in toto because they do not in any way extend into a new area. They simply take advantage of the practical experience we have had in other parts of the United Kingdom.
Lord Howarth of Newport (Lab)
My Lords, given the very disappointing levels of registration and turnout among young people to which both the noble Lord, Lord Roberts, and my noble friend have referred, we clearly need to be a lot more energetic and imaginative in the ways in which we seek to engage young people in our democratic processes. I find the proposals in these amendments very attractive, but I wonder whether the Minister, or the noble Lord who moved these amendments, would offer any thoughts on two issues.
The first is that it is going to cost money. The noble Lord, Lord Roberts, suggested that these processes could be carried out even, perhaps, at a profit. I would be grateful if he could clarify how this might occur because, if we ask electoral registration officers to take on additional responsibilities and to become busier, it is likely to cost money. In this time of austerity, when local authorities are operating within such extremely stringent financial limits, there are questions about priorities. When local authorities are finding it extremely difficult to carry out the responsibilities that they wish to do in relation to education, social services, housing and so forth, where would the pursuit of improved levels of electoral registration best lie within their scale of priorities?
The other issue on which I would be interested to hear the views of the Minister and of the noble Lord is whether we should move to giving the vote to young people at the age of 16. Of course we want to encourage young people to participate in our democracy. Many young people would wish to do so and feel ready to do so at 16. When I was the Member of Parliament for Newport East and used to hold meetings with sixth-formers in my constituency, I was quite surprised to find how many young people had their doubts as to whether it was appropriate to lower the voting age to 16. I would be interested to hear the thoughts of noble Lords opposite as to whether that sentiment has changed in the 10 years since I ceased to be a Member of Parliament for a Welsh constituency and whether, if we enfranchise people at 16, we will see them positively engaging in democracy with that new opportunity.
Lord Lexden (Con)
My Lords, I am glad to follow the noble Lord, Lord Howarth of Newport, whom I have known personally and respected for many years. I strongly support Amendment 20 which provides the key to securing a marked and rapid increase in the number of young people registered to vote. Time and again, the need for effective action to tackle the acute problem of underrepresentation among the young has been highlighted, not least in the reports of the Hansard Society of which I have the privilege to be a trustee.
Across the House we support the marvellous organisation Bite the Ballot, which is bringing determination and dedication to the task of getting many more young people on to the register, as we have heard. Surely we must give the organisers of Bite the Ballot the tools they need for this vital job. Nothing, it tells us, is more important than the creation of a sustained and lasting partnership between electoral registration officers and schools based on the model developed in Northern Ireland. We have heard today from my noble friend Lord Roberts and others that this is the wish of the Welsh Assembly, too.
The case for such a partnership is surely overwhelming—it has been proved beyond all doubt in Northern Ireland. The Province has pointed the way. As a staunch unionist, I say: let Wales, and indeed the rest of the country, follow where Northern Ireland has led. It would be a tragedy if the United Kingdom as a whole failed to reap the benefits of what has been pioneered in Northern Ireland—a point that I hope my noble friend on the Front Bench would be particularly sympathetic towards, given her dual responsibilities in Wales and Northern Ireland, and I am quite convinced that St Edward the Confessor would be on our side.
Lord Richard (Lab)
My Lords, perhaps I may say a brief word. Following the noble Lord, Lord Tyler, I should perhaps declare an interest. First, I am Welsh; secondly, I am a lawyer; and, thirdly, I am not a Methodist minister but my grandfather was, so I suppose that that qualifies me to speak on this amendment. I do so for one basic reason, which is to assure the Government that there is very warm cross-party support in the House for these amendments. When the Minister replies, I hope that we shall not hear, as we have on many occasions on the Bill so far, that this is not the right time to do it. It seems to me to be absolutely the right time to do it. Indeed, if you are looking for a better time to do it, it will be difficult to find one. With elections looming for the Assembly in 2016, it seems to me absolutely right that we should go down this route now.
The desirability of the amendments is perfectly clear. What is proposed is not based upon anything fanciful; it is based upon practical experience of the way that it has worked in Northern Ireland. There is also some evidence in the United States that this type of approach is effective, and I cannot see for the life of me any reason why it should not be introduced in Wales in time for the next election. I hope that the Minister is not going to get up and say merely that it is not the right time to do it; I believe that the House thinks that it is.
The Parliamentary Under-Secretary of State, Wales Office (Baroness Randerson) (LD)
My Lords, there must be, and clearly is, concern across the Chamber about the low engagement of young people in particular with our democracy and with civic life. However, I have to make the point to noble Lords that registration in itself does not mean that young people vote. Experience in Northern Ireland—and, as my noble friend Lord Lexden made clear, I am very familiar with that experience—has shown that voting does not necessarily follow from registration. Therefore, I think that we have to work very hard at what is a complex issue which goes beyond simply having to ensure, quite rightly, that more people vote.
Lord Richard
Before the noble Baroness leaves that point, it is perfectly true that if you register, you do not necessarily vote, but it is also true that if you do not register, you cannot vote. With great respect, we are talking here about the qualifications for voting.
Baroness Randerson
I think that the noble Lord misunderstood what I was saying, which was that this is a very complex problem that goes well beyond these amendments, and is one of which the Government are very well aware.
My noble friend’s Amendment 19 would impose a duty on the Secretary of State to make regulations which require government bodies to provide registration officers with personal data. Registration officers could then use this information to add people to the electoral register or make contact with them in order to obtain the necessary information. Amendment 61 is consequential on Amendment 19, and Amendment 20 inserts two new subsections into Section 9A of the Representation of the People Act 1983, in order to place duties on registration officers in Wales to ensure that they focus their registration efforts on specified groups, particularly young people, disabled people and people from certain ethnic groups.
Lord Tyler
As my noble friend will know, I have been following the DVLA issue through the IER process for a number of years and I welcome what she has just said. But even more valuable than all these pilot studies would be to look very carefully indeed at the very recent experience in Scotland. The levels of registration, particularly among young people, exceeded anything we have seen anywhere else in the United Kingdom. One of the differences between Scotland and Northern Ireland on the one hand and England and Wales on the other is that there is greater direction in Scotland to the local electoral registration process to make sure that there is an equal quality of service at the lower level.
As I mentioned quickly in my previous remarks, I encourage the Minister and her colleagues to look very carefully indeed at the recent experience in Scotland. It is practical experience—it is not a pilot in a particular area. As the noble Lord, Lord Richard, said earlier, it gives added impetus to the suggestion that now is the right time to take a forward step in this area.
Baroness Randerson
My noble friend makes a good point. Of course, the Electoral Commission will be doing a report on the referendum in Scotland that will cover those issues.
I recognise that there is considerable sympathy in this Chamber and beyond for the aims of Amendment 20. I assure noble Lords that I share them. However, the Government are already taking steps to increase the engagement and registration levels of traditionally underregistered groups. Five national organisations and every registration officer in Wales, as in England and Scotland, have shared £4.2 million of funding aimed at maximising the rate of voter registration as part of the transition to IER. I draw my noble friend’s attention to the fact that every electoral registration officer in Wales has received that funding—not just one. Cardiff received almost £25,000 in order to engage more with underregistered groups and Ceredigion received £4,290 in order to take that work on. The amounts given were based on a formula that related to the level of underregistration in every local authority throughout Great Britain and the number of 16 to 18 year-olds within that area specifically so that EROs could go into schools and do the engagement work that is encompassed in my noble friend’s amendment.
Perhaps I may also respond to his comment that it needs only a tick in a box—would that that were so. Unfortunately, there is a complex legal basis for voting. The form has to be set out in a particular way and it has to be of some considerable length. The tick-box would work in terms of expressing an interest in voting, but, as the noble Lord, Lord Howarth, pointed out, it means that you have to follow up on the person. It is to be hoped that if they have ticked a box, they would respond to a letter, but people often tick boxes and then do not respond to a letter, so they could well require door-to-door canvassing. Ticking a box sounds good and it works up to a point, but in itself it does not actually get anyone on to the register. Northern Ireland is indeed a case of best practice in our country. That effort was based on going into schools and getting young people to fill in paper forms. The crucial difference between Northern Ireland and the rest of the UK is that Northern Ireland has a paper-based system and we now have online electoral registration.
Perhaps I may return to the amendment. I know that the Electoral Commission sent a briefing to noble Lords setting out its view that while it strongly supports the principle of EROs working with local education establishments to encourage registration, there is no need for additional legislation to provide for this. I should point out that there is no obligation in Northern Ireland on the electoral officer to engage with schools and colleges. That work was done without any legal obligation or basis. However, in the light of concerns expressed by noble Lords and indeed in the letter referred to from the four party leaders in the Assembly, I will be happy to look at this issue again. However, I should say that registration officers already can and do visit schools, colleges and other locations in Wales in order to target under-registered groups and fantastic work is being done up and down the country by civil society organisations to find new ways of reaching a range of underregistered groups and encouraging them to register to vote. The Government are proud to fund this type of activity and I congratulate the wide range of organisations engaged in this work.
I want to make a final point about Northern Ireland in response to the comments made about the low levels of registration among young people there. Yes, the figures were woefully low in part because they had not been doing the annual canvass. That has proved to be the crucial thing. The annual canvass must be maintained alongside all the additional work. However, given that registration had fallen to very low levels in Northern Ireland, considerable remedial work needed to be done.
The noble Lord, Lord Elis-Thomas, referred to the National Assembly. The National Assembly has an excellent record in terms of its outreach work with young people. I think that at one point the Assembly was the major tourist attraction in Wales. A large number of young people come into the Assembly to learn about politics and to hear excellent debates. That is the kind of thing I was referring to in the first sentence of my response. It is about more than registration—you have to engage young people and explain why it is relevant to them.
I have already referred briefly to online registration. It brings voter registration into the 21st century and it is particularly attractive to young people because it is easier, simpler and faster. More than 410,000 applications have been made online by people aged between 16 and 24 since 1 July this year. More than 90% of the users of the system have been either satisfied or very satisfied, so it is obviously an easy system to use. The Electoral Commission has further noted that a statutory change specifically relating to electoral registration officers in Wales would be complex to manage at a time when they are dealing with things throughout the UK on IER. However, in the light of the concerns and the consensus here today, I certainly undertake that, before Report, I will discuss with the Minister for the Constitution all the issues that have been raised. I will also discuss with the Electoral Commission the issues that it put forward in its circular to all of us saying that these amendments are not necessary.
Lord Elis-Thomas
In the spirit in which the Minister has spoken, and in the spirit already referred to by colleagues of the all-party consensus emerging very strongly in the National Assembly—I draw the attention of Members of this House to the Motion that has today appeared on the Order Paper signed by the four party leaders, which will be debated in the Assembly on Tuesday—would it be possible for her to give an assurance that she will speak to the First Minister, the appropriate representatives, the Presiding Officer and so on in the National Assembly on this matter?
Baroness Randerson
The noble Lord has anticipated my next sentence. In the light of the letter that has been received, I will, of course, liaise with Members of the National Assembly, because it is very important to ensure that their views are taken into account. In the light of these points, I urge my noble friend to withdraw the amendment.
Lord Roberts of Llandudno
I am most grateful to my noble friend for her full reply. I understand her reluctance, but I do not accept it and I hope that on Report we will have a very different statement from her. Perhaps I may tackle one or two matters. First, over the next four or five years, we are going to face a referendum on whether we remain in Europe. If that referendum takes place on the register as it is, then half our young people will not be eligible to take part. There will be a general election next May, and unless we move immediately—there is no time to lose—our young people will not have a voice in that election. There is no time to waste. I know that there are “t”s to cross and “i”s to dot, but there is certainly no time for anybody—including the Electoral Commission—just to hope that this will go away. It will not go away.
Secondly—this is the most important point of all—what is the relationship between the Houses of Parliament here in London and the Assembly in Cardiff? Yesterday I asked the Electoral Commission itself who has the last word: is it the civil servants or the Electoral Commission or is it the parliamentarians representing us at every level? The answer, of course, is that it is the parliamentarians. I say to my good friend here that something must be done immediately to come to an understanding. If the Assembly in Cardiff has voted 41 to a handful in favour of this, if all four leaders of the parties there have voted and written in favour of this, then unless we do something, we could well create resentment in Wales that will cause us to have another referendum, this time not in Scotland but in Wales itself. Therefore, I urge the Minister—I know she will; I know her well enough—to move in immediately and perhaps by Report give us a glimmer of light, if not a big flashlight, on this matter. I beg leave to withdraw the amendment.
Lord Wigley
Lord Wigley (PC)
My Lords, as well as Amendment 21, I will also speak to Amendments 22 and 23, all standing in the name of my noble friend Lord Elis-Thomas and myself. Amendments 21 and 22 are aimed at allowing the Welsh Government to introduce new tax credits as well as devolved taxes. That would mean that Wales was able to help target areas that require economic stimulation in one form or another.
Paragraph 4.6.8 of the Silk commission’s first report stated:
“In addition to the use of taxes to achieve policy outcomes in devolved areas, credits can also be applied so that activities are effectively subsidised. While existing tax credits such as the working tax credits (and in future the Universal Tax Credit) should remain UK wide, the Welsh Government should be able to introduce its own credits in relation to devolved taxes and through use of devolved grants and subsidies to promote investment and getting people into work”.
I hope that the Government will therefore either accept these amendments or bring forward their own amendments on Report to achieve that end—unless of course the Minister can persuade me that some other power exists or is in the pipeline that will achieve that.
I turn to Amendment 23. At present, any devolved tax to be implemented in Wales must be agreed by each House of Parliament as well as the National Assembly. We feel that it is wrong that a party in the Welsh Government implementing a manifesto pledge should be prevented from doing so by Governments in London. If the objective of this Government is to get the devolved Government to accept full responsibility for their actions then surely they should be given full and undivided authority in such matters. Manifestos and devolved taxes are matters for Wales, and the UK Government should not interfere in them. This amendment therefore removes the requirement for each House of Parliament to agree to the devolved tax so that it is in the hands of the National Assembly. It would mean that the people of Wales were absolutely clear as to where responsibility lies. I beg to move.
Baroness Morgan of Ely (Lab)
My Lords, the tax credits that currently exist are closely associated with welfare payments. The whole issue is integrated into the wider debate about welfare support which provides a basic living standard for people who are working and yet need state help. Introducing any amendment that would erode the provision of welfare in Wales would be a mistake—in particular, without that very comprehensive and structured debate about the implications in Wales. The Minister suggested that the noble Lord is talking about a new kind of tax credit. Could the noble Lord elaborate on what kind of thing he had in mind, beyond what currently exists?
Lord Wigley
If the noble Baroness refers to the Silk report, she will see the arguments made there. The whole point and ethos of the Silk report is to open out as much freedom as possible for the devolved authorities to develop ideas and even experiment with this area to reach the objectives that both she and I would wish they did. It is giving them more tools. I hope that those tools help them do the job.
Lord Howarth of Newport
My Lords, whatever the future structure of the United Kingdom, the union is surely to be based upon twin principles of solidarity and diversity. Tax credits are a principal structure of the welfare state. As my noble friend just now suggested, the welfare state is a fundamental underpinning of that solidarity. Given that in the last figures I saw only about 2% of the people of Wales do not wish to maintain the union, I very strongly suspect that noble Lords are a little bit ahead of themselves—not for the first time—and that the people of Wales would wish nothing to be done that would weaken the welfare state and undermine that principle of social solidarity that ought to underpin the union. I make this point particularly because great figures in Welsh political history were among the leading architects of the welfare state. Whether by accident or design, we should not do anything to undermine the welfare state and the solidarity that binds the people of Wales together with the rest of the United Kingdom through the welfare state and associated principles of fiscal redistribution.
Lord Newby (LD)
My Lords, Amendments 21 and 22 seek to include a reference to “associated tax credits” as part of the power to add further devolved taxes. I thought that the noble Lord was going to discuss tax credits associated with devolved taxes. In respect of landfill tax, at the moment, existing site operators can contribute a percentage of their tax liability to environmental benefits and get a 90% tax credit. As far as devolved taxes are concerned, that ability will still exist. For that type of tax credit, the power is there.
I think that the noble Lord, Lord Howarth of Newport, was talking about welfare benefit payments. Welfare benefits are not covered by the Bill. There has been no proposal to devolve power over welfare benefits to the Welsh Assembly. I thought that the noble Lord made strong arguments about why that might be opposed. The Bill makes no provision for devolving discretion over welfare benefits to Wales for good reason, and the Government are not minded to change their view on that.
Amendment 23 would remove the UK Parliament from the process of creating further devolved taxes. The Bill enables the Government to devolve further existing taxes as well as enabling the Welsh Government to create new devolved taxes. Clause 6 requires that if either of these powers is used the order would need to be approved by this House and the other place as well as by the Assembly.
Lord Wigley
Where powers to devise and implement new taxes in Wales are devolved to the National Assembly and those taxes have an appropriate dimension where tax credits could be introduced, would the powers allow that?
Lord Newby
Yes, they would, just as for existing taxes. The same principle would apply to any further taxes that were devolved to the Welsh Assembly.
Clause 6 requires that if either of the powers devolving further existing taxes or enabling the Welsh Government to create new ones is used, the order would need to be approved by this House and the other place as well as by the Assembly. The amendment would remove the UK Parliament from this process so that the order would need to be passed by the Assembly only. That would mean that the Assembly could pass an order under which existing tax powers would be transferred from the UK Parliament without this Parliament having any say. Clearly, that cannot be right. Surely it is important that the process of tax devolution continues to take place in the constructive and collaborative manner that has led to this Bill. As a mere Englishman now grappling with what we do about devolution within England, I have found the Silk process extremely impressive and one that could possibly be successfully emulated in England. The follow-up to the Silk process, under which there have been discussions with the UK Government and parliamentarians about how to take that forward, has been extremely constructive.
As for how we manage the existing devolution of tax proposals and take them forward, we have established the Joint Exchequer Committee, based on a similar body in Scotland, consisting of leading parliamentarians in Wales and the Treasury, specifically to look at how we implement the existing powers and at what further can be done. That would be one of the ways in which it would be sensible to contemplate adding additional tax powers. If Members of the Welsh Assembly have strong views about additional tax powers—and first they would have to express those views—they will then have a vehicle for discussing them. It seems to me that that is a very sensible way forward. Any change or devolution of powers over tax from the UK to Wales has, at the very least, implications for tax legislation in the rest of the UK, so it is only logical that the rest of the UK is involved in the discussions. It must be right that any future order-making process, whether initiated by the UK Government or the Welsh Government, should involve both the Assembly and Parliament. I hope that the noble Lord will withdraw his amendment on that basis.
Lord Wigley
My Lords, I listened with considerable interest to the responses I have had, and part of the clarification has been helpful. Certainly with regards to the tax credit associated with any new taxes, that may come along. However, may I just say to the Minister and to the House—without in any way wanting to cut across what has been largely a consensus approach to this legislation—that the whole point of giving new powers to the National Assembly for Wales or indeed to the Scottish Parliament is to trust them and enable them to go on with their business. We had for a period after the 2006 Act powers to legislate in Wales but in every instance we had to get orders passed through the House of Commons and the House of Lords. In its wisdom, Parliament has seen that this is probably not the right way to do it—if you have a dog you allow him to get on with it and do not try barking yourself. In this regard as well, if the people of Scotland had been told that any powers that they will get over taxation will be second-guessed at Westminster and orders will need to be put through before they can be implemented there might have been some second thoughts in Scotland as well on 18 September.
I believe that there is a strong opinion in Wales that, while all the details of devolution for Scotland and for Wales may not be at the same place in their development and some details may not even be appropriate, the principle is that the elected Assembly in Wales, the National Assembly, and the elected Parliament in Scotland should have the clear-cut responsibility for what has been devolved and that people should be able to see that. Once you bring in mechanisms to second-guess and to veto you are cutting right across that approach. I realise the Minister will not be in a position to give me any authoritative response with regard to the similarity or contrast between the powers for the National Assembly and those for the Scottish Parliament but it is undoubtedly an issue that will raise its head again, and I invite the Government to give further thought to it. On that basis, I beg leave to withdraw the amendment.
Baroness Morgan of Ely
“Review
In the event that the power to add new devolved taxes under section 116C of GOWA 2006 is exercised, the Chancellor of the Exchequer shall undertake a review of the benefits of parity in the devolution of taxes between Wales and Scotland, and shall review the existing principles of tax devolution.”
Baroness Morgan of Ely
In this amendment we are looking at future-proofing the legislation. We are very aware that there is a fast-moving feast going on in terms of constitutional changes in Scotland so we need to look at how we future-proof it. That is why we have suggested that if any new taxes are devolved to Scotland—and I must say that we probably need to tighten up the amendment’s wording—we would like an opportunity to assess whether they could be offered to Wales as well. That is the idea behind the amendment.
We are conscious that things are changing very quickly and we do not want to lock ourselves in because of the timing of this Bill. Labour is very keen to ensure through our suggestion, which we will come to later, that Wales can vary income tax rates, for example, to 15p in the pound rather than 10p, which is consistent with our position in Scotland. That is not the position of the Tory party which has suggested that it wants to see 100% of income tax being devolved to Scotland. The amendment looks at this consistency in approach and would at least give us the opportunity to think about whether we might like to pick up other opportunities that may be offered to Scotland later; we have to understand that there will be an impact on other parts of the UK if income tax rates are varied. It is correct to ensure that we take the temperature of how devolution has changed between now and the time when the powers to vary taxation at a Welsh level are taken up.
It is interesting to look at the joint agreement that has been made by the parties and the Assembly. On the proposal that if, for example, air passenger duty for long-haul flights were to be devolved to Scotland and Northern Ireland, we would want to look at that. That is the spirit of the amendment: we need to understand that if they are getting extra powers it will have an impact on us. We need to think about how we would want to respond to that.
Lord Newby
My Lords, Amendment 23A seeks to place two statutory duties on the Chancellor of the Exchequer when a new devolved tax is created in Wales. The first would be to review the benefits of symmetry in the devolution of taxes between Scotland and Wales. This would effectively require the Government to assess whether a tax being devolved to Wales should also be devolved to Scotland, although the way in which the noble Baroness moved the amendment inverted Scotland and Wales.
The second duty would be to review the principles of tax devolution. These are three: it should have cross-party support; it should be evidence-based; and any devolution of taxation should not be detrimental to the rest of the UK. These are good principles, and I am not sure that we want to have a root-and-branch discussion of them. What the noble Baroness was talking about, however, were the circumstances in which Scotland gets more powers, and the formalisation of a structure under which the Welsh Assembly not only thinks about them but has a process for discussing those matters with the UK Government.
On the symmetry of devolution settlement, until now the Government have been clear that we consider devolution decisions for each country on their own merits. The existing arrangements provide flexibility for the Government to consider Wales and Scotland either separately or at the same time. However, the Scottish referendum result puts us in a new position in discussing devolution. Nobody seriously believes that we are at the end point in terms of devolution anywhere in the United Kingdom. Over the next year or two, we are clearly going to see a debate of an intensity that we have not seen in England at all, and have not seen in Wales since the Assembly was first established. We are talking about considerable potential changes. In these circumstances, it seems that the Welsh Assembly will be involved in those discussions, not least through the Joint Exchequer Committee if it has any specific proposals. There will be also be almost ceaseless debate in any constitutional convention, if one is established, or more generally in Parliament about what the future structure should look like.
I therefore think that the kind of formal review the noble Baroness proposes will be unnecessary. There will be no lack of opportunity for these issues to be debated. The challenge to the English regions and counties and to Wales is to produce a compelling argument for the kind of change that is required, and then to seek and obtain a political consensus for it. Whoever is in government after the next election will be faced with a situation in which there is a clear appetite for devolution in various respects. That will only crystallise into action when there is real pressure and a consensus in the nations and regions of the UK as to what that future of greater devolution might involve. With that in mind, I hope that the noble Baroness will feel able to withdraw her amendment.
Baroness Morgan of Ely
I thank the noble Lord. It is important to understand that, at the moment, we do not know what that process is. My concern is that if we do not get this down somewhere, it is possible that Wales will be left out of that debate, until a mechanism is devised. Ministers have talked eloquently about the mechanism that may be put in place but, at the moment, there is no formal structure. At this point, we are trying to make sure that there is a proper mechanism in place so that there is an opportunity for us to work out whether anything that is offered in Scotland is something we would want to take up in Wales.
Lord Rowlands (Lab)
My Lords, I wonder if I may briefly intervene before the Minister moves her amendments. I have a very modest amendment, Amendment 31, which has been included in this list. It addresses a completely separate point from the whole swathe of government amendments and I would suggest that we take Amendment 31 separately. I hope that that would be possible.
Baroness Randerson
I understand the noble Lord’s point but I am intending to speak to my amendments and then give way to the noble Lord to make his points. I will then respond separately. Although it is in the same group, there will be plenty of time for us to give separate attention to the noble Lord’s amendment.
Lord Rowlands
I appreciate the Minister’s offer but it is a very different point altogether. I think that it would disrupt the flow of the debate on the Government’s amendments if Amendment 31 was included and involved in it.
Baroness Randerson
Following the points that the noble Lord has made, we will uncouple his amendment and have a separate debate at that point.
Amendment 24
Baroness Randerson
Baroness Randerson
My Lords, I am delighted to be introducing this series of amendments. Concerns were raised across the Chamber at the previous stage of the Bill. The Government have listened and, as a result, have tabled the amendments that we have before us. These amendments seek to remove the lock-step from the income tax provision in Clauses 8 and 9, which has been subject to a great deal of debate during the passage of the Bill thus far.
The Bill would enable the National Assembly for Wales to set a single rate of income tax that would be applied to all three income tax bands if income tax devolution were approved in a referendum. These amendments would allow the Assembly to set separate Welsh rates for each band instead, as the Silk commission recommended. I said at Second Reading in July that the Government were prepared to revisit these arrangements, and that is what we have done. The lock-step has been debated at some length in both Houses throughout the passage of this Bill and we have listened to and reflected on the arguments that have been raised. Through these amendments, all three income tax rates would still be reduced by 10p in Wales, with the Assembly taking control of nearly half of all income tax paid as a result.
It would then be for the Assembly to set a separate Welsh rate for each band which would be added to the reduced UK rates. I believe that these amendments remove a significant barrier to devolving an element of income tax to Wales. Subject to their inclusion in the Bill, my hope is that the Welsh Government will now feel that they can call a referendum on income tax devolution as soon as possible after the Bill receives Royal Assent.
As a result of this Bill and the full devolution of business rates which we will implement next April, the Welsh Assembly will become responsible for raising around a quarter of the money it spends. By removing the lock-step, the Welsh Government now have no reason to delay a referendum. It is high time that the Assembly is given power and responsibility for raising significant amounts of its own revenue and thereby becomes more accountable to the people of Wales.
These amendments align the income tax provisions in the Bill with the Silk recommendations and show that the Government are prepared to listen to the arguments of those who disagree with us. The amendments show that we are prepared to be bold in progressing devolution in Wales. I therefore urge noble Lords to support them. I beg to move.
Lord Wigley
My Lords, I am very glad to have the opportunity to speak in this debate and to welcome the step taken by the Government in moving their ground with regard to lock-step. The noble Baroness, Lady Randerson, will well remember that I expressed some fairly strong feelings at an earlier stage with regard to lock-step. We felt that it was an inappropriate restriction and I am delighted that the Government have seen fit to move on it.
Amendment 37, standing in my name and that of my noble friend Lord Elis-Thomas, is included in this bank of amendments. We had a very useful debate on Monday in relation to constitutional principles on which there was a lot of consensus. Although the Government could not necessarily immediately accept the points that we made, they undertook to look at some of them. I hope that the same spirit will be adopted in their approach to other financial matters as has been shown with regard to the lock-step.
Amendment 37 seeks to ensure that the Assembly will be able to levy the three Welsh rates of income tax as it sees fit. The amendment is drafted to ensure that the Assembly will get full responsibility for raising and spending one of the three largest sources of government income alongside national insurance and VAT. If we give the Assembly the power to control these rates, it will enable Welsh Ministers to create additional jobs, which we hope will lead to an increase in the Welsh tax base. That would be an incentive for investment in the Welsh economy—which it certainly needs. As I say, we welcome the fact that the lock-step has been removed, which will give the Welsh Government greater freedom.
Amendment 38 stands in the name of the noble Baroness, Lady Morgan, who will no doubt speak on it in a moment. I will listen carefully to the arguments that she will put forward but I have some sympathy with what appears to be the intention of that amendment. However, I will listen carefully to what she has to say, and will listen to the Minister’s response to Amendment 37 to hear how the Government intend to build on their intention to give maximum flexibility to the Welsh Government.
Baroness Morgan of Ely
My Lords, the Labour Party understands the principle of the need for accountability and the need for the Welsh Assembly politicians to have responsibility not just for spending money but also for raising it. Devolving an element of income tax will undoubtedly increase the financial accountability of the Assembly. It will enable the Assembly to fund more of the spending for which it is responsible and will allow the Welsh Government to vary the levels of tax and spending in Wales and, crucially, it will allow Wales to borrow against tax.
We focus in these amendments on issues of income tax. However, it is worth pointing out that this is just one tax. In context, in 2013 income tax was 26% of the total tax take in the United Kingdom. It is significant, visible and understandable, but it is worth remembering that it is only one tax.
Devolving income tax powers to Wales has never been a priority for the Labour Party and the Welsh Government. However, it is important in terms of positioning the Assembly in the right place in the long term. We should remember that it was the Labour Party which devolved income tax powers to Scotland, but only after asking the Scottish people in a referendum whether they wanted that power. We would have to undertake a similar referendum if Wales were to follow suit. I will elaborate on this further when we discuss that group of amendments.
We will not always be in this situation. We are future-proofing here. I am confident that one day the Welsh economy will grow. There are clear signs that the Welsh Government’s efforts in this area are already bearing fruit. However, we must be aware that the whole principle behind the concept of the UK as a political entity is that we are supported by a social system that is available to all. We must be careful not to erode that basic philosophy and so provide fuel to the nationalist fire. There is a £16 billion annual gap between what Wales raises and what it spends. We must not lose focus on this issue. This is the economic foundation stone of the UK.
What drives us in the Labour Party is not some ideological zeal to create an independent utopia in Wales, but a practical, hard-headed approach to what is best, in particular for those who are struggling on low incomes, are desperate to make ends meet and are often dependent on the state to keep them afloat. We must remember that Wales has a weaker tax base than the UK as a whole. We must be careful when devolving tax powers that we do not lose out. HMRC estimated that in 2010 there were 89,000 higher rate taxpayers in Wales. They represented 7% of all taxpayers and were responsible for 33% of all the income tax revenues raised in Wales. There were only 4,000 additional rate taxpayers paying 45p in Wales. I could practically name them—they were mostly Tories, I will let you know. On the whole, we must understand that our tax base is very weak and we must be careful when we go down this route.
It is also worth noting that a very small proportion of revenues are raised by local taxation and the consequent tendency of Whitehall to wish to dictate how funds from the centre are used has seriously eroded local democracy and accountability. We must be very cautious and note that local revenue-raising should not go too far, since that tends to reinforce the regional disparities of income and wealth.
Tax differentiation can also lead to tax competition. In principle, this is not something that we encourage. We must be clear that we do not want to embark on a race to the bottom in relation to taxation. We are fearful that there is a hidden agenda on the part of the Conservative Party, which is for ever anxious to reduce the role of the state. The Conservative Party is committed to cutting taxes for the wealthiest people. Let us be clear: tax competition will lead to less money in the state pot, which means less money for our schools and hospitals.
The Conservative Leader of the Assembly, Andrew RT Davies, has said that he would like to make Wales into a “low tax economy”. He has pronounced proudly that he wants to cut just the top rate of tax. We must be aware that every time there is a tax cut, it is accompanied by a cut in services. It seems odd to consider this, at this moment in particular, in isolation from the discussions in the rest of the United Kingdom, and we need to consider what is happening in relation to the Smith commission in Scotland. That is why Labour would like to see this discussion occurring in the context of a broader constitutional convention involving the public and representatives of civil society. We must acknowledge that there is a disconnect between politicians and the public, and it is critical that we do not have a conversation about how money is collected and distributed from the distance of an ivory tower. However, the genie is out of the bottle and we need to respond.
Let us be clear that devolving income tax powers will not be a panacea for the economy of Wales. The chances are that income tax variations will not be significant. The previous Secretary of State suggested that he would like to see a 1p cut in income tax rates across the board. Research has suggested that that would cost £200 million. That would mean £200 million in terms of cuts to services—the equivalent of 7,700 nurses losing their jobs—in the hope that the economy would grow. That could happen but in the context of a Welsh Government budget of £15 billion it is hardly going to make a massive impact.
Of course, differential taxation of income would involve the need for a separate Welsh revenue collection mechanism that must be neither inefficient nor costly. The Government do not seem to be clear about the costs involved in establishing this mechanism. In Scotland, it is estimated that differential taxation would cost between £40 million and £42 million to set up. Can the Minister give some indication of how much it would cost to set up in Wales?
In anticipation of the Bill receiving Royal Assent, the Welsh Government have already set out in a White Paper how that mechanism would work. The Welsh Government and the National Assembly will have the ability to develop certain taxes shaped to the needs, circumstances and priorities of Wales. This is the first Welsh tax legislation in modern times. It is both historic and significant for Wales but we need to consider border issues, and I therefore turn to our Amendment 36.
We need to be aware of the complexity of border issues in relation to Wales, compared to Scotland. The Scotland-England border is not nearly as densely populated as the Wales-England border. Only 3.7% of the population of Scotland and 0.5% of the population of England live within 25 miles of the English-Scottish border. In Wales, the situation is totally different, with 48% of the population of Wales and 10% of the population of England living within 25 miles of the Wales-England border. There are more than 130,000 daily commuters. The fact is that introducing a variation in income tax could give rise to the possibility of higher taxpayers moving across the border in one direction or another. My understanding is that no Treasury impact assessment has been undertaken on this matter, although I understand that the previous Secretary of State said that a consultation has happened. Can the Minister confirm whether that is the case and will she commit to a Treasury impact assessment on that border issue?
I turn now to the lock-step issue. The Government have put down an amendment to remove the lock-step, thereby allowing the Welsh Government to vary increases or decreases to individual tax bands independently of one another. Again we would argue that this discussion ideally needs to be set in the context of a UK debate over the organisation of tax across the whole UK. To deal with this in isolation is inviting trouble, and that is why we need urgently to establish the constitutional convention. The public should have a greater say on where power should lie across the UK, including on the nature of tax devolution. Further devolution should not be piecemeal. The Minister referred to that in her comments on Monday. The notion of breaking lock-step is something that needs to be discussed in that broader context
Lord Howarth of Newport
My Lords, it must be right as a matter of equity that Wales should have the same powers to alter tax rates as does Scotland, but my noble friend is right to remind the House that the exercise of those powers could be a poisoned chalice. In the extremely unfortunate situation in which we find ourselves, in which the Government are pledged to retain the Barnett formula, it is very hard to foresee circumstances in which it would be in the interests of Wales to use such further devolved powers of taxation. So long as Wales gets an unjust and inadequate funding settlement from the Exchequer, not based on needs but based on population, Wales will be at a loss, and it would be very dangerous for the Government of Wales to accept that it is their job to make up the shortfall by raising tax rates in Wales. I think that that would lead to extremely unhappy long-term consequences for the economy and society of Wales.
So, although I support my noble friend in her amendment to create powers that would be comparable to the powers in Scotland, we should keep our eyes wide open as to the realities of this. I cannot foresee that, in the absence of reform of Barnett, there is going to be any possibility of a stable and acceptable new constitutional settlement for the United Kingdom. However, these are larger issues that we shall debate another day.
My noble friend is also right to remind the House that the nature of the border between Wales and England also imposes a very powerful, practical restraint on the scope for differentiating tax rates. If people who are living in Wales near the border feel themselves to be so penalised, so disadvantaged by differential tax rates in Wales as compared with England, a number of them will move their residencies across the border and that would be very detrimental to Wales. As far as I can foresee, the practicalities are pretty unattractive compared with the notional possibilities that we are discussing in this legislation.
Baroness Randerson
Noble Lords will have noticed that the pleasant agreement and consensus across the Chamber has disappeared in the last group of amendments. I thank the noble Lord, Lord Wigley, for his speech, bearing in mind that the transfer of powers proposed in his amendments would mean Wales becoming entirely separate in taxation terms. He will not be surprised to hear me say that I am not going to accept these amendments.
However, I wish to spend some time on the speech by the noble Baroness, Lady Morgan, and to express some considerable surprise. I took the trouble to reread what she said at Second Reading. The Labour Party’s views appear—to use a colloquial phrase—to be all over the place because of the considerable gap between what the noble Baroness said at Second Reading, what she is saying now, what the First Minister of Wales has said and what the honourable Owen Smith said in the other place. Name a person, name a debate and you can have a slightly different view. In fact, there is a huge gap between one debate and another.
The principle of accountability lies behind the proposal in the Bill to devolve an element of income tax to the Welsh Assembly. The noble Baroness asked me what the reason was for the Government changing their mind on the lock-step. The reason was quite simple. People such as the First Minister said that this power was no use, therefore they could not use it. They said that the lock-step was not a good idea. We listened to people and it seems that, across parties and across the country, there has been huge support for the removal of the lock-step except now, suddenly, in the Labour Party, which had condemned the lock-step as being fatally flawed. It therefore surprises me that, when the lock-step was proposed, the Labour Party did not make clear that it was totally opposed to the devolution of income tax, rather than simply opposed to the lock-step.
I want to take up a few issues that the noble Baroness, Lady Morgan, raised. She referred to the serious erosion of local accountability. That may be the case in Wales and, if so, it is down to the Welsh Government, because they have devolved responsibility for local government. However, looking at the pattern in England, there has been a big increase in the amount of local power and local discretion for local authorities and councils in England. I agree with the noble Baroness that there has been a contrast between the two countries. In Wales, there has been a process of centralisation; in England, there has been a process of decentralisation.
Lord Howarth of Newport
I am grateful to the Minister but does she recognise that, in the context of an unfair funding formula which simply fails to address the reality of the needs of Wales, Wales has less scope to cut taxes than other parts of the United Kingdom?
Baroness Randerson
I recognise that there is an issue with the funding formula but I think it is also possible to overestimate the level of unfairness. I believe that this week the honourable Owen Smith suggested that the gap in funding for Wales was £150 million per annum. That is a significant amount of money but in a budget of more than £15 billion it would not offer a total revolution for Wales. Nevertheless, I recognise that it is an issue that needs to be looked at in the context of other devolution discussions at the moment.
I turn to the questions asked by the noble Baroness. An impact assessment of the costs was published alongside the Wales Bill. It indicated that the estimated cost of setting up the income tax changes in Scotland was £40 million to £45 million. An updated estimate is now available of £35 million to £40 million, which is rather less than we initially thought. There has also been an updated impact assessment. The estimate of the annual running costs is £4.2 million, and that will be updated in due course.
The noble Baroness also asked whether we would agree to a Treasury impact assessment of the taxes on either side of the border. The key thing is that there are provisions in the Bill on the transparency of the whole thing and of the discussions between the parties. A joint Treasury committee has been established between the Welsh Government and the UK Government, and it is already in discussions. Welsh Ministers and UK Ministers are discussing these matters. That is the kind of detail that would flow from those discussions.
I turn now to the Labour amendment. Forgive me, but I find it quite difficult to understand the intellectual inconsistency of arguing against the removal of the lock-step, while at the same time arguing for an increase in the amount of devolved income tax from 10p to 15p. I remind noble Lords that the First Minister said on several occasions that the lock-step was an inappropriate method of dealing with income tax devolution, and that this was unusable and unworkable. He did not say that he was opposed to income tax devolution. Now, apparently, it is dangerous as a mechanism to devolve income tax and, at the same time, it is also all right to devolve 15p but not 10p.
I believe that noble Lords will be surprised that the Labour Party is having so much difficulty in coming to a firm position on this. The noble Lord, Lord Howarth, exposed one interesting piece of inside information with his use of the phrase “poisoned chalice”. He said that the devolution of income tax could be a poisoned chalice for the Labour Party in Wales. It is called “government”. I leave you with that thought.
Lord Rowlands
Lord Rowlands
My Lords, like many Members of this House, for a number of years I have had to read through Bills. In doing so, I eventually developed a habit that I cannot kick, namely that if I come to a clause or part of a clause that I cannot fully understand or appreciate and translate into the language of a lay man, I table amendments to delete those particular elements in the clause. I do this in the hope and the expectation that when Ministers reply they will tell me what it really means, and it will become crystal clear. I have to say that there have been occasions in the past when that has not happened, but I am sure that it will happen tonight and that we will have a clear view of what some parts of this clause are saying.
I must confess that I struggled with much of Clause 8. It is a very long clause; it rambles on for four and a half pages of the Bill. However, I was okay and I was getting there, until I hit new Section 116F on page 10. I was particularly intrigued by its subtitle, “Welsh taxpayers: Scottish parliamentarians”. I was intrigued to find out how this clause—presumably—seeks to define those Scottish parliamentarians who may end up paying Welsh income tax. I immediately seized the text to find out who these unfortunate—or fortunate—Scottish parliamentarians would be who could become liable to pay a Welsh income tax. I went through the text of new Section 116F from line 20 on page 10. We find in this new section that the Scottish parliamentarian is:
“An individual (T) who is a Scottish parliamentarian for the whole or any part of a tax year is a Welsh taxpayer for that tax year if—
(a) T is resident in the UK for income tax purposes for that year (see Schedule 45 to the Finance Act 2013),
(b) T meets condition C in section 116E for that year, and
(c) T meets either of the following conditions for that year.
(2) T meets the first condition if—
(a) the number of days in that year on which T is a member as described in any of paragraphs (a) to (c) of section 116E(4), exceeds
(b) the number of days in that year on which T is a Scottish parliamentarian.
(3) T meets the second condition if—
(a) the number of days in that year mentioned in paragraphs (a) and (b) of subsection (2) are the same, and
(b) T meets condition A or B in section 116E for that year”.
I am sure now that every Member of the Committee who is here will know exactly who the Scottish parliamentarians are who are liable for tax.
I am quite good at the Times Codeword, but I have not decoded this particular new section at all. I immediately seized the opportunity to read the usually helpful Explanatory Note on this particular new section. It should be illuminating and answer all my queries. It states:
“Section 116F(1) sets out that if an individual has been a Scottish parliamentarian in a tax year, they will be a Welsh taxpayer if they are UK resident for the tax year, have also been a Welsh parliamentarian in that tax year and can meet one of the two conditions set out in the section. Taken with section 116E(5) this means that, if an individual is a Scottish parliamentarian for part of the year, but not a Welsh parliamentarian in that tax year, they will be a Scottish (rather than Welsh) taxpayer, even if, for example, they also have a close connection with Wales”.
Did I read that right? Are we talking about a Scottish parliamentarian who would be liable if he or she was also a Welsh parliamentarian in the same tax year? Who is this amazing creature? Who has this amazing electoral capacity to serve in one tax year both as a Welsh parliamentarian and a Scottish parliamentarian so that he or she would then be liable to pay tax in Wales? I find it difficult to envisage such a person ever existing. Everyone talks about belt-and-braces draftsmanship and this must surely be it. I would be grateful, when the Minister comes to reply, if he or she will tell me whether they know of anyone who is likely ever to be a Welsh parliamentarian and a Scottish parliamentarian in the same tax year so that we might then know which Scottish parliamentarian may be liable for Welsh income tax.
I use this as an illustration because I sometimes find that in this House—and I was a strong campaigner in the other House—I occasionally rebel against parliamentary draftsmanship of this kind. All these cross-references make it almost impossible to read. Even an intelligent person who is used to reading legislation should not be faced with drafting of this kind. It would be a good idea, once in a while, for the House to say to the Government, “Take this back, not because we do not agree with the intent but because it is drafted in such a way that it is almost incomprehensible”. If we started doing that, maybe we would have Bills better drafted than this one is.
The Deputy Chairman of Committees (Lord Geddes) (Con)
Having posed such a fascinating question, would the noble Lord like to move his amendment?
Lord Richard
My Lords, I support my noble friend on this. I am not a tax lawyer and I have given thanks for that ever since I was called to the Bar. I am bound to say that I read this new section with incredulity. It is designed to cover a Scottish parliamentarian as well as a Welsh parliamentarian—Mr Mac ap Jones, I suppose we can call him. That individual is covered here in such a way that it is a masterpiece of almost Proustian complexity. Even for one who is reasonably familiar with looking at legislation, I found it almost impossible to understand. I did what my noble friend did and went to the Explanatory Notes, but they are almost impossible to understand, too. Why on earth are we legislating in this way? Some 40 years ago, I was a member of a committee presided over by the late Lord Renton on the drafting of legislation. It was an interesting committee and we said that the practice of legislating by cross-reference meant that you had to have half a dozen books open at the same time to get even a glimmer of understanding of the subject. We said that that was bad and something should be done about it. Of course, successive Governments said, “Yes, we agree entirely that it should be changed”, but it never is. It just seems to get worse as time goes on—until we arrive at the nonsensical drafting that appears in this Bill.
Perhaps I may make a simple suggestion to the Minister. It is obviously designed to deal with a person who may be working in one jurisdiction and has residency in another. It is meant to make sure that the person does not pay two lots of tax in two different jurisdictions. Why can we not have a simple residence test? I would suggest tentatively that the Minister should look at proposed new Section 116E, which states at the end of page 9:
“For any year, a Welsh taxpayer is an individual”,
and thereafter it sets out an enormously complicated structure. Why can we not say that in any tax year, a Welsh taxpayer is an individual who is resident in Wales? We could have similar rules for Scotland, England and Northern Ireland. With any luck, Mr Mac ap Jones would be successively reinterred and we need not bother about him again. Really, the way this has been drafted is too much. I agree totally with my noble friend that perhaps it is time for this Committee to say, “We do not like this drafting. We don’t understand the purpose of it, and we think it could be simplified so that people can understand it. The Government should take it away and try again”.
Lord Wigley
I want to join briefly with colleagues who have raised these points. Over many years I have often heard the argument made that matters of substance are passed through Parliament by order—by secondary legislation and so on. Here we have the reverse position, where there are matters that should surely be set out in orders. Ministers should be empowered to introduce orders to deal with a variety of circumstances that certainly do not warrant taking up the face of the Bill. If that were the case, there would be flexibility within the orders to deal with other cases which possibly have not been thought of. Putting this in the Bill in this way is surely a nonsense.
Lord Thomas of Gresford
My Lords, I am most grateful to the noble Lord, Lord Rowlands, for drawing my attention to these new sections, in particular new Sections 116G and 116H. I spend around 140 days of the year here, about 60 days in my family home in Scotland and the rest of the time in Wales. On these formulae, I am not liable to pay income tax in Wales, certainly not in Scotland, and possibly not in England, if we have similar provisions. Thank you very much. Devolve away.
Baroness Randerson
My Lords, I understand that this new chapter is not the easiest read. In fact, I found it quite good for getting to sleep on one occasion. However, it is important to recognise that this is a complex issue and has a direct relationship with things such as tax law, and when you get an indirect relationship with tax law. When you get into these things, the more you think about it, the more exceptions that occur to you to be considered.
The clauses in this Bill are very closely based on those in the Scotland Act and have been subject to the whole scrutiny process in that respect. I suggest that noble Lords think about how to deal with somebody who is a lorry driver or a shift worker. Every time you set a test, you can think of exceptions. Before the noble Lord, Lord Rowlands, thinks that being a Scottish parliamentarian and a Welsh parliamentarian in the same year is unusual, may I remind him that I call this the “Keith Raffan clause”? Keith Raffan was an MP in north Wales and then almost immediately an MSP in Scotland. He moved from Wales to Scotland.
Lord Anderson of Swansea (Lab)
Did he hold both positions in the same tax year?
Baroness Randerson
We are talking about the situation in the past. Keith Raffan moved from Wales to Scotland; he also moved from the Conservative Party to the Liberal Democrats. The whole thing is a relevant example: the thing you would imagine would never happen has already happened.
Lord Rowlands
I am sorry; I do not know Mr Raffan’s parliamentary history? Was Mr Raffan both a European Member and a Member of the Commons in the same tax year?
Baroness Randerson
He was an MP and an MSP in the same tax year. I am pretty certain I am right, but the principle is that he moved from Wales to Scotland, straight from one job to the other.
Lord Richard
Is it not absurd that we should be legislating in this way for one person? Is it not absolutely ludicrous? Has there been a flow of parliamentarians across the borders in this way, or is it just this one individual? The Minister, with great respect, should take these measures back and look at them again and, if she wants to, simplify them and bring them back.
Baroness Randerson
This has been through the whole scrutiny process in relation to Scotland. If noble Lords wish to blame someone, I suggest they blame the Scots. They sat in here and in the other place and thought up a lot of complexities that had to be answered in the case of both this Bill and the Scotland Act. Just for the sake of clarification—
Lord Anderson of Swansea
What is the answer to the good point made by the noble Lord, Lord Wigley, that this is appropriate for an order, rather than for the face of the Bill?
Baroness Randerson
That is a perfectly valid point, but we have it here in the Bill. I am also very conscious of the fact that noble Lords constantly complain that there is not enough in the Bill and that there should be more on its face and less in orders for the sake of transparency. On this occasion, you have total transparency. There is also, of course, the argument that we are talking about tax rules for individuals. In fact, if you have more on the face of the Bill, that could be said to be easier for individual taxpayers to follow.
May I finally make it absolutely clear to noble Lords that the noble Lord’s amendment would, in fact, mean taking away the simple test—which is the test, if you have only one home, of where your closest connection is—and replacing it with everyone counting days? Counting days is one way of dealing with it but not the simplest one. For most people, the simple thing is to ask, “Where is your home?” and, “Where do you spend most of your time?”. Taking away that option and leaving everyone counting days would possibly make life much more complex.
The noble Lord, Lord Richard, asked why not just say “resident in Wales”? I think noble Lords are well aware that the concept of where your residence is has caused a number of people a lot of trouble over the years. It is really important that we have clarity and absolute rules. There should be no doubt in people’s minds as to which rules they need apply.
Lord Richard
With the greatest respect to the noble Baroness, residence is a very well known concept in tax law. If you talk to taxpayers, particularly in areas such as the City of London, they know what their residence qualification is. They know that they have to establish a certain residence and that it is on the basis of where that residence is that they pay their tax. That is a much simpler concept than this.
Baroness Randerson
These rules flesh out what the term “residence” means in tax rules in relation to Wales. I hope noble Lords will accept that although the rules may not make pretty reading, they are workmanlike and, despite their complexity, they are clear, unambiguous and easy for people to follow.
Lord Rowlands
I find it difficult to believe that they are very easy to follow. I also do not believe that there is clarity here: there is a lot of confusion. I am delighted that the noble Lord, Lord Thomas, will become completely tax-free as a result of the other provisions in the Bill. What we are trying to show and expose is that we are getting fed up with the way in which Bills are drafted in this kind of way. The constant cross-referencing makes it almost impossible for a Member of Parliament or Member of this House to follow the Bill as closely as he or she would want. This amendment was tabled to cause this debate and I have no intention of forcing it to a vote because, of course, in the process I would take out other parts of the Bill that I would support. I hope that, if nothing else, when Ministers go away and talk to parliamentary draftsmen, they will say that there is great and bitter agitation against this type of drafting and legislation. If nothing else, this debate would then have served a purpose. I beg leave to withdraw my amendment.
Baroness Randerson
Baroness Randerson
Lord Wigley
“(3A) The Secretary of State must lay a draft statutory instrument containing an Order under subsection (1) before each House of Parliament and the Assembly if—
(a) the First Minister or a Welsh Minister appointed under section 48 of GOWA 2006 moves a resolution in the Assembly that, in the Assembly’s opinion, a recommendation should be made to Her Majesty to make an Order under section 12(1), and(b) the Assembly passes a resolution on a vote in which the number of Assembly members voting in favour of it is not less than two-thirds of the total number of Assembly seats. (3B) The Secretary of State must lay the draft statutory instrument specified in subsection (3A) within the period of 30 days beginning immediately after the day on which the resolution under that subsection is passed.”
Lord Wigley
My Lords, this amendment stands in my name and that of my noble friend Lord Elis-Thomas. I will also speak to the associated group of amendments on the Marshalled List. In doing so, I suspect that there may be differences of opinion across the Chamber on some of the matters involved in these amendments.
Amendments 41 to 48 are drafted to ensure that only the National Assembly can begin the process of calling a referendum on the commencement of the income tax provisions in the Bill. Amendment 41 would ensure that a referendum might be called if a two-thirds supermajority of Assembly Members approved it—and that, this being the case, the Secretary of State would be required to make the order within 30 days of it being approved. This is evidently a change from the 180 days in the Bill, which we believe to be an unnecessary delay.
Amendments 42, 43 and 44 are consequential and ensure that although an order would still need to be laid before each House of Parliament, only the Assembly would need to approve the referendum order. We believe that the responsibility should be fairly and squarely on the shoulders of the Assembly in this matter, as in other matters which we debated earlier.
Amendment 45 similarly ensures that there is no unnecessary delay in the proceedings. As currently drafted, Clause 12(6) allows the Secretary of State to consult on the draft order until whatever time he or she considers appropriate. Amendment 45 would remove that provision.
We have laid an amendment arguing that Clause 13 should not stand part of the Bill for the reason that, were our other amendments in this group carried, the provisions in this clause would no longer be necessary. It should be for the Assembly to determine whether a referendum is needed. This decision should not be subject to the approval of the Secretary of State.
Amendments 47 and 48 allow for a supermajority of the National Assembly to decide whether there should be a referendum on transferring income tax powers or whether—I emphasise this—simply to commence the provisions. We believe that if a cross-party consensus were reached in the Assembly, which would be needed in order to achieve a supermajority of Members, that institution should not be compelled to put it out to a referendum. If all the parties agree on these matters, why on earth go to the expense of holding a referendum? Scotland is apparently going to be given far-reaching new taxation powers without such a referendum. Why should we in Wales have one forced on us?
On Monday, I argued that the Assembly should have the power to hold a binding referendum on matters which are already within its competence. A referendum on tax matters should be an available option if the Assembly deems it necessary. That would be for the Assembly to determine. The principle contained in this group of amendments is the same: if the Assembly should determine for itself whether to put a question to the electorate, it should have the power to commence that process itself. Similarly, if it agrees that a referendum on a technical issue such as this should not be necessary, it should be within its power to commence the provisions itself and, at election time, to be held accountable to the Welsh electorate on that basis. I beg to move.
Lord Elis-Thomas
My Lords, this amendment follows the amendments to Part 1 that were debated on Monday. The intention is to establish the constitutional principle that it is by requiring a threshold of a two-thirds majority of Members of the National Assembly present and voting that we can maintain the checks and balances brought about by the change in devolution. Since we debated these matters on Monday there has been rapid movement in the interparty discussions both here in Westminster between the political leaders and, equally importantly—I was about to say more importantly—in Cardiff. Those discussions have resulted in the Motion on the Assembly’s Order Paper which will be debated on Tuesday. It will clearly set out the view of the four party leaders in the Assembly in relation to negotiating with the United Kingdom Government and to the interparliamentary negotiations on some aspects of the procedure that will be required to take these matters further.
The principle of interparty agreement in Cardiff leading to a request to the UK Government, and to the UK Parliament where relevant, should generally be welcome in this place and throughout the United Kingdom levels of government in response to the new times that we are in as regards devolution.
Interparty agreement has been the route that we have taken for the development of devolution in Wales since the conversion of the Welsh Conservatives—I see my friend from the Assembly, the noble Lord, Lord Bourne, sitting on the Front Bench—to a position of embracing devolution. My intention has always been that, regardless of what happened in Scotland or Northern Ireland, that should be the route followed in Wales. Therefore, when there are contentious matters, it is the Assembly, on a supermajority, that should decide these things. It does not need to have it imposed on it by Parliament or, indeed, by political parties outwith the Assembly.
I therefore ask the Minister to consider this amendment in a spirit of agreeing to serious discussions. The Prime Minister has said—we do not need to quote this continually—that Wales should be at the heart of the debate on devolution. If the Assembly’s making a request to the UK Government and Parliament is not the people of Wales speaking through their elected representatives and asking to be part of the discussion on equal terms, what is? How are we to express that will? The expression of that will is essential to the spirit of the new union, as the First Minister of Wales called it today in this city. In that spirit, I ask the Government seriously to consider the direction of our amendment.
Lord Elystan-Morgan (CB)
I endorse with very great enthusiasm everything that has been said by my noble friends Lords Wigley and Lord Elis-Thomas, particularly on the question of unity. We as a nation have been blighted by disunity for so long. That refrain was taken up over the years by my old and very dear friend Lord Elwyn-Jones: our predilection to fissiparous division. He had a marvellous story, and I hope the House will indulge me for a moment. A shipwrecked sailor was cast on a desert island, the only survivor of the tragedy. He was there for years, but ultimately a ship drew into the bay. A boat came ashore, and there was great jollification all round. Before leaving the island, the sailor showed the boat’s crew where he had been living: his living quarters, where he had kept the animals and a cave with a cross over it. He said, “That is the church in which I worshipped on Sundays”. Somebody among the boat’s crew said, “But there’s another cave with a cross on it”, and he said, “I wouldn’t be seen dead in that place”. That is the sort of people that we have all too often been in Wales, and unity is very greatly to be welcomed. I have already paid tribute to the noble Lord, Lord Bourne. The Silk commission tried to find a reasonable, meaningful, least common multiple. The chairman, the assessors and the four representatives of the various parties succeeded in doing that, and long may that continue.
I turn to the question now of the amendment itself. I accept the principle that it is healthy, proper and courageous for the Welsh people to take on themselves these heavy fiscal responsibilities and that the decision should essentially be theirs alone. On the other hand, I would not wish the situation to develop other than through a referendum because I think that a referendum would clarify the mind—as Dr Johnson might have said—and would allow these issues to be examined in very great detail. I was disappointed in 1997 when the Labour Government, having been elected, made it clear that they would proceed with the issue of some form of Parliament for Wales and then said at the same time that there would be a referendum. I was disappointed but I was enthralled that we managed to carry that referendum, albeit by a slim majority. It gave us a sovereignty and a moral certainty in relation to the matter and I think the same would be true in this connection.
I am sorry that I missed the beginning of this debate—I was upstairs in a sub-committee dealing with European matters and I apologise for that—but I believe I heard the Minister say, with regard to a referendum, that she wished that the matter would be dealt with fairly quickly by the Welsh Assembly. I see that she nods. This is my plea. This is a crucial matter that deals with the very essence of whether a Welsh Parliament can succeed in a credible way. Everything turns in the first place on the validity of that referendum in so far as it reflects the wishes and understanding of the Welsh people. There can be no question of meandering into the dark in this matter, marching possibly to the beat of a distant drum while looking at some faint point of light in the distance. It is the same as a jury contemplating a serious case. There has to be certitude over exactly what the issues are and what the main relevant facts are in relation to them.
Let me come to the point immediately. There are many issues but the most important one is Barnett. The Government have said in relation to Scotland, understandably and perhaps in a mode of panic, that they will not touch Barnett at all. Barnett shall be utterly inviolate. Having said that, it means that it is virtually impossible to contemplate a situation where they will be willing to discuss Barnett in the context of Wales. It is one and indivisible—the bubble is either pricked or it is not. As far as the losses under Barnett are concerned, I know that various figures are mooted. The probability is that the annual loss at this stage is of the order of £200 million to £300 million and will increase as prosperity increases. Be that as it may, I ask the Minister to give these undertakings. First, the Government should appreciate that it is the legal right of the Welsh Assembly, and no other body, to decide whether there should be a referendum and when there should be one. Secondly, they should not contemplate bringing any pressure to bear on the Welsh Assembly in that regard—it should have a free, unfettered choice. Thirdly, there should be no question of asking the Welsh people to determine this momentous matter of a referendum without the Barnett matter having being settled fully, comprehensively and once and for all.
Baroness Morgan of Ely
My Lords, the Labour Party in 1997 made a promise in that first referendum which established the Assembly. In that promise we made it clear that we would not introduce income tax variations to Wales unless and until the people of Wales gave us permission to do so. Let us not forget that we won that referendum by a hair’s breadth. It would be a massive political mistake to go against that. I honestly believe that had there been a question about tax in that referendum we would not have an Assembly today. We have to honour that promise we made to the Welsh electorate. The referendum promise to the people of Wales is one of three locks we want to be sure are in place before tax raising or cutting powers can be used in Wales. If we have learnt anything from the Scottish experience it is that the public will get involved if it is something that impacts on them directly. There is nothing that impacts more directly than income tax so they are sure to get involved in this debate. We must do them the honour of respecting their views and we will not know what those views are unless and until we hold that referendum.
Baroness Randerson
I thank noble Lords for their contributions to this debate. The Government have been consistently clear that the decision on whether to trigger a referendum on the devolution of income tax is a matter for the Assembly and the Welsh Government. I say that in response to the noble Lord, Lord Elystan-Morgan. Clause 13 empowers the Assembly to trigger a referendum to ask the electorate in Wales whether they want some of their income tax to be devolved. The Government agree with the Silk commission that the 2011 referendum on full lawmaking powers for the Assembly provides the best model for conducting such a referendum. Clause 13 replicates for the most part Section 104 of the Government of Wales Act. The clause provides for the Welsh Government to move a resolution in the Assembly to trigger a referendum. If the Assembly passes the resolution by a two-thirds majority, the First Minister must ensure that notice of the resolution is given in writing to the Secretary of State. The Secretary of State or the Lord President must lay a draft order before Parliament within 180 days. I refer the noble Lords, Lord Wigley and Lord Elis-Thomas, to Clause 13(3)(a) and (b) on page 18 of the Bill:
“the Secretary of State or the Lord President of the Council must lay a draft of a statutory instrument … the Secretary of State must give notice in writing to the First Minister of the refusal to lay a draft”.
The first thing I asked when I read the Bill was, “In what circumstances could the Secretary of State refuse?”. I was advised that the only sorts of grounds on which a Secretary of State could refuse would be where there was genuine doubt about the procedures of the Assembly that led to the two-thirds majority being obtained or whether it had been obtained.
Lord Wigley
Where in the Bill does it say that those are the only circumstances in which the Secretary of State can refuse to do so? Why must it take up to 180 days for such a decision to be taken?
Baroness Randerson
The Bill does not give those reasons. The legal advice I was given related to tried-and-tested constitutional principles. Dare I say it, the noble Lord is now asking for more to go into the Bill and in the previous debate he was asking for it to be reduced.
Baroness Randerson
I will just answer the noble Lord’s intervention and then I will certainly give way.
The noble Lord, Lord Wigley, asked, both in his speech and just now, about the 180 days. I remind noble Lords that the previous referendum in 2011 took 246 days, albeit with the intervention of a general election—but we have them quite regularly. It could be that another referendum would be interrupted in such a way. I am sure that the noble Lord, Lord Elis-Thomas, recalls that there was a tremendous scramble to make that timetable of 246 days. Our 180 days is therefore an amendment to take account of experience. I reassure the noble Lord that it is a limit, not a target.
Lord Elystan-Morgan
With great respect, I wholeheartedly agree with the noble Baroness that that is the only circumstance in which there could be any dubiety at all. My question is not irrelevant: who decides? Is it the Secretary of State who decides whether there has been a valid two-thirds majority, or it is the courts?
Baroness Randerson
That would depend on the circumstances, would it not? Someone may wish to test such a matter before the courts; I speculate here, but there might be objections lodged by certain Assembly Members. I emphasise to noble Lords that the driving seat is occupied by the Assembly in this process.
Lord Elis-Thomas
I will not pursue this matter, but I tell the Minister that if she has been given legal advice that procedures of the Assembly are in doubt, she must know that those matters are for the Presiding Officer and the Assembly itself, and must be so.
Baroness Randerson
That is exactly the view of the Government. The Assembly, as I have just said, is in the driving seat in this process.
I resume my response to the initial speeches in this debate. I point out that by opposing the question that the clause should stand part of the Bill and through Amendments 41 to 45, 47 and 48, noble Lords are of course seeking to remove important parts of a tried-and-tested mechanism which was recommended by the Silk commission. Silk is the basis of consensus. The noble Lord, Lord Elis-Thomas, referred to the importance of agreement, and so on, and the characterisation of consensus as something that the Assembly has sought on many occasions. Silk is the basis of the consensus behind the Bill. I ask noble Lords to recognise that we sometimes need a bit of choreography in order to maintain unity. That means that there has to be agreement to work in unison, although it may not always be exactly what we would prefer at any one time.
Amendments 41 to 45 would remove the need for Parliament to approve the draft order that sets out how a referendum is to be conducted, and the right of the Secretary of State to consult before such an order is laid. I repeat that all this is based on the experience of the 2011 referendum for lawmaking powers. It is the mechanism that has been agreed.
Through Amendments 47 and 48, noble Lords are seeking to provide a mechanism by which the Assembly could resolve to commence income tax provisions in this Bill without a referendum. I realise that there are those who do not believe that a referendum is necessary, but I recognise entirely the arguments put forward by the noble Baroness, Lady Morgan, that the original referendum did not include a tax question. It is therefore important that people are engaged in this debate and given the opportunity to make their voice heard. It is a fundamental, far-reaching issue and therefore the people of Wales need to be consulted.
The noble Baroness, Lady Morgan, was concerned that I had deliberately misunderstood her, which I find a distressing accusation. I invite the noble Baroness to reread what she said earlier in the debate; she might then understand why it is possible to have misunderstood her.
I therefore ask the noble Lord, Lord Wigley, to withdraw the amendment, and not to oppose the question that Clause 13 stand part of the Bill.
Lord Wigley
My Lords, I am grateful to every noble Lord who has taken part in this debate and to the Minister for her response. There has been clarification on some points, such as the 180 days and so on, which is useful.
There is, however, a central point here: whether or not this House trusts the National Assembly for Wales, the elected parliament of Wales, to take decisions such as this. I have every faith in its Members that, if there is doubt as to whether they can carry the people of Wales with them in their decision within the Assembly, they know that they may need to revert to a referendum. Of course, they have as much intelligence to provide that as we do in this House.
Lord Wigley
More, my noble friend says. In many ways, he is right: they are in Wales dealing with the circumstances of Wales. With all the good will in the world, what is done here is done for Wales and what is done in Cardiff is done by Wales. We want to ensure that they take that responsibility on their own shoulders. That is one of the driving forces towards getting a consensus of approach.
The noble Baroness mentioned choreography in getting agreement. There must have been a lot of choreography in getting all four party leaders to sign up to the Motion that is coming before the Assembly next Tuesday. It is a substantial step in the right direction. The way in which we are doing these things in Wales is different to the way in which they are being done in other parts of these islands. I think that, in many ways, we are doing them better and they will stand the test of time. We have to trust the people in a referendum, yes, but also the representatives to come to a sensible decision in regard to such matters.
I accept what the noble Lord, Lord Elystan-Morgan, said about the Barnett formula. We will be coming on to that in a later bank of amendments. Of course there has to be an acceptable basis before one moves into the income tax provisions, but we are going to have to go there. Otherwise we are not going to get the answerability that we need. Any hurdle that we put between the present position and getting those powers means that we are imposing a delay, a built-in roadblock, that stops the movement towards a more responsible and transparent national parliament for Wales. That is the background to the tabling of the amendment, and the Government should take it on board not just in the context of this debate but in the generality of the Bill. On that basis, I beg leave to withdraw the amendment.
Lord Rowlands
My Lords, there is a consensus that both stamp duty and landfill tax should be devolved. I have no intention of questioning that consensus. The purpose of my seeking a debate on these clauses is to ensure that we know the implications of devolving these taxes, particularly on the block grant. To date, I do not think we have concentrated on that issue.
I have some questions, first, about stamp duty. Stamp duty revenues were £115 million in 2010-11, according to the Silk commission. This represents only 2% of the total. The Silk commission makes the obvious point that stamp duty is a very volatile tax. It can vary from year to year depending on the state of the housing market. No form of indexation such as has been developed to deal with income tax devolution was recommended; in fact the recommendation was for a fixed reduction. How is the fixed deduction from the block grant going to be determined? What will be the arrangements and process, and how will it be assessed? What impact will the devolution of stamp duty have on the block grant?
The second tax that we are devolving—the landfill tax—is very different. It is a tax that is not really aimed at raising revenue. It is intended to encourage waste saving and recycling. In fact, the success of this tax would be if the revenue declined. Indeed, the Silk commission points out that that is exactly what is happening: the taxable base—that is, the volume of waste sent to landfill—is declining. Across the UK, the taxable base for landfill has fallen by 33% in the last five years, and so the value of the block grant offset would need to reflect a declining tax base. Again, there is a serious issue about what impact the devolution of this tax would have on the block grant: how it will be assessed and how it will be decided what the deduction will be.
There are a couple of other complications with the landfill tax, as listed in paragraph 24 of the March 2014 White Paper. There is a UK Landfill Communities Fund attached to the landfill tax. This fund is financed by contributions from the landfill site operators, who receive an LfT credit worth 90% of any contribution they make. This is a UK fund and a UK landfill tax credit arrangement. However, once devolved, the operators in Wales will no longer be eligible for UK tax credits. As I understand it—and it is clearly stated in paragraph 24 of the White Paper—once we devolve the landfill tax, the eligibility for the UK-based landfill tax credits will disappear. I am not quite sure but I thought that the Minister implied in an earlier remark that in fact it would not, but according to paragraph 24, that is the case. It says:
“Once LfT is devolved to Wales, operators of landfill sites in Wales will no longer be eligible for a UK LfT credit”.
So that credit would fall. Are there powers in the Bill to allow a Welsh Government to create an equivalent landfill tax credit scheme of this kind?
In Wales, there are 24 registered landfill site operators, of which 15 were in receipt of tax credits during the financial year 2013-14. HMRC will not disclose information relating to how much the individual operators receive but the landfill communities contributed £4.19 million in 2010-11, £4.3 million in 2011-12 and £4.3 million in 2012-13 towards environmental projects in Wales.
Paragraph 24 on page 11 of the White Paper explains that there is going to be a transitional period. Will the Welsh Government, if they wish to, be able to establish an equivalent landfill tax scheme, of the kind that has been operating and which has successfully ensured that in some areas—where these landfill sites are often very controversial and have impacts upon local communities—they are able to make contributions and maintain some kind of local community fund?
The second problem identified in paragraph 24 is that:
“LfT is a key lever for the UK Government to achieve its 2020 landfill reduction target under the Landfill Directive (relating to the biodegradable municipal waste). Member states may be fined if they fail to achieve their target. In the unlikely event that the UK fails to meet its landfill reduction target solely because of changes to landfill tax policy in Wales, the Government will seek to recover this cost from the Welsh Government”.
There is an uncertainty hanging over this issue and the impact that it will have.
We are advised in paragraphs 31 and 32 of the Government’s White Paper on the question of how we are going to determine the reduction in the block grant. I would be grateful if the Minister could elaborate and explain paragraph 31 in more detail, as I have not fully understood it. It indicates some kind of proposition for the way they will handle the assessment of the reduction in the block grant once these taxes are devolved.
Paragraph 32 says:
“The Government continues to discuss this proposal, and other options, with the Scottish Government and has now opened similar discussions with the Welsh Government”.
Could the Minister update us on these discussions? How close are they to coming to some real understanding and agreement on the basis for reductions in the block grant as a result of devolving these taxes? I hope that the Minister will give an assurance that when we come to Report, these two important implications of how the block grant will be reduced will be much clearer and we will be able to approve these clauses in the full knowledge of the impact they will have on the block grant. I hope that the Minister will be able to reply.
Lord Anderson of Swansea
My noble friend as usual asks some very probing and cogent questions. On the face of it, these transfers of tax responsibility are relatively symbolic because, on the “bucket and the well” principle, what is gained on the one hand is lost on the other in terms of the block grant. It would be helpful if that could be elaborated on. Perhaps the best answer is that these transfers give a basis for the borrowing powers, which are very welcome, and which are contained in the Bill. Just a word of caution, however: the idea of a transfer of stamp duty has already been seized upon by other groups, notably by the Mayor of London, Boris Johnson. London, of course, has far greater resources and far more wealthy houses and land than Wales. If this were to move along the spectrum in the UK, it could have substantial implications, not least for Wales. Therefore, I utter a word of caution. However, on the other side of the coin, the borrowing powers, and the use to which they will be put—pace the noble Lord, Lord Thomas of Gresford, who feels that north Wales is likely to lose out in terms of the borrowing powers—are indeed welcome in principle.
Baroness Morgan of Ely
My Lords, Labour supports the move to devolve stamp duty land tax to Wales as it would be an obvious candidate due to the highly immobile nature of the tax base. The other issue to consider is the fact that housing is already a devolved issue. Devolving this tax would allow the Welsh Government to have a more comprehensive approach to housing needs in Wales. I echo the concerns of my noble friend Lord Rowlands about the impact on the block grant. Obviously, there would be an impact. The Command Paper states that the Government continue to discuss this proposal. However, the problem is that we are back to a negotiated agreement based on subjective decisions, so it is not as clear as we would like it to be.
As my noble friend Lord Anderson said, we have to be very careful about this issue. If Scotland and Wales opt for this measure, what will happen when London, with its £1.3 billion of stamp duty, starts to ask for it? If we go down this route, we must be very careful and do so with our eyes open. I am not saying that we should not go down this route but we should be aware of the floodgates that we might open in doing so. However, we support this tax.
The most obvious problem with the landfill tax is that the more successful the policy of using the tax as a means of getting people not to use landfill is, the less income will be derived for the Welsh Government. The other problem is that the current system of landfill does not identify the geographical location of the taxable activity, so we would have to bring in a whole new administrative mechanism as it does not exist in the UK at the moment. A danger could arise of the cross-border disposal of waste if there were a change in the rate of tax between one country and another. We need to be aware that these things could cause problems. However, as I said, the benefit is that this is a relatively immobile tax and waste management is a devolved responsibility so there would be opportunities to co-ordinate policy, particularly in respect of the environmental aims of the Welsh Government. We are in favour of devolving these taxes given their importance in providing an independent source of income to borrow against but we should be aware of the floodgates that might open in the rest of the UK.
Lord Newby
My Lords, I am grateful to the noble Lord, Lord Rowlands, for raising these questions, which are central to how these two devolved taxes are administered. As he said, stamp duty land tax is a somewhat volatile tax and is not as steady as some others. However, there is a borrowing power to deal with any volatility. As with any other body, it will be available to the Assembly to build up cash balances which could be used should it find that in a particular year stamp duty brings in less than it expected. However, the volatility is not all one way. As with the UK Government more generally, in some years the Welsh Assembly will do very well out of stamp duty land tax and may choose in such a year to set aside a certain amount against any potential property downturn.
The noble Lord’s most fundamental question concerned how one decided what the block grant off-set should be for both these taxes. As he pointed out, the Command Paper says that there is a two-part process. First, you make an initial reduction to the block grant which is based on current takings from those two taxes. That is straightforward; it is just a mathematical calculation. Secondly, you have to decide how you amend the block grant in every subsequent year. As we say in the Command Paper, a logical way to do it is by having smaller Barnett consequentials every year. However, that may be an unacceptable way of doing it from a Welsh perspective. There are other ways of doing it. For example, it could in theory be linked to overall changes in public expenditure. However, this is one of the key issues to be discussed by the Joint Exchequer Committee, which will have its first meeting next week. Therefore, I hope that by the time we reach Report there will be something further to report on all this. However, that is the mechanism for deciding exactly how the subsequent year adjustment is calculated. The key point is that it is something that will be agreed with the Welsh Assembly, rather than being imposed by the UK Government.
The noble Lord, Lord Rowlands, asked about the eligibility for UK tax credits, or rather how tax credits will be treated. It will be for the Welsh Assembly to determine what sort of tax credits it wants. If it wants to set up the same operation as we have had with the Landfill Communities Fund, it has the power to do so.
Lord Newby
It is in the Bill. I will correct myself if I am wrong but I am sure that this flows from the point I made earlier about the ability for tax credits to be assigned to these taxes in the same way in Wales as they are in the UK.
The noble Lord, Lord Rowlands, asked what would happen in respect of the existing Landfill Communities Fund and possible contributions to Wales. The fund is financed by contributions from landfill site operators. Obviously, once the Welsh landfill tax is in operation, the eligibility under the UK fund will eventually dissipate. However, I understand that this will not happen immediately. I believe that the Joint Exchequer Committee will determine the exact mechanism for dealing with that, bearing in mind that the Welsh tax is not envisaged to be operational until 2018, so there will be a transitional period and projects that are already in the planning process, or where allocations have already been made, will go ahead.
Questions were asked about how you determine whether somebody is an eligible landfill operator. My understanding is that 13 landfill operators have all their landfill sites in Wales and would need to register for the new Welsh tax and deregister from the UK landfill tax, and that another 11 have landfill sites in both Wales and elsewhere in the UK and would need to register for the new Welsh landfill tax in respect of their sites in Wales but would remain registered for the current UK landfill tax.
The noble Lord, Lord Rowlands, asked what would happen if, as a result of Welsh decision-making, the UK failed to meet its landfill reduction targets under the landfill directive. He also asked about the meaning of the statement,
“the Government will seek to recover this cost from the Welsh Government”—
that is, if the UK were fined. Obviously, if the Welsh Government were to say that they were setting the landfill tax rate at or near zero, and as a result all English landfill operators were rushing to landfill in Wales, and we therefore missed our target, it would be reasonable for the UK Government to say, “We are being fined only because of that decision and therefore it is reasonable that the Welsh pay any fine”. We are talking about a very remote possibility, not least because we are making reasonably good progress in reducing landfill across the UK. We do not believe that we are in danger of being fined under that directive in the foreseeable future.
The noble Lord, Lord Anderson, raised a word of caution and talked about borrowing powers and their limits. All I will say is that the sooner the Welsh Assembly agrees to have a referendum, that referendum is won and an element of income tax is devolved to Wales, the greater the borrowing powers for the Welsh Assembly will be.
The noble Baroness, Lady Morgan, raised a couple of problems. I am new to this debate, but I am slightly surprised at the tone of the noble Baroness. She speaks of problems, of everything being difficult and of unforeseen circumstances. It is quite depressing. She asked about what would happen if London asked for control of its own stamp duty land tax. The English regions—not just London but the Core Cities Group, which represents all the northern cities as well as London—have argued that all property taxes should be devolved to them in the same way that stamp duty land tax will be devolved to Wales. I cannot see it being a problem for Wales as, in cash terms, stamp duty land tax is a very small proportion of the total tax take. It will not have a significant impact on the overall level of public expenditure by the UK. Therefore any Barnett consequentials, for example, of London having control of its own stamp duty land tax, would be minimal. I would have thought—and I know that this applies to my colleagues—that Wales would welcome the thought that England would benefit from a degree of devolution in the same way that Wales expects to benefit.
Baroness Morgan of Ely
If you just look at stamp duty in London, the estimate is that £1.3 billion is collected there. That is quite significant. It is worth pointing out that that is a concern. We want to see this devolved, but I thought that the whole point of the House of Lords was that we look at something and say that there may be a problem here—let us check it out. I thought that was the point of this place.
Lord Newby
We like to do it in a positive spirit. The truth is that stamp duty land tax is a very small proportion of the overall UK tax take compared to income tax, national insurance and VAT. It is only a couple of per cent of that. It is a small tax. It is important for local areas, and it will be interesting to see what Scotland proposes to do, now that it has powers over its stamp duty land tax, to shift the balance of where that tax is borne. One of the advantages of devolving the tax to Wales is that the Welsh Assembly can choose to do something similar if it wishes.
Lord Rowlands
I apologise for interrupting the Minister, but he has mentioned Scotland. Presumably the discussions between the Government and Scotland on how the reductions will take place in the block grant to Scotland are much further down the road. May we assume that our arrangements will be very similar to, if not the same as, what will be agreed in Scotland?
Lord Newby
There is a Joint Exchequer Committee in Scotland, as there is in Wales. It will be for the Welsh Assembly representatives to decide whether the approach that is eventually adopted in Scotland makes sense for Wales. I think that there is a presumption that it probably will. The less complexity that there is in how we do these things, the better. Although there may be a presumption in that respect, there is no rule that requires it. It will be for that committee to look at Scotland and other examples in making up their minds.
I hope that I have answered the principal questions that were raised and, on that basis, that the noble Lord will remove his objections to the clauses.
Lord Wigley
“Responsibility over fuel duty
Her Majesty may by Order in Council provide for the transfer of responsibility for varying fuel duty to the National Assembly for Wales.”
Lord Wigley
My Lords, I will also speak to Amendments 50 and 51, which each seek to transfer financial powers and hence strengthen the Assembly’s tax base.
Amendment 49 would transfer powers over fuel duty to the Welsh Government, so allowing that institution to address the concerns of the electorate relating to fuel costs, a problem which is particularly stark in rural areas, where people are forced to spend significantly more on fuel than in urban areas. The Office for National Statistics recognises that poorer families in rural areas spend more of their income on petrol than richer families. Plaid Cymru has long pushed for a genuine fuel duty stabiliser to cap prices at the pump when prices rise above expectations.
Amendment 50 provides the mechanism for a review of the tax receipts from Welsh natural resources. We believe that this should include the Crown Estate, which we believe should be the responsibility of the Assembly. Wales is an energy-rich nation, yet too many of its citizens live in fuel poverty. We believe that Wales should be properly recompensed for its natural resources.
Amendment 51 is aimed at transferring powers over corporation tax to Wales, in the event of this power being transferred to Scotland or Northern Ireland. I should point out that the draft Motion, standing in the name of all four party leaders in the National Assembly, supports the approach taken in Amendment 51 in relation to corporation tax, stating:
“The National Assembly for Wales … calls for the UK Government to ensure that the same powers are given to Wales regarding the devolution of corporation tax if they are provided to Northern Ireland and Scotland”.
Those are the words that are supported by all four party leaders in the National Assembly and that will be discussed on Tuesday.
We recognise that the Silk commission in its report did not support the transfer of corporation tax to Wales due to its volatility, but said that it should be considered if corporation tax were devolved to Northern Ireland, which was seen as most likely at that stage. We believe that it would be wholly unacceptable if these powers were granted to other countries and not to Wales. The amendment is drafted to ensure that, if these powers are given to those other countries, the same would happen for Wales to ensure that we are not left behind in this matter. I beg to move.
Lord Rowe-Beddoe (CB)
My Lords, I wish to speak to my Amendment 51A, which relates to air passenger duty devolution. I draw the attention of the Committee to the register of interests, in particular the reference to my chairmanship of Cardiff Wales Airport.
The UK Government’s stance on APD remains bafflingly inconsistent with the devo-zeitgeist, if I may call it that, that has so enraptured everyone over recent months. The decision to cherry pick parts of the Silk recommendations is a sad example of the short-sightedness that seems continually to put Wales behind. The Bill provides an opportunity to redress this state of affairs. I shall quote the relevant passage from Silk 1, so that I can put it on record. It states:
“We have also recommended the devolution of long haul rates of Air Passenger Duty, and consideration of full devolution in the future. We do this in the context of the wider consideration of regional airport developments across the United Kingdom associated with the independent commission on airport capacity, chaired by Sir Howard Davies”.
The UK Government position currently is that:
“APD devolution will distort competition”,
when applied to Cardiff and Bristol. This is unsound and I put it to your Lordships that that position is not supported by the European Commission guidance that defines the laws on support of regional airports. The European Commission in its latest guidelines on state aid to airports and airlines made it clear that airports with more than 5 million passengers per annum can and should run on their own steam, without any government support. Bristol has more than 6 million passengers. The Commission recognises that there is a case for government state aid being offered to smaller regional airports, and defines them as those that have between 1 million and 3 million passengers per annum. Cardiff currently handles just over 1 million. The Commission also states that if airports are more than 100 kilometres apart, then they have, by definition, different core catchments, and aid to one will not affect aid to the other. I can assure noble Lords that Cardiff Airport is more than 100 kilometres from Bristol Airport—I have actually used my tape measure—and each certainly has different core catchments. It is my contention that aid to one will not affect the other. It is therefore my contention that the UK Government’s current position is flawed because they could not make a legitimate case, underpinned by EC guidance, that aid to Cardiff distorted competition with Bristol.
The Welsh Government have a long-standing policy of lobbying for full devolution of air passenger duty, with a view to abolishing it. I was informed this afternoon that all four party leaders have agreed to propose again the abolition of long-haul air passenger duty. The Commission on Devolution in Wales, Silk 1, recommended that long-haul air passenger duty should be fully devolved. So where are we? This is a very important factor regarding competition. Belfast was given such devolution on the basis that it is near to Dublin. I do not think that it is 100 kilometres distant but Belfast was given it anyway by the UK Government. I bet my bottom dollar, if I may use such vulgarity in your Lordships’ House, that Edinburgh will be after this in a flash when it gets whatever it is going to get in the future.
I put it to noble Lords and the Government Front Bench that this situation is very serious for us in Wales. The Howard commission recognised the importance of regional airports. This is the one regional airport of our capital city in Wales, and has to be provided for and helped. That is the point of my amendment and I ask the Government to consider it.
Lord Anderson of Swansea
My Lords, I have two brief comments—one on the varying of fuel duty and the other on air passenger duty.
I hear what the noble Lord, Lord Wigley, says and the assumption is that we as a people are relatively poor in Wales in terms of prosperity when compared with much of the rest of the UK. That is certainly true and, therefore, the assumption is that he would wish to reduce fuel duty rather than increase it. If that duty were to decrease, I can imagine the Luxembourg precedent happening. Those of your Lordships who know that country will know that fuel duty is lower there than in the adjoining countries, so there are large queues at all the filling stations in Luxembourg of people who come across the border. One can imagine similar occurrences over the border in Cheshire, Herefordshire and elsewhere, the sorts of problems that would arise as a result, and the complaints that would be made if there were to be a reduction in fuel duty.
I hear what the noble Lord, Lord Rowe-Beddoe, said about air passenger duty and different core catchment areas. I come from Swansea and I should have thought that Bristol and Cardiff are, frankly, within the core catchment areas. I can see nodding from the direction of Newport. This is not like the precedent in Northern Ireland, where there is no immediate competitor. Bristol and Cardiff are very close and, in my judgment, the passenger catchment areas are similar. There is therefore a substantial difference in this situation and there could be real problems in seeking to provide greater competitiveness for Cardiff, which could only be at the expense of Bristol.
Lord Rowe-Beddoe
It is not my idea of a catchment area but the European Commission’s, and the figure of 100 kilometres between two regional airports is in the Commission’s guidance. I again submit that Cardiff and certainly Swansea are not within the Bristol catchment area, as defined by the European Commission.
Lord Anderson of Swansea
That may be the definition of the European Commission but I speak on a matter of reality and look at it from the perspective of those who travel from those airports.
Lord Rowe-Beddoe
With respect, the journey from Swansea to Bristol is considerably longer than the journey from Swansea to Cardiff.
Lord Thomas of Gresford
Surely the distance between Bristol and Cardiff and the services provided from Bristol are such that Bristol sucks people out of south Wales to use the additional services that fly there. That is why it seems to be in competition. What we are after is the development, the building-up, of Cardiff. If it comes within the European definition, that must be good enough.
On the issue of fuel duty, I understand that provisions have been made in Scotland to reduce fuel duty—I stand to be corrected—if you are more than 100 miles away from an oil refinery. In Wales, we have rural areas and people who are very much dependent on the use of motor vehicles—almost exclusively so in parts of Wales. However, Milford Haven, which is not built to supply Wales, happens to be within that 100-mile area in the south; and, of course, we have Ellesmere Port in the north. Consequently, the reduction of fuel duty, as happens in Scotland, does not happen in Wales. However, that ignores reality. It ignores the fact that the needs of the rural population of Wales are just as great as those in the highlands of Scotland. They suffer the same impoverishment as they do in the highlands of Scotland, perhaps even more, and accordingly there is a case for taking fuel duty under the wing of the Welsh Assembly. That does not necessarily mean applying it to the whole of Wales, so that we have queues of English people in Gresford from across the border, which is not something that I would wish to see. That is not the idea at all. It would enable the Welsh Assembly to vary fuel duty with regard to the needs of the people of Wales, which I think is very sensible.
Baroness Morgan of Ely
It is worth putting on record the Labour position on some of these points. First, in relation to fuel duty, we think it will be impossible to organise separate fuel duties within the United Kingdom and probably very difficult to comply with European Union rules within countries. Those cross-border issues we have just heard about could be quite complex and difficult to police. That would be a problem for us. Of course we have genuine sympathy for the problems relating to the cost of fuel in rural areas, but we do not think that this is the mechanism by which we should be addressing it.
On natural resources tax-sharing arrangements, we do not agree that this is a good idea. Wales is not sitting on vast quantities of oil like Scotland’s and a key point to remember is that we do not tax energy production from wind, wave and water in the same way as we do barrels of oil, so there would probably not be much in terms of tax return anyway—we would probably have to invent new taxes. On the issue of corporation tax, one of the most disappointing aspects of the Scottish referendum campaign was to see Plaid Cymru members actively supporting independence for Scotland. It was not surprising but was a little disappointing, because we know that one key thing Alex Salmond wanted to do was to reduce corporation tax 3% below that of the rest of the UK. That would have done untold damage to Welsh companies. It would have adversely affected Welsh companies, so we did not understand why Plaid Cymru was quite so enthusiastically supporting independence.
Lord Elis-Thomas
I spoke on this matter in this House during a debate in June. Let me make it clear that my support was for the right of the Scottish people to express their own self-determination. They have done so, with marvellous consequences for the rest of us. We would not be debating in the way we are tonight if they had not done that.
Baroness Morgan of Ely
That is great to hear, but there are some aspects of Salmond’s policy commitments that I think would have been problematic for Wales and it is worth noting those.
Lord Thomas of Gresford
Does the noble Baroness agree that all the things we have been discussing tonight are levers—things such as airport taxes—that we can use to increase prosperity in Wales to an equality with the rest of the United Kingdom? These are levers that would achieve a balance between the various nations in the United Kingdom. That is what it is all about. If you have a power to vary corporation tax, for example, it may be something that you exercise for a certain period in order to pull in industry, and then you may feel that you face competition from elsewhere and you should drop it. These things are all economic levers to achieve equality of prosperity in the United Kingdom.
Baroness Morgan of Ely
I understand that, but I also think that we should be aware of the dangers of a race to the bottom. That is my real concern. We have already seen that it is hard enough to get many of these corporations to pay their taxes at all, so for us to encourage corporation tax competition within the UK would be very problematic. The problem is that if you reduce the tax take, you start to have to cut services, and that becomes a problem. It means that our schools and hospitals have to be reduced.
On the issue of air passenger duty, it is worth noting that this is another issue where there has been cross-party agreement on devolution, on the basis that if this is provided to Scotland and Northern Ireland in the same way as corporation tax is, then we should be allowed to review it in Wales as well. The point is that if they are going to do it, of course we want to be part of that game. What we cannot have is them going off by themselves. That would be problematic. It is why Scottish independence was a problem for us.
Lord Wigley
I am grateful to the noble Baroness for giving way. She has warned about a race to the bottom as a reason to avoid this, but she then says that Scotland might do it, that that is the first step in a race to the bottom and that we should then do it. Is she not embarrassed by the fact that her party leader signed up to this in the Assembly and she has difficulty in selling it to her group here?
Baroness Morgan of Ely
Not at all. Let me be clear: we in the Labour Party are not encouraging this; we do not want it to happen. At the moment we are not in charge of the government of this country. If it is introduced by the Government, then, of course, we want to make sure that we have a fair crack of the whip, so that Wales can compete as well. We are not encouraging this, though.
Lord Newby
I shall take the amendments in turn. Amendments 49 and 51A seek to include explicit provision in the Bill for fuel duty and air passenger duty to be devolved to the Welsh Assembly. First, I remind noble Lords that Clause 6 of the Bill already contains the power for further taxes to be devolved to the Assembly by Order in Council and therefore the Bill does not rule out in perpetuity any tax being devolved at a future point if there is agreement to do so. I shall explain why we are not devolving these powers in the Bill, starting with air passenger duty. As has been pointed out, the Silk commission recommended that long-haul rates should initially be devolved with devolution of all rates considered subsequently. In the Government’s response to the Silk commission we highlighted HMRC research which suggested that differential rates of APD could end up redistributing passengers rather than creating additional growth. This potential distortion, despite what the noble Lord has said, is particularly acute in relation to Wales, given the short distance between Cardiff and Bristol airports. As the noble Lord, Lord Anderson, pointed out, for many people who fly from south Wales and just across the Severn there is a real and immediate choice between those airports, which they see as close competitors.
Lord Rowe-Beddoe
Let me just point out that Cardiff—perhaps noble Lords do not know—has lost more than 1 million passengers to Bristol in the past five years. This happened because of the management of the airport at the time and the company that owned it, but there was a bleeding of that number of people. We have got to get the passengers back. It is not a distortion of competition; it is to restore the services. You require two things for an airport: good customer experience and a plane that goes where the passenger wants to go. We are desperately trying to bring people back; this is a levelling to help that situation. It is not a question of distortion. We have heard about the 100 kilometres, or whatever. Forgive me—go around the Midlands and see where the airports are. It is not a question of distortion in that sense.
Lord Newby
The noble Lord has just made my point that they are part of a single market for passengers in south Wales, or there would not have been that bleeding away. Passengers are not bleeding away from south Wales to Manchester airport because it is just too far. The point is that Bristol is within a relatively easy ambit and people are going there. The noble Lord discussed the question of distortion in respect of strict EU law, but the kind of competition we have been debating—and, indeed, his description of what has happened and how he wishes to reverse it—suggests that if we were to devolve this power and APD was reduced it could and probably would contravene the third principle of devolution, which we discussed earlier, that any change in one part of the UK should not be to the detriment of another part of the UK. The noble Lord wants it to be to the detriment of Bristol, so that there will be a balancing away from Bristol towards Cardiff.
Lord Thomas of Gresford
If I may interrupt, the noble Lord, Lord Rowe-Beddoe, does not want to do something to the detriment of Bristol—he wants to do something for the people of south Wales so that they have easy access to an airport and do not have to go more than 60 miles down the road to Bristol. I really do not see why it is not possible for the Assembly to have this power of setting a lower airport tax so that it attracts people in. It might then be possible to balance, with the use of that lever, the number of passengers going to Bristol or Cardiff; those coming from Swansea or further west may think, “Well, I’d rather go to Cardiff than to Bristol”. Eventually, you could start equalising the airport tax again, if the economics are correct. I am sorry to repeat myself, but we are talking about putting levers into the hands of the Welsh Government. I should have thought that the Government of the noble Baroness, Lady Morgan, in Wales would welcome levers of that sort to try to do something about the Welsh economy—otherwise we are just stuck with what we have got.
Lord Newby
Noble Lords are, as ever, extremely eloquently making a case for preferential treatment for Wales, which would benefit Wales. I am just making the point that it might well benefit Cardiff Airport but that would be to the detriment of Bristol Airport. That only stands to reason. There is not going to be a sudden explosion of long-haul traffic because of a tax change.
Lord Rowe-Beddoe
In my definition of a regional airport, I made it very clear that it had between 1 million and 3 million passengers. We want to develop regional airports. Howard Davies’s commission refers to this. That is what we are talking about. Of course it would benefit Wales, if it were ever to happen. Cardiff Airport falls exactly within the categorisation made by Howard Davies and the EU.
Lord Newby
My Lords, I am sure that the Welsh Assembly, which I believe—including the Labour element of it—is in favour of devolution of air passenger duty to Wales, will continue to make the case. However, I am afraid that the Government are not at this point persuaded of it. The situation in Northern Ireland is completely different, in that it shares a land border with the Republic, which has a significantly lower rate of air passenger duty. That is its competitor.
The Silk commission recommended against devolution of fuel duty largely on the basis that member states must set a single rate for each fuel under the EU energy products directive. It also highlighted that fuel duty is a highly mobile tax base—no pun intended. As noble Lords have made clear, we could very easily see queues of motorists across the border if there was a significant disparity, which in itself makes it an unlikely candidate for devolution. So the Government accepted the Silk commission conclusion on that.
The noble Lord, Lord Thomas of Gresford, referred to the issue of whether the rural fuel scheme in Scotland might be extended to Wales. The Silk commission recommended that the Government assess whether the rural fuels scheme should be extended to remote and rural areas of Wales. It now operates in the Scottish islands and the Isles of Scilly. The Government have applied to the European Commission to extend the current scheme to areas on the UK mainland that meet strict criteria around pump price, population density and cost of fuel transportation. However, no areas in Wales were included, because they were not felt to meet the objective criteria. The Government believe that areas should experience similar characteristics to the islands in the current scheme to make the strongest possible case to the European Commission. The Government have yet to receive a response from the Commission to their existing proposal.
Amendment 51 would devolve corporation tax to the Welsh Assembly if it is devolved to either Scotland or Northern Ireland. The Government have been consistently clear that the devolved countries are different and that it is therefore right that decisions on devolution are treated on their own merits. In relation to corporation tax, the Government are committed to making a decision on devolving rate-setting powers to Northern Ireland by the time of the Autumn Statement. However, similar to the position on long-haul rates of air passenger duty, the potential devolution of corporation tax to Northern Ireland is being considered in the light of two unique features. First, Northern Ireland is competing against the Republic, which has a much lower headline rate of corporation tax. Secondly, the stated purpose of tax devolution in Northern Ireland is to help to rebalance the Northern Ireland economy. In Wales, as noble Lords will be aware, the principal aim of devolution is to increase the accountability of the Welsh Assembly and Welsh Government. Different objectives potentially require different decisions on devolution; it is therefore right that the UK Government retain the flexibility to take the right decisions for each part of the UK.
Finally, I turn to Amendment 50, which would require the publication of an independent report on options for the UK and Welsh Governments to share tax revenues from natural resources in Wales. The noble Lord in moving the amendment spoke about the resources available potentially to the Crown Estate and referred to energy. With regard to the Crown Estate, there are no provisions in the Bill to change its status, and I find it difficult to envisage circumstances in which that would happen. Therefore, I am not sure how relevant that is. On energy, I can only agree with the comments of the noble Baroness, Lady Morgan, about the fact that one does not tax wind power in the same way as one taxes a barrel of oil, and it is very difficult to envisage that we ever would do so. So I do not think that an independent report as proposed by the noble Lord would be of any real value.
In the light of my remarks, I hope that all noble Lords who have proposed amendments in this group will feel able not to press them.
Lord Wigley
I am grateful to noble Lords who have taken part in this short debate. On the amendment proposed by the noble Lord, Lord Rowe-Beddoe, on Cardiff Airport, of course we need intervention—that is the whole point of government. If we just leave it to free market forces, those areas that have difficulties with the economy will get worse and worse. I am amazed that the Government look at devolution and powers of the Assembly only in terms of answerability and do not see the central need to have intervention in the economy to build it up. In Wales, the GDP per head is 25% below the UK average, so something is going wrong. If London is not capable of sorting that out, and Westminster is not capable of sorting it out, we have to do the job ourselves. But we need the tools to do that job and to intervene, as the noble Lord, Lord Thomas of Gresford, said. Some tools may be more appropriate than others, but in the case of Cardiff Airport, when all the effort that is being made to rebuild it at the moment is in question, I find it staggering that they want just to turn it down on that basis.
On the other amendments and the reasons given against them, with regard to petrol charges we already have a massive differential. We do not see people queuing from north Wales to Chester to find cheaper fuel because there is a cost involved in travelling. The need to get fair play in rural areas should be recognised by the Government. Goodness only knows that life is difficult enough as it is without the very high petrol taxes that we have.
On the natural resources of Wales, we hear so much about fracking coming along, and we know it is a matter of considerable concern. That is a new source of energy, and it may be something that comes into the purview of government in those terms. We need those powers to be there.
On corporation tax, I again underline that there is unanimity within the Assembly to have those powers, if they are going to Scotland and Northern Ireland, and the Government in fairness should allow it for Wales, which is in competition for inward investment against the Irish Republic. The Irish Republic has this advantage, so why do we not? We need that in order to rebuild our economy. It is something that the First Minister of Wales has very reasonably asked for and I hope that the Opposition Front Bench will support the First Minister in those representations.
I was heartened by the comments made by the Minister that there are provisions for other taxes to be devolved by order. We shall have to look to the order-making system to try to ensure that we have the tools necessary to do the job.
Lord Thomas of Gresford
Does the noble Lord not agree that, if the Welsh Labour Government are not prepared to use the tools, there is no point in having these powers?
Lord Wigley
That is true of all the powers, and we have to look to the Assembly to take a responsible attitude. Obviously there are questions to consider—cross-border questions and all the rest—and the Assembly needs to make these powers work, so it is not going to do stupid things. It will take up the powers and use them in a way that moves our economy forward. I am quite happy to trust that people who give priority to the needs of Wales will do this, from whichever party they come. All I want them to have is the tools to do the job. I beg leave to withdraw the amendment.
Energy: Onshore Wind Farming
(10 years, 2 months ago)
Lords ChamberRead Full debate Read Hansard Text
Baroness Quin
To ask Her Majesty’s Government what is their assessment of the extent of onshore wind farming in the county of Northumberland.
Lord Gardiner of Kimble (Con)
My Lords, perhaps I may respectfully remind noble Lords that we are very tight for time in this forthcoming debate. When the clock says four, noble Lords will have had their time.
Baroness Quin (Lab)
My Lords, I am delighted to introduce this debate about onshore wind farming in the county of Northumberland. I should say from the outset that the idea of having such a debate was not mine alone but that of a group of Members of the House who live in Northumberland or who are very familiar with it and who care passionately about its landscape and its communities. I am pleased that members of that informal group are in the House today and plan to take part in the debate. The noble Lord, Lord Walton of Detchant, the noble Viscount, Lord Ridley, the right reverend Prelate the Bishop of Newcastle and the noble Lord, Lord Wrigglesworth, have all been part of a combined effort to express concern about some of the negative effects the proliferation of wind turbines in Northumberland and the number of applications for further schemes which are in the pipeline have caused. I know, too, how concerned about these issues are the noble Lord, Lord Vinson, the noble Lord, Lord Shipley, and other Members of this House.
In bringing forward this debate, I should like to stress that we have had strong support from the Northumberland section of the Campaign to Protect Rural England and the Northumberland and Newcastle Society—an organisation now in its 90th year and which has, throughout its proud history, promoted the historic buildings and the special and beautiful landscapes of our part of the world. I know that the views of these organisations are shared by many local communities and by people in Northumberland who have been affected by inappropriate onshore wind farm developments. I also recognise the role of the local and regional media in highlighting these issues. The Newcastle Journal and the Northumberland Gazette have supported many local communities in their efforts to get a fair hearing for their views.
Let me say from the outset that, in my view, this debate is not about energy policy generally or about the role that renewables can and could play in our energy mix. Among the members of our informal group, we have not discussed these matters and probably have different views about them—certainly about the energy priorities that the UK Government should have. Speaking for myself, I see an important role for renewables. By coincidence, in the week that I was involved in lobbying a Minister in opposition to a particular wind farm scheme in Northumberland, I was also having solar panels installed on the roof of my home in that county.
I am also proud to be one of the city of Sunderland’s ambassadors. I applaud the efforts of that city in seeking to establish itself as a low carbon hub—indeed the Government have recognised it as one of the low carbon economic areas. I applaud its efforts in offshore wind development and its commitment to the Dogger Bank project which could be important both to our renewables commitments and also in terms of jobs in manufacturing and maintenance. Indeed, the four north-eastern ports of Sunderland, Seaham, Blyth and Tyne are all well placed to support offshore projects of this kind.
No, my Lords, this debate is essentially about onshore wind farms which are in the wrong places and which we feel should not have been given planning permission. It is also about expressing concern over the disproportionate amount of onshore wind in Northumberland and the fears of many of us that more and more developments are going ahead, despite the near unanimous objections to them from the county council and from local communities. I look forward to the Minister’s reply in due course, but she will appreciate that some of the issues raised in this debate also relate to the work of her colleagues in the Department for Communities and Local Government. I ask her to commit herself to discussing our debate and the contributions made with her colleagues in the other department so that our concerns can be fully considered.
A lot of statistics have been produced by the Minister’s department and by interested organisations which, I believe, show how much wind farming there is in Northumberland compared to other counties of England. I shall refer to some of these. However, it is not just a question of numbers because, in a county such as Northumberland, with its distinctive landscape of sweeping views to distant hills and to its magnificent coastline, even just one wind farm inappropriately placed can have a damaging effect over a wide area.
Indeed, I first became involved in this issue when I took a friend up to the ancient hill fort, Ros Castle, to admire the outstanding view of coast and countryside from the top. It was a clear day and I promised my friend a superb view of Dunstanburgh Castle. I was utterly dismayed to find that the view of Dustanburgh’s very distinctive silhouette was totally obscured by phalanxes of turbines.
Another striking example concerns the ancient monument which we, rightly in my view, refer to as Northumberland’s Stonehenge—the Duddo stone circle in its tranquil and timeless setting. I was delighted when the Government decided not to defend the legal challenge in that case earlier this year, but the threat to this very special monument has not gone away as a further appeal to install a tall turbine has been lodged. Obviously I hope that this will be unsuccessful. I ask noble Lords not from the north-east to imagine what the national outcry would be if a similar proposal were being envisaged for Avebury, or indeed for Stonehenge itself.
Northumberland’s contribution to onshore wind capacity in our country is already very considerable and we produce far more than we consume. Northumberland’s consumption of electrical energy is just over 0.5% of total consumption, yet it accounts for 10% of all consented onshore wind power. From the department’s own figures, we see that our county has virtually twice as much onshore wind consented in our one county as in all seven Home Counties—Berkshire, Buckinghamshire, Essex, Hertfordshire, Kent, Surrey and Sussex combined.
The Northumberland and Newcastle Society points out that over half of the counties of England have approved less wind than a tenth of that approved in Northumberland. In a perhaps entertaining statistic, Northumberland has apparently over 100 times as much wind capacity as that permitted in the home counties of Ministers of the Department of Energy and Climate Change. Yet, despite such figures, there is an argument for saying that the terrain of Northumberland—due to the Pennine hills and the Cheviots—is not ideal for onshore wind because the fundamental wind resource is not strong. So why is there such huge pressure on this unspoilt county to accept more and more unwelcome developments?
Particularly worrying are the figures which seem to show that there are more examples in Northumberland of schemes which have been opposed both by local people and the county council and then subsequently overturned and allowed by national inspectors and therefore by national government. My understanding is that Northumberland has been overruled at a rate twice that of the next county in that particular league table.
We have also seen that the level of subsidies for such onshore wind schemes have proved particularly attractive to outside investors, but these same investors often have little or no loyalty to the local communities who have to live daily with the effects of the investment. It is true that such subsidies can be accompanied by pledges on the part of the investor to give a financial donation to some local amenity. However, this is little consolation to those communities where over 90% of the people objected to the scheme in the first place, and indeed such promises of local financial aid are often viewed as little more than a bribe. Sometimes these investors are seen as the new generation of Border Reivers—making a quick raid, for huge profit, and then disappearing without suffering the consequences.
Consumers ultimately have to pay for such generous subsidies, and this does look like an example of the poor subsidising the already well off. I should, however, like to pay tribute to those landowners in Northumberland who have resisted the temptation and refused the sizeable carrots dangled in front of them, and who have shown their concern for our landscapes, for our communities and for the future of tourism, which in recent years has become such an increasingly important part of our economy.
There is one other point which I have become aware of in the battles that have taken place on this subject. It is difficult in a county of low density and low income such as Northumberland to mount expensive legal challenges to the planning process. Therefore, I believe that those of us who are aware of these problems need to take every opportunity to highlight them.
I realise that time is short, so I say in conclusion that I hope that the Minister will be able to respond positively not only to the points raised by speakers today but to the concerns of the people of the affected communities. Indeed, I hope that the Minister and her colleagues will visit the county, see the actual and planned projects that I have mentioned, engage fully in tackling the problems which have already been created and act to prevent further damaging schemes going ahead. I look forward to hearing what other contributors have to say in this debate.
Viscount Ridley (Con)
My Lords, I congratulate the noble Baroness, Lady Quin, on securing this debate and on her eloquent introduction to it. She is truly a great champion of Northumberland and the north-east.
I declare my interests in the energy industries as listed in the register, and that includes an interest in opencast coal, so I am not against development in the countryside per se. As long as it provides good jobs, supplies affordable energy, does not stick up above the horizon and does not last for very long, I think it is an excellent idea.
Northumberland, as the noble Baroness, Lady Quin, said, is an incomparable county. It is the county of Cuthbert and Hotspur, of Cheviot and Bloodybush Edge, and of Delaval and Dunstanburgh. The battles of Otterburn and Flodden, which are redolent of our history, have now been joined by less bloody but still very contentious battles, such as Fenrother, Wandylaw and Middlemoor. These are names of wind turbines that have been bitterly opposed by local communities. Virtually no community in Northumberland has been unaffected by these battles, and often it has split them, and families, right down the middle.
Yet Northumberland is, on the whole, bearing this pain on behalf of others, because there is no great net benefit to the county itself. These wind farms do not create great numbers of jobs, most of the profits do not stay in the region or even in the country, and they leave a legacy of high electricity bills, which go to subsidise the rich and are mostly paid disproportionately by the poor. Therefore, I challenge the party opposite to follow the courage of the noble Baroness, Lady Quin, in questioning whether it really is such a good idea to champion this regressive policy.
Meanwhile, I would say that this form of energy is having very little measurable effect on the climate and is unlikely to do so. It produces very little measurable benefit for the bird life—in fact, on the contrary, birds such as eagles are often killed by these turbines—and there is no benefit for the landscape. Indeed, in particular it is blighting tourism in many parts of the world. Many people believe that Northumberland’s potential for tourism is being seriously affected by wind turbines.
And all this to provide electricity for others, because the juice goes south from Northumberland to provide other people with light. We are delighted that people in the south want to turn their lights on but, as the noble Baroness said, Northumberland consumes just 0.6% of England’s electricity but produces 10% of England’s wind energy. It is doing far, far more than its share. From wind electricity it produces 172% of its total electricity needs—in terms of ratio, double that of Scotland.
This issue is of course for the planners but the county council is often overwhelmed by applications. There are many of them. The council finds it very hard to get the resources together to deal with them, and it is in a very difficult position. It needs support and guidance from a national level on how to cope with this flood of applications. As the noble Baroness, Lady Quin, said, the county has a relatively small population to support battles of this kind.
I hope that the Minister will agree to look at this iniquitous imbalance, which was never envisaged when we embarked upon the dash for wind. We never envisaged that the weight of this industry would fall so heavily on one county rather than be distributed equally across the country. I hope that she will agree to look at the planning system to see whether there is some way of equalising the balance. Why must the people of Northumberland bear the brunt of this often bonkers policy? Why must we spoil our landscape so that rich landowners can grow richer and rich Greens can look more smug? As the noble Baroness, Lady Quin, said, here is the final irony: Northumberland is not even that windy a county.
Lord Giddens (Lab)
My Lords, I, too, congratulate my noble friend Lady Quin on having initiated this debate so ably. I want to take an unusual and, one might think, improbable tack in this debate.
Everything today is simultaneously local and global, so I am going to look at the case of Northumberland in relation to countries that have a lot of experience of wind power: Denmark, Portugal, Germany and Japan. There is a remarkable similarity across the world in terms of the dilemmas and struggles that arise. I shall mention three here. The first is “Not in my back yard”, which is more or less universal. Most people in most countries are in favour of wind power but much less so if it is very close to them. The second, which is the opposite to that and has just been referred to by the noble Viscount, Lord Ridley, is also found almost everywhere. It does not have an acronym, so I invented one. I call it GMPML, which stands for “Get maximum profit from my land”. It pits landowners against local communities everywhere. Thirdly, there are real and justifiable concerns in many cases about the harm done by wind farms to areas of natural beauty and wildlife. All three are visible in Northumberland.
We can and should learn a lot from other countries that have a longer experience of these problems than we do. Against this backdrop, it is not surprising that there has been so much turmoil in Northumberland, given the haphazard and erratic relation between the wind farm companies, local communities, local councils and national government. In my view, it is right that an increasing number of projects have been blocked. Radical localism, suggested by some, is not the answer. I agree with the recent report produced by the Campaign to Protect Rural England, which calls for:
“A strategic, plan-led approach to developing renewable energy infrastructure, locally and across planning boundaries”.
We should note that there have been very rapid developments in offshore wind power—these are not remote; they are here—such as those involving floating platforms. Investing in developing or appropriating such innovations should be a key part of national energy strategy. Problems of corrosion are being resolved. Moreover, out at sea there can be far higher continuity of operation, compensating in some part for the higher initial start-up costs as compared with onshore wind power. What is important in Northumberland, as it is throughout the country, is to get an appropriate mix of all these elements.
To conclude on a comparative note, however, I suppose that I feel more favourable towards wind power than the noble Viscount, Lord Ridley. There are some days, famously, in which Portugal has supplied more than 90% of its electricity from wind power alone, and that shows what can be achieved. However, I fully support the sentiments that have been echoed by the first two speakers.
Lord Wrigglesworth (LD)
My Lords, I strongly endorse the remarks made by the noble Baroness, Lady Quin, by my noble friend Lord Ridley and just now by the noble Lord, Lord Giddens. In case people think that we are protesting as nimbys who do not want these in our back yards, we are not. We do not mind having some in our back yards, but we do not want them stacked full of these wind farms. We are perfectly happy to have some, but we want a fair share rather than the massive numbers which have already been mentioned by the noble Baroness, Lady Quin, and others.
I want to dwell for a moment on the impact which this is having and will continue to have upon the very important tourist industry in the north-east and in Northumberland. I have been quite heavily involved in the tourism industry over recent years. I was chairman of the NewcastleGateshead Initiative, the destination marketing agency for Newcastle and Gateshead. I was chairman of the BALTIC Centre for Contemporary Art in Gateshead, the second largest arts space in the United Kingdom after the Tate Modern, and I was chairman of the Port of Tyne until 2012. All of those organisations had a direct interest in tourism in the north-east. It is tremendously important, accounting for more than £1 billion coming into the north-east. In a region suffering from deep economic problems which is trying to move rapidly into the 21st century with modern industries, the tourist industry is tremendously important to us.
Independent research by VisitScotland showed that wind farms are very unattractive to visitors, and indeed that they avoid staying in areas with wind farms. However, you do not need independent research to demonstrate the damage which these things are causing to the county. Some of the sites which have been affected by turbines have been mentioned, such as the site of the Battle of Flodden, Dunstanburgh Castle. Holy Island, of all places, cannot be seen from some sides without seeing a wind farm. Frankly, this is outrageous; we are seeking to attract many people to come to a region which is known for its outstanding natural beauty and its wonderful environment but which has been badly damaged by the turbines that have been erected.
I hope that the Government will respond positively to the plea we are making on behalf of Northumberland. We think we have our fair share, and are making an adequate contribution. I am in favour of the renewable energy sector, but I can tell you that in the Port of Tyne the interest is in offshore wind farms. As was said by the noble Lord, Lord Giddens, this is a rather better form of renewable energy than those turbines which are on land. The Dogger Bank is just off the mouth of the Port of Tyne. If substantial wind farms are built there, which I hope will happen—it is a pity that it has not started happening already—it will ensure a tremendous number of jobs and a tremendous industry based on the Tyne, which has strong engineering traditions. I hope that that will happen, but I hope that the Minister will give us some reassurances that this unfair and damaging incursion into Northumberland will be restrained in the future.
Lord Walton of Detchant (CB)
My Lords, I, too, am most grateful to the noble Baroness, Lady Quin, for enabling us to have this debate. I am a proud Northumbrian. I live in Belford, at the heart of some of the lovely Northumbrian countryside. I am also a past captain and chairman, and now president, of Bamburgh Castle Golf Club, which was described by a national newspaper some years ago as arguably the most scenically beautiful golf club in the United Kingdom.
Looking down from the top of that course, one can see the grandeur of Bamburgh Castle and out to sea the wonderful bird sanctuary of the Farne Islands, where St Aidan spent some time as a hermit, and even beyond that to Longstone Lighthouse, made famous by the exploits of Grace Darling. To the left of that are Holy Island and Lindisfarne, with the priory that was one of the cradles of the development of Christianity in northern England. There is also a lovely castle designed and built by the Lutyens family, and a wonderful walled garden designed by Gertrude Jekyll. If one then turns to the west, one can look at St Cuthbert’s Way and St Cuthbert’s Cave, where the monks carried Cuthbert’s body from Holy Island on its way to Durham Cathedral. Beyond that is Ros Hill, where Earl Grey sat when he was Foreign Secretary and looked at his land that lay all around him and at the timeless beauty of Northumbria, which he adored.
However, if one now looks down to the south, there are 24 rotating monsters at Wandylaw and Middlemoor. Their approval by the planning authority as the result of an appeal strikes me as amounting to arrant environmental vandalism. They have destroyed the views of some of the loveliest countryside in Britain. As others have said, this is crucial because Northumberland has borne more than its fair share of these developments. I admit that the past captain of Bamburgh golf club once said that it is not windy at Bamburgh when the ball will stay on the peg on the 15th tee. We have some wind, but that does not justify the desecration of these views and of these important cradles of Christianity, which have been damaged by this development.
There was recently a proposal to put up a whole series more of these wind farms at Belford Burn. Happily, the county council planning committee rejected this application. There were 500 letters of opposition from people in the local community, and five letters in support. However, it is probable that, again, this particular application may be subject to appeal. One of the problems in Northumberland is that more appeals on applications for wind farm development have been allowed than in any other county in England.
I invite the Minister to draw to the attention of the inspectors the clear recommendation made last year by the Government that, when considering planning applications, more account must be taken of the views of the local community. The local community in Northumberland is implacably opposed, not to wind farms on brownfield sites or where they do no great damage to the environment, but to those which damage the untold beauty of a wonderful piece of scenery.
The Lord Bishop of Newcastle
My Lords, last Friday I took a relatively short train journey from Waterloo to Winchester, in the heart of the Hampshire countryside. The journey took little more than an hour, about the same time as it takes me to travel through my diocese from Newcastle to the Scottish border. There was a striking difference between those two train journeys. Obviously, there was no beautiful coast or even the odd castle on my trip to Hampshire, and yet to me the most striking difference was that there was not a wind turbine—let alone a wind farm—in sight at all. This is hardly surprising when you consider that Northumberland now has more wind power capacity installed than 16 counties in the south of England put together. It is then hardly surprising that a recent survey claimed that 70% of the British public support onshore wind. The truth is that 70% of the British public live in places where they will never have to put up with the sight or the sound of a wind turbine, unlike the people who happen to live in the beautiful county of Northumberland. During my time as bishop, wind farms have proliferated across the countryside to an alarming degree.
The level of Northumberland’s contribution to the Government’s onshore wind targets has been disproportionately high, as we have heard. We contribute more than 10% of all England’s wind energy but consume just over 0.5% of England’s electricity. Nobody should accuse us of nimbyism. It is hardly surprising then that the message from this short debate is simply: enough is enough. The good people of Northumberland have had enough of onshore wind farms. That point has finally, if belatedly, been recognised by DCLG in recent guidance, which states that it does not mean that,
“the need for renewable energy … overrides environmental protection and the planning concerns of local communities”.
Of course, we all recognise the need for a greater reliance on renewable forms of energy. Our countryside needs to be protected, which is why the recent refusal of two more wind farm developments in Northumberland was so welcome, despite in one case more than £3 million being offered by developers to a small village community. Thankfully, the huge financial inducement—I will not call it a bribe—did not sway the local people. Money cannot buy what the residents are being asked to give up. That was the message of the local people. The trouble is that so many of the most beautiful parts of the Northumberland landscapes have already been scarred and disfigured, despite the fact that, as we have heard, the wind does not blow as well as in other areas of the country, and there being no evidence that I have seen that wind will ever provide the reliable, controllable energy that we need.
We all have a duty and responsibility to care for our environment and to exercise wise stewardship over God’s creation. We are custodians of the future for our children and our children’s children. That is why I urge the Minister to take back to DECC the case for ending any further subsidies for onshore wind, especially in Northumberland, and for deploying those funds more sensibly and more wisely on other forms of renewable energy.
Lord Vinson (Con)
My Lords, this debate is on a serious matter because, bluntly, government-subsidised foreign companies are destroying Northumberland’s heritage. This must be prevented. We are grateful to the noble Baroness, Lady Quin, for raising the matter so eloquently.
Like so many things in life, it is the unintended consequence of a poorly thought out government programme being rushed through to try to save the globe from overheating through excessive CO2 emissions caused not just by fossil fuels but by the consequences of the huge growth in world population—an aspect that is seldom mentioned. It is quite proper in this debate to ask whether it is sensible for taxpayers and all users of electricity to continue massively to subsidise the erection of wind turbines, which can produce only sporadic energy and need coal-fired polluting back-up to support them, when there are alternatives. If the wind programme were going to save the globe, many of us might accept its harmful consequences, but the whole exercise serves no good purpose. It is estimated that it will cost some £4,000 per family over the life of the turbines. Consequently, many now doubt the wisdom of this regressive programme. That is the background to our county’s problems.
From the turbine developers’ point of view, Northumberland is a sitting duck because it has fewer people to complain and who can afford to challenge their subsidised ambitions. That may explain why Northumberland is chosen, but why do so many of its appeals against development fail when examined by departmental inspectors? These inspectors may be ex-lawyers or judges but they are human beings. They are encouraged by their departmental brief to help the Government meet their targets. Many cases that come before them are obviously borderline. They obviously regard the development near our historic Duddo Stones as a borderline case.
Like our local planners, they are wrestling with the two-way pull of government advice on the one hand and citizens’ objections on the other. So I hope this debate will be brought before them and will help them to take a more considered view of the two-way pull now that the Government’s targets have been met and Northumberland has had more than its fair share of development—a point so well raised hitherto in this debate. To date, they have taken insufficient account and failed to recognise adequately the seething anger within our county. The Government’s pledges on localism and respect for the regional view have been overridden, and with them our custodianship of our wonderful historic landscape.
The inappropriateness of the wind turbine programme should be at the back of every inspector’s mind when weighing priorities, as there are alternatives. In Northumberland, we have lived for 40 years within a few miles of massive nuclear power stations, which have quietly and safely produced some 7% of the country’s need for electricity throughout that period. New forms of nuclear power—small modular reactors, factory-built and inherently safe—are on their way. America and other countries are pouring billions into their development, seeing this as a long-term solution to producing abundant energy that is relatively cheap and CO2-free. We can do the same in the north-east and create many jobs.
There are better, longer-term and more effective ways of reducing the world’s CO2 output. For that reason, we do not want to see the heritage of our beautiful county destroyed wholly and unnecessarily. The Duddo Stones are the north of England’s Stonehenge and just as old. We have had our fair share of wind turbines. As the right reverend Prelate said, enough is enough on all counts. Finally, this debate will have been worth while only if the Minister undertakes to make certain that any new briefing given to the planning inspectors draws their attention to the balanced arguments have been put forward today in the Chamber and suggests that they well regard them. Will the Minister assure us that that will happen?
Lord Shipley (LD)
My Lords, I thank the noble Baroness, Lady Quin, for initiating this debate.
I received a few days ago a copy of the National Trust members’ magazine. In it was an article entitled Powering the Future. It talked of the role of that great industrialist and inventor Lord Armstrong, who introduced renewable energy to his home at Cragside in Northumberland, which is now owned by the trust. It was encouraging to read of the National Trust’s pledge to generate 50% of its energy use from renewable sources by 2020. I was also pleased to read the comment against a photograph of wind turbines on the Cumbrian coast near Whitehaven which said that,
“the trust supports the sensitive use of renewables such as wind turbines”.
I agree with the National Trust. The crucial word here is “sensitive”, which is at the heart of the debate. We should not allow visually intrusive development in areas of outstanding natural beauty. We should not lose the tranquillity that Northumberland is renowned for, and we should not damage tourism, which is such a fundamental part of Northumberland’s economy. I am pleased that Northumberland County Council is doing an impact study of wind farms on tourism to assess the perceptions of visitors.
The north-east like all regions needs to play its part in energy generation. However, I am grateful to the Campaign to Protect Rural England and to the Northumberland and Newcastle Society for pointing out in a letter earlier this year that while they are supportive of the development of renewable energy they feel that too many wind farms are being built in Northumberland, which has twice the megawatt consents for onshore wind generation of the nine home counties put together. They have a point; the wind does blow in the home counties.
We have to think very carefully, however, about energy security. I do not want the lights to go out and so I believe that we need to promote every form of sustainable energy that we can. We should note that last year, onshore wind turbines produced 5% of our electricity. They help to keep the lights on, supplying 3 million homes. A recent poll I saw showed that two-thirds of people support onshore wind energy production. However, as has been pointed out this evening, local people quite rightly want a bigger say over where onshore wind installations are permitted, and I am pleased that the Government have responded, delivering a fivefold increase in the benefits that communities in England can receive worth up to £100,000 per year for a medium-sized development. The crude block on onshore wind energy that some are calling for would seriously risk investment in the UK’s renewable energy market, which has the potential to create 200,000 new green jobs by 2020.
There are very few sources of energy that do not arouse strong opposition. Nuclear, wind and shale all have active opposition, but banning wind farms would drive up consumers’ energy bills because onshore wind is the cheapest type of renewable energy. At the same time, we have to protect our natural environment, so we need a balance between keeping the lights on and protecting areas of natural beauty.
In conclusion, I hope that the Minister will think carefully about what has been said this evening and I hope that it will be possible to have the discussion that the noble Baroness, Lady Quin, asked for. I find it hard to understand why Northumberland is producing 10% of onshore power while consuming well under 1% of the electricity generated by onshore wind. We have heard very clearly what the impact has been in some areas of outstanding natural beauty in Northumberland, and I hope that the Minister will take note.
Lord Berkeley of Knighton (CB)
My Lords, I know and love the Belford area and I objected to the wind farm there, just as I did to one in mid-Wales which is close to Offa’s Dyke and the grade 1 Repton-designed gardens at Stanage Park. Everyone has made the point that this is not about denying the need for renewables, but about trying to look at their value, particularly when we do have offshore as another possibility and, in the not too distant future, I am sure, wave power. Nothing is more certain in life than that while we are here, the waves will continue to come in. We need to look at these things because I feel that the dice are loaded against local people who try to object to a wind farm.
We have just heard an example of the kind of money people turn down in order to protect their local countryside. That should be combined with how much money people raise from their own pockets to fight these schemes. It really is a David and Goliath situation. I feel that one thing the Government could do is try to encourage inspectors to up the power they apportion to local opinion and beautiful landscapes. Trying to encourage further investment in wave power would immediately take a lot of pressure off the desire for onshore wind farms.
Like in Northumberland, there are a lot of wind farms in Wales and therefore in sensitive areas. I have to admit that the wind farms on old coalfields and in mining areas look beautiful and do not destroy the landscape, so I am certainly not against them per se. I just want us to look at those wind farms that are in sensitive areas that may not have been declared to be areas of outstanding natural beauty. That is a very important point. At the moment it is a loophole by which inspectors tend to find against objectors.
I was shocked to hear people who have been objecting in my area say that the only party that is representing little groups is UKIP. The Government should take note of that because it is a rather shocking thought. The noble Lord, Lord Gardiner, sitting opposite has said in the past that we must be sensitive about landscape and local opinion. My plea to the Government echoes the words used by the most reverend Primate the Archbishop of Canterbury at the finish of last night’s debate on bringing in women bishops. He simply said, “Listen, listen”.
Lord Grantchester (Lab)
My Lords, the decarbonised power sector is a prerequisite to tackling climate change and to achieving domestic and international commitments to reduce the UK’s carbon emissions. There is a place for all forms of renewable power in the UK’s energy mix, but they should be in the right place. Onshore wind is the cheapest form of generating low-carbon electricity and therefore must continue to be an essential part of the UK energy mix in order to limit the impact on consumer bills. Within this overall policy statement, however, there must be a balance between the various interests to establish the best solution in each individual development and locality. The planning system is meant to enable these contrasting interests to be taken into account. Guidance makes it clear that the need for renewable energy does not automatically override environmental protections.
However, something is clearly going wrong in Northumberland, and I am grateful to my noble friend Lady Quin for drawing attention to this problem in her much-loved county. While it may be the opinion of a Conservative former Minister in this House that renewable energies can be hosted in the north-east—or was that the north-west?—because not many people live there, my noble friend has drawn attention to the overwhelming concern of local communities that a disproportionate number of wind farms are in the area, to the detriment of many amenities that are vital to the visitor economy and tourism, even when cities such as Sunderland plan their future as a low-carbon hub.
Other contributors to this debate have drawn attention to the lack of strategic planning that would give balance to Northumberland and wind power more generally. In this it is instructive to look more critically at the guidance provided on renewables. Only last week, on 7 October, the Minister’s department published new guidance on community benefits and community engagement for onshore wind. It certainly recognises the wind industry’s commitment to local communities and it will encourage communities by providing a framework for communities, local authorities and developers to work together from the initial conception of a scheme. But what if there is widespread local opposition to schemes, as my noble friend has pointed out? Community engagement must work both ways, and the process needs to be seen to be accessible in order to give voice in areas where local residents lack the funds and expertise to mount a serious challenge to development. The guidance will go a long way towards reducing resentment and animosity, but it may miss the point if it is regarded only as an inducement to overcome serious local objections. Can the Minister clarify whether the guidance can provide a dialogue whereby the answer may be that the community would rather forgo the development altogether and that this will be noted in addition in the planning process?
While Northumberland can be congratulated on its embrace of new technologies, can the Minister confirm any evidence that Northumberland is being unfairly targeted from a desire to meet our national targets by a disproportionate predominance of refusals to developments in other, more Conservative-dominated counties? What is the Minister doing to encourage other areas to host their fair share of renewable onshore wind? The case stated tonight has come across very strongly and it needs an answer.
The Parliamentary Under-Secretary of State, Department of Energy and Climate Change (Baroness Verma) (Con)
My Lords, I start by congratulating the noble Baroness, Lady Quin, on introducing this debate. All noble Lords have provided measured opinion and well-informed views of wind farms, and I think that there is general agreement around the House that wind has to be seen as part of the diverse energy mix that this country needs. But I listened carefully to everyone who spoke in the debate and of course there are concerns about where wind farms are located.
I know that the noble Baroness does not want to refer to the energy policy, but part of the debate has to refer back to why wind farms are part of the diverse mix. As the noble Lord, Lord Grantchester, said, we must have an energy policy that provides us with security of supply and ensures that we meet our national and international targets to reduce carbon emissions. The requirement for increasing renewable energy supplies is clear. Wind power provides clean energy and reduces our dependence on finite fossil fuel supplies. Also, as I have said, wind increases our energy security by reducing the need to import energy supplies from abroad. It also creates jobs and investment in the economy, with an estimated £29 billion invested in the economy since 2010. We need to increase the amount of energy produced by renewables to meet our legally binding targets by 2020 and the decarbonisation targets set for 2050 in the Climate Change Act 2008 by the previous Government. As the noble Lord, Lord Grantchester, said, it is the cheapest large-scale renewable energy source. Onshore wind plays a vital role in its contribution to the balanced energy mix that we need. Renewables provided around 17% of our electricity in quarter 2 of 2014, with almost a quarter of this generated by onshore wind.
Of course, I will resist the comments of the noble Lord, Lord Grantchester, referring to my colleague, because those comments were not helpful. We are to look at how we can improve the powers that local communities have and I think that was what the noble Baroness was asking me to take away from this debate today. Of course, wherever turbines are going to be located, the communities concerned must have a greater say on whether they want them there. We must be clear that it has been this Government who have taken those concerns very seriously, listened hard to what communities have said and taken action to respond to those communities, given that a lot of the planning for those turbines was already in the system when we came into Government.
We estimate that we need 11 gigawatts to 13 gigawatts of onshore wind within the energy mix to meet our goals by 2020. The UK pipeline of projects in planning and awaiting construction gives us confidence that onshore wind will be able to make the contribution we need. In Northumberland, I am told that there are four onshore wind farms awaiting construction and eight in planning. However, we should be clear that we cannot know that all of these specific turbines will be built. We know that not everything in planning will get planning consent and not everything that receives consent will be built. The planning system ensures that only well sited proposals are developed. Moreover, in addition to the planning system, through careful management of the levy control framework, we can ensure that only the most cost-effective developments are built, ensuring that we meet our deployment ambitions while delivering value for money to consumers. Ultimately, we have to look at that part of this very complex debate: what is the cost to the consumer in the round of energy?
Furthermore, we understand that some people have concerns about developments. Every noble Lord who spoke today has raised those concerns. We have been clear that onshore wind planning applications will be accepted only where the impacts are, or can, be made acceptable. The right reverend Prelate the Bishop of Newcastle rightly referred to the new planning guidance for renewable energy that was published last year. That will help to deliver the balance required by the National Planning Policy Framework, making it clear that the need for renewable energy does not automatically override environmental protections and the planning concerns of local communities. Indeed, properly involving local communities in proposals that will affect them is a critical step in improving the quality of proposed onshore wind development. That is why we have made it compulsory for developers to have pre-application consultations with local communities for any onshore wind development of more than two turbines or where the hub height of any turbine exceeds 15 metres. This means that developers will need to engage very seriously with communities before even submitting a planning application.
Communities hosting renewable energy installations are playing a vital part in meeting a national need for secure, clean energy, including those in Northumberland. It is right, therefore, that local people should be recognised and rewarded for this contribution. That is why we worked with industry to secure a voluntary agreement that developers will contribute a minimum of £5,000 per megawatt per year to local communities hosting wind farms.
The tangible benefits from community benefits funds are clear to see. Some examples were quoted by my noble friend Lord Ridley and others of where they felt that turbines have been a blight, but Middlemoor wind farm in Northumberland has provided funding for roof repairs in the Eglingham village hall and learning resources, equipment and outdoor protective clothing for Little Acorns pre-school. There are other examples across the north-east and indeed the whole of the country where communities are seeing real benefits from hosting onshore wind farms. To improve the standards of engagement between developers, communities and local authorities for these developments, we published best practice guidance on 7 October. These documents will provide communities with information as to what to expect, in terms of both engagement and community benefits, and when to expect them.
There were a number of questions raised to which I would like to respond before closing my remarks. My noble friend Lord Ridley seemed to be a little pessimistic about the creation of jobs, but according to industry estimates, onshore wind has supported around 17,000 jobs in 2012-13 in the UK. We in the department estimate that about £7.6 billion has been invested in the UK in onshore wind between 2010 and 2013, in 2012 prices. Since 2010, we have recorded announcements of £1.9 billion worth of private sector investment in renewable electricity in the north-east. This has the potential to support an area where we need to see job creation and around 2,190 jobs will be supported.
My noble friend also raised a question on the impact of these turbines on birds. The Royal Society for the Protection of Birds has noted in its own reports that the majority of studies indicate that bird collision mortality rates per turbine in the UK are incredibly low.
My noble friend Lord Vinson talked about planning practice guidance. Protecting the local environment is just as much a concern for the Government as protecting the global environment, but we are bound by targets that have been set within the Climate Change Act 2008.
Lord Vinson
Will the Minister assure the House that this debate is brought to the attention of the planning departments, and in particular, the planning inspectors? Unless they read this debate, it simply will not have the effect that we all think it should have.
Baroness Verma
My noble friend is absolutely right, and I have made a note to ensure that the Department for Communities and Local Government has sight of this debate, because it is really important. The noble Baroness, Lady Quin, asked for that too. This has been an informed debate and it had a lot of personal ownership behind it. It is only right, therefore, that it is seen by my right honourable friend Eric Pickles and his colleagues in the Department for Communities and Local Government, so I will ensure that it reaches them.
Last year, we published new planning guidance for renewable energy to help deliver the balance expected by the National Planning Policy Framework by making it clear that the need for renewable energy does not automatically override environmental protections and the planning concerns of local people. The new planning guidance has been published to assist local councils and, on my noble friend’s point, planning inspectors in their consideration of local plans and individual planning applications.
The noble Lord, Lord Walton, asked whether there was a way to check decisions after they had been made in line with new planning guidance. On 10 October last year, my right honourable friend the Secretary of State for Communities and Local Government announced a temporary change to appeals recovery criteria for a period of six months. On 9 April this year, he announced an extension to that temporary change—and that will continue. It allows him to consider recovery appeals for new energy developments for a further 12 months. There are processes in place that have been much better firmed up because we have taken the time to listen to those local community concerns raised by noble Lords here today.
In closing, the Government have three objectives for energy policy: to keep the lights on, keep energy bills affordable and deliver on climate change goals. Onshore wind will play a part in meeting those three objectives. To achieve the necessary change, we passed the Energy Act 2013 to provide the legal and financial mechanisms necessary to attract the investment we need. At the same time, we simplified and strengthened the planning process by creating the National Planning Policy Framework to ensure that only appropriately sited projects receive consent, taking into account the needs and concerns of local communities—I re-emphasise that: the needs and concerns of local communities. Taken together, this Act and our reforms will enable us to deliver the energy infrastructure we need to secure our future at the right price and in the right place. I thank all noble Lords for an excellent debate and will ensure that what has been said is taken back to the department.
Wales Bill
(10 years, 2 months ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Wigley
“(5A) The Secretary of State shall make arrangements for an independent report to be compiled on the issuance of bonds by Welsh Ministers.
(5B) The Secretary of State shall lay a copy of the report specified in subsection (5A) before each House of Parliament within three months of this Act being passed.”
Lord Wigley (PC)
My Lords, I will also speak to Amendments 53 to 55. This group seeks to bolster the Assembly’s economic accountability and resources. We in Plaid Cymru believe that the Welsh Government should be able to issue bonds, just as the Scottish Government can. Amendment 52 would hence provide for a review into whether this could in fact take place. It is a very modest amendment giving the opportunity for this to be further investigated. I should point out that this was a recommendation of the Silk commission and is supported by the Welsh Government as well as by my own party.
Having this power would allow the Welsh Government to use innovative, less volatile ways of borrowing such as the Build for Wales scheme that we have championed. Such a project would create a new entity to invest in public infrastructure. At present, if the Welsh Government want to undertake large amounts of capital expenditure to invest in building schools, hospitals, roads and so on, they are unable to borrow and cannot raise enough by way of tax to provide the necessary resources. If they save the funds, the Treasury may claw the money back if it is not spent within a certain period—as was so disgracefully done in 2011 when savings prudently accumulated by the Welsh Government were ruthlessly purloined by Her Majesty’s Treasury. It is surely against common sense that the Welsh Government are unable to borrow funds long term to fund capital assets.
Amendments 53 to 55 would ensure that the threshold for the Assembly’s capital borrowing powers is raised from the £500 million in the Bill to £1,500 million—that is, £1.5 billion—which would make the Welsh Assembly more closely aligned to the £2.2 billion threshold afforded to the Scottish Parliament. We would feel very unhappy if the Scottish Parliament were able to borrow four times the sum that we can in Wales. We arrived at our figure by taking into consideration Wales’s population base as well as the fact that we have fewer PFI commitments than Scotland, hence giving us greater flexibility over repayments. I beg to move.
Lord Howarth of Newport (Lab)
My Lords, it is absurd that there should be a need for a review of such a matter. It is absurd that there should be limits on the ability of the Welsh Government to borrow. We all remember—I think we are all old enough—that in the 1960s and 1970s local authorities issued bonds, as did utilities. Much more recently, universities have issued bonds, notwithstanding that to a significant extent they are publicly funded. This is an elementary tool of financial management which, if the Assembly is to take serious responsibility for its own affairs, of course it ought to have.
My only complaint about Amendment 55, proposed by the noble Lord, Lord Wigley, is that he has been so modest. He wants to limit the amount that the Assembly is permitted to borrow to £1,500 million. There is a constraint on the amount of borrowing that rests in the ability of the Welsh Government to service the interest. That should be a sufficient discipline.
Baroness Morgan of Ely (Lab)
I will speak to Amendments 53 to 55, which are about increasing the amount that the Welsh Government should be allowed to borrow. One of the key reasons why the Assembly is so enthused about this Bill is that, for the first time, the Welsh Government will be able to access those borrowing powers. This is particularly important at the present time as £1.7 billion has been cut from the Welsh budget and the capital budget has been slashed by 33%. If the Welsh economy is to grow, it needs to invest in essential infrastructure. That ability to invest has been choked off by government cuts. It seems unfair that the Government connected the amount that the Welsh Government are able to borrow to the taxation revenue stream of the Welsh Government. Revenue streams in relation to stamp duty and landfill—two taxes that are, it is proposed, to be devolved initially—have proved to be extremely volatile in the past.
How was it determined how much the Welsh Government are allowed to borrow? It strikes me that the approach to Wales is very different from the approach adopted for the borrowing powers in Scotland, where a connection was not drawn to the funding stream but to the capital budget. The Scotland Act allows the Government to borrow 10% of the Scottish capital budget in any year to fund additional capital projects. That would be around £230 million in 2014, up to £2.2 billion in total. Scotland seems able to borrow proportionately considerably more, despite the fact that it has considerable PFI commitments—unlike the Welsh Government. This is not the case for Northern Ireland, where no revenue stream exists apart from the block grant. Yet, it is allowed to borrow.
This Bill allows the Welsh Government to borrow up to £125 million per year, up to a limit of £500 million. However, if the same rationale were used in Wales as in Scotland, so that borrowing was based on capital budget not tax revenue stream, Wales would be allowed to borrow up to £1.3 billion—or £130 million per year—reflecting that £1.3 billion capital budget in Wales. Ideally, we would like the Government to allow flexibility so that the Welsh Government can increase their borrowing powers at a time when the economy looks like it is much more on its feet. Could the Minister outline whether there is any mechanism through which that would be possible?
Lord Newby (LD)
My Lords, in this group of amendments on borrowing powers, I begin with Amendment 52, which would require the Secretary of State to lay an independent report on Welsh bonds before both Houses. As the Government have previously made clear, the subject of bond issuance by Welsh Ministers is something that the UK Government are willing to consider. Moreover, initial discussions have now taken place between the two Governments on the form that those considerations should take and we are keen to progress this work quickly and bring it to a conclusion.
The Government have previously committed to consider Scottish bonds and have agreed to make this source of borrowing available to the Scottish Government. Our record therefore demonstrates that we are able to consider such matters without legislation, and I therefore ask the noble Lord to withdraw his amendment on that basis.
I turn to the proposed amendments to the borrowing limits. The Government have consistently been clear that capital borrowing must be commensurate with the level of independent revenue available to support the costs of borrowing. This is an important principle that ensures borrowing remains affordable in much the same way as mortgage lending must reflect the capacity to service borrowing. It is also worth repeating that the £500 million capital borrowing limit is already substantial relative to the level of independent revenues that will be available to Welsh Ministers when stamp duty and landfill tax are devolved. In particular, the limit is far higher than it would have been had we simply applied the tax and borrowing ratios implemented by the Scotland Act. Such an approach would have given the Welsh Government capital borrowing of only £100 million rather than £500 million. Although the noble Baroness talks about the relationship between capital expenditure and borrowing powers as the consideration that she wants to underlie the amount that the Welsh Government can borrow, it has to be related to the Welsh Government’s management of their taxes; otherwise, by the same logic—perhaps she supports this—large cities and the English regions could also have large borrowing powers if they were simply related to the fact that they are already spending money on capital. The link between borrowing powers and the Assembly is secured by the fact that the Assembly has its own sources of revenue.
Baroness Morgan of Ely
Will the Minister explain how Northern Ireland is allowed to borrow when it does not have this income stream?
Lord Newby
My Lords, as we have discussed in respect of virtually every tax we have talked about today, the considerations in Northern Ireland, and the situation in Northern Ireland, are very different from those in all other parts of the United Kingdom. The noble Baroness is aware of the history of Northern Ireland and why we do things differently there. Noble Lords have made good points about read-across from Scotland to Wales, but it is a lot less easy to do the same with Northern Ireland. Very different considerations apply, and the nature of the economic challenges facing Northern Ireland is rather different.
I fully understand the desire to see as much investment as possible in Wales, but we must ensure that it is manageable for the Welsh Government. Not only must the Welsh Government repay borrowing, they must fund the associated interest payments. That is why we need to ensure appropriate independent funding streams are in place. I remind noble Lords that for every 1% that the Welsh Government have to pay in interest on their £500 million borrowing—if they reach that level—they will have to take £5 million from their overall budget. The maths is clear. It is a very significant amount that the Welsh Government will have to provide from their overall budget in any event.
We should be encouraging the Welsh Government to hold a referendum on income tax powers. If an element of income tax is devolved to Wales, that increased funding stream could allow Welsh Ministers to borrow around £1 billion. Our message to all parties in Wales is that it is time to get cracking, once we get this Bill through, and get that referendum held and the income tax powers devolved.
Finally, in order to manage forecast error, the Government have provided the Welsh Government with exactly the same £500 million of current borrowing as in the Scotland Act, despite the more limited tax powers initially being devolved to Wales. The Welsh Government’s current and capital borrowing limits are therefore relatively generous compared with Scotland, and I ask the noble Lord not to move his amendments.
Lord Wigley
I am very grateful to the Minister. I certainly welcome his announcement that progress has been made with the bonds issue, and I hope that the National Assembly can move forward rapidly to take advantage of that opportunity.
With regard to borrowing, the capital budget of the National Assembly was reduced by just over 40% when the changes introduced by the Government were brought in. That put an immense squeeze on, among other things, the capital requirements of Governments, such as the Government in Wales, with responsibility for roads, schools, hospitals and all the rest. To get the economy moving, we have to get the capital injection, particularly into the economic infrastructure. I entirely accept that there has to be a cash stream to service this, and the Minister once again mentioned the income tax proposals. As he knows, I welcome those and want to see them used. Are the Welsh Government constrained to income tax? There are other sources of taxation revenue, and there may be other sources of revenue as well. For example, in the next four or five years, the M4 tolls will be reconsidered and renewed. Is it not possible for the Welsh Government to use sources other than income tax to service the capital borrowing that they need? Can the Minister give any indication on that?
Lord Newby
As the noble Lord knows, the Bill is permissive in terms of additional taxes being established in Wales. My working assumption would be that if such new taxes were devolved or established, there would be a commensurate rise in borrowing powers. However, many of the taxes that people sometimes talk about do not necessarily raise a huge amount of money. Therefore even if you got a commensurate increase in borrowing it would not necessarily be a transformative amount on its own. However, I think that the principle is very clear. The Bill is permissive in terms of additional tax powers for the Assembly and, as it were, borrowing follows income.
Lord Wigley
I am glad that the Minister has emphasised that there is a basket of possible sources of revenue which would justify the capital that is needed. No doubt the Welsh Government will need to use the capital responsibly as it is for capital investment projects and not just to subsidise revenue budgets that are running at a loss. As far as that is concerned we are making progress. Can I just pick him up on the comments that he made about Northern Ireland when he said that the situation there is different. Of course the situation is different from Wales. I understand the historic difference and all the rest but in economic terms the challenges in Wales are just as great as those in Northern Ireland—they are in terms of the income per head, the GDA. Is the Minister aware that the GDA per head in areas such as Kensington and Chelsea is 10 times the GDA per head in the Gwent valleys and Anglesey? That is the scale of the discrepancy. We need to regenerate the economy, otherwise we are always going to be going down this spiral. We need the tools to do the job and quite clearly this will be a responsibility of the Welsh Government. All I would press for is for him to be as sympathetic to the economic needs of Wales as he clearly is to the economic needs of Northern Ireland. I beg leave to withdraw the amendment.
Lord Wigley
“Review of Barnett Formula
(1) The Secretary of State shall make arrangements for an independent review of options for reforming the Barnett Formula in order to meet the objective of calculating the block grant funding for Wales on the basis of need.
(2) The Secretary of State shall lay a copy of the report of the review specified in subsection (1) before each House of Parliament within 3 months of the passing of this Act.”
Lord Wigley
This amendment stands in my name and that of my noble friend Lord Elis-Thomas. Noble Lords will be glad to know that this is the final amendment tabled in our names for today’s debate. It deals with perhaps one of the most central questions of all. We are coming to it last: the much-beleaguered Barnett formula which every party in Wales accepts must be replaced. Unfortunately, for what appear to be narrow political reasons the parties up here do not agree on that point. Those of us in Wales who know how much Wales misses out on funding due to this formula were horrified to hear the government parties giving pledges to the Scottish electorate that they would keep the discredited system in place in the event of a no vote. If it is to stay in place without amendment it will have very dire consequences for Wales.
As the Minister will know, in Wales an independent commission, the Holtham commission, has shown how we are disadvantaged by the implementation of the Barnett formula which, as noble Lords will be aware, calculates how much consequential funding the devolved nations get based on the spending levels in England. The Holtham commission argued in 2010 that we in Wales are underfunded by between £300 million and £400 million every year. We believed at that time that it was probably an underestimate. Since 1999 the aggregate shortfall in Wales arising from the Barnett underfunding of the necessary services amounts to more than £5 billion. That is why our NHS, education system and local government have been inadequately financed. Services vital to the people of Wales are being squeezed because successive Governments at Westminster have not got to grips with this problem.
The Holtham commission argued that the formula should be replaced with a mechanism based on needs as opposed to the per head of population as is currently the case. This would allow for the fact that Wales has more vulnerable and disadvantaged people, including older people—many people retire to Wales—disabled people and those on benefits. The level per head of population is higher than the UK average. Even the noble Lord, Lord Barnett, has openly argued that the formula to which he gave his name should be replaced. A committee of this House came to the same conclusion.
Our amendment calls for a review of the options for replacing this formula. In the Motion to which I referred in earlier debates in the Chamber today there has been agreement between the four party leaders. There is a Motion coming up for debate on Tuesday in the name of the four party leaders, including the First Minister, Carwyn Jones. It states in the context of Barnett that the National Assembly for Wales,
“calls for bilateral talks that are informed by the Holtham and Silk 1 Commissions’ findings, including an updated assessment of the current level and likely future direction of Welsh relative funding”,
and,
“calls for those talks, which should begin immediately and be completed by January 2015, to have a particular focus on fair funding, with the goal of securing rapid implementation of a funding floor which both addresses underfunding in a way that is consistent with Welsh needs and halts future convergence”.
There are three steps that can be taken to sort this out and I put to the Minister that they are within the Government’s easy competence and can be achieved. The first is to determine the extent of the shortfall at present. I accept that it has come down because of the economic patterns and it may now be at £150 million to £200 million rather than the £400 million back in 2010, but it is almost certainly still there. If the Government were also to commit to a one-off adjustment to sort that out and bring in a floor so that as the economy picks up again we do not get the Barnett squeeze hitting us in the way that it has, and if the Barnett formula is adjusted to a percentage basis rather than an absolute one so that we do not lose out every time the absolute figure in Wales gives a lower percentage of benefit than happens elsewhere, it would be possible to live with the Barnett formula although it still does not give us a needs-based formula.
Ideally, however, what Wales needs—and what all the parties in Wales have been calling for—is a needs-based formula. At some point we are going to get some daylight on this. We cannot go on from year to year with this underfunding. I press the Government very strongly indeed, even if they cannot accept these amendments, to please give us some ray of hope that we might find our way out of the hole in which we find ourselves in Wales. I beg to move.
Lord Anderson of Swansea (Lab)
My Lords, my Amendment 59 has the same target as that of the amendment of the noble Lord, Lord Wigley, but approaches it in a different way. I ask that the tax reforms shall not come into force until a Welsh Government Minister has laid a report before the National Assembly containing a statement that the Welsh Government, with regard to the statement of funding policy, are content with the fairness of the allocation of funding arrangements from the UK Government to Wales. So this is effectively about fair funding, also known as the Barnett formula. I follow the noble Lord, Lord Wigley, in saying that in the current, somewhat depressed, economy, the gap has been narrowed. If there is positive economic development, that gap will be widened again.
The noble Lord, Lord Newby, asked us to be positive and not to be “moaning minnies”. I therefore turn to the front page of yesterday’s Western Mail, which quotes Shadow Welsh Secretary Owen Smith as saying after the discussions yesterday afternoon:
“I impressed on the Secretary of State the need for his Government to deliver fair funding for Wales”—
and here it is—
“and am pleased that he seemed prepared to address this issue”.
Well, if he is prepared to address it satisfactorily, I could sit down, I suppose. However, it is clearly a major issue in Wales.
Many years ago I sat at the feet of the noble Lord, Lord Morgan, who went on to become the vice-chancellor of Aberystwyth. He had come “al hoot” from Oxford and taught us poor undergraduates in Swansea new words such as “marginal”. He taught me about the great American labour leader Samuel Gompers, who was once asked, “What does American labour want?”. Some people expected him to suggest revolution or radical change. Samuel Gompers answered: “More”. If the grand public in north, south or mid-Wales were asked what they wanted, they would not enthuse about the proposed changes to landfill tax or income tax, or modified powers. They would say, “We want more”—because we are currently underfunded; the extent is uncertain, but we are certainly underfunded.
That was the position taken by the First Minister. I recall that immediately after the Scottish referendum he said something to the effect that Scotland has put the United Kingdom “through the grinder”—I think those were his words—and that the funding issue should now reappear: we should effectively shout more loudly. Scotland has been rewarded for it. Are we in Wales to continue to be taken for granted? We have played Mr Nice Guy and been ignored. Objectively, we have lost out financially.
Time is such that I will not detain the Committee, but I was impressed by an article by Alice Thomson in the Times of 24 September which—unusually, coming from a non-Welsh person—stated:
“While Scotland is being showered with largesse, Wales—failing and underfunded—has been pointedly ignored”.
She went on to give examples from Holtham:
“Last year under the Barnett formula, Scotland received £10,152 per head, while Wales, despite being much poorer, got £9,709. If Wales received the same levels of public spending per capita as Scotland, its public services would be boosted by £1.4 billion”.
Well, there may be argument about the exact amounts, but I cite what she says: Wales has been the orphan within the United Kingdom. She says:
“Wales is now barely acknowledged by politicians in Westminster … When I asked one English minister what the future held for Wales, he said: ‘Sheep and singing’”.
I hope that is not the attitude of other Ministers in this Government. I would ask noble Lords to read that article, which is very important.
It may well be that the shortfall could be remedied in other ways. I think it was the noble Lord, Lord Wigley, who mentioned a review of Severn Bridge funding. What is clear is that the Severn Bridge, with its substantial and increasing toll, is a major tax on Wales. There would be a big boost to the economy of Wales if that toll were to be removed. I would commend that to the Government. There may be other ways of making up that shortfall, but fair funding there should be.
I will end again on a positive note. I am encouraged by the way in which Owen Smith emerged from that conclave and said that he thought the Secretary of State was listening. Not just listening I hope, but ready to act.
Lord Richard (Lab)
My Lords, I start by declaring an interest. Some years ago, I had the privilege and honour of chairing the committee of your Lordships’ House that looked into the operation of the Barnett formula. It was an extraordinary committee. On it, among other people, we had a former Chancellor of the Exchequer, two former Secretaries of State for Scotland, assorted junior Ministers, and other Members of your Lordships’ House. The committee came to the unanimous conclusion, set out in a report, that the Barnett formula was out of date, inefficient, basically unfair and ought to be replaced. One of the most substantial parts of evidence we had was from my noble friend Lord Barnett himself. He said that he thought it was out of date and inefficient and was never intended to last this long—that it was introduced as a temporary measure in about 1977 or 1978 and not designed to be semi-permanent. It was meant to last a year or so and then expire. I put it to him whether it was fair to say that it ought to be replaced. He said, “Yes, perfectly fair.” He has persisted in that view.
Where are we on this issue? Here we have a formula, introduced nigh on 40 years ago, which still determines the basis of the block grants for Scotland, Wales and Northern Ireland. It is based on evidence garnered in the 1970s, and is not based on needs but rather on population. You hear the argument frequently that you cannot have a formula based on needs because it is too imprecise and difficult to do. I would commend that the people who veer in that direction of the argument read the evidence that we produced in that report about six years ago. There was a detailed examination of a needs-based formula and the evidence then seemed quite conclusive, as it does now. The Barnett formula is unjust and unfair. Wales is unfairly discriminated against as a result of the operation of the Barnett formula.
No Government in recent years have been prepared to take this issue on. In terms of the Labour Government which left office in 2010, the then Chief Secretary to the Treasury appeared before our committee and said that he thought the operation of the Barnett formula was broadly sort of fair. Indeed, the then Secretary of State for Wales even came in front of the committee and said he thought it was sort of fair. Of course, the Secretary of State for Scotland thought it was extremely fair. The Secretary of State for Northern Ireland also did not dissent from that general proposition. I was appalled, frankly, at the evidence that we got from the Chief Secretary to the Treasury and the Secretary of State for Wales. Nothing has changed. Things have not got better as far as the Barnett formula in Wales is concerned: on the contrary, they have got worse. Something has to be done about it. We really cannot go on with this.
Although I have held the view for some time that the formula’s time has come and that it should be quietly expunged from the public record, I was surprised and, indeed, somewhat appalled to see the three party leaders re-emphasise in the Scottish referendum campaign that it should continue to apply to Scotland. If it is said that it should continue to apply to Scotland, on what basis should it do so? Does that mean that it should continue to apply to Wales? If so, will Wales be asked to put up with what is, by almost everybody’s admission now, a basically unfair system of allocation of resources from central Government to Cardiff? Are we really going to be asked to put up with this because the party leaders went up to Scotland at the end of the referendum campaign and made what is, on the face of it, an extraordinary offer to the Scots? If the party leaders want to keep the Barnett formula for Scotland, so be it, but they should not be prepared to inflict it upon the Principality in perpetuity. It is basically unfair, unjust and out of date, and something should be done about it.
Lord Howarth of Newport
My Lords, it is enough to make one weep that, in the run-up to the Scottish referendum, political leaders felt themselves driven by expediency to pledge to retain the Barnett formula. As my noble friend Lord Richard explained to the Committee, it is one of the great injustices and malfunctions of government in this country over the past 40 years and a lamentable lack of statesmanship has prevented it being reformed. There was a great opportunity in 2010. The Conservatives had nothing to lose in Scotland. With universal recognition of the need for austerity, there was a political opportunity to deal with it then. That has been made infinitely harder now by the rash and unprincipled pledges that have recently been made.
The report of the committee of my noble friend Lord Richard is unanswerable. We debated it in your Lordships’ House and there was not a scintilla of a persuasive argument to defend the status quo. Indeed, I do not recollect anybody even trying to defend it. The pledges that have been made will come back to bite their authors because I cannot foresee how we can make progress towards new constitutional arrangements in this country following the referendum in Scotland and following the pledges that have been made in respect of devolution so long as there is such a fundamental inequity in public financing. I cannot see how there can be a fair and acceptable new set of arrangements while the Barnett formula is retained.
The noble Lord, Lord Wigley, spoke extremely well and constructively with his practical suggestions as to how we might try to develop a sort of fallback position. My noble friend Lord Richard suggested that if the Scots are to retain their advantage, it may none the less be possible to find ways at least to reduce the inequity for Wales. However, it seems to me that that path also bristles with political difficulties because, if public spending is a zero-sum game, if there is to be more for Wales, then it has to come from somewhere and if the Scots are allowed to retain their present advantages, then it will come from Northern Ireland or, more likely, from England. However, there is, rather belatedly, a growing recognition in the regions of England that the Barnett formula is a lousy deal for the English. I cannot see that there is a path towards remedying at least a part of the injustice from which the people of Wales suffer if it is to be done directly at the expense of the people of England. Hasty pledges have placed us all in immense difficulty but I look forward to hearing from the Minister or the noble Lord, Lord Bourne, who may be able to pluck a solution out of the hat, although I somehow doubt it.
Baroness Morgan of Ely
Today, the First Minister called again for a new funding system that meets the public service requirements in Wales. He likened the Barnett formula to,
“fixing a hole in the roof with Blu Tack and cardboard”.
It is no secret that Wales does not do well out of the Barnett formula. However, we know, following the Scottish referendum, that that formula is not in danger of dying any time soon. Indeed, the Prime Minister made his sentiments on the issue quite clear last week, when he reiterated that he had no intention of reopening the debate on providing a fair funding mechanism for Wales. That seems very different from the position of the Secretary of State for Wales, who said yesterday that he is prepared to address the issue. It would be nice to hear which one of those statements is correct.
At present, the block grant provides 113% of the English level of spending on devolved services, while the Holtham report found that Wales’s relative needs were between 114% and 117%. The noble Lord, Lord Newby, has asked me to be more positive, so I will give it a good go. The good news is that an arrangement was put in place in October 2012 that established a process to review the relative funding of Wales to England in advance of every spending review. If it looked like convergence were happening—for example, if the level of funding between England and Wales looked like it was becoming more equal, despite Wales’s needs being greater, due to things such as ageing population and rurality—then the Government would discuss options to address the issue in a fair and affordable manner. That is the good news.
The problem is that there is no guarantee. It is purely up to the good will and subjective decision-making of the respective Ministers in Cardiff Bay and Westminster. The Labour Party has acknowledged that there is a specific funding problem in Wales and that we will address the issue when we are in office.
I am sorry, but I am afraid that I must return to my negatives. One of the problems with the income tax recommendations is that this issue is compounded by the problem of the devolution of income tax in Wales. It is clear from David Cameron’s insistence that Wales should just pick up that offer of income tax powers that he has not understood the link between underfunding in Wales and the method through which the block grant will be reduced in future, should Wales pick up the option of introducing the Welsh income tax. While it is worth re-emphasising that we agree with the principle of income tax devolution, it is also worth underlining the risks that Wales would be undertaking if we were to devolve income tax powers without changing the Barnett formula.
The idea is that, if the Government suggest that in the first year of operation 10 points of personal income tax receipts are yielded to Wales, then the equivalent amount will be deducted from the Welsh block grant. That cut is then adjusted proportionately in subsequent years. The Government have suggested that the indexed deduction method, as recommended by Gerry Holtham, is used as a method to determine what that proportional cut would be. The problem is that if the block grant fails to produce a fair level of funding relative to need at the outset, as every subsequent change will be based on that initial level of funding, any cut in grant in future, however it will be adjusted, will probably make matters worse as convergence happens.
On the one hand, we are saying that we need fiscal accountability in Wales. On the other hand, we need to ensure that before we set out on this path we start from a fair position. It is critical that a fair funding mechanism is established from the outset, otherwise that unfairness will be locked into the system for the long term.
I know that the Minister is intensely aware of this issue. She has her fingers all over it and has been discussing it for years. However, I ask her to reiterate what the Secretary of State said this week: that he is prepared to look at this issue.
Lord Thomas of Gresford (LD)
The noble Baroness said that a future Labour Government would address the Barnett formula. Well, they addressed it in the last Labour Government; they appointed the noble Lord, Lord Richard, and his commission to produce a report and then ignored his findings.
Lord Richard
That is not right. I was appointed by this House, in accordance with the usual rules for the appointment of chairmen of committees.
Lord Thomas of Gresford
I withdraw the term “appointed” but I am sure that the idea was generated by the Labour Government of the day. It was not something that this House thought up of its own accord.
Lord Richard
I am sorry but it was an ad hoc committee, which was set up after the Liaison Committee decided that that was one of the subjects on which the House should have an ad hoc committee. That is how the committee came into existence and I was then asked to chair it.
Lord Thomas of Gresford
I had misunderstood the basis of that committee, so I withdraw what I said first of all—that the last Labour Government addressed the Barnett formula. They clearly did not and it was a committee of this House, chaired by the noble Lord, Lord Richard, which did address it. The Government then ignored its findings. That is what I am told. I am told that there was a second committee but I am not particularly aware of it.
Where the problem really arises is that the Barnett formula is used as an excuse for the failures of the Welsh Labour Government in the fields of education and other devolved areas. They say, “We don’t get enough money”. As soon as I read of the vows given to the Scottish people by the three leaders, it seemed to me that at that moment the concept of having a formula that could apply equally in Scotland and Wales was dead because one surely has to decouple whatever funding formula eventually applies in Scotland when it exercises its powers from whatever formula happens in Wales when it exercises different and more limited powers. Accordingly, we need something specific to Wales through looking at the needs of its people as opposed simply to dividing money on a population basis.
The whole point of the social contract is that taxes are paid—not to be divided equally per head of population but so that services according to need can be paid for by the government of the day. That is the principle that must be the basis of the way in which Wales is funded in the future.
The Parliamentary Under-Secretary of State, Wales Office (Baroness Randerson) (LD)
My Lords, as ever, a debate on the Barnett formula is interesting but I am afraid that from my perspective it is rather too well worn territory.
I start by responding to the comments of the noble Lord, Lord Wigley, in relation to the £300 million to which he referred as the funding gap identified in the Holtham report. The gap has indeed come down in size and it would be very useful to determine the current shortfall. It is particularly important to point out that when the agreement was made between Jane Hutt and the Chief Secretary to the Treasury in an exchange of letters in October 2012, it acknowledged that convergence had ceased to take place, that there was, in fact, divergence and that Welsh funding was within the region of what the Holtham report regarded as fair funding. Therefore, at the moment, there is not a major issue of unfair funding. There may be issues at the edge, but it is not a big problem at the moment, as was acknowledged by the Welsh Government. Of course, that does not solve the problem, because convergence is predicted to start again around 2018. That issue has to be addressed if the gap is not going to widen again. I agree that there is a need to deal with this in the scope of the devolution discussions because it distorts the political debate in Wales. Funding is quite simply blamed for every policy failure. Even if we take the figure of £300 million, in a budget of £15 billion, £300 million is a significant amount of money, but it is not something that could possibly be blamed for every health failure, every education failure and every social problem within Wales. It is not so massive that it is fundamental to the problems that we all acknowledge are faced in Welsh society.
The noble Lord, Lord Anderson, is absolutely right in saying that it is the funding issue that the public are interested in. They do not worry too much in general about devolution, but they are interested in fair funding. The noble Lord, Lord Anderson, referred to the Severn tolls. I look forward to our debates on that in the next Government. Whoever wins the election, there will be debates on the Severn tolls because, of course, the end of that franchise is due in the mid-years of the next Government.
I strongly welcome the acknowledgment by the noble Lord, Lord Richard, that the Labour Party did not deal with the problems of Barnett. Indeed, the Labour Party refused for 13 years to agree publicly that there was any problem with the Barnett formula and it was in those years that convergence was taking place and the funding gap was really growing. It would certainly be the case that Wales would have fewer problems now if that had not been neglected. It is my view, and the Secretary of State certainly agrees, that it is time to look at the funding formula for Wales, and it is my view that one could do this even with the constraints of the agreement that Scotland will retain its current funding. One can look at Wales on a unilateral basis.
The noble Baroness, Lady Morgan, asked me to clarify the Prime Minister’s statement. He simply restated the oft-stated government position on funding in Wales, which is that because the problem of the deficit is our priority, no additional funding can be provided within this Government. That is in no way at odds with the Secretary of State saying that the long-term funding position of Wales needs to be looked at. There is an immediate situation and a long-term situation. The noble Baroness also asked for clarification on the impact of having income tax powers on the block grant and so on and referred to the index deduction method. The purpose of the index deduction method was to protect Wales from big swings in the economy as a whole and the sort of big swings that are due to UK government policy. However, I point out yet again that the Welsh Government have acknowledged that funding is fair at this point, within the region of fairness. Given that the Welsh Government acknowledged that we were in that sort of territory two years ago, it would be a good idea to go for a referendum on income tax powers as soon as possible to give the Welsh Government the maximum opportunities to use the taxation system to increase prosperity in Wales.
I shall very briefly look at the technical details of the amendments. Amendment 56 would require the Secretary of State to lay an independent report on options to replace the Barnett formula. Amendments 59 and 60 would seek to make the devolution of an element of income tax conditional on dealing with the funding formula. They specifically say that income tax can devolve only when the Welsh Government confirm that they are content with how funds are allocated. The progress that this Government have made on working towards fair funding, with the significant exchange of letters in 2012 between the Ministers in the two Governments, can be built on. I urge the noble Lord to withdraw his amendment.
Lord Richard
Can I be perfectly clear as to what the Minister has just said? As I understand it, she is saying that the fact that a vow has been given to Scotland that the Barnett formula should continue to apply there is no bar to the funding arrangements for Wales being reconsidered, and that it is the Government’s position that those funding arrangements for Wales will be reconsidered.
Baroness Randerson
I am saying that I do not believe that it is impossible to overcome the issue of the commitments made to Scotland and that you can honour those commitments and look separately and independently at the funding for Wales. Northern Ireland is also funded via the Barnett formula but from time to time gets additional funding for specific things. I cannot see why Wales cannot be treated, as Northern Ireland is, as a separate thing, as a matter of principle. Having said that, I am simply arguing the case—it is not government policy to do that. I am firmly saying that the Secretary of State for Wales has made it absolutely clear that it is his view that fair funding needs to be looked at in the context of the devolution settlement and the discussions that are going on about it. In that case, I am confident that those discussions will encompass the issue of funding, although I cannot predict the outcome.
Lord Richard
So that is government policy—what the Secretary of State said?
Baroness Randerson
Yes, that is policy, announced by the Secretary of State for Wales.
Lord Wigley
And of course, every word uttered from the Dispatch Box is government policy, as well. What I am trying to reconcile from the Minister’s response are the comments that things are more or less right now and that there is a need to look at fair funding. There is something a little bit contradictory about that. They are not absolutely right now, or at least we do not know that they are. That is the argument in favour of having more investigation.
The Holtham methodology may or may not have been right, though it has generally been accepted that it was. That indicates there has been a closure of the gap, though there probably is still a gap, of maybe £200 million rather than £300 million to £400 million. We do not know. Taking the comments that the Minister made a moment ago in response to the noble Lord, Lord Richard, if there is a gap of £200 million which could be put right, it would bring us on to roughly what a needs-based formula would generate.
The assumption is that Holtham was looking for a communality of standards in public services in Wales, as might be expected in England. Whether it be £300 million or £400 million as it was, or £200 million as it is now, if that could happen with a one-off adjustment and by bringing in a floor and making sure that the changes—convergence or divergence—were on percentage rather than absolute terms, so that we are not missing out, we would at least have a system that would be sort of needs-based. It is not the radical needs-based formula that a lot of us are looking for, where you have determinants that generate entitlement to certain funding, but at least it would meet the Holtham assessment of the needs as he saw them at that point in time.
Lord Anderson of Swansea
“(1A) Subject to the other provision made by this section, Parts 1, 2 and 3 come into force on such day as the National Assembly for Wales shall determine.
(1B) Parts 1, 2 and 3 may not come into force until the recommendations of a constitutional convention examining the distribution of power between Wales and the rest of the United Kingdom have been considered and voted upon by each House of Parliament.
( ) Subsection (1A)”
Lord Anderson of Swansea
My Lords, the last two amendments—and I hope I will not detain your Lordships too long—are in my name. They refer to the constitutional convention and the relevance of the Williams report: a report which is not mainly about the structure of local government but which contains important clauses on that. My contention would be that, just as we have looked at the relationship between the component parts of the United Kingdom, we should look also at the relationship between the Welsh Government and local government in Wales.
On the constitutional convention, there seems to be an increasing consensus that we need to look at the British constitution in the round. I fear that the response of the Minister would be: if you are so keen on your constitutional convention, why not put it in the manifesto for the next election when it can be debated? But that was Monday’s argument—since when, as we say, an amendment has been moved.
As an assiduous reader of the Western Mail I notice that, on the front page of yesterday’s paper, the Secretary of State, no less, is quoted as saying:
“Up to now, we’ve been saying, ‘Well, these are just matters for the individual parties and their manifestos at the next election’, but actually I think we can do better than that”.
Clearly, the noble Baroness appeared not to be on message on Monday; perhaps she will be a bit more on message today when she comes to respond.
So there is an increasing consensus. I hear the argument from time to time that to suggest a constitutional convention is no more than a device for delay and for kicking the matter into the long grass. The answer is that promises were made to Scotland—and some might argue that never has so much response been made by parties in the United Kingdom to one maverick opinion poll. When the Sunday Times YouGov poll suggested that there was a majority for independence, there was a certain panic among all parties, resulting in a response that may now be regretted at leisure.
The promises made to Scotland are clear and should be honoured, but they can be implemented on their own grounds. However, there are implications for the rest of the United Kingdom and, in my judgment, for the constitution—and I think that the Liberal Democrats have broadly been the leaders in this field. Clearly, the quasi-federal constitution needs to be viewed with all the difficulties that may arise. We need to have concern across the board, including in relation to your Lordships’ House. If there is to be a new regionalism, it should be reflected in the way that this House is elected, directly or indirectly—possibly, as in France, using the notables from local authorities. I think that the electorate of the French Senate is roughly 80,000. These are the people who are in the localities, the regional assemblies and the local authorities, and they come together having been elected indirectly to work together in the Senate. Your Lordships’ House should not be excluded from this consideration.
I think it was Alastair Campbell who said, “We don’t do religion”. That may or may not be the case but in the United Kingdom we don’t do constitutions—except for other people. We are pretty keen on delivering constitutions to colonial powers from high to low but we are not so good at doing it for ourselves. I have spoken to many groups from the Commonwealth Parliamentary Association and have been tempted to use the phrase “the Mother of Parliaments”, but clearly things are creaking in our own constitutional structures at the moment. Perhaps the 45% vote for independence in Scotland is a means of alerting us to the fact that the status quo cannot continue.
I recall Lord Weatherill, who was both a distinguished Speaker of the other place and the Convenor of the Cross-Bench Peers in this House, telling me a little story. He worked in the family firm of tailors and on his first day there was an old Jewish tailor to monitor him. One of the senior people came to the old Jewish tailor and said they wanted a suit made. He said, “Do you want it quick or do you want it good?”. There is an element of that in terms of constitutions. After all, we have agonised over changes for so long, going from precedent to precedent with a little tweak here and a little tweak there.
Now there must surely be a case for a group to make an initial analysis by looking at foreign examples and then for the elected representatives, so far as they are able, to take a considered view. It may be a federal system. Even within a federal system or a quasi-federal system one can have a range of very different powers. We know that in the different autonomía of Spain, for example, it is federalism à la carte. An autonomía such as Valencia has relatively limited powers, whereas Galicia and Catalonia have far more extensive powers—all within the same system. There is no reason why, according to demand, there should not be asymmetric devolution.
The key question is: are we happy to continue with constitutional tinkering or do we feel that we have reached the point where we need to look at the whole constitution from this place and the other place. I recall that one of the major cogent arguments used when we were discussing the future of this House was that there was no attempt to place it in the context of the relationship between this House and the House of Commons. We need to look at the devolved assemblies, and we also need to look at local authorities.
If we are not happy to continue tinkering, it is clearly right that we should now recognise that after the Scottish referendum we are in a new context, and that the status quo has proved insufficient. I recall that when the three party leaders made a vow, they came together quite properly. If they accept the case for a constitutional convention that is good although perhaps not quick, what is now stopping them? Is there not a reason for them to now make a similar vow on a consensual basis that this country deserves a constitutional convention?
I turn now to my second point, on which I shall be quite brief, which is the question of the Williams report. I submit that it would be wrong to ignore the position within Wales: that is, the relationship between the Assembly and the local authority. I recall that during the initial debates on devolution in the 1970s the Welsh Office, as it was then called, totally ignored local government. It was only at a fairly late stage of the debate that it was recognised and brought within the discussion that there were substantial implications for local government.
There is clearly a temptation for Cardiff Bay to hold on to what it has. However, I am encouraged by the response of the leader and, indeed, all the parties in the Assembly. Although the Williams commission hoped that there would be action by Easter of this year, we know that on 1 July the overview on broad public service recommendations was addressed, and on 8 July the local government reorganisation was addressed with a general White Paper. Now we are promised that on 28 November there will be a voluntary merger of local authorities. On 28 February there will be a White Paper setting out the process for merging councils that do not want to merge. There is already a timetable in process.
I will not labour the point that there is no ideal local government structure in Wales. I recall that many years ago when I was the Member for Monmouth there were certainly at least a dozen local authorities: rural district councils, urban district councils and town councils. That was done away with in the Walker reforms, with counties and districts. Clearly, it was right that the counties had responsibility for education and social services, but the divisions were not easily made.
We have now had further elements of reform. City regions are being considered. However, perhaps the failures over food safety are very good examples of the fact that, for certain areas of expertise, local authorities need to be able to employ experts in the field. I end on the plea that we do not forget local government. There appears to be a consensus within the Assembly on implementing the recommendations of the Williams commission, and the timetable is such that these could well be implemented before the provisions of the Wales Bill become law. I beg to move.
Lord Thomas of Gresford (LD)
My Lords, it is such a delight to hear from the noble Lord, Lord Anderson, who had a somewhat feckless youth when he was passionately anti-devolution. Clearly, somewhere between Monmouth and Swansea he was struck with the true light of liberal principle. As I understand his speech, he now supports not merely Liberal Democrat policy but also what was, in his feckless youth, Liberal policy.
Lord Anderson of Swansea
My position then was as it is now. Devolution within a unitary system is flawed in many respects, including the fact that there is no end position, whereas a federal or quasi-federal system with a constitutional court to adjudicate on the differences between the component parts is logical. We were embarking in the 1970s on a strange new journey and perhaps it was Mrs Thatcher, with her own form of centralisation, who was the major recruiting sergeant for me on that.
Lord Thomas of Gresford
The noble Lord, Lord Anderson, has disappointed me slightly with this recantation of what he said earlier, but never mind. I am entirely with him that we need a constitutional convention and that we should be looking for the abolition of the House of Lords and some form of federal, directly elected or proportionately elected Chamber that could consider the situation as a whole, perhaps with a Supreme Court charged with the sort of duties that attach to the Supreme Court in the United States. That is not, however, any reason for holding up the provisions of this Bill, which are urgent. The Bill needs to go through because Wales cannot wait for a future nirvana when we have got it all together, it is all very logical and all the problems are at an end. We cannot keep the Bill waiting for that moment.
Lord Howarth of Newport
If my noble friend Lord Anderson’s Amendment 57 is passed it will be a very long time before the provisions of this Bill are brought into force. I am against that delay because I want the Welsh Government and the people of Wales represented by them to have the new borrowing powers that are built into the Bill. However, if there is to be a constitutional convention, I am in favour of it taking its time. In the field of constitutional reform, more haste means less speed, as we saw rather painfully in the attempt at reform of your Lordships’ House in this Parliament.
I also think that the constitutional commission, if there is to be one, should be very much at arm’s length from the political parties and the Westminster and Whitehall establishment. It will be important that the public should not suppose that this is any kind of stitch-up or a device for the existing establishment to protect its own interests. The public would want to see that members of the commission were deeply versed in constitutional theory and constitutional law, and that while they may have close affiliations and loyalties to the different nations and regions of this country, they were prepared to take, as far as they could, an objective view of the long-term interests of the United Kingdom.
It would also be essential that they should receive submissions from the public. Those submissions would be numerous and would take a very long time to consider. I am sure that if a committee of wise people formed on these principles were to set to work, they would perform a valuable task in clarifying the issues, educating us all and pointing the way forward. They would probably succeed in coming up with a blueprint for a new federal model of the United Kingdom. However, it is one thing to come up with a blueprint; it is quite another to implement it, and then politics would re-enter. I anticipate that the processes of constitutional change would then be, as has always been the case in this country, incremental, and they would be the better for that.
I cannot support my noble friend’s amendment, but as we reflect on what we might be seeking in a constitutional commission we should disentangle it from our continuing day-to-day requirements of legislation and politics. We should get on with enacting this Bill. We should get on with implementing it and think generously, spaciously and patiently about how to develop a future framework for the government of the United Kingdom.
Baroness Morgan of Ely
My Lords, we have to understand what the Scotland referendum was really about. It was a cry from the people of Scotland who feel cut out of the political process. Of course, that has had an impact not just in Scotland because of the commitments that were made in the last days of the referendum, but it is having and will have an impact across the whole of the United Kingdom. It makes sense for us to place the discussion within a broader context.
We are not in favour of stopping this Bill in its tracks. A lot is in the Bill and there is a lot more to come with Silk 2. It is important that the Welsh devolution process does not stop because of a huge transformation in Scotland. However, it is worth saying that we have to think in a broader way about the constitutional arrangements of our country. What happens in Scotland is having an impact in Wales. Those commitments on Barnett are already having an impact in Wales and there is a problem if they continue to do so. We need to get the balance right and we need to have a broader discussion.
For two years the First Minister of Wales has been calling for a constitutional convention to be established where a discussion about the power relationship between Wales and the rest of the United Kingdom would be undertaken. Who would be on such a constitutional convention? Obviously there would have to be representatives from the devolved Administrations and local government representatives from England. But, crucially, we would also want to see representatives of civil society and the general public. The disconnection between politicians and the public absolutely has to be halted. We would need to work to a clear timetable. The last thing we want is a discussion that goes on for years and years without end. We would also need to think clearly about what the convention would do. We would have to define the core elements of a new constitution that would enshrine a programme of fundamental reform for the UK. The new settlement, while recognising the different circumstances of the four nations, must be based on common principles that reflect the multinational and multi-union character of our United Kingdom.
The referendum in Scotland was a wake-up call for all members of the political class. We must acknowledge the depth of disillusionment in this country and the distance that people feel from the political process. Through establishing a convention, we would have a one-off opportunity fundamentally to reform the system of governance of this country. A constitutional convention is needed and it is well overdue. We recognise, however, that the Wales Bill is not the ideal mechanism for introducing the idea of a constitutional convention, but it seems rather odd for us to be ploughing on with constitutional changes as if nothing has happened. As Carwyn Jones, the First Minister of Wales, has said, the current constitutional settlement is dead. We recognise the need and the demand for more devolution in Wales, but we need to set the whole within the broader UK framework. To proceed in isolation from the wider discussion would be to miss the opportunity to elaborate on a new vision and a constitution for this country, a constitution that would involve, include and invigorate the population so that people would feel as if they had ownership of their own country.
Baroness Randerson
My Lords, the noble Lord, Lord Anderson, has pointed out the flaws in the devolution settlement for Wales. I say to him that I have campaigned for devolution for virtually the whole of my adult life. I have faced downright nasty opposition at worst and a lack of enthusiasm and total incomprehension at best. Long ago, I came to the conclusion that the overwhelming majority of people simply were not interested. It is a really exciting time for me because devolution is suddenly fashionable and a lot more people understand what it is about. Noble Lords will not be surprised, therefore, that I am keen to seize the moment; I am keen to get this Bill through as a basis on which we can take the next step. The Bill is a very important step forward in devolution in its own right.
Yes, there is a great deal to be said for a constitutional convention. The noble Baroness, Lady Morgan, said that the First Minister has been calling for one for two years. My party has been calling for one for 40 years. On that basis, I would argue that one should not place too much faith in the immediate production of an outcome of the concept. I agree with the noble Lord, Lord Howarth, when he says that this is something that we need to think about widely and in the long term. The message from my noble friend Lord Thomas and the noble Lord, Lord Howarth, is that, despite the great advantages of a constitutional convention, we have to get on with it now.
To the noble Lord, Lord Anderson, I say that if I accepted his amendments, it would ensure that Parts 1 to 3 of the Wales Act could be commenced only by the Assembly on a day of its choosing, but the Assembly could not decide to commence the provisions until the recommendations of a constitutional convention had been voted on by both Houses of Parliament or until the Welsh Government had implemented the Williams report. I would say that would mean a minimum of five years. My noble friend Lord Bourne, being a member of the Williams commission, assures me that that should be implemented a lot sooner, but we all know that local government reform in Wales does not prove easy. Therefore, I am not betting my political reputation on the timescale for either of those events.
The last few months have been momentous for our United Kingdom. It is now time for us to come together and move forward, but we also accept that it is not “business as usual”. The referendum in Scotland has led to a demand for reform across the UK. We now have a chance—a great opportunity—to change the way we are governed, and change it for the better. The Government have made it clear that we want a debate on how to make the United Kingdom work for all its nations. We have introduced a new devolution committee, chaired by the Leader of the Commons, to consider how we can best do this. The Wales Office is fully represented on that committee and my right honourable friend the Secretary of State for Wales is also having meetings across the parties to pursue this agenda.
We have as a Government already committed to devolving further powers to Scotland as a result of the referendum, and we will deliver on that commitment. England, Wales and Northern Ireland are now on the agenda. This is the time to put our foot on the pedal of devolution. I regret that the noble Lord’s amendments would apply the handbrake. Wales needs the powers this Bill provides now, not in several years’ time, which would be the case if the noble Lord’s amendments were accepted.
The noble Lord’s amendments would also enable the Assembly to decide the commencement of the provisions in the Bill, subject to his other conditions being met. I regret to say that they are very imprecise conditions and it would be difficult to know when they are satisfied. We will of course—this is a commitment—work with the Welsh Government and the Assembly on the commencement and implementation of the provisions in a Wales Act.
The Bill is about creating truly accountable devolved government for Wales. It is about providing the Welsh Government with the levers to grow the economy in Wales and ensuring clarity for Welsh voters when they go to vote in 2016. All these things would be prevented if commencement of the Bill was delayed in any way, including through the amendments put forward by the noble Lord. I therefore respectfully ask him to withdraw his amendment.
Lord Anderson of Swansea
My Lords, the Minister vastly overstates her case by claiming that this Bill would lead to a truly accountable Welsh Government. If we look at this objectively, it is pretty small beer. It is a Wales (Miscellaneous Provisions) Bill. It was framed in a very different context from that which we have now, after the Scottish referendum. I assure her that the purpose of these two amendments—
Baroness Randerson
Is the noble Lord saying that a Bill that provides fiscal accountability for the very first time for the Welsh Assembly and Welsh Government is not a big step forward? Is he saying that the provision of borrowing powers for the first time for them is not also a big step forward? Does he not accept that the devolution settlement has been sadly lacking up to now because there has not been that proper accountability and that this is a vital development?
Lord Anderson of Swansea
I hear what the Minister says about accountability but given the relatively small changes and the small amount of money involved in these taxes which are to be transferred, I doubt that one can properly say that there is real accountability. There is considerable scepticism in the Assembly in relation to the tax powers, which may be stillborn in any event. Yes, I accept that borrowing powers are a major innovation in the Bill but these borrowing powers, albeit in diluted form, are available to local authorities in Wales in any event so why not to the National Assembly?
On the general point she made, my purpose in having this formula of,
“may not come into force until”,
was clearly only to provoke a debate. It was not intended as a freeze or delaying device. I accept that after the result of the Scottish referendum we cannot return to business as usual. Finally, I also accept the point made by my noble friend Lord Howarth that there are great problems in the concept of a constitutional convention. Even if we have the so-called constitutional experts, no doubt there will be minority opinions—as there have been on similar issues. It may be extremely difficult to find—as we saw in respect of reform of your Lordships’ House—any reasonable consensus following that.
Having provoked the debate that I set out to provoke by using the formula that, I say again, was not intended to freeze in any way the progress of the Wales (Miscellaneous Provisions) Bill, I will withdraw the amendment.
Baroness Randerson