Grand Committee
Maternity and Parental Leave etc. (Amendment) Regulations 2014
Lord Popat
That the Grand Committee do consider the Maternity and Parental Leave etc. (Amendment) Regulations 2014.
Relevant document: 9th Report from the Joint Committee on Statutory Instruments
Lord Popat (Con)
My Lords, I will also speak to the Paternity and Adoption Leave (Amendment) (No. 2) Regulations 2014.
Over recent weeks we have debated some of the key regulations which will implement the Government’s modern workplace agenda, which is updating and landscaping the family-related leave legislative framework. My noble friend Lord Bourne led the debate on 10 November on the main, architectural regulations, which create a new statutory right to shared parental leave and pay for eligible working parents. On 17 November, my noble friend Lady Neville-Rolfe led the debate on the six sets of regulations which allow other groups to benefit from shared parental leave and pay. These new groups are intended parents in surrogacy arrangements and employees who are adopting from overseas. Those regulations also provide an entitlement to adoption leave and pay, and paternity leave and pay, to qualifying intended parents.
Today, we have our last debate on the regulations which will complete the overhaul of the family-related leave landscape to which this Government are committed. We are debating two sets of regulations today. First, the Paternity and Adoption Leave (Amendment) (No. 2) Regulations provide an entitlement to adoption leave and paternity leave to employees who are prospective adopters and with whom looked-after children are placed. These placements are sometimes known as fostering for adoption placements. They are made using the powers introduced into the Employment Rights Act by Section 121 of the Children and Families Act 2014.
These regulations amend the Paternity and Adoption Leave Regulations 2002 to ensure that the eligibility criteria for adoption leave and paternity leave are modified. They will now recognise the particular process in which an employee has a child placed in their home by means of a fostering for adoption placement. As a result, the regulations enable local authority foster parents who are also approved adopters and who have a child placed with them with a view to adoption to access adoption leave and pay, and their partners will be able to access paternity leave and pay, if they meet the eligibility requirements. This group of individuals is willing to take on and care for perhaps some of the most disadvantaged children in the country and to provide them with loving, stable homes. These prospective adopters do so knowing that the placement may ultimately not end up becoming formal adoption. In recognition of the role that these prospective adopters play in providing loving, long-term homes for looked-after children, the Government feel that it is only right to extend the same benefits to them as are enjoyed by other adopters.
The regulations apply to situations where a child is matched with a local authority foster carer who is also an approved adopter and the adopter is notified of that match on or after 5 April 2015. From that date adoption leave will become a day-one right, and, as provided for through the Children and Families Act 2014, if they are entitled to statutory adoption pay, prospective adopters will receive an enhanced rate of statutory adoption pay for the first six weeks which amounts to 90% of their salary.
The regulations are aimed at smoothing the transition for a looked-after child into their new home. Enabling families to spend time together when there is a new member of the family and not having to wait for the final adoption paperwork to be finalised will be an important part of the settling process. Being able to be at home for the first year following placement means that the prospective adopter is there providing love and support in those first challenging months. However, as anyone with a child will know, it is not just the first year of parenthood that is challenging. The challenges of parenthood and the difficulties of managing career and family life are not like a tap that switches off after one or even five years. Being able to find the right balance is a challenge that working parents continue to face right up until their child is an adult.
The second set of regulations that we are debating today aim to address that. The Maternity and Parental Leave etc. (Amendment) Regulations 2014 extend the period in which an employee can take unpaid parental leave from the existing five years to 18 years. That means that an employee who is entitled to 18 weeks of unpaid leave because they have been continuously employed for at least a year, and have parental responsibility for a child, will have a much longer period in which they can make use of that leave if they need to. This applies to both birth and adoptive parents. The requirement to give an employer 21 days’ notice before taking leave and the limit of taking a maximum of four weeks in a year are unchanged.
The Government announced that they were making this change in November 2012. We also decided to bring in the change to coincide with the wider package of reforms to family-related leave and pay in April 2015. In light of the broader changes, the Maternity and Parental Leave etc. (Amendment) Regulations also make a small consequential change to the right-to-return provisions to reflect the introduction of shared parental leave.
These two sets of regulations complete the full picture of reform that this Government committed to in November 2012. They mark an important milestone, which we hope will support wider cultural change to encourage greater shared parenting and equality in the labour market. They are important steps towards ensuring working parents are able to manage their careers and caring responsibilities more effectively. I commend these draft regulations to the Committee.
Paternity and Adoption Leave (Amendment) (No. 2) Regulations 2014
Lord Popat
That the Grand Committee do consider the Paternity and Adoption Leave (Amendment) (No. 2) Regulations 2014.
Relevant document: 9th Report from the Joint Committee on Statutory Instruments
Lord Gardiner of Kimble (Con)
My Lords, it may be necessary for the Committee to adjourn for a few moments because of the sequence of events. The Minister is arriving almost imminently but it might be sensible if we were to adjourn during pleasure for five minutes.
The Deputy Chairman of Committees (Lord Geddes) (Con)
I can hardly decline given that I was somewhat late.
Legal Services Act 2007 (Chartered Institute of Legal Executives) (Modification of Functions) Order 2014
(10 years ago)
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Lord Faulks
That the Grand Committee do consider the Legal Services Act 2007 (Chartered Institute of Legal Executives) (Modification of Functions) Order 2014.
Relevant document: 9th Report from the Joint Committee on Statutory Instruments
The Minister of State, Ministry of Justice (Lord Faulks) (Con)
My Lords, I shall also speak to the draft Legal Services Act 2007 (The Institute of Chartered Accountants in England and Wales) (Modification of Functions) Order 2014, the draft Legal Services Act 2007 (the Chartered Institute of Patent Attorneys and the Institute of Trade Mark Attorneys) (Modification of Functions) Order 2014 and the draft Referral Fees (Regulators and Regulated Persons) Regulations 2014.
The first order—for CILEx, the Chartered Institute of Legal Executives—is made under Section 69 of the 2007 Act and modifies the functions of CILEx. CILEx is currently an approved regulator under the Legal Services Act 2007 for the following reserved legal activities: probate activities, the exercise of a right of audience, reserved instrument activities, the administration of oaths and the conduct of litigation. If made, this order will enable CILEx to operate more effectively by modifying its powers to make regulatory arrangements.
Specifically, the order will enable CILEx to make compensation arrangements as defined in the 2007 Act and allow it to make rules authorising it to establish and maintain a compensation fund, requiring CILEx-authorised entities to contribute to it. The compensation fund will protect clients of CILEx-authorised entities who suffer loss in the event of dishonesty or a failure to account.
In addition, this order modifies the provisions of Schedule 14 to the 2007 Act so that the intervention powers there are available to CILEx in its capacity as an approved regulator. For example, these powers would enable CILEx to seek an order from the High Court to intervene into an entity, to enter its premises and seize documents or property. This power will both protect consumers and provide the public with continued assurance that there are mechanisms in place to protect and safeguard their interests.
Taken together, the increased safeguards put in place by this order will enable CILEx to authorise and regulate entities for the first time. This will enable individuals who have been assessed by CILEx as sufficiently competent to carry on one of the reserved legal activities for which CILEx is designated to set up independent businesses for that reserved legal activity. The LSB conducted a public consultation between 23 June and 21 July 2014. No responses were received. This order follows a recent order designating CILEx as an approved regulator for reserved instrument activities and probate activities, bringing the total number of reserved legal activities it can regulate to five.
The Section 69 order for the Institute of Chartered Accountants in England and Wales modifies the functions of the institute in two main ways. First, it enables the institute to make regulations or rules providing for appeals to the First-tier Tribunal against its decisions as an approved regulator and licensing authority. Secondly, and similarly to the CILEx Section 69 order, this order modifies the provisions of Schedule 14 of the 2007 Act so that they apply to the institute in its capacity as an approved regulator. This gives the institute the same intervention powers as an approved regulator that it already has automatically as a licensing authority. This order follows the two orders, made in July and August this year, designating the institute as an approved regulator and licensing authority for probate activities.
This Section 69 order, dealing with appeals and intervention powers, now comes before the House following a public consultation by the Legal Services Board. No responses were received to the consultation. The recent designation of the Institute of Chartered Accountants in England and Wales as an approved regulator and licensing authority for probate activities has been an important step. The institute’s entry to this sector will help to contribute to the growth of the legal services market and bring further innovations, leading to benefits to consumers of legal services.
The order will ensure that the institute’s decisions as both an approved regulator and a licensing authority can be appealed to the First-tier Tribunal, which will help to ensure consistency of regulation. The order will also provide the institute with the same intervention powers as an approved regulator that it already has as a licensing authority, similarly ensuring consistency of regulation.
With regard to the Section 69 order for the Chartered Institute of Patent Attorneys and the Institute of Trade Mark Attorneys, CIPA and ITMA are both approved regulators under the Legal Services Act 2007 for the following reserved legal activities: the exercise of a right of audience, the conduct of litigation, the administration of oaths and reserved instrument activities. CIPA and ITMA have applied to be designated as licensing authorities in relation to the same reserved activities for which they are approved regulators.
The order essentially does two things. First, it harmonises the approach that CIPA and ITMA take in regulating all registrants to undertake patent and trade mark work, whether they are registered bodies—that is, non-alternative business structures—or licensed bodies—that is, alternative business structures. It does this by making various provisions to ensure that the regulatory framework for CIPA and ITMA is the same whether they are acting as an approved regulator or as a licensing authority. Secondly, the order enables CIPA and ITMA to make rules or regulations providing for appeals to the First-tier Tribunal or High Court against decisions made by CIPA and ITMA as an approved regulator and, in certain circumstances, as a licensing authority.
CIPA and ITMA are not yet licensing authorities, but they applied in May 2013 to the Legal Services Board to be designated as licensing authorities in relation to the same four reserved activities for which they are already approved regulators. Following a recommendation from the LSB to the Lord Chancellor, a decision in principle to make such a designation order was made by the Parliamentary Under-Secretary of State on 5 March. The order was laid in Parliament on 20 November. The present Section 69 order modifying the functions of CIPA and ITMA comes before the House following a public consultation by the LSB. No responses were received.
The order puts in place a number of measures to harmonise the approach that CIPA and ITMA take in regulating all registrants to undertake patent and trade mark work, whether they are acting as approved regulators or, eventually, as licensing authorities. This will help to ensure consistency of regulation and will pave the way for the continued widening of the legal services market.
With regard to the CILEx referral fee ban order, the background is that on 1 April 2013 a ban was introduced on the payment and receipt of referral fees in personal injury cases by “regulated persons”. The ban was introduced by the Legal Aid, Sentencing and Punishment of Offenders Act 2012, which defines “regulated persons” as solicitors, barristers, claims management companies and insurers. This ban was a response to the concern, highlighted in Lord Justice Jackson’s review of civil litigation costs, that referral fees in personal injury cases contribute to the high costs and volume of personal injury litigation.
As CILEx-regulated practitioners did not fall within the definition of regulated persons at that time, they were not included in those provisions. However, if made, the CILEx Section 69 order being debated here today will bring CILEx-regulated practitioners who are authorised to conduct litigation within the scope of the referral fee ban. Without formally extending the ban to them, they will be able to pay and receive referral fees. This would compromise consumer protection and would give them an unfair commercial advantage over other practitioners in the field.
This order therefore adds CILEx to the list of regulators for the purposes of the ban and specifies the group of practitioners to whom it will be applied. In so doing, it fulfils one of the major objectives of statutory regulation—namely, to protect and promote the public and consumer interest. It will also create a level playing field in relation to other regulated legal service providers.
In conclusion, these orders enable those bodies to strengthen their regulatory powers, leading to greater consistency and greater protection for consumers, and I commend them to the Committee.
Baroness Hayter of Kentish Town (Lab)
My Lords, I rise simply to welcome the first three orders which extend alternative business structures—which, of course, started under the 2007 Act. That change is gradually rolling out and is to be welcomed.
I want to say a particular word of welcome about the first order, on CILEx, because CILEx has gone through part of the process to enable legal executives to carry out reserved or regulated legal activities, which now include litigation, rights of audience, administering oaths, probate and conveyancing. As the Minister suggested, CILEx members are currently not able to set up their own businesses unless they get together with someone else who is regulated by another regulatory body such as the Law Society. In future, however, with this change, CILEx will be able to authorise independent CILEx businesses. That is good for clients. As we know, many local firms, particularly small ones, will not go to a lawyer when they have a legal problem because of the expense. This much broader provision of legal services will therefore be very good. At the moment, only about 12% of small businesses turn to a lawyer even when in difficulties. With this gradual increase in what they can do, as well as a greater availability of CILEx businesses, these specialist firms will be able to offer a service.
I want to say just one other thing. Because of the particular way in which CILEx’s members come up through the institute and become lawyers, CILEx is composed of a far broader mix of people, from a broader range of backgrounds, than is perhaps the case with the traditional lawyer. It has a much more diverse membership in terms of, for example, ethnicity, as one-third of CILEx members are from ethnic minorities; gender, as three-quarters are women; and social background—indeed, 86% did not have parents who went to university, a statistic which is quite different from that applying to some other groups. What is happening with individual lawyers will now also happen with these new businesses. They, too, will be more diverse, and represent the diverse needs of consumers. I therefore thank the Ministry of Justice for getting this through. The Minister indicated that there had not been many responses to the consultation but, as I understand it, that is basically because people were happy with the change. I think that it will be broadly welcomed.
Lord Kennedy of Southwark (Lab)
My Lords, the three orders that we are discussing today modify the functions of the Chartered Institute of Legal Executives, the Institute of Chartered Accountants in England and Wales, the Chartered Institute of Patent Attorneys and the Institute of Trade Mark Attorneys in respect of regulatory matters to the extent necessary to modify their powers under the Legal Services Act 2007, and the one regulation extends the ban on the payment and receipt of referral fees in personal injury cases to include appropriately qualified practitioners who are members of the Charted Institute of Legal Executives.
CILEx is an approved body to award practice rights in the reserved legal activity area and this regulation will be undertaken by ILEX Professional Standards. It also has to have the ability to protect the interests of the public who use the services of its members, and this includes the power both to provide redress in the form of compensation to clients and to be able to intervene into legal practices. The order gives it the required powers to set up a compensation fund and collect the required fees and, secondly, to take appropriate enforcement action to protect the interests of consumers. I agree with my noble friend Lady Hayter of Kentish Town that this is good news for consumers in giving them a wider choice in the marketplace when looking for legal services and in providing the public with proper protection. It is a boost to legal executives seeking to widen the sphere of work that they undertake, particularly unsupervised work, as they can demonstrate that they have proper protections in place.
The order in respect of the Institute of Chartered Accountants in England and Wales provides for appeals to the First-tier Tribunal against decisions made by the institute as an approved regulator and as a licensing authority. It also changes its arrangements and increases its scope for using intervention powers. This again is a sensible measure, and the Opposition have no issues with what is proposed here. Giving consumers uniform protections and rights is in itself a sensible move and works towards improving the efficiency of the regulatory and protection framework for legal services.
The third order makes changes to the regulatory arrangements in respect of the Chartered Institute of Patent Attorneys and the Institute of Trade Mark Attorneys acting as approved regulators and, if designated in the future, as licensing authorities. Again, the Opposition have no issue with what is proposed, but I have a few questions for the Minister. In respect of the order relating to CILEx, what work has the Ministry of Justice done to satisfy itself that the Legal Services Board has acted with due diligence in coming forward with this proposal and that CILEx has the range of competences required to undertake these new regulatory powers?
In respect of the order regarding the Institute of Chartered Accountants in England and Wales, what work has the MoJ done to satisfy itself that this order is appropriate and, again in respect of the third order, what specific work has been undertaken in the MoJ to satisfy itself that these measures are proportionate, they deliver the objectives being sought here and those objectives are right in practice?
I have no issues to raise in respect of the regulation adding CILEx-registered practitioners to those banned from the paying and receipt of referral fees.
Lord Faulks
My Lords, I am grateful for the contribution to this debate from the noble Baroness, Lady Hayter, and the noble Lord, Lord Kennedy, who I know broadly welcome all these changes by statutory instrument. I shall deal first with what the noble Baroness said about CILEx. She accurately described this as the next step in rolling out CILEx so that its increased role and activities can be used by more people. She rightly pointed out that many people will go to legal executives rather than spend more money on lawyers. There is increasing confidence in the standard of advice that they are giving. I have been to a number of events of theirs, and it is a profession that is in good health. The noble Baroness is also right to point to the range of diversity among their number. Although my figures do not precisely coincide with hers, as there were some CILEx members who chose not to provide information, I confirm that on the figures that the MoJ has, 74% of CILEx members are women and there is a higher than usual percentage of members from black and minority ethnic backgrounds—certainly not less than 16%, which is encouraging.
The noble Lord, Lord Kennedy, asked whether the Government were satisfied that CILEx had put effective and appropriate arrangements in place generally for these arrangements. He will appreciate that under the Legal Services Act 2007 the Legal Services Board was set up as a super-regulator. It was his Government who brought in that legislation, and it is not for the Government to regulate the regulator who then regulates the regulator, so we have to be satisfied that the Legal Services Board is in fact doing its job. Of course, as with all arm’s-length bodies, it is regularly reviewed.
The Ministry of Justice analysed each application made to it by the Legal Services Board before the Lord Chancellor agreed to make the specific orders that are before the Committee today. That included looking at the underlying regulatory framework. I can assure the noble Lord that that additional step was taken. The Ministry of Justice has to be satisfied with the overall framework of regulation that exists in relation to all these professions, whether it is legal executives or trade mark and patent attorneys. The Government are satisfied that effective and appropriate arrangements have been made in respect of the regulation and authorisation of CILEx members, and indeed in relation to compliance with the Legal Ombudsman, although the noble Lord did not specifically ask me about that.
The intention, by setting up the compensation fund and giving rights to intervention, is clearly to put such professionals in the same, more established position applying elsewhere and to provide additional security for consumers. That has been done, in so far as one can ever be 100% sure of these things.
Baroness Hayter of Kentish Town
Before the Minister sits down, I want to apologise: his figure was right and mine was wrong. The one-third figure refers to new CILEx students, so I got that wrong. His figure of 16% is right. However, up to one-third of new CILEx students are from black and minority ethnic groups.
Legal Services Act 2007 (The Institute of Chartered Accountants in England and Wales) (Modification of Functions) Order 2014
(10 years ago)
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Lord Faulks
That the Grand Committee do consider the Legal Services Act 2007 (The Institute of Chartered Accountants in England and Wales) (Modification of Functions) Order 2014.
Relevant document: 9th Report from the Joint Committee on Statutory Instruments
Legal Services Act 2007 (the Chartered Institute of Patent Attorneys and the Institute of Trade Mark Attorneys) (Modification of Functions) Order 2014
(10 years ago)
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Lord Faulks
That the Grand Committee do consider the Legal Services Act 2007 (the Chartered Institute of Patent Attorneys and the Institute of Trade Mark Attorneys) (Modification of Functions) Order 2014.
Relevant document: 10th Report from the Joint Committee on Statutory Instruments
Referral Fees (Regulators and Regulated Persons) Regulations 2014
(10 years ago)
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Lord Faulks
That the Grand Committee do consider the Referral Fees (Regulators and Regulated Persons) Regulations 2014.
Relevant document: 9th Report from the Joint Committee on Statutory Instruments
Compensation (Claims Management Services) (Amendment) Regulations 2014
(10 years ago)
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Lord Faulks
That the Grand Committee do consider the Compensation (Claims Management Services) (Amendment) Regulations 2014.
Relevant document: 8th Report from the Joint Committee on Statutory Instruments
The Minister of State, Ministry of Justice (Lord Faulks) (Con)
My Lords, the regulations before the Committee amend the Compensation (Claims Management Services) Regulations 2006 with regards to the available enforcement tools of the claims management regulator. The regulations provide for the regulator to impose financial penalties on non-compliant regulated claims management companies. The penalties would apply to: breaches of the Conduct of Authorised Person’s Rules; failing to comply with a code of conduct; failing to comply with directions relating to indemnity insurance; failing to comply with directions relating to redress and complaints handling; failing to comply with an information notice from the regulator; and obstructing the execution of a warrant.
The regulations also provide for certain situations in which CMCs will not be able to surrender their authorisation without the consent of the regulator. This is to ensure that a CMC cannot avoid investigation and enforcement action by simply surrendering its authorisation. The new financial penalty power provides an additional deterrent from malpractice within the regulated claims management industry. With this new power, the regulator can look to remove any monetary gain that may have been made by a CMC through non-compliant practices, where possible.
Before setting out further details about the regulations and why the Government are taking this action, I will briefly explain some background with regards to claims management regulation and the need for an additional available sanction in this area. Businesses providing regulated claims management services in England and Wales under the Compensation Act 2006 must be authorised to do so by the regulator, which forms part of the Ministry of Justice.
Claims management regulation covers a range of sectors, most notably the personal injury and financial products and services sectors. There are also a number of lower profile claims sectors, such as employment, criminal injuries, industrial injuries disablement benefit and housing disrepair, which are subject to regulation by the regulator. Once authorised, regulated CMCs are required to comply with certain conditions of authorisation, including adherence to the Conduct of Authorised Persons Rules. Where breaches of the conditions of authorisation are identified, the regulator can take enforcement action, such as the variation of the CMC’s authorisation, by imposing additional conditions or the suspension or cancellation of authorisation in the most serious cases.
These measures form part of a wide package of reforms which I will explain shortly. First, I will set out why they are needed. Bad practices by some regulated CMCs have created poor outcomes for some consumers and businesses, particularly in the area of financial products and services. Current enforcement powers have not deterred some CMCs from carrying out speculative behaviour or engaging in other forms of malpractice. This has led to delays in receiving compensation for some consumers who have legitimate claims and has increased costs for some defendant financial services firms where claims are unsubstantiated. Where a CMC is subject to formal enforcement action, such as the cancellation of authorisation, this can directly affect clients whose cases cannot be progressed by the CMC if its authorisation is removed.
The power to impose financial penalties on non-compliant CMCs does not replace any existing enforcement sanctions but provides an additional, flexible tool that will assist the regulator to carry out its duties even more effectively. This new power therefore acts in the best interests of both consumers and businesses by ensuring that the regulator has a full range of appropriate tools to deter non-compliant behaviour.
A public consultation on the proposed amendments received wide support from the claims management and banking industries as well as those with a general interest in claims management matters. Responses to the consultation suggested that the proposed measures would improve regulation while providing an additional and necessary deterrent from malpractice.
It is important to make clear that, since the start of regulation in 2007, the regulator has utilised its existing powers fully and has done extremely well to stamp out non-compliant behaviour across the claims management industry. The regulator continues to make improvements to the regulated claims market through targeted compliance programmes and enforcement action.
Since April 2013, the regulator has overseen a package of reforms to the regulatory regime. These include: key changes to the conduct rules to ensure that claims are substantiated before being pursued; naming CMCs under investigation and subject to enforcement action online; increased resources and the establishment of a specialist compliance team to tackle non-compliant marketing practices; a ban on CMCs offering financial rewards or similar benefits to potential claimants as an inducement to make a claim; a ban on the payment or receipt of referral fees between CMCs, lawyers, insurers and others; and the appointment of the first two independent non-executive board members to the executive-led claims management regulation board, enabling a greater element of external challenge and continuous improvement.
With that background, I turn to the draft amended regulations before the Committee today. In effect, the order amends the regulations to include provisions regarding: the process that must be followed to impose a financial penalty, which is the same process currently used for the imposition of existing forms of formal enforcement action; the requirements to consider the nature and seriousness of any breach by the regulated CMC and its turnover in determining the amount of the penalty; and the penalty that can be imposed, which will be a maximum of £100,000 for regulated CMCs with a turnover of less than £500,000 and 20% of turnover for regulated CMCs with a turnover of £500,000 or more. It also amends how the regulator can deduct any administration costs incurred in collecting or enforcing the payment of a penalty before the remainder is paid into the Consolidated Fund; how the penalty can be enforced by the regulator as a civil debt, if necessary; and the restriction on the surrender of authorisation by an authorised person without the consent of the regulator.
I am sure that the Committee will agree that the regulator must have the necessary tools to impose a range of appropriate sanctions that deter malpractice and encourage regulatory compliance. The order provides the regulator with additional powers to ensure that a complete range of robust and proportionate enforcement options can be considered as appropriate. I therefore commend the draft regulations and beg to move.
Lord Kennedy of Southwark (Lab)
My Lords, I say at the outset that the Opposition very much welcome what is proposed today. Since joining your Lordships’ House in June 2010, I have regularly raised the question of claims management companies and the end of the industry that indulges in bad practice. I also want to start by paying tribute to the work undertaken by the claims management unit at the MoJ, led by Kevin Roussell. It does a really good job with limited resources and the regulations will be another important tool in its box to deal with bad practitioners who rip off consumers and cause unnecessary costs for businesses to which they submit claims.
What is most reprehensible is submitting pointless, vexatious claims to financial services providers with which their client has no record of doing business. That is done as a fishing expedition on the off chance that they may get lucky, with no regard to the cost to the business, the clogging up of the processes in each business and the Financial Ombudsman Service, or to the genuine people who have been ripped off by bad practice in the financial services industry, who will have to wait even longer to have their claim settled.
I must say that I have no problem with the responsible claims management company, which can provide a valuable service to its clients. It can give advice on how to proceed, and as long as its client is aware of the charges to be incurred and is happy to pay them, and the company is properly processing and managing claims, that is fine. Nothing here will concern the responsible claims management company. In the consultation there was broad support for the proposals from all respondents, including the claims management industry, which wants to improve the image of its industry, raise standards and get rid of the rogues.
However, it is important to put on record that CMCs working in this field are dealing with bad practice in the financial services industry. There have been a number of cases in recent years where people have behaved very badly in that industry. I note in the Explanatory Memorandum that the Ministry of Justice does not see a case for consolidation at present. I think that that is probably right. I hope, however, that the department will keep this under review, as things change over time, sometimes very quickly. We may get to the point where the case for consolidation becomes more compelling. If that is the case, the Minister can be assured of support from these Benches. I have no wish to detain the Grand Committee any longer than necessary, and conclude my remarks by again welcoming the proposals.
Lord Faulks
I am grateful for the observations of the noble Lord, Lord Kennedy, who has indeed several times in your Lordships’ House raised questions about claims management and the more unattractive habits in which they have been prone to indulge. I am also grateful to him for specifically drawing the Committee's attention to the claims management unit and Kevin Roussell, who runs it. I have visited that unit in Burton-on-Trent. It is a small, efficient, extremely dedicated collection of employees who, I think, have made real progress in improving the industry. Although there are some who wonder why we need claims management companies at all, we are increasingly left with fewer, better regulated and better organised claims management companies who provide a service to clients.
I accept the noble Lord’s point that that there is a need to be nimble and alert, and possibly in due course to consolidate. This is an area where the market changes swiftly, and there has to be a swift response—if necessary, a legislative response—to make sure that changes in market do not bring about unacceptable practices. We feel that the changes embodied in the statutory instrument—the new power to impose financial penalties—which are similar to those of regulatory authorities such as the Financial Conduct Authority and the Information Commissioner’s Office, are an additional and useful adjunct to the existing powers. I hope the Committee will agree that they are proportionate and necessary measures, and in those circumstances, I commend the regulations to the Committee.
Child Poverty Act 2010 (Persistent Poverty Target) Regulations 2014
(10 years ago)
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Lord Freud
That the Grand Committee do consider the Child Poverty Act 2010 (Persistent Poverty Target) Regulations 2014.
Relevant documents: 10th Report from the Joint Committee on Statutory Instruments, 11th Report from the Secondary Legislation Scrutiny Committee
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud) (Con)
My Lords, the regulations laid before the Committee today introduce a new persistent child poverty target, as required by the Child Poverty Act 2010. At the end of this Parliament, as at the start, the coalition Government remain committed to tackling the key drivers of child poverty and improving the lives of the most vulnerable people in our society. We remain committed to the goal of ending child poverty in the UK by 2020 and, despite challenging economic conditions and fiscal restraint, we are making significant progress: under this Government, 300,000 fewer children live in relative poverty.
The evidence is clear that work remains the best route out of poverty. We know that children are about three times as likely to be in poverty if they live in a workless family. Therefore, at the centre of our child poverty strategy is a commitment to tackling worklessness, and it is clear that our reforms are making a real difference. With employment up by nearly 1.7 million since 2010, there are now around 390,000 fewer children in workless households, and both the number and the proportion of children in workless households are at the lowest levels on record. Through our structural reforms to welfare, we are lifting people out of poverty, putting in the right incentives to get people into work and to make work pay.
We are not stopping there. We are helping people to progress in work through universal credit and the next phase of the Work Programme with a clear focus on skill development. Before they reach the workplace, this Government’s commitment to improving educational outcomes has seen poor children do better than ever at school. Between 2010 and 2013, the proportion of children on free school meals getting good GCSEs, including English and maths, has increased by 7% to 38%. These are substantial leaps in educational attainment, which will make a real and lasting difference to children’s lives as they develop.
Today, we are publishing the Government’s response to the Social Mobility and Child Poverty Commission’s State of the Nation 2014 report. This reiterates our goal to end child poverty and achieve lasting change for the poorest in our society. This, along with the regulations before the Committee today, demonstrates our ongoing commitment to tackling child poverty and helps us to meet our obligations under the Child Poverty Act 2010. The Government firmly believe that, in the long term, a revised set of child poverty measures are needed which underline our commitment to reducing child poverty but better reflect the evidence about its underlying causes. We are not yet in a position to put these new measures forward. In the absence of these new measures, we therefore remain committed to meeting our existing obligations under the Act and to introducing a persistent child poverty target by the end of this year.
This fourth child poverty measure will complement the three existing child poverty measures which are already in statute. These are on relative poverty, absolute poverty, and combined low income and material deprivation. There are compelling reasons for introducing a persistent poverty measure. This Government recognise that persistent poverty can be particularly harmful to children’s life chances. We know that children living in persistent and long-term poverty have a radically different experience of growing up, compared to other children. The longer that a child remains in poverty, the more likely it is that he or she will experience poor outcomes such as social exclusion, below average attainment and reduced life chances. This was a view shared in the majority of responses to our consultation on the target. Reponses from the Social Mobility and Child Poverty Commission and others put particular emphasis on the damaging effects of persistent poverty and urged the Government to continue to put this at the centre of policy ambition.
We are steadfast in our commitment to addressing child poverty in all its forms and our Child Poverty Strategy 2014-17, published in June, sets out the action that we are taking as a Government. We will continue to focus action on breaking the cycle of persistent poverty and exploring what further steps can be taken to reduce persistent poverty as far and as fast as possible. So in June this year, the Government launched a consultation on setting a persistent child poverty target of less than 7%. This means that the percentage of children living in households that are in relative poverty in at least three of the four years up to 2020-21 must be less than 7% of all children in the UK.
The Secondary Legislation Scrutiny Committee queried why we are not setting this target at zero per cent. According to all measures, child poverty is assessed using robust and well established statistical surveys to capture information about household income. However, like all sample surveys, this one contains some naturally occurring error. For example, some people will give inaccurate reports of their income when interviewed, or are between jobs at the exact point when they respond to the survey. It is therefore not statistically feasible for these surveys to report that zero per cent of children are in poverty and does not make sense to set a target at this level. That is the same reason that the existing Act’s targets were not set at zero per cent.
Our decision to choose a target of less than 7% is both evidence-based and consistent. First, it is based on analysis of the historical relationship between persistent poverty and relative poverty. Secondly, it is consistent with the ambitious relative poverty target of less than 10%, as set out in the Child Poverty Act 2010. The evidence shows that in a given year, levels of persistent poverty are typically 50% to 70% of relative poverty. According to past trends, therefore, when relative poverty reaches around 10% persistent poverty should be somewhere between 5% and 7%.
However, we must also take into account how future trends might affect the relationship between relative and persistent child poverty. As the number of children in relative poverty reduces, the children from harder-to-reach families who face most disadvantage are likely to make up a greater proportion of the group. These children are more likely to suffer from persistent poverty, which means that the historical relationship between relative child poverty and persistent poverty is likely to shift. Therefore, when levels of relative child poverty are about 10%, children in persistent poverty could make up a high proportion, if not the entirety, of the group. In such an event, the proportion of children in persistent poverty could be much closer to 10% of all children.
Baroness Lister of Burtersett (Lab)
My Lords, I endorse what the Minister has said about the damaging effects of long-term persistent poverty. However, I am sure that he did not expect me to come here to agree with him, so I will now make a few critical points. The Secondary Legislation Scrutiny Committee was critical of the lack of clarity in the explanatory material with these regulations, which, as it points out, is not for the first time. It asked about the definition of qualifying households. Just for the record, will the Minister clarify which children are excluded? The scrutiny committee referred to children in state institutions. Am I right in thinking that it also excludes the children of asylum seekers and Travellers? Are there any other groups? It would be helpful for noble Lords to know that.
A perhaps rather techie but significant point, which was not raised by the committee, is the use of before housing costs to measure child poverty. According to the Social Mobility and Child Poverty Commission’s State of the Nation report—I did not realise that the Government’s response was published today; I am not a clairvoyant and I have not read it—if you use the after-housing-costs measure rather than the before-housing-costs measure, which is preferred by the Government, it adds an additional 1.4 million children to the numbers in relative poverty. Therefore, 27% of all children rather than 17% of children are in poverty. As I say, that may seem a rather techie point but it makes a huge difference. As recent research by the Joseph Rowntree Foundation has underlined, housing costs are an increasingly important driver of poverty among people of working age and their children. When I questioned the Minister about this in Oral Questions yesterday, he did not answer my question, and it is a rare opportunity to be able to come back the next day. I will not re-ask the question, which concerned what the Government are doing about high housing costs, but I noted that, instead of answering the question, he talked about how they are making really good progress in tackling poverty. Of course any reduction in the figures is welcome, but it is interesting that every time the Government get up and say, “We’re reducing poverty”, they use a measure that in other contexts they tend to rubbish. Anyway, I will put that to one side.
If we take the figures after housing costs, they are rather less favourable. Indeed, the child poverty figures increased in 2012-13 over the previous year, whereas if you look at before housing costs, they are flat. That is just to underline the importance of these different measures and how they are used.
The scrutiny committee also queried, as the Minister acknowledged, why the target figure in the regulations is not lower. I absolutely accept that zero is not realistic, but the committee pointed out in particular that the majority of consultation responses argued for 5% or less. In fact, 31 out of 39 written responses were against the below 7% target, with only six arguing for it, and 23 were in favour of a below 5% target. One example was the Child Poverty Action Group—I declare an interest as honorary president—which made the point that:
“In setting the persistent child poverty target, the government should consider past historical performance in the UK, and the performance of other comparable countries in tackling persistent poverty. This is suggestive of a range of 3 to 5 per cent”.
It was also critical of the lack of ambition of a 7% target.
I cannot help wondering why the Government bothered to consult in the first place. When they reject a clear consensus of pretty expert opinion, I fear that that feeds cynicism around consultation exercises, despite the warm words in the Written Ministerial Statement, which the noble Lord repeated, that the Government “carefully considered all representations”.
The scrutiny committee also said that it remained unclear as to how the Government intend to implement their policy. The Minister talked about that today with regard to the child poverty strategy, which, as I am sure noble Lords are aware, was published earlier this year. I could say plenty about that, but I will not say what I think about it; I will simply quote—at a bit of length, because it is worth putting on the record—what the Social Mobility and Child Poverty Commission said in response to the draft child poverty strategy, and the final strategy was not that different regarding the overall strategic approach. The commission said:
“The new strategy is the Government’s opportunity to revise its plans for tackling child poverty to get back on track towards meeting its legal obligation to end child poverty by 2020 … Our key conclusion is that this opportunity has not been taken. While there have been improvements in the Government’s strategic approach and in some policy areas, overall the strategy falls far short of what is needed”.
The Minister talked about reducing worklessness being at the heart of the strategy, but the commission points out that its research shows that,
“ending poverty mainly through the labour market does not look remotely realistic by 2020”.
It goes on to say:
“We acknowledge that there are some good things in the draft strategy”—
as do I—but continues:
“However, overall it falls far short of what is needed. Key problems include: the lack of any clear measures, with the Government continuing to distance itself from the statutory measures in the Child Poverty Act 2010 without suggesting any additions or alternatives. This is not acceptable—a strategy which cannot be measured is meaningless. In the absence of further measures and in line with our statutory duty, the Commission will continue to monitor progress”.
Other key problems are:
“The absence of a step-by-step plan for meeting the statutory targets, with the strategy presenting a list of policies rather than a detailed plan with impacts clearly delineated. A failure to engage with independent projections that poverty is set to increase substantially … Lack of new action on in-work poverty … Limited action to mobilise society-wide efforts to tackle poverty … Ignoring the impact of additional welfare cuts”.
It points out what that likely impact would be. Then it says:
“To ensure the final strategy is an effective and credible plan for tackling child poverty, the Government needs to … set out clear measures … Develop a step-by-step plan … Engage with independent projections of increases in child poverty over the next few years … Resolve gaps in the strategic approach … by taking action to address the structural as well as the individual-level causes of poverty”.
That is a really important point, because the Government are always going on about how they are concerned about the causes of poverty but do not tend to acknowledge the structural causes as opposed to individual ones. The response also says that the Government need to:
“Ensure the strategy represents a clear plan for mobilisation and leadership of other actors in society … Engage with the challenges posed for the child poverty strategy by continued fiscal consolidation”.
All the projections are very worrying regarding what the impact of other policies will be on the numbers in poverty, including the numbers in persistent poverty. The fear is, obviously, that the 7% is not going to be achieved because of these policies. It sometimes feels a bit unreal that we are designating 7% or 5% when the policies now being implemented suggest that we are going to go the wrong way on levels of child poverty, including persistent child poverty.
Lord Kirkwood of Kirkhope (LD)
My Lords, it is a pleasure to follow the noble Baroness—my noble friend, as we steal one another’s best lines. I concur with just about everything that she has said except to say that, while I yield to no one in having demanded money over the last 30 years for social security purposes, I am getting quite frightened about the national debt; £1.449 trillion is an enormous sum of money. You may have to configure responses to these kinds of policies a little more carefully than I have been doing.
Having said that, however, I would like to gently poke the Minister in the ribs, politically speaking. The pupil premium has been a significant potential success but I am not sure that we can be certain that this is replicated throughout the United Kingdom. We will need to watch that very carefully in future. Weighing in the balance some of the work done by the IFS, of which I am a council member, the persistent reductions in the social security spend over the past five years have been enormous. There is a lot of tension here and we have to do all that we can to remain positive and ambitious.
I concur with the view expressed by just about everyone in the consultation, including the noble Baroness who has just spoken, that 5% would have been a more ambitious target. That is an opportunity missed. I am trying to understand better the basis on which the target has been set. I think that the circumstances have changed a lot since 2010. Along with other colleagues, I was responsible for the implementation of the Child Poverty Act 2010, and I thought that it was the right thing to do. It was much more focused on money than it now is, so I can understand the coalition Government’s intention to try to broaden the approach to deal with some of the underlying consequences, but it is a bit disappointing.
I know that this is not easy but at paragraph 7.2 of the Explanatory Memorandum there is a confession that the Government,
“are not yet in a position”,
to take some of these new child poverty measures forward. Can my noble friend the Minister give us any expectation of when that work may be completed? He is right to say that we are all slightly blindsided by the fact that the British Household Panel Survey data finished in 2008, so we will probably have to wait until the end of 2015 to see the data that we really need. If that is the reason for the delay, I will understand; it might be impossible to make any sensible assessments until that point. However, that leaves it rather late to try to affect things by the end of fiscal 2020, which I suppose means achieving a target by 31 March 2021.
However, that is still a very short timescale. The legislature is right to say to the Executive, “There may well be compelling reasons why we are hastening slowly here”, but it is unfortunate that we still do not have a clear idea what the Government are really driving at—an argument reflected, reasonably, by the Scrutiny Committee. From a position of relative poverty standing at 17% in 2012-13—although it may be 27%, because of the difference in before and after housing costs—trying to get to 7%, or even 5%, over the period from 2017-18 to 2021 is a good trick, if we can do it.
Lord Farmer (Con)
My Lords, I believe that it is important to acknowledge that poverty rates, and persistent poverty in particular, will not be beaten down to the small number of 7% that we are talking about today—which is, rightly, the Government’s target—by means of financial assistance alone. The root causes need to be addressed in the total war against poverty that it is morally and pragmatically necessary to fight. The Joseph Rowntree Foundation, which my noble friend mentioned, and others have made the persuasive and well evidenced case that no country can afford to keep paying the costs of poverty, not least in terms of lost human potential. Therefore, I encourage the Government, in their various policies for tackling persistent poverty in children and adults, to come at this problem from as many angles as research has shown are necessary.
The 2014 social justice progress report, which has just been published, led on the recognition that family breakdown, divorce and separation, father absence, and dysfunction are drivers of poverty, not just a result of it. The report says that,
“family breakdown and other risk factors—worklessness, educational failure, mental health or drug and alcohol dependency—can feed off one another, compounding their effects, and leading to outcomes that can be very damaging for those affected and costly to society as a whole”.
Yesterday, the front page of the Times revealed that almost two-thirds of children felt that their parents’ break-up affected their GCSEs. One in eight had turned to drugs and alcohol to ease the stress, while almost a third were at risk of developing mental health problems in the form of eating disorders. Put that alongside the fact that two-thirds of 12 to 16 year-olds in the poorest households have seen their parents separate, and it becomes clear that the full effects of family breakdown will hit the poorest the hardest. Poor family functioning also gives children a very poor start in life, so this Government are to be applauded for their investment in the troubled families programme, about which we have just heard, as well as the Family Nurse Partnership Programme and other approaches aiming for the transformation of children’s life chances. This is the much bigger prize to be won, as opposed to merely moving their parents’ income across a somewhat arbitrary line.
However, we must not mistake the battle for the war. This Government have been courageous in putting family breakdown on the policy agenda for the first time ever but 40 years of negative family trends cannot be reversed in one term and with the somewhat restrained approach which we have seen to date. Divorce and separation carry a £46 billion price tag, yet only £7.5 million is spent on prevention. This is 0.02%, or less than one five-thousandth, of the costs that the policy is trying to save. Marriage is the far more stable family form yet the transferable tax allowance for married couples is worth a meagre £200 per family per year. This is a vital form of assistance to single-earner families who are not eligible for any childcare subsidy. It should be at least doubled for families with young children, so that they have a little more choice about mum and dad staying at home for the few short years of infancy. I believe that this would cost an additional £480 million per annum—money well spent.
Finally, the Government’s groundbreaking family stability review is deemed to warrant only a scant couple of pages in the social justice progress report. It must be published in full because of its fundamental importance for local authorities. They have to construct their own local child poverty strategies and urgently need to commission on the basis of the evidence contained in that review. I urge my noble friend to look again at the policy base for tackling family breakdown and consider strengthening it in the interests of hitting the persistent poverty target that he has set through these regulations.
Lord McAvoy (Lab)
My Lords, I open by getting it on the record that the last Labour Government lifted more than 1 million children out of poverty. In passing the Child Poverty Act 2010, Parliament enshrined into law the commitment of the then Labour Government to prioritise—a word that I will come back to—the fight against child poverty. A central aspect of this legislation dictates that appropriate targets be set for poverty reduction and that future Governments be held to account for their success in reducing the number of children and families living in poverty.
My noble friend Lady Lister of Burtersett mentioned one or two points made by the Secondary Legislation Scrutiny Committee. It is worth putting on record that its 11th report states:
“These Regulations are drawn to the special attention of the House on the ground that the explanatory material laid in support provides insufficient information to gain a clear understanding about the instrument’s policy objective and intended implementation”.
Lord Freud
My Lords, I wish that the noble Lord, Lord McAvoy, had not gone rather crudely political on what is a difficult area, especially as the facts that he used are simply not true. There has been an absolute cut in income for the richest 20% and an increase for the lowest, as has been put out by the Government. This is not the forum to have that kind of crude debate and I do not want that.
Some really important points have been made today. This is a difficult area at a difficult time. My noble friend Lord Kirkwood looked at the national debt and blanched, for very good reason. I look down my nose at him because, when looking at the performance of the last Government on poverty, one saw that they achieved the trajectory for people who were out of work, and they were able to do that through income transfers, but for people at the next level who were just in work and at the next level of income, there was very little movement. That is the problem that we are addressing. We are looking at a problem that cannot be solved just by moving money around particular areas. I commend the noble Lord to look through those figures, which are very interesting and illustrate the fact that we have got to the limits of what you can do just by income transfers, which is what the previous Government did.
Baroness Lister of Burtersett
I was not part of that Government, but will the noble Lord not accept that part of their child poverty strategy was also to move people into work? Part of the problem with the current situation, as the noble Lord, Lord Kirkwood, said, is that, although it may not be completely new, this is certainly the first time where more people in poverty are in work than out of work. We all agree that work is a good route out of poverty; but it is not necessarily a route out of poverty. Both Governments have faced the same problem of what you do with a labour market which is not providing enough to keep people out of poverty.
Lord Freud
I speak here from a somewhat privileged position, in that I advised the last Government in exactly this area and now speak for the current Government on it. So I am in a position—
Lord Freud
So I am in a position, slightly embarrassingly, to do this. The trouble with statistics is that you can get very confused by them. When you have had a massive increase in employment and a lot of people entering the market—2 million people into the private sector—you have some very substantial distorting data relating to those new entrants, which change the averages. You have also had massive changes because of the biggest financial crash since the 1930s—it used to be since the 1920s. I looked through the figures, and one-third of the fall in average income, for instance, can be roughly explained, as far as I can tell, by the reduction in bonuses in the City. Before one looks at these average figures, one really needs to dig under them to understand them. Otherwise, people in the Opposition will get into some cheap points that do not really stand up and which will just look foolish when people do the research properly, which they will do in the years to come.
I come off the generality into the specifics and the very difficult set of problems involved in solving child poverty, which we remain absolutely committed to. I will go through the points raised. The noble Baroness, Lady Lister, asked about the qualifying households. Surveys work by taking data from private households, so there are a relatively small number of children—it is a small number—who are not in there. They are, as she said, children in children’s homes, Travellers and one or two other categories, as she mentioned.
The after-housing-costs point has been very thoroughly debated. My noble friend will remember the thoroughness of some of those debates; the noble Lord, Lord Northbourne, was there too. Costs before housing are the set of measures in the Act, which is why we are using them. To change the measures would be to rewrite the primary legislation. Also, clearly, if you use a different base, you might think about what the right percentage figure is. That is the reason that we use before housing costs as a standard measure and as an international comparison. It was chosen because after housing costs reflect, or can reflect, choices that people make to spend more on rent or mortgages because that is what they value more than other things. Therefore there was a good reason that that set of measures was chosen.
Baroness Lister of Burtersett
I am sorry to intervene again. Before the Minister moves on, my understanding was that although the noble Lord, Lord Kirkwood, mentioned the delay because of the survey data, he was asking about what the actual measures are, and that is separate from the survey data. There was a big consultation about a set of measures that I personally did not think were measures of poverty. That is also what most people said in response so, fortunately, that time the Government did take note of the consultation and withdrew it. However, as the commission says, they are still distancing themselves from the measures that they have without coming forward with a more acceptable set of measures to complement them. The question is: what has happened to them? Have they got lost? There have been rumours about the Treasury having had something to do with it. What has happened to those complementary measures?
Lord Freud
In the long term, the Government think that we need a revised set of child poverty measures which would better reflect the evidence about poverty’s underlying causes and where we need to target action most—the kind of thing that my noble friend Lord Farmer, in particular, was talking about, but we are not currently in a position to put those new measures forward. As our consultation, which the noble Baroness mentioned, showed, this is a complex area and there are a variety of views. I am afraid that that is all I am in a position to say at this stage.
On the noble Lord’s point about how these measures are made up; clearly, both relative and persistent poverty levels depend in part on how both median income changes and how those with low incomes improve relative to the median. That is just how the Act was made. We spent an awfully long time debating during the passage of the Bill a general level of discomfort with just this mechanistic approach to this kind of measure. That is just how it is, and that is what the Act shows, but the fundamentals are that we need to maintain our focus on helping those on lower incomes, which means helping people into work—or more work, which is what universal credit will do—and in help with living costs.
Lord Kirkwood of Kirkhope
The Minister is being very helpful, and I do not want to detain the Committee. Presumably Section 6(3) of the Child Poverty Act 2010, as I understand it, requires the Government to set a figure, which has been set at 7%. However, that is all it does. Presumably, the Government, on cause shown if the evidence changed, could in subsequent years change that target. Am I right about that?
Lord Freud
I actually said something rather careful—that we will keep the evidence under review. We will get some up-to-date evidence next year about the persistent poverty target in relation to the relative poverty targets. Clearly, we will be able to monitor that and see how it moves, but we will have set the targets here in these regulations.
Lord Kirkwood of Kirkhope
The question I am asking is: are we stuck with the 7% target until 31 March 2021?
Lord Freud
The targets are in secondary legislation, and it would be up to a future Government, for which at this stage I cannot talk, to change secondary legislation. In practice, yes; it is a changeable target.
As I said in my opening remarks, we are committed to tackling child poverty, and we have a strong record. Relative child poverty is at its lowest level for 30 years—a fact that will perhaps surprise the noble Lord, Lord McAvoy. There are 300,000 fewer children in relative poverty since the election, and now 390,000 fewer children are growing up in workless families. We are especially committed to tackling persistent poverty and to breaking the cycle which sees poor children grow up to become poor adults. That is why I am proud to present these regulations before the Committee today, which set an ambitious persistent poverty target of less than 7% of all children in the UK, meeting our obligations under the Child Poverty Act 2010.
Lord McAvoy
The noble Lord did not respond to many of my points because, as I understand it, he dismissed them as being wrong. Can I respectfully ask him if he could help me by writing to me, outlining what parts of my speech were factually wrong and what the answers were to them? I am sure that he would not want to be thought to be making a cheap accusation—a cheap note—and I am sure that he will recognise his responsibility by writing to me, giving the details of what he said.
Lord Freud
I will, with great pleasure, note down and send to the noble Lord the figures, which I think I have used in the past, about how the income of the richest 20% has moved relative to the poorest 20% under this Government. I will provide him with those precise figures. I commend the regulations to the Committee.
Reports on Payments to Governments Regulations 2014
Baroness Neville-Rolfe
That the Grand Committee do consider the Reports on Payments to Governments Regulations 2014.
Relevant document: 11th Report from the Joint Committee on Statutory Instruments
The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Baroness Neville-Rolfe) (Con)
My Lords, I thank you for finding the time to consider these regulations. We tried for an earlier date, but the weight of business in the House meant that that was not possible.
I should first mention that we are introducing the regulations ahead of the next common commencement date in order to allow oil, gas and mining companies to align these reports with the calendar-year approach that they take to gathering information, making the work easier for them and avoiding reporting on a partial-year basis. The directive allows us the flexibility to implement prior to the transposition deadline.
The introduction of the regulations is important for the UK but also for the rest of the world. It is estimated that 1.6 billion people live in countries officially classified as rich in oil, gas or mineral deposits. Greater transparency will provide important information about the payments made: the income that a country gets from the extraction of natural resources. That may seem obvious, but that is not the case in every country around the world. This is a vital step in enabling citizens to hold their governments to account. Payments made to governments by companies active in the extractive industries have the potential dramatically to boost economic growth and to help resource-rich developing countries to pull themselves out of poverty.
The regulations demonstrate the UK’s commitment to transparency. We are taking the lead globally. The UK will be the first EU member state to introduce legislation to fully implement the requirement, although France is well on the way to doing so, Norway already has similar legislation in place, Canada is on track to implement a similar new law this year and we expect the USA to have rules in place next year.
Increased corporate transparency was a key feature of the UK’s presidency of the G8 in 2013. Following the discussions at Lough Erne, the official communique endorsed by our Prime Minister noted that the EU members of the G8 had committed to “quickly implement” the EU’s extractive reporting requirements. The UK is now delivering on that important commitment.
As noble Lords know, much of my career was in business. Transparency also makes good business sense: those who invest in companies must consider a wide range of issues and many investors will welcome additional information to enable them to make sound decisions. Increasing economic stability in countries where long-term investments are made is also good business.
The regulations before us are being considered following the agreement of the EU accounting directive. Chapter 10 of the directive deals with payments to governments by companies in the extractives industry. The UK took an active role in negotiating the detail of the new accounting directive. While recognising the importance of a strong and effective reporting requirement, we also recognised that the burdens imposed on industry by such a requirement needed to be proportionate. Industry and civil society representatives were closely involved throughout the negotiations for the directive. I am pleased to say that this close working relationship has continued as we developed the regulations that we are considering today.
I will now explain some of the detail of the regulations. As I have said, they implement part of the EU accounting directive and many of the requirements are fixed by that directive. Companies must report on payments made to all governments at all levels—national, regional and local—as well as to government agencies and state-owned companies. The report must detail information of the payments made on a project-by- project basis. During negotiations, we ensured that the definition of “project” was one that would reflect the ways in which industry manages and reports on its business activities.
The payments to be reported are listed within the regulations and include production entitlements, royalties, licence fees and payments for infrastructure improvements. The directive does not allow for any exemptions from reporting if a company is within scope. Companies are required only to report payments over the threshold of £86,000. The regulations also make clear, however, that one payment cannot be split to avoid the reporting requirements.
In many countries, payments to governments may not always be in cash; they may be in kind. Such payments are common and an in-kind payment could include improvements to infrastructure by building a new road, or perhaps a hospital. Such payments have to be included and, for the purpose of the report, a value must be attributed to any in-kind payment. To avoid doubt, the basis for the value given must also be set out. The directive requires all large companies and public interest companies active in the extractives sector to prepare reports. The transparency directive applies the same requirements to all companies listed on the main regulated stock markets in the European Union. This will ensure a level playing field, in that foreign listed companies also have to report even if they are not based in the EU. The Financial Conduct Authority, which is responsible, is currently considering rules to implement the requirements of the transparency directive.
Our consultation also considered the areas where the directive offered flexibility. These areas included the date of the first reporting period, the period allowed for the preparation and publication of reports and the reporting format. In line with the UK approach to improving transparency, companies will be required to prepare reports for financial years that begin from 1 January 2015—this January. The first reports will therefore be published in 2016.
The reports do not form part of the accounts but form a separate record of taxes paid directly to each level of government in each country around the world where they operate. The information will be set out project by project, so it will be possible to see the taxes paid directly to an individual country as a result of removing natural resources from the ground. The reports will have to be sent in two months after the deadline for filing company accounts—that is, 11 months after the end of the financial year, or six months for listed companies. This will allow sufficient time to compile the appropriate information without putting extra pressure on business at the time when accounts are due. We also want the reporting format to be as simple as possible. Companies House is working closely with industry on the format of the report. Requiring electronic reporting will facilitate the efficient receipt and sharing of data contained within the reports.
The Companies Act requires companies to report on a wide range of issues. In many cases, Companies House relies on public scrutiny of the register to ensure that company information is up to date. This is the approach that we are taking to achieve compliance for reporting payments to governments. We want to ensure that all companies are able to report in a simple and effective way.
If a company fails to prepare and publish a report or delivers a factually incorrect one, the registrar will write to ask why. There is no automatic penalty imposed as it may be that a company did not actually make relevant payments to governments in the year in question, or they may have been included in a parent’s consolidated report. The company will be given the opportunity to comply with the requirements, but if they fail to do so then the law sets out a penalty regime. The penalty regime for complying with the regulations has been carefully considered. The regime is consistent with that for similar reporting requirements in the Companies Act 2006. Failure to prepare and publish a report could result in either a fine or a prison sentence—so, a criminal penalty.
There is also provision for a review of the regulations. We will report within three years on whether they are efficiently achieving the intended objectives. This report will also enable us to feed into the European Commission’s own review of the directive, which is scheduled to be completed by July 2018.
Industry recognises the importance of reporting payments made to governments. Those who responded to our consultation clearly stated that transparency was an important tool in improving governance as well as fighting against poverty. Many companies already collect this information and make it available on their websites, and they find that investors welcome it. The Reports on Payments to Governments Regulations are an important step in improving global standards in transparency reporting in extractive industries, and I commend them to the Committee.
Lord Young of Norwood Green (Lab)
My Lords, I welcome the report from the Minister on what I agree is an interesting and important introduction of new legislation, and I welcome the speed with which the Government have operated.
Most of the questions that I started to write down have been answered by the Minister. I was interested in what the penalties would be, and we got some additional information on that. In the conclusion of her contribution, the Minister referred to a three-year report. I wondered whether any interim information would be published about how companies are beginning to comply.
The other thought that crossed my mind—this is not an attempt to launch an impossible question—is how this legislation, as it seems to me it did when I checked, complies with the UN Ruggie principles. I was hoping that the Bill team were not going to look puzzled; given that these are principles that they ask businesses to enact in relation to human rights and corporate governance, I would have thought that they would have met with them. I ask that as a matter of interest because the Ruggie principles are important.
We are willing to introduce this legislation. The Minister is right that it will make a difference as the sums of money involved around the world are enormous. Hopefully, it will make a difference in giving further information to investors before they make up their mind about the ethical nature of the company that they are about to invest in. Apart from awaiting answers to those questions, I am happy to support this statutory instrument.
Baroness Neville-Rolfe
My Lords, I thank the noble Lord for his welcome—I welcome the welcome. There seems to be fair measure of agreement on the way that we have implemented this measure, including the penalty regime and the ultimate sanction of criminal penalties. I very much agree with his point about investment—that having ethical information is increasingly important for investment and the identification of, if you like, political risk.
Obviously, I very much welcome the point made by the noble Lord about the Ruggie principles, in which I certainly took an interest in my former life. But I am afraid that he has managed to ask us a question which we cannot answer. Therefore, I will write to him. My guess is the answer will be a resounding yes. There are very few things that I have introduced that seem to be closer to those principles. I will confirm that.
On interim information, we will start to see information published from 2016 at Companies House. We are not planning a formal review until 2017 but, given the interest in transparency and development, civil society certainly will be looking to see what is happening in this important area, and we will begin to get information coming through. I think that the effect in the countries of the information being available online should help to encourage regimes to use the money being given to them, either in taxes or in kind—as I have said, that is important—and will help citizens in developing countries to hold the politicians to account. That is another benefit.
The regulations mark a step change in transparency reporting. They were agreed during our presidency of the G8 and it is always good to see progress during these important leadership opportunities. It is also good to see the UK at the forefront of this change. Once payments to governments are available, citizens will be bringing governments to account to a greater extent. The fact that this is not just a UK initiative but an EU directive with changes also taking place around the world is very encouraging. I urge the Committee to support the regulations and I beg to move.
House of Lords
Domestic Violence: Refuges
Baroness Thornton
To ask Her Majesty’s Government what assessment they have made of the adequacy of provision of refuges for women and children fleeing domestic violence.
The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Lord Ahmad of Wimbledon) (Con)
My Lords, on this the International Day for the Elimination of Violence Against Women, I am pleased to announce that the Government are launching a £10 million fund to support women’s refuge provision. This is not just about short-term funding. We will also be publishing strengthened statutory guidance setting out clear standards for the support that victims can expect to receive. The guidance will also make it clear that support in refuges should be extended to all victims, not just those living locally.
Baroness Thornton (Lab)
I thank the Minister for that Answer. Today is indeed White Ribbon Day, which, apart from anything else, is about men committing to working for the end of violence against women, and I trust that all noble Lords will have taken the pledge to do so.
I return for the third time to the Question that I put to the Minister previously. In a way, he may have answered it, so perhaps he can be specific. It concerns women and children who seek refuge from violence but whose local authorities, like those of Gloucester, the Forest of Dean, Stroud, Cheshire West and Chester, have closed or dramatically reduced access to refuges. That is not consistent with the Government’s policy. Are the Government monitoring the effects on those families of not being able to access a refuge? Does the fund being launched represent new money, and will it be used to make up the deficits of the cuts in those local authorities that have closed refuges?
Lord Ahmad of Wimbledon
I pay tribute to the noble Baroness’s work in this area. I can assure her that this is indeed new money. It underlines the Government’s priority of this issue and follows on from the international summits that my right honourable friend William Hague led, the Prime Minister’s speech at the Girl Summit and the Home Secretary’s cross-ministerial leadership on issues relating to violence against women. This is a specifically new set of funding that will be available to local authorities to tackle those issues. The Government are acutely aware of the specific issues that the noble Baroness has raised, and safeguards in legislation recognise the inherent risks of domestic abuse. This means that victims can apply to any local authority in the country and cannot be referred back to their home authority if they are at risk of violence.
Baroness Hussein-Ece (LD)
My Lords, is my noble friend the Minister satisfied that there is sufficient consistency of provision across local authorities and across regions? As has been pointed out, local authorities cannot send women back in those instances where they have suffered domestic violence and abuse. Is he satisfied that there is enough provision wherever they may go and whichever local authority then takes responsibility for them?
Lord Ahmad of Wimbledon
My noble friend raises an important point. As with anything, there are examples of good practice and there are other local authorities that need to do more. The Government’s commitment of £10 million will ensure a maximum of new moneys of up to £100,000. Within that, as I have already said, there is statutory guidance now to make clear that support in refuges should be extended to all women, linking up with other support networks in the local area.
Baroness Uddin (Non-Afl)
My Lords, is the Minister aware that recently the all-party parliamentary group on violence against women and sexual exploitation took evidence from a number of groups, including the national Women’s Aid and Rape Crisis England & Wales? Is he aware that many of the organisations are expressing deep concern about the extensive cuts to their services over a prolonged period? Is he also aware that particularly suffering are the specialist organisations, including those dealing with the effects of domestic violence, forced marriage and so-called honour killing? Will he ensure that they also have funding equally distributed to them?
Lord Ahmad of Wimbledon
The noble Baroness raises an important point. I have met with Women’s Aid, which does an incredible amount of work, and I am sure that it will acknowledge the support that the Government are extending, not just with this new funding, which will help local authorities, but to deal with these issues of domestic abuse. Noble Lords should know that 77 women were killed last year from domestic abuse in the UK; I am sure that, for all of us, that is 77 women too many.
Lord Laming
What wonderful support, my Lords. Can the Minister assure the House that steps are being taken to equip police forces and accident and emergency units to make sure that adults and children at risk are identified at the earliest possible stage and given the right kind of protection that they need, rather than be sent back into these dangerous situations?
Lord Ahmad of Wimbledon
It is always a pleasure to take a question from the noble Lord, who raises an important point about joined-up thinking. The Government are investing a great deal more—whether, for example, through our Troubled Families programme, on which the DWP and the DCLG are working together, or through recent announcements about local health provision. The noble Lord will recall that my honourable friend Jane Ellison made an announcement on how hospitals and doctors’ practices will be encouraged to identify such cases. On policing, my right honourable friend the Home Secretary has written to each PCC to ensure that our policy is reflected as a key priority in their programmes.
Lord McColl of Dulwich
My Lords, will the Minister acknowledge that one of the problems in this field is that large numbers of people in public life refuse to admit the size of the problem, which is that millions of men are smashing up millions of women? Their reply is: “I like to think the best of people and I cannot believe the size of this problem”. We all like to think the best of people, but that does not preclude accurate diagnosis.
Lord Ahmad of Wimbledon
My noble friend again raises an important concern that has been relayed to us. Women who are abused in this way sometimes blame themselves, and it is important that we have local experts working at a local level. One of the things that we can perhaps take some comfort from is that, after a slight dip this year, we have seen an increase in referrals to the CPS on this issue. More importantly, there has been an increase of 21% in the last calendar year in prosecutions for this heinous crime committed against women and, on occasions, against children. It needs to be stamped out.
Baroness Scotland of Asthal (Lab)
Can I say to the noble Lord how welcome this news is? Can he tell us what efforts, if any, will be made to enhance the opportunity for these women to take advantage of legal aid? He will know that there has been a dramatic reduction in access to legal aid, which is trapping many women in dangerous, life-threatening circumstances.
Lord Ahmad of Wimbledon
This funding is on top of the £6.5 billion that we have invested to help vulnerable people, including those suffering from domestic violence. The whole essence of this aid is to focus on those most acutely in need of assistance—to provide, first, a safe refuge and then whatever assistance they may need to overcome being victims of crime. The noble and learned Baroness raised an important issue on assistance through the courts. Of course, extensive advice will be offered. On the specific issue of legal aid, I will write to her.
Transport: Women’s Safety
(10 years ago)
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Lord Berkeley
To ask Her Majesty’s Government what action they are currently taking to improve women’s safety on transport.
The Minister of State, Department for Transport (Baroness Kramer) (LD)
My Lords, we work on a number of fronts to improve safety and security for all passengers and staff. In particular, the Government are supporting a British Transport Police-led academic literature and tactical review on reducing sexual offending and improving perceptions of safety on transport. This research will be delivered for February 2015 and will support an international expert session to debate the findings.
Lord Berkeley (Lab)
I am grateful to the Minister for that reply. Is she aware of a study recently done in the UK and Canada that found that,
“women passengers generally prefer staffing to technological solutions and are very skeptical of the tendency of”—
transport operators—
“to replace staff from trains or buses with automated machines”.
Will she encourage operators to have more staff and fewer machines and CCTV and to recruit more women to the front line, which women also prefer in many instances?
Baroness Kramer
My Lords, I completely agree with recruiting women to the front line. It is also important to have a staff presence where that is feasible. I am very encouraged, for example, by Transport for London’s commitment to take staff out of the ticket offices and put them out on the platforms and places where the passengers are. However, if we were to man every station at all hours at all times, we would unfortunately have to close stations because of the inherent cost.
Baroness Scott of Needham Market (LD)
Does the Minister share my concerns about the cycle rickshaws or pedicabs that operate in parts of central London? Unlicensed, the drivers are not required to be trained or insured; nor do they undergo CRB checks. Do the Government intend to take up the recommendation of the Law Commission and create local authority licensing for them?
Baroness Kramer
My noble friend is absolutely right: the Law Commission has provided some instructive direction on this. We received the Law Commission’s report in May. We will be following up on that and providing our response shortly. As she knows, the situation on licensing is somewhat different in London from elsewhere.
Lord Davies of Oldham (Lab)
My Lords, why are the Government pressing ahead with Clause 12 of the Deregulation Bill? It supposedly frees us from red tape but actually reduces the safety checks on minicabs. Will the Minister review the Government’s approach—there is still time in the legislation—in the light of the recent case reported by the Daily Mail this weekend of a young woman who was taken from Leeds to Bradford where she was attacked and raped? Will the Minister accept that this is not just a triviality about red tape; it is about reducing the chances of gang rape? The criminals involved got sentences totalling 68 years.
Baroness Kramer
My Lords, as the noble Lord, Lord Davies, knows, even under the deregulated mechanisms, whenever a taxi or private car licence is issued there will be a CRB check every three years. I have also written to all the authorities to remind them that they should be working with their local police so that wherever there is an accusation or a crime they are immediately informed and can take appropriate action—and I do not just mean in a taxi cab, but where someone is accused.
Lord Borwick (Con)
My Lords, I first declare an interest in the register that my wife is a Deputy Mayor of London and a member of the GLA. Will the Minister encourage the London Tube unions to allow Tube drivers who are not needed to drive the new automatic trains to walk along the carriages in the evening to improve the safety of women passengers rather than sitting in their cabins with nothing to do except open the doors?
Baroness Kramer
My Lords, I hope that all staff are totally aware of the priority that we must give safety for passengers. In any situation where it is safe, I would encourage staff to use an opportunity to make sure that safety is enhanced.
Baroness Farrington of Ribbleton (Lab)
My Lords, would the Minister care to expand a little on her reply to my noble friend Lord Davies about the deregulation proposals? How can people be assured of safety without reference to anyone? Someone who has a minicab licence in place A can go to place B. It is not a safety or security issue. Will she please get the Government to reconsider their policy on this? I declare an interest in that the noble Baroness, Lady Gardner of Parkes, and I were involved in getting licensing for minicabs, and this—to mix a metaphor—drives a coach and horses through that.
Baroness Kramer
My Lords, the licensing of minicabs absolutely remains in place. It means that an operator can call a cab not just from within their own fleet but from a neighbouring area. That also has to be a licensed cab driver. The operator remains responsible for the journey.
Domestic Violence
Baroness Gale
To ask Her Majesty’s Government what progress has been made since March, when the Domestic Violence Disclosure Scheme, known as “Clare’s Law”, was implemented in all police forces in England and Wales.
Baroness Williams of Trafford (Con)
My Lords, the domestic violence disclosure scheme is an important tool that can prevent tragic deaths from occurring by enabling potential victims to receive information about previous violent offending committed by their partner. The Government are committed to reviewing in the new year how the scheme has been implemented nationally.
Baroness Gale (Lab)
I thank the Minister for her reply. Can she say what measures are being taken to train front-line police, in line with the recommendations of the pilot scheme that was held last year in four police areas? There were three recommendations: training on “Clare’s law” for front-line staff; developing ways of raising awareness of “Clare’s law” locally; and working with voluntary and community sector organisations to ensure that an information pack is available for the women who seek a right to ask. No information was available, but they obviously had concerns. What back-up will be given to those women who need additional support?
Baroness Williams of Trafford
My Lords, the noble Baroness raises an important point about the change in culture that is needed to deal with women who are terribly vulnerable and who seek an empathetic response from the police. I know that the Home Secretary is chairing a national oversight group to respond to some of HMIC’s findings from earlier last year. That group will report on its findings in December. The culture in which a woman can feel confident in going to the police and in having her concerns dealt with in an empathetic and sympathetic way is certainly important.
Baroness Brinton (LD)
My Lords, I understand that under “Clare’s law” third parties may also inquire about a suspected assailant on behalf of a family member whom they are concerned about. How many such third parties asked the police for information during the pilots? Are there more data since the scheme went nationwide earlier this year?
Baroness Williams of Trafford
I do not have information on third parties, but I can give my noble friend the headline figures. There were 386 applications and 111 disclosures were made. I can write to my noble friend on third parties.
Baroness Afshar (CB)
My Lords, has the noble Baroness taken note that minority women, particularly Muslim women, would prefer to have a Muslim woman available—someone whom they can talk to openly? Are there any provisions for women who prefer to speak to people like themselves to report such activities?
Baroness Williams of Trafford
My Lords, I can think of examples where that does happen, but to go back to the question asked by the noble Baroness, Lady Gale, that whole change in approach to make the police environment a far more comfortable one for a vulnerable lady is what we are seeking. I will write to the noble Baroness on her point about the specific needs of specific types of ladies.
Baroness King of Bow (Lab)
My Lords, “Clare’s law” is most welcome, but does the Minister agree that prevention should start much earlier? If so, will the Government ensure that all young people learn that no form of violence in relationships is acceptable through the introduction of compulsory sex and relationship education, which 86% of British adults support and which Labour is committed to? Lastly, does the Minister recognise the irony of using “Clare’s law” to, for example, tell a woman that she is at risk from a convicted rapist but then denying her a place at a refuge because so many have already closed due to lack of sustainable funding?
Baroness Williams of Trafford
My Lords, my noble friend Lord Ahmad has already answered the point about the additional funding that will be made available. In April this year, the Department for Education issued Keeping Children Safe in Education, which is statutory guidance on the roles and responsibilities of schools and their staff in safeguarding children. I totally agree with the noble Baroness that we need to stop these problems before they happen and to keep children aware of what is acceptable as they grow up.
The Lord Bishop of Birmingham
My Lords, I am grateful to the noble Baroness for her response to some of the questions. I would like to press her a little further on the deep need for culture change, specifically in the area of training for the police and the Crown Prosecution Service. Is she minded to enable the Government to make that mandatory?
Baroness Williams of Trafford
My Lords, I cannot give that assurance from the Dispatch Box at the moment, but I hope that a change in culture will lead to a culture of what is and is not acceptable practice in terms of how the police deal with vulnerable people.
Baroness Scotland of Asthal (Lab)
My Lords, under the previous Administration, we had dedicated teams, both in the Crown Prosecution Service and in the police, which specifically focused on ending violence against women and responding appropriately. Are those teams still in existence at the same level or has there been a reduction? Secondly, can she give the House an assurance that every police authority across the country has implemented “Clare’s Law” so that those who wish to report or make a request of this sort are able to do so locally?
Baroness Williams of Trafford
My Lords, answering the second question first, I understand that there will be reports in the new year detailing the success of the rollout of “Clare’s law”. Certain fundings for different types of support for women and men in domestic abuse situations are committed until 2015 but I hope that, post the Autumn Statement, these will be rolled over until at least 2016.
Lord Laming (CB)
My Lords, in the light of the questions put today, do the Government accept that we all have a responsibility to help very young people understand that there is no place for violence in normal relationships, and certainly not in close family relationships?
Baroness Williams of Trafford
My Lords, I totally agree with the noble Lord. We all lead by example, whether we are parents or people in public life, and schools also have a duty so that children in those environments are somehow engaged with and led to know that what is happening is wrong.
Baroness Walmsley (LD)
Would the Minister include footballers in that group of people who should be showing an example?
Baroness Williams of Trafford
My Lords, I would say that especially footballers have a duty to reflect good behaviour to young adults.
Lord Avebury (LD)
My Lords, in answer to a previous question, the noble Lord, Lord Ahmad, referred to the Government’s Troubled Families programme. Has there been any increase in the disclosure of cases of domestic violence as a result of that scheme?
Baroness Williams of Trafford
My Lords, referrals are up by almost 15,500 to 103,000 in 2013-14. I am very pleased to say that 70% of those have been convicted. Convictions are up by 15% between 2005 and 2014.
Hong Kong
(10 years ago)
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Baroness Falkner of Margravine
To ask Her Majesty’s Government what is their assessment of the impact of recent events in Hong Kong on the prospects for democracy in that region.
Lord Wallace of Saltaire (LD)
My Lords, Hong Kong’s future is best served through a transition to universal suffrage in line with the Basic Law that meets the aspirations of the people of Hong Kong. As noted in our repeated statements, we call for rights and freedoms to be respected, and we urge all sides to engage in constructive dialogue and to work to build a consensus that allows a meaningful advance for democracy.
Baroness Falkner of Margravine (LD)
My Lords, does my noble friend agree that the pro-democracy protesters in Hong Kong have very genuine concerns about the pushback from the joint declaration of 1984, particularly with regard to judicial independence and elections? He will be aware that the chair of the All-Party Parliamentary China Group has just been denied a visa for China for the mere act of instigating a debate in the other place on the Hong Kong situation. Does my noble friend agree that the actions of the Chinese Government are imperilling Hong Kong’s status and stability, as well as destabilising the whole region?
Lord Wallace of Saltaire
My Lords, there were several questions there and I shall try to answer at least two of them. Hong Kong plays a very important part in Britain’s relations with China. It is also one of the most sensitive issues in Britain’s relationship with China. We regret the Chinese Government’s refusal to allow Richard Graham, the chair of the All-Party Parliamentary China Group, to take part in what would have been a very valuable exchange between Members of both Houses of Parliament and their Chinese equivalents, and we have made that clear to the Chinese Government at a very senior level.
Lord Luce (CB)
My Lords, since it is in China’s, Britain’s and Hong Kong’s interests to do nothing to undermine the 1984 declaration, which the noble and learned Lord, Lord Howe, helped to negotiate, and since universal suffrage is on offer for the first time, is not the most important thing that the people of Hong Kong should engage in constructive dialogue with the Chief Executive of Hong Kong to ensure that the next time there is an election for Chief Executive, there is a reasonable and wide range of choice of candidates?
Lord Wallace of Saltaire
I thank the noble Lord for that detailed and constructive question. We are talking about the Basic Law of 1997 and not the joint declaration of 1984, and we are talking about the commitment to universal suffrage. The issue at stake regarding the demonstrations is how open the nomination of the Chief Executive should be. The question of judicial independence came up with regard to a Chinese Government White Paper of June 2014. It is the British Government’s view that judicial independence in Hong Kong has not been compromised by that White Paper.
Lord Bach (Lab)
My Lords, the Basic Law of Hong Kong, which the Minister has already referred to, dealing with the introduction of universal suffrage, also affirms rights to freedom of speech, press freedom and freedom of association. I am sure that the Minister will agree that the Basic Law of Hong Kong is crucial in the present circumstances and that it must continue to be pursued in practice.
Lord Wallace of Saltaire
My Lords, I entirely agree with that. On the whole, the demonstrations in Hong Kong have been handled well and they have continued peacefully. Recently, some of the student leaders of the demonstrations conducted discussions with the executives of Hong Kong on television. There are not that many countries in the world where that would be possible on quite such a peaceful basis. Therefore, there are aspects of the joint declaration and the Basic Law that are very fully observed.
Baroness Falkner of Margravine
My Lords, I think I understood my noble friend to say that he believed that the British Government did not feel that judicial independence had been jeopardised through the White Paper. Would he like to tell the House how requiring judges to be patriotic without defining patriotism is upholding judicial independence?
Lord Wallace of Saltaire
My Lords, there may be people inside the Chinese Government whose sense of the importance of the distinction between the different aspects of government—legislature, Executive and judiciary—is a little less highly developed than it is in the UK. However, I suspect that in some aspects of British politics, and possibly some newspapers, there are those who would think that judges who could not describe themselves at patriotic were not appropriate judges, even in the UK. I am not at all saying that Her Majesty’s Government are pleased with that.
Lord Howarth of Newport (Lab)
My Lords, is there not a striking contrast between the passion for democracy among the people of Hong Kong and the democratic inertia and cynicism of so many people in this country who are entitled to vote and do not do so?
Lord Wallace of Saltaire
My Lords, I can only agree, but it is up to all of us and the Members of the other place, as well as all those involved in democratic politics, to re-enthuse the British public with democratic politics as far as we can and, in particular, in the next five months.
Lord Faulkner of Worcester (Lab)
My Lords, bearing in mind that the noble Baroness’s question refers to democracy in the region, will the Minister take the opportunity to pay tribute to the people of Taiwan, who change their Governments regularly through the ballot box, and whose parliamentary system is very close to our own, unlike that of mainland China? I declare an interest as co-chair of the British-Taiwanese All-Party Parliamentary Group.
Lord Wallace of Saltaire
My Lords, there are a number of states across east, south-east and southern Asia that have made successful transitions to democracy. There are others that have some way to go. We welcome the evidence in a range of Governments there of the rule of law, open elections and the transition from one head of Government to another, all of which are fundamental. These are principles to which good Governments and well run economies should adhere.
Lord Roberts of Llandudno (LD)
My Lords, we must welcome the statement in the Wales Bill last week that the electoral registration officers in Wales—all 22 of them—are to encourage new ways of registering young voters. Can we ask whether this might also apply to all electoral registration officers throughout the United Kingdom?
Lord Wallace of Saltaire
My Lords, I hesitate to suggest that Her Majesty’s Government should bring that to the attention of the Chinese Government. I accept the noble Lord’s point that all of us, in every way, including the many Members of this House who go out on school visits, should be doing our utmost to raise the level of interest of people of all ages in the democratic process.
Recall of MPs Bill
Business of the House
(10 years ago)
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Baroness Stowell of Beeston
That the debate on the Motion in the name of Lord Liddle set down for today shall be limited to three hours and that in the name of Baroness Kingsmill to two hours.
House Committee
The Chairman of Committees
That the 2nd Report from the Select Committee (Access and the use of facilities by retired members) (HL Paper 59) be agreed to.
The Chairman of Committees (Lord Sewel)
My Lords, the House Committee has considered access privileges for those Members retiring under the provisions of the House of Lords Reform Act 2014. The House has previously agreed the procedure for marking those retirements.
In the interests of simplicity and striking a balance between acknowledging the contribution of retiring Members and avoiding unreasonable burden on the taxpayer, the House Committee has agreed that Members retiring under the Act should be entitled to a photo identity pass, may sit on the steps of the Throne, may use the Library—but not its research facilities—and have limited access to catering facilities.
These are the same modest privileges currently afforded to retired bishops, and I suggest to your Lordships on this occasion that what is good enough for the bishops is good enough for the rest of us. Those Members who cease to be Members as a consequence of non-attendance would not be entitled to any such access rights.
Lord Steel of Aikwood (LD)
My Lords, I hate to press the Chairman of Committees on this matter, but, since the passage of the Act, the committee has not done anything to encourage retirement and get the numbers in this House down. Is the committee going to look at the various suggestions that have been made, or will we have a special Select Committee to do that?
The Chairman of Committees
I think that I can give some comfort to the noble Lord. What is going on may not necessarily show above the waterline, but quite a lot of friendly, informal activity is taking place underneath.
Economic Affairs Committee
The Chairman of Committees
That Baroness Wheatcroft be appointed a member of the Select Committee in place of Baroness Noakes, resigned.
Insurance Bill [HL]
The Chairman of Committees
Further to the resolution of the House of 19 November 2014 appointing a Special Public Bill Committee to consider the Bill, that the Committee have the power to appoint a specialist adviser.
The Chairman of Committees (Lord Sewel)
My Lords, last week, the House appointed a Special Public Bill Committee to consider the Insurance Bill. That committee has since met and has agreed that it would be desirable to appoint a specialist adviser. While it is unusual for a Special Public Bill Committee, I consider the technical nature of this particular Bill a good and sufficient reason to grant the committee the power to appoint a specialist adviser. I beg to move.
Modern Slavery Bill
(10 years ago)
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Lord Bates
That it be an instruction to the Committee of the Whole House to which the Modern Slavery Bill has been committed that they consider the Bill in the following order:
Clauses 1 to 14, Schedule 1, Clauses 15 to 37, Schedule 2, Clauses 38 to 45, Schedule 3, Clauses 46 to 53, Schedule 4, Clauses 54 to 58.
Intelligence and Security Committee of Parliament Report: Fusilier Lee Rigby
(10 years ago)
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The Lord Privy Seal (Baroness Stowell of Beeston) (Con)
My Lords, with the leave of the House, I will now repeat a Statement made by my right honourable friend the Prime Minister in another place. The Statement is as follows.
“Mr Speaker, today the House of Commons Intelligence and Security Committee has published its report into the murder of Fusilier Lee Rigby. He was a British soldier who stood for our country and for our way of life, and he was killed in broad daylight on the streets of our capital city. It was an appalling, sickening act and it was a stark reminder of the threat we face from home-grown terrorists and extremists plotting to murder our people. But at the same time we should be clear that it was a betrayal of Islam and of the Muslim communities in Britain who give so much to our country. I am sure that the thoughts of the whole House are with Lee Rigby’s friends and family at this time.
When I spoke in the House in the aftermath of the attack, I said that we would bring those responsible to justice and that we would learn the lessons of what happened in Woolwich. The two murderers, Michael Adebowale and Michael Adebolajo, have since been convicted and sentenced to life in prison. And today this report answers the questions we had about what our security services knew about these murderers and the lessons we can learn to help prevent similar attacks in the future. I am grateful to my right honourable friend the Member for Kensington and his committee for their comprehensive report. It contains an unprecedented degree of detail on the current workings of MI5, the Secret Intelligence Service and GCHQ. I wanted us to get to the truth as quickly as possible, without a prolonged judicial process, and I think that is exactly what has been done with this exceptional report. Few countries in the world would publish this degree of detail about the activities of their security services. It reflects the way we have strengthened this Committee with new powers to hold our security services to account. And for this report, the agencies have carried out the same searches they would for proceedings in the law courts.
Before I turn to the key findings, let me be clear that this is a very serious report and there are significant areas of concern within it. I do not want anyone to be in any doubt that there are lessons to be learnt and that things need to change. But on the key findings, I am sure the House will welcome that the Committee does, and I quote,
‘not consider that, given what the Agencies knew at the time, they were in a position to prevent the murder of Fusilier Lee Rigby’.
Furthermore, as the Committee says,
‘it is greatly to the Agencies’ credit that they have protected the UK from a number of terrorist plots in recent years’.
As the Commissioner of the Metropolitan Police says, at least four serious plots have been foiled this year alone. So much of what our agencies do necessarily goes unreported. They are Britain’s silent heroes and the whole country owes them an enormous debt of gratitude. But there are four broad areas where things need to change: in dealing with the delays in the process of investigating potential terrorists; in dealing with low-priority cases and so-called self-starting terrorists; on the role and responsibilities of internet companies in helping to keep us safe; and tackling foreign fighters travelling abroad for terrorist purposes. I want to take each in turn.
First, the report identifies a number of serious delays and potential missed opportunities. The committee expressed concern over the four-month delay in opening an investigation into Michael Adebolajo following his return from Kenya in 2010 and the eight-month delay before Michael Adebowale was first actively investigated in 2012. The report concludes that an application for intrusive surveillance on Michael Adebowale in 2013 took,
‘nearly twice as long as it should have,
and that had the original target been met,
‘these further intrusive techniques would have been in place during the week before, and on the day of the attack’.
But crucially the report goes on to say that,
‘there is no indication that this would have provided advance warning of the attack: retrospective analysis of all the information now available to the agencies has not provided any such evidence’.
The report also finds that the two murderers were in contact 39 times between 11 April and 22 May, including seven attempted calls and 16 text messages on the day before the murder. But again we should be clear that post-event analysis shows:
‘None of these text messages revealed any indication of attack planning or indeed anything of significance’.
So while the committee accepts that these delays and missed opportunities did not affect the outcome in this case, it is, however, absolutely clear that processes need to be substantially improved. MI5 are improving guidance and training for investigators for its online teams and it is looking at new automated processes to act on extremist material online.
The MI5 initial lessons learnt document has already been published in today’s report, and I have asked the Security Service to provide a further detailed report to the Home Secretary and to me in the new year setting out progress on implementing each and every one of the lessons learnt. In all of this we need to remember the extreme pressure our agencies are under. As the Director-General of MI5 put it in his evidence to the committee:
‘We are not an army that has battalions waiting in barracks for deployment’.
Everyone they have is always out there working.
Secondly, one of the most challenging tasks facing our agencies is how to prioritise the many and various potential threats to our security. This is incredibly difficult and it is not an exact science. During the weeks prior to the Woolwich attack, MI5 were running several hundred counterterrorism investigations and, as the committee notes, they are monitoring at any one time several thousand subjects of interest.
It is obviously essential to focus on the highest-priority cases and especially those where there is specific intelligence that terrorists are planning an attack in the UK. But the report details how Michael Adebolajo and Michael Adebowale were both known to the security services for some time. Michael Adebolajo had featured in five separate Security Service investigations since 2008 and MI5 had put significant effort into investigating him as part of several of these investigations. Michael Adebowale featured in two lower-priority investigations. Now, while none of these investigations revealed any intelligence of an attack, the committee does recommend improvements to the processes for dealing with recurring subjects of interest, with low-priority cases and with so-called self-starting terrorists.
This Government have protected budgets for counterterrorism and the security services and they have been clear with me that they have always had the resources they need. But the increasing threat we face, including from these so-called self-starting terrorists, means that we should now go further in strengthening our capabilities. So my right honourable friend the Chancellor of the Exchequer will make an additional £130 million available over the next two years, including new funding to enhance our ability to monitor and disrupt these self-starting terrorists.
The report also makes clear the important role of all public bodies in dealing with the threat of self-starting terrorists and extremists. The Counter-Terrorism and Security Bill being introduced tomorrow will include for the first time a clear legal obligation on our universities, prisons, councils and schools to play their part in tackling this poisonous extremism. The new funding being made available today will include additional resources for programmes to prevent radicalisation.
Thirdly, turning to the role of internet companies, the committee is clear that it did find,
‘one issue which could have been decisive’.
In December 2012, five months before the attack, Michael Adebowale had a crucial online exchange in which he wrote about his desire to kill a soldier, but the automated systems in the internet company concerned did not identify this exchange. Further, when it automatically shut down other accounts used by Michael Adebowale on grounds of terrorism, there was no mechanism to notify the authorities. So this information only came to light several weeks after the attack as a result of a retrospective review by the company.
The committee concludes that,
‘This is the single issue which—had it been known at the time—might have enabled MI5 to prevent the attack’.
This is a very serious finding. The report does not name the company and it would not be appropriate for me to give a running commentary on the level of co-operation from different internet companies. But the committee is clear, and I agree, that it has serious concerns about the approach of a number of communications service providers based overseas.
This summer, the Government introduced emergency legislation to put beyond doubt in UK law that the Regulation of Investigatory Powers Act applies to companies based overseas but that deliver services in this country, and I appointed Sir Nigel Sheinwald as a special envoy in intelligence and law enforcement data-sharing to address concerns that there could be a conflict between UK and US law in this area.
Since then, a number of companies have improved their co-operation. But as I said in my speech to the Australian Parliament earlier this month, there is much further to go. We are already having detailed discussions with internet companies on the new steps they can take, and we expect the companies to report back on progress in the New Year. But the truth is this: terrorists are using the internet to communicate with each other, and we must not accept that these communications are beyond the reach of the authorities or the internet companies themselves. We have taken action. We have passed emergency legislation. We will continue to do everything we can. But, crucially, we expect the internet companies, too, to do all they can. Their networks are being used to plot murder and mayhem. It is their social responsibility to act on this, and we expect them to live up to that responsibility.
Fourthly, the report also raises a series of issues directly relevant to the increased threat in recent months from British citizens travelling to fight abroad—so-called foreign fighters. The committee expresses concern about what it describes as a ‘deeply unsatisfactory’ response to Michael Adebolajo’s arrest in Kenya. It highlights the importance of tackling British citizens travelling to fight with terrorists groups in Syria and Iraq, and the report recommends further powers, including considering whether existing proscription powers should be amended to enable further prosecutions.
Tackling foreign fighters is an absolute priority for our agencies. To be fair to the agencies and police, in the case of Michael Adebolajo, he was interviewed on his return from Kenya to the UK. Their operational effort has been stepped up, with more than 120 arrests this year for Syria-related offences, compared to just 27 in the whole of 2013. However, the committee is right to ask whether we need to give our agencies stronger powers to tackle extremists, so our Counter-Terrorism and Security Bill—being introduced in Parliament tomorrow—will include essential new powers to seize passports to prevent travel; to stop suspects returning unless they do so on our terms; and to relocate suspected terrorists to other parts of the country and away from their extremist networks. I very much hope that we can take this Bill forward on a cross-party basis so our agencies are able to start using these vital powers as soon as possible.
Finally, the committee criticises the Secret Intelligence Service for the handling of allegations of Michael Adebolajo’s mistreatment in Kenya. This Government took the important step of publishing the consolidated guidance in 2010 on the obligations of our agencies and the Ministry of Defence in relation to detainees who are being held overseas. Of course, however, there are cases which fall outside the scope of this guidance: for instance, where people are entirely dealt with by overseas agencies, but where the Secret Intelligence Service clearly still has an operational interest. In these cases, the agencies are clear that they always seek assurances about the treatment of detainees and that in future, they will record the outcome of their investigations and inform Ministers if mistreatment has in any way occurred.
Of course, it is right that there is vigorous oversight of this issue, so the Government will put the oversight role of the Intelligence Services Commissioner on a statutory footing. I will issue a direction under the Regulation of Investigatory Powers Act in the coming days to formalise Sir Mark Waller’s role in overseeing the guidance on detainees. Sir Mark will have full access to all the material referred to in the report and will be able to examine the concerns raised by the committee about the Government’s responsibilities in relation to partner counter-terrorism units overseas.
Today’s report contains a number of very detailed recommendations. We will publish a full response to all the points that are raised in the new year. We will not shrink from doing what is necessary to keep our people safe. The terrorist threat we face cannot be ignored or contained: we have to confront it. We have to equip our security services with the powers and the information they need to track down these terrorists and stop them attacking our people. We have to confront the extremist ideology that drives this terrorism by defeating the ideas that warp so many young minds. Of course, none of this will be easy: we will need stamina, patience and endurance, but we will in the end defeat this extremism and protect our people and our way of life for generations to come. I commend this Statement to the House”.
That concludes the Statement.
Baroness Royall of Blaisdon (Lab)
My Lords, I am grateful to the Leader of the House for repeating the Statement made by the Prime Minister. Fusilier Lee Rigby served his country with courage. He was a brave soldier and his murder was an appalling act—an atrocity. Our thoughts today are with his family and friends, for whom reading this report will mean the pain of reliving his brutal killing. I also thank the members of the Intelligence and Security Committee for their investigation. It is right that this investigation took place; the report was the most detailed account of the agencies’ work ever published.
The security services and the police play a vital role in keeping us safe, often in challenging circumstances. They do a hugely difficult job of seeking to identify those who pose a risk to our country. We should remember that, while the perpetrators of terror need succeed only once to achieve their dreadful aims, our agencies and others need to be successful every time to keep us secure. In so far as there are criticisms in the ISC’s report, they need to be understood in that light. The ISC’s report outlines in detail how the two men who killed Lee Rigby—Michael Adebolajo and Michael Adebowale—were under investigation at various times before the murder.
We welcome the announcement of additional resources, but will the Leader of the House tell us whether it is simply a question of resources or whether she thinks a better strategy is needed for dealing with those, like Adebolajo, who are recurring subjects of interest on the periphery of several investigations? In addition, the report points to the fact that at times there is a lack of co-ordination between MI5 and the police. Can the noble Baroness outline the steps that will be put in place to strengthen the working relationship between the different agencies—MI5, SIS, GCHQ and the police?
The report also highlights the issue of returning foreign fighters. We will engage constructively with the forthcoming Bill and welcome the decision to reinstate relocation powers, which were removed three years ago. As the Leader of the House said, Michael Adebolajo was arrested, but the report states that his case was not then followed up. This is not simply about the powers but the way in which cases are followed up. Can she assure us that there will be a more systematic and rigorous response to returning foreign fighters, including mandatory referrals to deradicalisation programmes?
The report underlines the fact that these two individuals, and in particular Michael Adebowale, were radicalised over a number of years, including by accessing extremist material online. Thus it makes a compelling case for an expansion of the Prevent programme. The report says:
“The scale of the problem indicates that the Government’s counter-radicalisation programmes are not working”.
Noble Lords will recall that we raised this important issue in the House before. How will the Government ensure that Prevent will receive the priority and resources it needs? Would the noble Baroness agree that we should consider widening the scope of Prevent so that in future people like Michael Adebowale would be included, and to ensure that local communities are engaged in the prevention of radicalisation?
The role of internet companies is clearly of crucial importance. This raises two vital issues: whether the companies have a responsibility to draw authorities’ attention to issues of national security and whether the major US companies regard themselves as compelled to comply with UK warrants legally authorised by Ministers in cases of national security. Can more be done to encourage companies to flag up issues of concern where matters of national security are raised? The report says that companies may sometimes decide to pass on information to the authorities when they close accounts because of links to terrorism, but in this case they did not.
Part of the problem in this area is that there are different practices by different companies and no agreed set of procedures. In the case of images of child abuse, there is a procedure in place for companies to take action and refer abuse allegations to the authorities. There should be much stronger procedures in place and a much stronger responsibility placed on companies when it comes to terrorism as well. Does the Leader of the House agree? Further, can the Leader update the House on work being done to improve our ability to get information, with a warrant, from companies based in the US?
Lastly, on the issue of detention, we welcome the Government’s announcement that oversight will be strengthened but urge them to go further. For some time we have said that the framework of commissioners needs strengthening and this report demonstrates the value of thorough scrutiny and the ability to learn lessons. Can the noble Baroness confirm whether David Anderson’s review also covers strengthening oversight and the role of commissioners?
This report is a stark reminder of the threats we face in keeping our country safe. The murder of Fusilier Lee Rigby was an appalling act of cruelty and depravity. We must learn the right lessons—and that is what the ISC report seeks to do. It does so thoroughly and with diligence. In seeking to put those lessons into practice, the Government will have our full support.
Baroness Stowell of Beeston
I am very grateful to the noble Baroness for her response and the manner in which she made her remarks on the Statement by the Prime Minister that I repeated. I certainly join her in paying tribute to Lee Rigby’s family and in recognising that this must be a very difficult day for them indeed. I also agree with the noble Baroness about the good work the committee has done in its investigation and the thoroughness of its report. Of course, she is absolutely right to restate that the security services and the police do a very difficult job in keeping us safe. We very much acknowledge that.
On the questions that she asked, first she asked about increased resources and whether the security and intelligence services had sufficient funding. It is worth explaining to the House that funding for the security and intelligence services has increased in cash terms now by 5% compared with 2010 and they had a good funding settlement compared with other departments, including in the 2013 spending round where they saw an increase when other departments saw a reduction in their funding.
The noble Baroness asked about the way in which MI5 and the security services are responding to some of the identified persons who might be described as peripheral risks or operating on the periphery. MI5 responds to this point in its initial response to the report and says how it has already started to take steps to improve in this area. We will come back again with more detail on this in the new year. She also asked about how connections could be improved between the different agencies and the police service. They are continuing to improve all the time and they are working well and seeking always to address any issue that should be strengthened.
The noble Baroness asked about returning foreign fighters and the approach being taken to them. In its report, the committee criticised the way in which the particular person concerned was examined when he returned. The committee is right to say that we should look at this case by case and, indeed, one of the measures being introduced in the new counterterrorism Bill is to make sure that there is an improvement in this area and a more systematic approach.
The noble Baroness also asked about the improved arrangements for deradicalisation. Again, in the new counterterrorism Bill, which will be introduced tomorrow, the measures we have already in place, including those under the Prevent scheme referred to as Channel, will be put on a statutory footing.
As to the noble Baroness’s comments on Prevent funding and on how Prevent operates, it is worth reminding noble Lords that in 2011 this Government asked my noble friend Lord Carlile to carry out a review of Prevent. His conclusion was that Prevent should be split, with the money for integration—the more community-based measures to improve cohesion in communities—moving to DCLG, where that money now sits with the programme for cohesion, and the remainder of the money being specifically focused on guiding people away from extremism and terrorism. The money spent on Prevent has increased from £35 million in 2012 to £40 million in 2014. It is worth adding that in my noble friend Lord Carlile’s report he said there were cases under the previous Prevent regime where groups which we now consider to support an extremist ideology had received funding. Changing the Prevent regime by moving the cohesion aspect of it into DCLG and making Prevent more focused on tackling extremism and preventing terrorism was, we believe, the right approach.
As to the questions that the noble Baroness raised about internet companies, I agree with her that comparisons can be made between the way in which the internet companies have improved the way in which they remove from the internet sites and images that relate to despicable crimes of child abuse. That was at the prompting of government. We think that the same approach needs to be taken by the internet companies towards terrorism. We are very clear that these internet companies have a social responsibility to take the necessary action that should prevent any kind of terrorism activity occurring. We introduced new emergency legislation in the summer, which I referred to in repeating the Prime Minister’s Statement. We are working very hard to ensure that that legislation is properly applied to US companies which operate in the United Kingdom. As I said in the Statement, Sir Nigel Sheinwald is doing much in that area to see that there can be progress. That is something that we will pursue with vigour.
The oversight role of the Government’s adviser on counterterrorism measures, David Anderson QC, is very broad, and he is able to look at the threat response, the capabilities and important safeguards. He has done excellent work so far, and clearly we look forward to him continuing in his role and supporting us and helping us further in the weeks and months ahead.
Lord Dholakia (LD)
My Lords, I endorse the sentiments that have been expressed by both sides of this House about the death of Lee Rigby. The report talks about the introduction of the Counter-Terrorism and Security Bill tomorrow. We are told that for the first time it will include a clear legal obligation on universities, prisons, councils and schools to play their full part in tackling this poisonous extremism. Why are religious bodies excluded from this provision?
This is a serious report about significant areas of concern, yet we are told that the government response will not be available until January. What mechanism exists to ensure that the Government’s comments on the report will be available at the time the counterterrorism Bill goes through this House?
Baroness Stowell of Beeston
Religious bodies are excluded from the list of groups that will be bound by the Prevent measure that we are going to put on a statutory footing in the counterterrorism Bill because we are focusing on public bodies, and clearly religious faiths do not qualify in that area. That does not mean that all religious faiths do not have a responsibility to support us in preventing extremism and terrorism. Indeed, there is a wide range of different programmes, some of which are supported though the Department for Communities and Local Government. There is a lot of work going on in that area.
My noble friend asked about the Government’s response to the report being provided in January. Today, the Prime Minister’s Statement provided our initial response. The measures in the counterterrorism Bill being introduced tomorrow stem from two things: JTAC’s change of the security status earlier in the summer to the increased level that it is now and the creation of the extremism task force, which the Prime Minister put together following Lee Rigby’s death. The counterterrorism Bill contains measures that have been put together after careful thought and consideration. They are most definitely not a knee-jerk reaction to the ISC report published today.
The Marquess of Lothian (Con)
As one of your Lordships’ two representatives on the Intelligence and Security Committee, I welcome the commendation of our report by both the Government and the Opposition. I also welcome the announcement of further resources in this area, which is an important measure—although it is important to stress that such is the extent and pressure of the terrorist threat in this country at the moment that the prioritisation of threats to be dealt with by the agencies will have to continue.
I also make the point that despite the criticisms in this report of the agencies in regard to this particular case, on behalf of the committee I would like to commend our intelligence agencies for the sterling and tireless work they do in protecting all of us in this country from the threat of terrorism.
Finally, I raise a subject which has been raised before, which is what I call the capability gap in the agencies accessing communications from overseas communications service providers. Along with the measures that she has mentioned, I wonder whether the Minister would agree with me that in the end the United Kingdom has to use its influence with the United States through the exceptional co-operation on security between our two countries to find a final and lasting way to resolve this situation. Perhaps the Minister could say a word about what steps are being taken in that regard.
Baroness Stowell of Beeston
I am certainly grateful to my noble friend for echoing the support for the security services and the work that they do to keep all of us safe in this country. I would also like to take this opportunity to thank my noble friend for his work as a member of that committee. I know that the noble Lord, Lord Butler, from this House is also a member of the committee, and there are other Members of this House who have been previous members of that committee.
On my noble friend’s point about prioritisation still being necessary even in light of increased funding, that is right and will always be the case. There is a need for balancing prioritisation with not delaying the necessary steps. I quoted from the statement of the MI5 Director General in the Statement by the Prime Minister that I repeated. The security services do not have an army of people waiting to deploy; they have to use their resources all the time as best they see fit, and they are doing a very good job.
On the capability gap regarding communications service providers, which my noble friend mentioned, he is right that we have to use our influence at all levels and I can confirm to him and the House that that is happening right up to the highest level, including the Prime Minister with the President of the United States.
Lord West of Spithead (Lab)
The Minister will be aware that since the revelations of the traitor Snowden, terrorist groups—in particular ISIL—have changed their methods of communications, and have shifted to other ways of talking to each other. Consequently there are people dying who would otherwise be alive. Does the Minister agree that it is now critical that we move forward the Communications Data Bill, which was paused so unreasonably, because there is a very real danger that unless we do—and I am not exaggerating in saying this—people in this country will die who would have been safe if it was in place?
Baroness Stowell of Beeston
The noble Lord is right to say that the leaking by Snowden and the reporting of his leaks have had a serious effect on intelligence gathering. That is unquestionable. There is evidence that some of the terrorists and terrorist groups, in the light of that knowledge, are now moving their exchanges to different places, where the intelligence services are not operating, because they now know where they do and where they do not.
As far as introducing the Communications Data Bill is concerned, in the summer we introduced the emergency legislation which addressed some gaps there. The counterterrorism Bill that will be introduced tomorrow will close another gap. This is an area where I believe we will continue to have to keep making progress. We are not ready to move as far as the noble Lord suggests at this moment. To be successful in introducing a Communications Data Bill, we will need a consensus, and we do not have that yet.
Lord King of Bridgwater (Con)
Does my noble friend accept that this report, which I think is the most substantial one I have seen from the ISC, marks a very important stage in the development of its role of parliamentary oversight of the intelligence agencies? I hope that, on reading it, one will be able to reinforce one’s confidence in the capabilities of that committee. It is very important to this country that it carries high credibility in the world and among our people generally.
Having said that, the Prime Minister claims in his Statement that the committee had unprecedented access to detail that might not previously have been available to such an inquiry. Certainly, it seems to hold the world record for asterisks, deletions and redactions, indicating the amount of totally secret information that was available to the committee. Will my noble friend confirm that the report coincides with the announcement by the Home Secretary of the further Bill that will be introduced tomorrow—in the Commons, I assume. Will the government response be available to this House before we approach Second Reading, as I understand there is to be an accelerated procedure? Can she give any indication of when she would expect the Bill to come to this House? There is no question that it raises extraordinarily difficult issues. As the noble Lord, Lord West, indicated, the challenges faced by the intelligence and security agencies are massive and growing enormously. Some of the challenges will be revealed in the government response and we need the opportunity to consider it very carefully in this House.
Baroness Stowell of Beeston
My noble friend is a former chairman of the ISC and I pay tribute to his knowledge and assessment of the committee’s report published today. I share his view that it is a very substantial and unprecedented piece of work on the part of the committee. It shows that we were right to put the ISC on a stronger footing through the Justice and Security Act. The redactions in the report are in line with the process in that Act for redacting material and we have very much followed that process. I cannot confirm that the Government’s detailed response to today’s report will be available before Second Reading as I do not yet have the date when we will respond or, indeed, when the Bill will be introduced in your Lordships’ House. However, I will reflect on the point that my noble friend makes.
Lord Pearson of Rannoch (UKIP)
My Lords, are the Government aware that Fusilier Rigby’s murderers quoted 22 verses of the Koran to justify their atrocity? Therefore, is the Prime Minister accurate or helpful when he describes it as a betrayal of Islam? Since the vast majority of Muslims are our peace-loving friends, should we not encourage them to address the violence in the Koran—and, indeed, in the life and the example of Muhammad?
Baroness Stowell of Beeston
My Lords, British Muslims want strong counterterrorism measures in this country so that everybody in this country who shares British values, whatever their faith, is safe. That is basically all I need to say to the noble Lord.
Lord Elystan-Morgan (CB)
My Lords, may I raise with the noble Baroness the question of people leaving these shores to join armed formations abroad—and, indeed, in the event of their return, what they might do? Is it or is it not the case that the Foreign Enlistment Act 1870 is still in force? If I am correct with regard to that, has any use been made of it in the last half century? Furthermore, have the Government given any thought at all to the question of incorporating any of its provisions in the new legislation now before the House? I regret that I did not give notice of these rather technical matters but it was only when she mentioned foreign enlistment that it rang a distant bell with me.
Baroness Stowell of Beeston
I regret that I am not able to provide the noble Lord with a comprehensive answer to that question. Probably the best thing would be for me to write to him.
Lord Harris of Haringey (Lab)
My Lords, this is an important report and that importance is not diminished by the fact that the committee has only two Members of your Lordships’ House sitting on it. I would like some clarity from the Leader of the House on the extra resources that have been put in. The Statement mentions £130 million to combat the current threat over two years—I assume that is £65 million per annum. I had heard that the requirement to enhance the policing component of the response to the enhanced threat was of the order of £50 million per annum. What is the balance between the various security agencies and the police in terms of the £130 million? How much will go to funding for additional programmes to prevent radicalisation? In the case of the latter, who will be distributing those resources?
Baroness Stowell of Beeston
The overall funding for the security and intelligence agencies has increased from £2 billion in 2010 to £2.1 billion now. We do not give a breakdown of how the different agencies are funded for security reasons. The majority of the £130 million of new money announced today over the next two years will go to our agencies to give them new capabilities to monitor and disrupt terrorists—to deal with the new kind of threat that we are now facing from the so-called “self-starter” terrorists. Further funding will go to support counterterrorism policing and Prevent programmes to tackle radicalisation. My right honourable friend the Chancellor will set out more details of the breakdown of all the funding in the Autumn Statement. I would just add that we have protected £500 million of annual counterterrorism policing grant in real terms. There is quite a lot of information there, but the Chancellor will provide more in the Autumn Statement.
Baroness Falkner of Margravine (LD)
My Lords, my noble friend mentioned the Counter-Terrorism and Security Bill to be introduced in the other place tomorrow. Can she give the House an assurance that we will not use fast-track legislative procedures to take it through this House? I declare that I am a member of the Constitution Committee. She will know that the Constitution Committee believes that fast-track legislation should be used only in the most extreme circumstances. We still have parliamentary time and this Bill will need careful scrutiny by all Members of the House.
Baroness Stowell of Beeston
We ought to draw a distinction between fast-track legislation and emergency legislation. Fast-track does not mean that the time devoted to scrutiny would be diminished in any way; it means that the time between stages would be shortened. Having identified that these are important measures to address gaps that currently exist and that by addressing them we will put ourselves on a stronger footing to deal with a very serious threat, I would say to my noble friend and to the House as a whole that we should not delay doing so. I hope very much that we are able to agree that we will follow a fast-track process, but, as I said, that does not mean that the Bill will not receive the normal length of time it needs for debate in this House.
Lord Selkirk of Douglas (Con)
The Statement today is extremely welcome. Will the Leader of the House give an assurance that servicemen and servicewomen will be given advice and guidance if that should become necessary in the circumstances?
Baroness Stowell of Beeston
My noble friend is right. I can only imagine how members of the Armed Forces must feel, knowing that one of them has been attacked and murdered in cold blood on the streets of London. Our advice to the Armed Forces remains very relevant and will be reviewed should it ever be necessary to change it.
Lord Reid of Cardowan (Lab)
My Lords, can the Minister respond to the points arising from the imperative she mentioned—not to delay in doing that which is necessary to assure the country? Without being in the least bit churlish about this, what is now being admitted is that which was denied by the Government prior to, and from, 2010: first, we are fighting an international struggle against terrorism; secondly, the measures necessary for surveillance by improving GCHQ are less than adequate, for reasons connected with the coalition’s internal politics; and, thirdly, control orders, which were weakened down to TPIMs, are now being strengthened back up to become virtual control orders. If we are going to be honest and realistic about this, we have to answer the question that the public will ask. How is it that over the past four or five years, when we have had a high threat level in this country, we have diminished security and it is only now that the Government are thinking of increasing it again?
Baroness Stowell of Beeston
What I would say to the noble Lord is that what we have done and will continue to do is to take the advice of David Anderson QC on the measures that we introduce. We have responded to the increasing threat. We have listened to the security services and the police service. They have requested additional measures and we are bringing those additional measures in. Clearly, an appalling and tragic event happened, and this report focuses on that. We all wish that it had not happened. What the report tells us today is that, sadly, nothing could have been done to prevent it happening and the two men who were guilty of that crime are currently in prison serving life.
Iran Nuclear Talks
(10 years ago)
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The Minister of State, Foreign and Commonwealth Office (Baroness Anelay of St Johns) (Con)
My Lords, with the leave of the House, I shall now repeat a Statement made in another place by my right honourable friend the Foreign Secretary. The Statement is as follows:
“With permission, Mr Speaker, I will make a Statement on the negotiations between the E3+3 and Iran regarding the future of Iran’s nuclear programme.
In November 2013 the E3+3 signed an interim agreement with Iran, which came into force on 20 January 2014 for an initial period of six months. Under this agreement, Iran committed to freezing areas of its nuclear programme of greatest concern to the international community. In return, Iran received limited sanctions relief and the repatriation of $4.2 billion in oil revenues. Crucially, this interim agreement gave us the time and space to build confidence and begin negotiations on a comprehensive deal to ensure the peaceful nature of Iran’s nuclear programme.
Since February, we have engaged in extensive negotiations with Iran at both official and ministerial level. We always knew these negotiations would be difficult and complex, and they have been—even more so than negotiating the Geneva interim agreement. At their heart is the need to reconcile Iran’s aspirations for a peaceful civil nuclear programme with our insistence on ensuring Iran cannot develop a nuclear weapons capability. By July 2014, after several rounds of talks with Iran, we had deepened our understanding of the positions of both sides and made progress on areas of the negotiations. But we were still far short of reaching agreement on core issues. The E3+3 and Iran therefore decided to extend the negotiations until 24 November—yesterday.
Since July, negotiations between the E3+3 and Iran have intensified and we have closed the gap between the parties on a number of important issues. But significant differences remain. I and other Foreign Ministers from the E3+3 met in Vienna last Friday, and again yesterday, to evaluate the prospects of reaching agreement on a political framework for a comprehensive deal within the deadline.
The discussions in Vienna highlighted the need for further movement on some big issues by the Iranians and the need for flexibility on both sides. Despite the efforts of all parties, it was clear yesterday morning that we need more time to close the gaps between the E3+3 and Iran, particularly regarding the issue of Iran’s enrichment capacity, which remains at the heart of this negotiation. But based on the significant progress that we have made to date, I remain of the view—a view shared by my fellow E3+3 Ministers and Iranian Foreign Minister Zarif—that a comprehensive deal remains possible. We must capitalise on the momentum that we have gathered and push forward to achieve this prize.
Iran and the E3+3 have therefore agreed to extend the interim agreement again until the end of June to allow more time to bridge remaining gaps and tie down technical details. We will continue negotiations in December with the shared aim of securing an outline agreement within four months. We would, of course, have preferred to reach a comprehensive deal by yesterday’s deadline, but only if it was the right deal. As we continue to work towards such a deal, we have an interim agreement in place which maintains important constraints on Iran’s programme and the vast majority of nuclear-related sanctions. Under this arrangement, Iran will continue to be able to repatriate oil revenues on a similar basis to the current arrangements.
Successive Governments have enjoyed cross-party support in the House for the twin-track approach of sanctions and negotiations. I remain convinced that this approach is the right one and that it is yielding progress. The negotiations with Iran are tough and complex, but a comprehensive agreement would bring enormous benefits to all parties. For Iran, it would herald the beginning of reintegration into the international community and open the door to an easing of sanctions and access to significant frozen assets. For the international community, it would mark a considerable advance for regional and global security. We cannot and will not succumb to the temptation of sealing a deal at any price, but will remain steadfast in pursuit of a comprehensive agreement that respects the clear principle that Iran must not be able to develop a nuclear weapons capability”.
My Lords, that concludes the Statement.
Lord Bach (Lab)
My Lords, I thank the Minister for repeating the Statement made by her right honourable friend the Foreign Secretary in another place earlier today. It is an especial thanks to the noble Baroness, and I think she will know why I say that.
I agree with the comment in the Statement that there has long been cross-party support for a twin-track approach—sanctions and negotiations—and I confirm today in the House that that cross-party support exists.
Before asking the Minister a few questions, I am sure she will want to acknowledge the work of the EU’s outgoing High Representative for Foreign Affairs and Security Policy, my noble friend Lady Ashton of Upholland. All sides of the House will be very proud of the role that she has played. Over the past five years, she has played a decisive and constructive role on the world stage and her commitment and determination on the Iran nuclear issue in recent months have been very widely recognised. As Secretary Kerry said yesterday in his press conference,
“I want to thank … especially my good friend Baroness Cathy Ashton, whose partnership has been absolutely invaluable throughout this process and who has done a terrific job of helping to bring people together and define the process”.
We should be very proud of the role that our fellow Member has played.
Turning to events yesterday in Vienna, the fact that it was not possible to reach agreement by the already extended deadline of yesterday is, of course, a regrettable setback, but in our view it need not be an irretrievable one. The June 2015 extension could allow for a further opportunity for progress to be made towards the vital comprehensive deal.
For some years now, Iran has chosen to exploit regional sectarian tensions through supporting terrorist groups in other parts of the region, but today and in the next few months Iran has the capability to play a much more positive role. But that has to start with a clear commitment by Iran to address concerns about its nuclear programme, which have been unresolved for too long now. There should be no doubt that in an already very volatile region and at a particularly perilous period, a nuclear-armed Iran poses a threat not only to Israel and its neighbours but to wider global security. The interim agreement that the Statement talked of was a significant step forward, but it was only ever intended to freeze Iran’s nuclear programme. A final deal must focus on seeing that nuclear programme rolled back.
I seek a number of assurances from the Minister on the content, extension and negotiation of the potential deal. First, on the content of any final agreement, reports suggest that one of the main obstacles to securing a deal remains the crucial issue of the number of centrifuges Iran could operate. The Statement did not mention that matter, so can the noble Baroness say in her response what the Government’s assessment is of the appropriate number of centrifuges that Iran can retain, while still offering sufficient protections around the so-called break-out time?
Secondly, the extension of negotiations must be agreed only alongside sufficient guarantees that it will not allow Iran to gain by running down the clock. The terms of the now extended agreement explicitly forbid Iran from adding new enrichment capacity and accumulating more enriched uranium, and ban 20% enrichment altogether. Can the Minister confirm that these restrictions will remain in place and will continue to be monitored, and that any sign of breach will warrant a strong response?
Thirdly, on finance, can the Minister confirm that Iran will not enjoy any net financial gain through this extension? The Foreign Secretary said yesterday that:
“The expectation is that there will be a rollover of the current arrangements for Iran to access around $700 million per month of frozen assets”.
In the Statement, which the noble Baroness has been kind enough to read to this House, the Foreign Secretary said that Iran will continue to repatriate oil revenues on “a similar basis” to before. Can the Minister confirm that this does not allow for any further extension of sanctions relief without anything in return from Iran?
Briefly, on a separate but connected subject, we welcomed the announcement in June that the embassy in Tehran will be reopened. The Foreign Secretary’s recent answer to my right honourable friend the shadow Foreign Secretary stated that issues around getting the embassy back to a functional level and re-establishing a visa service are still under discussion. Can the Minister offer us today any timescale for when she thinks those matters will be resolved? It is important—and I hope this is a common view across the House—that that embassy is reopened as soon as possible.
Secretary of State Kerry was surely right to say that these talks will not get easier just because they go on longer. An extension is not a success in itself and must not be seen as such. The only successful outcome is a full and comprehensive deal being reached, upheld and effectively implemented. We very much hope that that is what happens as soon as possible.
Baroness Anelay of St Johns
My Lords, I thank the noble Lord, Lord Bach, for reconfirming the Opposition’s long-held view that this is a cross-party matter where both the Government and the Opposition support the policies of the twin-track approach. He quite rightly drew attention to the importance of ensuring that these talks progress in a way that achieves a fully implemented deal that can be properly monitored and to the fragility of security in the area. Against that background, he is absolutely right that we should address all these matters cautiously but firmly to achieve that full, successful outcome. I am also very glad to recognise the significant role played by the noble Baroness, Lady Ashton, and was delighted to be able to draw attention to that when I answered a Question at the Dispatch Box from the noble Baroness, Lady Deech, at the end of last month. The noble Baroness, Lady Ashton, showed, on the national stage, the skills of negotiation which she deployed so well in this Chamber.
I will address myself to the noble Lord’s questions. First, he asked about the precise number of centrifuges that the Iranians might wish to escalate to and the exact number that we might consider appropriate. This will certainly be the crux of the matter in the discussions that proceed and the noble Lord will understand that one does not necessarily go into the details of something that sensitive. However, I can say very clearly that, in all the negotiations considering how many centrifuges would be acceptable, at any stage, to a final agreement, we are very carefully balancing two facts. Whereas the Iranians might wish to increase the number of centrifuges to a level that might easily make it possible for them to move to a nuclear programme, we are determined that will not happen. The crucial part of any successful deal must be that the centrifuge numbers—and all the other technical matters, as the noble Lord will be perfectly well aware from the work he has done on this—are considered in such a way that the civilian needs of the Iranian Government can legitimately be met. However, such a deal does not allow for a number of centrifuges, or an escalation to a number of centrifuges, which would give the opportunity for any nuclear weaponry to be developed. It is the civilian use that we see as legitimate.
I come to the questions that the noble Lord properly asked about what happens now. I can certainly confirm that the restrictions on sanctions remain firmly in place, as they were before midnight last night. As the clock ticked over from midnight to one second past midnight, exactly the same restrictions as before remained in place and they will be monitored. He asked whether it means there is no net financial gain for Iran and that there will be no further extension of sanctions relief. I can reassure him on both those matters. To assist him a little more, I can say that, under the extension, Iran’s obligations under the joint plan of action continue exactly as before. This means that the most concerning elements of Iran’s nuclear programme remain frozen. In return, but just as before midnight last night, Iran receives instalments of oil revenues that had previously been restricted. The E3+3 will continue suspension of the same specific sanctions that were suspended under the joint plan of action. The EU Council decision was updated this very morning when the technical, legal provisions were put in place. This means that the Iranian Government can draw down a maximum of $700 million from oil revenues which is exactly the same position as at the beginning of the year and there will be no softening at all of any of the proliferation sanctions. I hope that reassurance satisfies the noble Lord.
He also asked whether I could give an undertaking that we would not provide further relief to the Government in Iran unless there were further concessions from that Government. That will indeed form part of the further negotiations; otherwise, existing sanctions remain in place.
The noble Lord then asked practical questions about the embassy in Tehran. As my right honourable friend in another place explained, we face two technical issues to be resolved. The first is the fact that the embassy, having been sacked, literally has to be resupplied. It is a case of getting agreements physically to take in and set up all the material that is required, and that is a matter for negotiation with the Government of Iran. Secondly, we, like the noble Lord, wish to see a visa service reinstated as soon as possible for the convenience of all—not only for Iranians travelling here but for British citizens who travel to Iran. I know that all those negotiations will be tackled in a very forthright but very careful manner. We all know that it is important for our embassies to be in position. I certainly know from talking to noble Lords that they, like me, have a great regard for our consular services.
Baroness Falkner of Margravine (LD)
My Lords, given where we were a few days ago, the extension of the talks is indeed very welcome news. I say from this side of the House that we are completely supportive of our Government’s endeavours in that regard. My noble friend will appreciate the importance of sequencing. It is really important that we have managed to hang on to the status quo at the moment. Of course there will be presidential elections in the United States in 2016, but people sometimes forget that there will also be Iranian elections, and it is terribly important that the reforming Government, such that they are, have something to show for their efforts in engaging with the E3+3 process. Will my noble friend bear that in mind as she goes back? It should be kept in mind as we go into negotiations, because this may well be our last chance.
I, too, pay tribute to the noble Baroness, Lady Ashton of Upholland, for her sterling work in this regard. However, it is slightly unclear who will now take over the principal EU negotiating role. Can my noble friend tell us whether the new high representative, Mrs Mogherini, will be doing that or whether the noble Baroness, Lady Ashton, will continue?
Baroness Anelay of St Johns
I am grateful to my noble friend for reiterating the support that I know she has expressed from her Benches before for the way in which these matters are taken forward. She asked me to bear in mind the pattern of elections. I can certainly assure her that those matters are borne in mind. I also ought to say that all those who are taking part in the negotiations bear in mind more technical details, too, regarding religious festivals in Iran, here and in the rest of Europe. That is why the next stage of the negotiations is beginning this very month. There will be no hesitation. The negotiations will begin before Christmas so that after four months we can have a framework of political agreement and we will then have the technical work that will provide the final result by the end of June.
My noble friend asked what will happen now that the noble Baroness, Lady Ashton, has completed the period for which she was “signed up”, if I may use that expression. She has given more of her time than she was due to give, so we express all thanks to her for that. This is a matter for the new Commissioner, Mrs Mogherini, to decide, and I am sure that she will be in discussions over that.
Lord Campbell-Savours (Lab)
My Lords, in terms of the debate going on inside Iran—the debate on television, on the radio and in the rest of the media—about developments in Vienna, is not one of the complicating issues of this whole affair the fact that the state of Israel refuses to give up its nuclear weapons and that many people on the streets in Iran simply cannot understand the position being taken by the western powers?
Baroness Anelay of St Johns
My Lords, I say to the noble Lord, who I know has great experience in foreign affairs matters—we have discussed them—that I think that the question is a lot more complicated than that. As we know, Israel is a signatory to the Non-Proliferation Treaty, while Iran is not. There are meetings with regard to the treaty next year, when a lot of these matters will be under discussion. I was interested to note last night that Mr Netanyahu made it clear that no deal is better than a bad deal. I think that that was an important thing for him to say, because it reflects exactly our view that, in order to achieve security there, we need a good deal for all.
Lord Hannay of Chiswick (CB)
My Lords, first, will the Minister accept support from these Benches for the reaching of a decision that was far better than breaking off negotiations or doing a bad deal? I add my voice to those who praise the noble Baroness, Lady Ashton, for a remarkable performance over the years. However, does the Minister recognise that, on the banks of the Potomac, there may be less all-party support for this prolongation than there is in this House? Will the British Government use the contacts that the embassy in Washington has with the Hill to explain why we think that this is the best outcome? Secondly, I express slight doubt as to whether the division of the next seven months into two periods as clearly as it has been done will bear the stress that time puts on it. Can she confirm, therefore, that the whole of the seven-month period will be available for negotiations and will not be artificially divided into two parts, which, if the first cannot be fulfilled in the time available, renders nugatory the second?
Baroness Anelay of St Johns
My Lords, I am grateful for the support from the noble Lord. He asks us to ensure that our colleagues across the Atlantic—perhaps all other colleagues involved in these negotiations—remain firm. In the meetings that were held last week by the Foreign Ministers, as the noble Lord will be aware, my noble friend the Foreign Secretary went twice to Vienna, on Friday and yesterday, in order to try to make sure that we got as close as possible to a result and, we hope, to a full result. All those taking part are showing an absolute resolve, so the E3+3 plus Iran have ended in a position where all have a determination to continue. I can give an assurance that our determination will be relayed to all our colleagues who are taking part in these negotiations. The noble Lord refers to the 4+3. Clearly we want to drive momentum. There must be no thought that there is time available to let anything drift and leave any nailing-down of the political framework until too late. That is why we have proposed 4+3 as a structure. If, at the end of four months, we have not got to the most perfect position on the political framework, I suspect that a huge amount of work will be going on to make sure that we do, but behind that there is a determination by all parties that we do not let this opportunity slip.
Lord Lamont of Lerwick (Con)
My Lords, I refer to my entry in the Register of Lords’ Interests as chairman of the British Iranian Chamber of Commerce. I agree with my noble friend that no deal is a lot better than a bad deal. It must be an effective deal, but it is good that the habit of dialogue, which increases understanding of each other’s position, is continuing. One hopes that that will lead to wider things. First, can the Minister say whether the Russian offer to build nuclear power stations in Iran and to convert the enriched uranium into fuel rods outside Russia has in any way contributed towards a narrowing of the gap on the scale of the programme and the scale of the centrifuges issue? Secondly, let me ask the Minister about sanctions relief for humanitarian goods. There have been reports that medicines and other humanitarian goods needed for hospitals are not getting through, despite the sanctions relief. The American banking boycott, which is not in its entirety part of British law but is imposed extraterritorially, is frustrating the supplies of humanitarian goods. We have always made it clear that we do not want the sanctions to hit ordinary people or vulnerable people.
Baroness Anelay of St Johns
My Lords, perhaps I may address that matter first. My noble friend is absolutely right to point out that humanitarian relief was never part of the sanctions regime. We have made it clear that we do not wish the sanctions to impact directly on the needs of Iranian people; they should be directed firmly at the Iranian Government. I appreciate that banks can make commercial decisions, but with regard to humanitarian relief efforts it is clear that there should not be any let or hindrance in their delivery. I have had discussions with humanitarian organisations which are firm in their belief on how to take their work forward effectively.
My noble friend also raised the issue of Russia and what it may have agreed to do. I appreciate that there was a story in the New York Times and elsewhere that Russia had agreed to take on responsibility for Iran’s stockpile of uranium and that that might have been a bit of a signal of a breakthrough in the talks. What I can say is that identifying areas for civil nuclear co-operation will be an important part of the final deal, but clearly it would not be appropriate for me to comment on the detail, let alone because it is something that Russia may or may not be involved in. I will say that a deal can be reached only if Iran addresses international proliferation concerns by simply—perhaps it is not so simple—reducing the size of its nuclear programme. That is the core of our negotiations.
Lord Reid of Cardowan (Lab)
My Lords, I thank the noble Baroness for a very well balanced Statement, which balances a degree of realism and circumspection with the political will to resolve this issue. That is something that the whole House will want. We were right to engage and we are right to endure as long as there is a prospect of achieving success. The reward, quite frankly, is staggering in its implications. Perhaps I may make a couple of points. First, in congratulating the noble Baroness, Lady Ashton, we are of course congratulating the European Union in an era when that is perhaps not fashionable in all quarters. While we all have our criticisms of the EU, I think that we should put that on the record. Secondly, this is important precisely because, as the noble Lord, Lord Hannay, said, there are more sceptical political voices on the other side of the Atlantic, so the British and European bearing could encourage a more positive approach among the politicians, if not among those who are engaged in this, although I do not doubt for a moment their bona fides. Finally, the last paragraph of the noble Baroness’s contribution is hugely important in its implications. Are we making it absolutely plain in everything that we do that, while achieving a resolution of the nuclear question as an end in itself is of course important, what is even more important in some ways is an entry through that gateway into the potential normalisation of Iran’s place and position in the world? Iran is a great and important nation with a proud history and it has a huge influence over large areas of the world which are at present unstable. If we can use these negotiations as a gateway through to normalising Iran’s role in the world, that would indeed be a prize worth winning.
Baroness Anelay of St Johns
My Lords, I agree entirely with the noble Lord, Lord Reid, and the emphasis that he places on the prize that is to be gained by having Iran return to normalisation in its relationships. The very fact of Iran being received back into the family of nations is also the prize to be seized by the rest of the world, not only in the region but elsewhere. Of course I also recognise what the noble Lord says about the noble Baroness, Lady Ashton, who has performed a great role within the EU and on the international stage. Perhaps I may take the opportunity, in answering his question, to say that in my enthusiasm when referring to the appearance on television of Mr Netanyahu last night, I suddenly signed Israel up as a signatory to the Non-Proliferation Treaty. That would certainly have surprised Israel, as it should have surprised me. Israel is not a signatory to the treaty.
Lord Howell of Guildford (Con)
My Lords, the Statement inevitably focuses somewhat narrowly on the nuclear deal, but there are those—I am one of them and I think that the noble Lord, Lord Reid of Cardowan, may be another—who believe that the more that future negotiations can open up the wider issues, including Iran’s possibly more constructive role in stabilising the chaos across the whole region and in general in the international landscape, the more likely it is that the development of those negotiations will proceed and succeed. Can my noble friend give a hint as to whether the future negotiations will go a bit wider than just “the deal”, as it seems to be called?
Baroness Anelay of St Johns
My Lords, we are not in a position where we can call it “the deal”, because we are working towards it. In a sense, the gap has been narrowed because we have been able to identify some areas where we may be able to resolve matters, but there still remains a core area that has not been resolved. It is a prize worth seeking and it can be sought —indeed, with encouragement we may get there—but I would not wish to say that we are at the stage where it is so resolved that we can think of next steps. My noble friend is absolutely right to draw attention to the role currently played by Iran in the region—it has been alluded to in this House and elsewhere—and the role for peace that it might play in the future. It could indeed play a constructive role. We welcome the support that the Iranian Government have given to the new Government of Iraq and their efforts to promote a more inclusive governance for all Iraqis, but a similar approach is needed in Syria, where Iran can and must play a constructive role. All these discussions will continue in tandem, I am sure, with what for us is the core issue today, which is to proceed with negotiations so that we can be in a position to achieve a political framework by the end of four months and by the end of seven to have a deal that is good for all.
Lord Beecham (Lab)
My Lords, is not a critical element of a settlement of this issue the existence of a robust inspection system? Could the Minister advise us on the present state of play on that important matter?
Baroness Anelay of St Johns
The noble Lord is absolutely right. It is essential that the International Atomic Energy Agency has access in Iran in order to make sure that the supervision of these matters is carried forward. That has to be an integral part of any deal so that the IAEA is able to scrutinise it. When matters have progressed and we hopefully get to agreement on a deal, at that stage the undertakings to achieve scrutiny will be included.
Lord Stoddart of Swindon (Ind Lab)
My Lords, I return to the point raised by the noble Lord, Lord Campbell-Savours, on Israel. Many people raise the point that Israel has nuclear weapons and the capacity to enrich uranium and produce more, so that is very relevant indeed. Could the Minister confirm that she said that Israel was a party to—she is shaking her head before I have asked the question—the Non-Proliferation Treaty and Iran is not? I understood that Iran was party to the treaty and Israel was not. Perhaps she could confirm or deny what I am saying.
Baroness Anelay of St Johns
My Lords, in answering the noble Lord, Lord Reid, I took the opportunity to make it clear that it is indeed that way round and that it is Iran that is a signatory to the Non-Proliferation Treaty and Israel is not. In an answer to the noble Baroness, Lady Deech, on 30 October I made that clear. This is what makes it a different type of discussion with Iran about how it fulfils its obligations under the Non-Proliferation Treaty. We know that the area has its security difficulties at the moment. All our efforts as parliamentarians are concentrated on trying to ensure security there and consequently security for a wider Europe and wider international stage. What we are doing today is discussing that part of the negotiations with Iran that focus on ensuring that we can resolve the outstanding issue, which is to prevent the acceleration and movement of Iran towards the capacity to have a nuclear weaponry system.
Lord Phillips of Sudbury (LD)
My Lords, like virtually every other speaker, I welcome strongly the Statement repeated by the noble Baroness, which represents a signal moment in the whole complex and difficult issue between Iran and the rest of the world. I do not want to labour the point, but does my noble friend accept that the fact that Israel is not a member of the IAEA or the various treaties gives a great deal of concern to the Iranians? I absolutely accept that Israel is desperate to preserve its safety by preventing Iran from obtaining nuclear weaponry. That is perfectly understandable. What is not so well understood is that within Iran there is genuine terror of an Israel with nuclear weaponry. I declare my interest as president of the British Iranian Chamber of Commerce. Does my noble friend accept that it is about time that we in the West exerted friendly pressure on Israel for it to come into the fold, so to speak, in terms of the world’s attempts at controlling nuclear power? Is that something that the Government will consider? In Iran, President Rouhani is currently taking considerable risks with his public opinion, knowing as it does that Israel sits there with weaponry and that we in the West do not even accept that it should be part of any of these arrangements. It really would be a positive step all round if something were to be done along those lines.
Baroness Anelay of St Johns
My Lords, clearly there are security issues in the area that go far beyond the discussion of whether or not Iran develops nuclear weapons. Clearly, though, the way in which the Iranian Government have sought to increase their capacity to obtain nuclear weapons has contributed to the destabilisation of the area. It is important that we continue our work with Iran in order to enable it, as the noble Lord, Lord Reid, said, to come back into the international world. That in itself would reduce instability and uncertainty in the area. Clearly, negotiations go on with all countries in the whole area of the Middle East and the Gulf with regard to security matters. There is no easy answer, let alone an easy answer for Israel or any other country there to find peace tomorrow. But what is clear is that each country needs to consider carefully what steps it takes to maintain its own security and whether those are reasonable or undermine the security of the area. Our attention is focused on the clear problem that has been caused by Iran working towards the development of nuclear weapons and that is where we should focus our attention, because we have the opportunity now to move forward in a constructive way. We need to seize that and not be diverted from it.
National Insurance Contributions Bill
(10 years ago)
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Lord Newby (LD)
My Lords, the Bill before us today takes forward the Government’s commitment to simplify taxes and make avoiding tax harder. The Bill contains four measures: first, simplifying NICs paid by the self-employed; secondly, accelerating the payment to the Exchequer of NICs in dispute in avoidance cases, and providing for the issue of follower notices where the scheme or arrangement has been shown to fail in another party’s litigation; thirdly, applying new information powers and penalties to promoters of avoidance schemes; and, fourthly, introducing a targeted anti-avoidance rule—TAAR—to prevent people from circumventing new legislation tackling avoidance involving employment intermediaries. I will explain each of these four measures in more detail, starting with simplifying NICs paid by the self-employed.
In Budget 2014, the Chancellor announced that the Government intended to simplify the NICs collection process for the self-employed, who currently have to operate two different processes for two separate classes of NICs. This followed a 2012 recommendation by the Office of Tax Simplification and a consultation paper published in July 2013. As noble Lords may be aware, having two separate collection methods for class 2 and class 4 NICs causes confusion and extra work for both the self-employed and HMRC. Class 2 NICs are currently collected via a flat-rate charge paid through six- monthly billing or by direct debit, while class 4 NICs are a percentage charge on profits paid through self-assessment alongside income tax. This measure will move the collection of class 2 NICs into self-assessment, making the system simpler and more straightforward, while reducing administrative burdens on the self-employed by allowing them to deal with their tax and NICs in one go.
The aims of Clauses 1 and 2 and of Schedule 1 to the Bill are: to change the way in which class 2 NICs are structured; to change the means by which class 2 NICs are collected by moving their collection into self-assessment, so that they can be collected alongside class 4 NICs and income tax; to change the means by which class 2 NICs are enforced, with changes to associated appeal rights to broadly mirror those for class 4 NICs and income tax; and to make consequential changes to legislation relating to maternity allowance to allow women to continue to become eligible for it post-reform. It is proposed that these changes will take effect for the 2015-16 tax year onwards, so that the collection of class 2 NICs under self-assessment will be from 6 April 2016.
One of the key changes that will be made by this reform is that there will no longer be a need for customers with low profits who want to opt out of paying class 2 NICs to apply for a small earnings exception in advance. HMRC is aware that the self-employed find this confusing and burdensome. Under the reform, customers with profits below the new small profits threshold will not be liable to pay class 2 NICs but will be able to choose to pay on a voluntary basis. Those with low profits who want to opt out of paying class 2 NICs will not need to do anything except to confirm this when completing their self-assessment return, while those who still choose to pay—in order to protect their benefits entitlement—will be able to do so quickly and easily. Rather than requiring a separate process, this decision will be built into the self-assessment return. There is a small proportion of HMRC customers who pay class 2 NICs but are not in self-assessment. These individuals will continue to get a separate class 2 NICs payment request. They will receive this once a year instead of twice a year, as they currently do.
I will now mention some specific points on this measure that attracted interest in the other place. The Financial Secretary provided reassurance that the self-employed will continue to have the option to spread the cost of paying class 2 NICs. The facility already exists in self-assessment to make budget payments to spread the cost of tax and NICs through the year. The Bill makes provision to allow women to continue to become eligible for maternity allowance following the class 2 changes. There was a concern in the other place that the process being put in place to allow pregnant women to pay class 2 NICs if they have not yet filed their self-assessment return would be impractical and require a high level of forward planning. I would like to confirm the remarks of the Financial Secretary that this will not be the case. I emphasise that the process does not require any forward planning beyond that which a pregnant woman would routinely undertake under the current process of applying for MA. A self- employed woman who wishes to make a claim for MA and has not already submitted her self-assessment return will be able to pay for any shortfall in contributions at the time of her claim, through the exception process that HMRC and DWP are putting in place.
I turn now to the provisions in the Bill dealing with accelerating the payment to the Exchequer of amounts of NICs in dispute in avoidance cases. This also includes providing for the issue of follower notices where there is a relevant case in which the scheme or arrangement has been shown to fail in another party’s litigation. For NICs, the provisions in the Bill broadly follow new powers included in the Finance Act 2014 that allow HMRC to issue a notice to taxpayers who used avoidance schemes that failed before the courts in another party’s litigation—a so-called follower notice. It is estimated that the provisions in the Bill and the Finance Act 2014 will raise £5 billion in tax and NICs for the Exchequer.
A follower notice sets out HMRC’s view that a judicial decision in another case is directly relevant and that those who receive the notice should settle their disputes. If the taxpayer does not settle in response to this notice, they will face a penalty if they are unable to show that their case is materially different from the other party’s litigation, or if they do not have reasonable grounds to continue the dispute. An accelerated payment may be required from taxpayers in the following circumstances: where a follower notice has been issued and the taxpayer decides not to settle their dispute; where taxpayers are involved in schemes subject to disclosure under the disclosure of tax avoidance schemes, or DOTAS, rules; and where taxpayers have used arrangements that HMRC decides to counteract under the general anti-abuse rule, or GAAR. These measures are expected to lead to the issuing of payment notices to some 43,000 taxpayers involved in avoidance schemes currently under dispute with HMRC over the period to the end of March 2016.
In debates in another place, the issue of HMRC implementation and resourcing of this measure was raised, and assurances were sought that HMRC would be sufficiently resourced to implement the measures. I echo the reassurances provided by the Financial Secretary. Since 2010, this Government have made sure that HMRC has the resources it needs to effectively police the rules, making significant investment of nearly £1 billion to assist it in its work. HMRC’s success demonstrates that it is well resourced and doing a good job. For example, in 2013-14, HMRC brought in £23.9 billion in additional tax revenue—a record amount.
I will now explain the provisions in the Bill that apply new information powers and penalties to the highest-risk promoters of tax avoidance schemes. This measure was announced for tax in Budget 2013 and the Government’s intention has been to extend the measure to NICs at the earliest opportunity. A consultation on the tax aspects, Raising the Stakes on Tax Avoidance, ran from August until October 2013. The Finance Act 2014 included legislation that allows HMRC to issue conduct notices to promoters of tax avoidance schemes and to monitor promoters who breach a conduct notice. This Bill applies the tax legislation to NICs so that the legislation operates as one unified measure covering both tax and NICs.
Monitored promoters will be subject to new information powers and penalties, which will also apply to intermediaries that continue to represent them after the monitoring commences. The monitored promoter may be named by HMRC and required to inform its clients that it is being monitored by HMRC. Clients of monitored promoters will also be subject to certain obligations and extended time limits for assessments. This measure is part of the Government’s strategic response to avoidance and is to deter the use of avoidance schemes through influencing the behaviour of promoters, their intermediaries and clients. It is aimed at changing the behaviour of promoters of NICs and tax avoidance schemes. Naming a monitored promoter should deter intermediaries from acting for them, and clients and potential clients from using their products.
Finally, I will describe how the provisions in the Bill relating to the new targeted anti-avoidance rule will work to prevent people from circumventing new legislation tackling avoidance involving employment intermediaries. The National Insurance Contributions Act 2014 strengthened existing legislation in respect of offshore employment intermediaries. That measure was effectively intended to address the non-payment of employers’ national insurance in the oil and gas industry involving the placement of the employer of oil and gas workers—who are working on the UK continental shelf—outside the UK.
As noble Lords will be aware, the temporary labour market is quick to react to any legislative changes and to find new convoluted ways to reduce the amount of income tax and NICs they would otherwise be liable to pay. Stakeholders have indicated to HMRC that intermediaries involved in the facilitation of false self-employment may set up avoidance vehicles involving convoluted structures specifically designed to circumvent the legislation introduced in the National Insurance Contributions Act 2014. To dissuade such intermediaries, the Government propose that a TAAR, which would be similar to the tax TAAR included in Finance Act 2014 for the same purpose, is included in NICs legislation to deter such avoidance. It will focus on the motive for setting up the arrangements and what they achieve. Were they set up with the motive of avoiding NICs? Do they result in less national insurance contributions being paid? In order that the tax and NICs TAARs operate as one, both will take effect from 6 April 2014.
In conclusion, the Government have already taken action to reduce significantly the burden of NICs on earnings and employment through previous Bills. This Bill continues that approach and I commend it to the House. I beg to move.
Lord Razzall (LD)
My Lords, this is clearly an important Bill, bearing in mind the number of people in the workforce in the United Kingdom who are now self- employed. Indeed, there is an ever-increasing percentage in that position and I suspect the Minister will agree with me that, as so often in your Lordships’ House, the importance of this legislation is in inverse proportion to the number of people who want to speak on it.
On these Benches—as indeed, I understand, on the Labour Benches—we welcome this legislation. On the first point of tax simplification, every Government come in saying they are going to simplify the tax code and four years later the tax legislation is even more complicated than it was when they came in. Anything that can be done, even of a minor nature, to simplify tax legislation is clearly desirable. All noble Lords will welcome the attempts to reduce tax avoidance in this area—again, all Governments want to do that and having practical examples there is obviously beneficial.
In supporting the Bill, I will just raise three or four questions. First, the Minister was correct that concerns were expressed in another place regarding the position of self-employed women claiming maternity allowance, which he referred to in his remarks. I understand the answer that the Government have given, which is a combination of responses from the Treasury and the DWP. However, as I understand it, the Chartered Institute of Taxation has suggested that the Government should review these changes at the earliest opportunity—maybe in a couple of years’ time. I would be grateful if the Minister could indicate whether that is a suggestion that the Government welcome. The idea is to ensure that the introduction of these provisions has not resulted in the reduction in the number of claims for the standard rate of maternity allowance, which would obviously be hitting women who wish to claim the allowance.
Secondly, the Chartered Institute of Taxation has pointed out that there will be a gap of 22 months between the collection of class 2 payments for 2014-15 and for 2015-16, as the liability moves from a weekly basis to arising at the end of the tax year. Have the Government considered the cash-flow implications of class 2 NICs coming in up to 10 months after the end of the tax year rather than being paid in-year as they are at the moment? That is clearly quite a significant point in relation to the Government’s finances.
Thirdly, there are significant changes being brought in to the entitlement to contributory benefits. I would be grateful if the Minister could confirm that the Government are satisfied that moving class 2 into self-assessment will not adversely affect entitlement to contributory benefits. In particular, what proposals do the Government have in mind to educate and inform people as to these changes? For example, direct debits will have to be cancelled before the introduction of the programme in 2015.
Finally, I have a general question. As the Minister will well know, a number of people have advocated for some time the merging of the NIC structure with the general income tax structure. Do the Government feel that these proposals, when implemented, will be neutral, negative or positive on that issue?
Lord Davies of Oldham (Lab)
My Lords, as the noble Lord, Lord Razzall, indicated, the Opposition support this Bill. In fact, he succeeded in raising most of the critical points that I was going to make in my contribution—a growing sign of just where the Liberal Benches stand as we get closer to the general election, I suppose. It certainly obviates the necessity for me to repeat all those points.
This is a fairly modest Bill, but a constructive one and one that went through without opposition in the other place, although I congratulate my honourable friend Shabana Mahmood on her contribution to the debate there. She raised the points that the noble Lord, Lord Razzall, reiterated today. She was not entirely satisfied with the responses. The noble Lord, Lord Razzall, obviously is not as yet. He thinks that there are still questions, and so do I, but those questions are more on the margin than on the central thrust of the Bill, which we endorse.
It is important that we get this issue right. Some 4.5 million people are now self-employed in this economy, which is one in six people. Of course, in many cases that will be through choice, but in many other cases it will reflect the fact that getting a job that pays remotely adequately remains very difficult for many people and that there are those who are self-employed because the people who organise their work see advantages in doing so on that basis, as tax advantages accrue to the organisers of the work as well as, supposedly, to those who are self-employed. I am therefore glad that the Government have taken up this issue and have addressed their mind to improving the situation.
We are in favour of the simplification contained in the Bill, and we wholeheartedly endorse the other main objective which is the targeted anti-avoidance rule. It means that we can tackle disguised employment made possible through employment intermediaries or offshore employers. We need to make sure that the Exchequer gets its proper receipts from those working in the economy and effectively owing a contribution to the finances of the nation.
We recognise that it is important that the Government get the specifics of this position right. At present, 0.3% of the £102 billion collected in NI contributions engenders 40% of the calls to Her Majesty’s Revenue and Customs. There is something clearly wrong with this distortion, and it all revolves around the category of the self-employed. That is why the Government have acted, and they have acted well in ensuring that the class 2 payers of NICs can now pay at the end of the tax year, and that they have their assessments worked out on the basis of self-assessment. So we are clearly seeing an improvement in the position, which we greatly welcome.
The noble Lord, Lord Razzall, raised the maternity issue. I will therefore not reiterate what he said except to endorse that there are still anxieties. The Chartered Institute of Taxation said that it had enough anxieties and question marks to urge the Government to think in terms of reviewing the situation within two years, and I hope that the Minister can, perhaps, be categorical in his and the Government’s determination to guarantee that this occurs. The maternity allowance affects about 25,000 women each year who claim for it, and it is absolutely critical that the system should work effectively for them.
I also endorse the point made by the noble Lord, Lord Razzall, to which the Minister made some reference in his opening remarks. It is quite clear that the Government have to be successful in their communication of the benefits of this legislation and the way in which people respond to it. Increasingly, the Inland Revenue, for all the obvious reasons, uses the internet and the computer for communication, and expects people to be online in response. A great number of our fellow citizens are only too delighted that their tax returns and obligations to the Government are met in this much more efficient and effective way. But a great many of the self-employed, for the very reason that I established the categories in the early part of this speech, have limited abilities and understanding of how to use the internet. We have just got to recognise that a substantial percentage of our population are not computer literate. An awful lot of them will be in the category of those who are in the self-employed ranks. That is why we need the assurance of the Government that they are going to carry out an effective programme of communication to all of our citizens, to ensure that there is a fair deal for the less advantaged among them, as well as the more obviously computer literate. I hope that the Minister will give some reassurance on that front.
Of course, people will get a vague perspective that the Government have done something about the NICs situation. But there is a difference between that and being able to implement action which defends their own direct interest, as the NICs payments are clearly of such significance to the substantial number of people who get very little returns in their self-employment statement. If there is any doubt about just how lowly the returns can be to the individual, just look at the Exchequer’s problem in indicating the lower level of receipts it has been getting in certain categories. A great deal needs to be done to make this legislation effective and fair.
Of course, we endorse the targeted anti-avoidance rule. It is clearly important that workers who are self-employed are in that position through their own wishes and are not just badged as self-employed by those people who take advantage of their labour, and organise it, and do it on a self-employed basis for the obvious advantages it gives to the so-called employer, or organiser of the work, in taxation terms. Clearly, if people fail to meet their NICs payment, they will have no provision for holidays or even for sickness, unlike others in the workforce, so this is an important piece of legislation for a substantial section of our population —and a growing section, as we all appreciate.
The Bill went thorough the Commons without a Division. It is not customary to divide the House at Second Reading and therefore I have no intention of doing so in any case. However, as the House will recognise, the Opposition are fully behind the Bill. We have a few questions that we want the Minister to answer satisfactorily but we join him in commending the Bill to the House.
Lord Newby
My Lords, I thank both noble Lords who have welcomed the Bill. The noble Lord, Lord Davies, said that it was a sign of the times that my noble friend Lord Razzall agreed with him, but surely it is a sign of the times that the noble Lord, Lord Davies, agreed with my noble friend. Whoever is agreeing with whom first, it is an extremely satisfactory position for a Minister at the Dispatch Box to find such a general welcome for a Bill.
Both noble Lords asked about the impact of the changes on the administration of the maternity allowance and whether it would be sensible to have a formal review two years after the Bill comes into force. That timetable does not make any sense, because the first payment of class 2 through self-assessment does not have to be made until the end of January 2017, so a two-year review date is pointless. However, both the DWP and HMRC are committed to ensuring that this group of women is not disadvantaged by the way the reforms work and will be keeping the operation of MA under review on a continuous basis. In response to the specific point that my noble friend Lord Razzall raised, it will be possible to see on an ongoing basis whether the number of claimants falls. I assure noble Lords that if there is any sign of that happening, the Government will act to deal with whatever the administrative problem is that has caused it because, obviously, that is not the intention of the legislation.
My noble friend Lord Razzall asked how there could possibly be no Exchequer impact, particularly when the measure is introduced, with people changing from paying monthly to paying up to eight months after the end of the tax year. National insurance contributions are accounted for on an accruals basis, so the important factor is the time period for which the money is due rather than the date on which it is actually paid. It will therefore continue to be counted in the tax year itself.
My noble friend Lord Razzall asked about the impact of the reforms on entitlements for benefits claimants and how that would work. The contribution conditions for benefits are changing. In addition to the maternity allowance, which we discussed, and in order to ensure that the self-employed are not disadvantaged as a result of the changes, the DWP will modify the relevant legislation to safeguard the position of claimants who pay their class 2 NICs by 31 January—the deadline for paying class 2 NICs through self-assessment. This will be done, first, by treating them as having satisfied the relevant contribution condition at the right time and, secondly, by disapplying the 42-day penalty that normally applies where contributions are not paid until after the start of the benefit year.
Questions were also asked about how the self-employed will learn about these changes and make sure that they comply with them satisfactorily.
HMRC and the DWP are working closely together in communicating the class 2 changes to the people who are going to be affected so that key messages are cascaded in a number of ways and a number of times. The department’s communication strategy includes: undertaking customer research and testing some of the products with customers; HMRC writing to all self-employed customers; an updating of existing customer outputs, such as the small earnings exception renewal letter; making HMRC staff and DWP staff aware of the changes and building the relevant information into call scripts and telephony, where appropriate; and using stakeholder partnerships with intermediary groups, agent organisations and forums to ensure that key messages are understood by everyone so that the self-employed hear the messages through a number of channels and in a consistent way.
Finally, the noble Lord, Lord Razzall, asked whether the effect of these changes on any possible future merger of NICs and income tax would be neutral, negative or positive. The whole question of merging income tax and NICs is fraught with difficulty and complexity. To the extent that these changes would have any impact at all, were any future Government to plan such a scheme, I suppose, if anything, it would be very marginally positive, but in the overall scheme of things and in the context of such a wide-ranging review it would be almost lost in the wash.
This is a short Bill, but as all noble Lords who have spoken have recognised, it is important to simplify the way in which we administer the system and to reduce the scope for avoidance. Therefore, I commend the Bill to the House.
EU: UK Membership
(10 years ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Liddle
That this House takes note of the case for the United Kingdom’s membership of the European Union.
Lord Liddle (Lab)
My Lords, it is high time that pro-Europeans made a stronger and more forceful case for Britain’s membership of the European Union, for, as matters now stand, Britain is sleepwalking towards exit. The blame for this situation, in my view —and I say this in no partisan spirit and with great regret—rests fairly and squarely on the shoulders of our Prime Minister. I have come to the sad and rather depressing conclusion that our membership of the European Union is no longer safe in David Cameron's hands.
I admired his Bloomberg speech of January 2013. It presented a well argued case for reform of the European Union that had wide resonance on the continent. While I thought that the commitment to an “in or out” referendum was a mistake, it seemed then that Mr Cameron was committed to a positive result. I remind your Lordships of what he said then:
“And when the referendum comes let me say now that if we can negotiate such an arrangement, I will campaign for it with all my heart and soul. Because I believe something very deeply. That Britain’s national interest is best served in a flexible, adaptable and open European Union and that such a European Union is best with Britain in it. Over the coming weeks, months and years, I will not rest until this debate is won”.
Yet, since the summer, the Government's European policy has hardened beyond recognition. In a “Today” programme interview in September, Mr Cameron proclaimed that he cared,
“a thousand times more strongly”,
about the break-up of the United Kingdom, had the Scots voted yes, than about Britain's membership of the European Union. I can give him five times, or maybe 10 times, but a thousand times? There is not much room left there for heart and soul commitment.
In his recent conference speech, the man who at Bloomberg had talked with great emotion about an open Europe looked straight into the television camera and declared that limiting immigration would be at the heart of his renegotiation strategy. Let us remind ourselves that in the Bloomberg speech the Prime Minister’s only reference to migration was to warn of the loss of freedom of movement rights for the over 2.2 million British citizens who live on the continent. That comes from a Written Answer from the noble Baroness, Lady Warsi, to the noble Lord, Lord Oakeshott of Seagrove Bay, earlier this year, so 2.2 million is the figure. Now, in the stampede to sound ever tougher on EU migrants, the consequences for our fellow citizens living on the continent are frankly forgotten and never get a mention.
No. 10 has licensed no less a person than the Foreign Secretary, as well as other Ministers, to talk up the possibility that the Government might recommend a no vote if their renegotiation objectives are not met. The whole focus of the Government’s European policy has become not persuading our partners of a credible reform agenda that would receive general backing in Europe but chasing after potential defectors to UKIP. The whole exercise is so pointless, for as your Lordships know there is no way you can “outkip” UKIP.
If we end up leaving, it is not as though there is a great public wave of indignation about our membership of the European Union. The latest Ipsos-MORI poll showed 56% opting in a referendum to stay in and 36% to come out. It is worth underlining that in a poll that YouGov took after the Rochester by-election, only 22% of UKIP supporters actually think that Europe is one of the main issues facing the country. Yet what we have now is a Prime Minister so desperate to win the next general election that he will say anything to win over UKIP votes and prevent further defections by Conservative MPs, and in the process will set renegotiation objectives that are incapable of being achieved. In the next Parliament, if he remains Prime Minister, he will find himself cornered by his own anti-Europeans in the Conservative ranks to recommend a vote to leave Europe because of the consequences of what I can only describe as recklessness and opportunism.
The sleepwalking nightmare will be upon us, and the nation will realise what a disaster its craven leaders have allowed to happen only when it is far, far too late. That is why we need to make a stronger case now to try to prevent the slide to populism, which ends up with parties making promises they will never be able to keep. Of course, as a Labour man, I want to see a Labour Government. As a pro-European, I commend my leader Ed Miliband for resisting the enormous pressure to concede a referendum. However, even if there is a Labour-led Government in the next Parliament, there may be in a hung House of Commons a majority for an EU referendum, so we have to start making the case now—and a better case than we have made so far.
The traditional British case for Europe is about growth and jobs. It is a strong one: 3 million jobs dependent on the single market, inward investment coming to Britain because of unimpeded access to that single market, and international companies relying on the scale of Europe’s home market that is the EU single market to win new global markets overseas. But I think we have failed as pro-Europeans to get across to the public the complex nature and full economic significance of the single market.
Many people I meet think, “Why can’t we rid ourselves of the encumbrance of all the EU regulation and cost, and trade freely with our EU partners?”. Pro-Europeans have to start challenging the pullers out—because that is what they are—with hard and difficult questions about their alternatives to our EU membership and the consequences of those alternatives.
Broadly, there are two. The first is to be a Norway: in other words, be outside the EU but accept all its rules, pay up to finance its budget and continue to allow the free movement of people that EU laws require. That Norwegian option gets us out of the EU but denies Britain any say whatever over the key rules that shape our economic future, so that is not much of an option, is it?
The second option is to abandon those EU rules and to say, “We’ll make our own way without them”. What will happen then? We will find that our products and services are discriminated against in EU markets because they do not meet EU approval standards. We will see the flight of foreign banks in the City to Amsterdam or Paris to avoid that discrimination and to be in the single financial area. In the case of the car industry, the most successful manufacturing renaissance that this country has seen, British producers will face a 10% tariff in order to enter the European market, with untold consequences for vital jobs in many of the deprived regions of our country. That option—that dash for the restoration of national economic sovereignty —would inflict an economic wound of massive proportions. We have to spell that out.
Of course we should fight within the EU for EU rules to be proportionate and to see unnecessary regulation abandoned. But again we should always challenge the pullers out who complain about EU regulation. What do they actually want to get out of? Do they want, for example, to get out of and have no UK equivalent of the working time directive, which guarantees British workers four weeks’ paid holiday a year? Do they want out of it or not? Similarly, on environmental laws, do they want out of the regulations that require clean rivers and beaches and not have them in Britain? Or on consumer laws, do they want to end the regulations that provide for cheap air flights and that end rip-offs in mobile roaming charges? Is that what the anti-Europeans want? If they do not want that they are going to have to comply with EU laws and regulations. Pressing the pullers out on their alternatives to EU membership will be the equivalent of the currency question in the Scottish referendum, which the nationalists could never satisfactorily answer.
Beyond these questions of national self-interest, I believe that pro-Europeans have to make an emotional argument—to use another Scottish parallel—that we are better together. Harold Wilson once dismissed the sovereignty argument against Europe with the quip that he regarded the gradual pooling of sovereignty as part of the advance of human civilisation, and he was right. In a world of interdependence, if we want to tackle problems that reach beyond national borders, we need international co-operation that is effective. For all its many problems and frustrations, there is no better example of this in the world than the EU.
Think of the world that we are now in, with China, the world’s largest economy, pursuing a national strategy of aggressive state capitalism, with the return of nationalism in Russia, barbarism and fanaticism in the Middle East, and chaos and heart-rending human tragedy in north Africa. We in Europe are surrounded by these multiple threats to our contentment and civilisation, and either we hang together in addressing them or we hang separately. Without the co-operative framework of the European Union, we cannot begin to tackle the problems of climate change, energy, migration, disease that crosses borders, terrorism and threats to peace.
But the antis now say that none of this counts for anything, because they are managing to successfully define the greatest challenge of our age as immigration. They are making the claim that as long as we remain EU members we cannot control our borders. I believe profoundly that it is the responsibility of political leaders to lead on this issue. The facts are clear: EU migration has been a huge economic benefit to Britain. The populists blame migration for overcrowded schools, for long waits for GP appointments, for housing shortages. Of course there are areas of stress, and I think that what Labour is putting forward—that there be a migration fund as part of the social and structural funds—is a good idea. But the fact is that without the tax revenues that EU migrants bring to the Exchequer, we would find it much more difficult to tackle these problems and to find the spending to address these stresses than otherwise.
Yes, I agree that exploitation in labour markets has to be tackled and that benefit abuses have to be stopped, but free movement is a fundamental founding principle of the European Union, which successive Governments have solemnly signed up to since we first thought about entry in the 1960s, and from which millions —2.2 million, to be precise—of our citizens benefit. We cannot, with our integrity intact, cross the line into quotas and blatantly discriminatory policies.
Some 16 years ago I attended the ceremony when Helmut Kohl got his freedom of the City of London. At the end of his speech he talked about his boyhood days in Ludwigshafen, when he used to need a pass to go from one zone of the town to another because they were in different zones of Germany. He contrasted that with when he went on summer evenings to the Brandenburg Gate in Berlin, the Spanish Steps in Rome and our own Trafalgar Square, where he met so many young people of different European and other nationalities, mixing together enjoyably and at peace with each other. The miracle of the European Union has contributed to that to a very considerable degree. It underpins our prosperity and contentment. As we remember this centenary, the horrors of the First World War and what came after, we cannot cavalierly throw away one of the greatest historic achievements of European civilisation.
Lord Howell of Guildford (Con)
My Lords, although the noble Lord, Lord Liddle, has just launched a number of sharp and critical arrows at the coalition Government and the Prime Minister—indeed, one might say a few howitzer shells—I am, in a strange sense, heartened by the way the debate on the European Union and Britain’s position in it is going. I believe that underneath a great deal of the rhetoric and partisan exchanges there is a clustering of opinion around the concept of reform of the European Union, of which Britain’s relations with the rest of the European Union is a part—it is certainly a part, but it is only a part. Indeed, official policy of the coalition Government is “renegotiation with a reformed Europe”. My question for all of us to ponder is: how is that reformed Europe going to come about that we can negotiate with?
If I have reservations, they are these. First, it seems to me extremely important that we should get away from the idea that negotiations will be purely bilateral between the UK and Brussels, with maybe one or two side discussions with individual member states. The issues being raised are far from being ones on which Britain is isolated. The smart pro-European think tanks are quite wrong in asserting all the time that there is no appetite for reform of the European Union around the rest of Europe. There is, it is very considerable and it was expressed at the European parliamentary elections with great vigour. It is not true that the whole political class in Europe is against all reform and regards Britain’s demands as eccentric and separate.
Secondly, to do that, we have to build up alliances very strongly. I would like to see much more of that diplomacy going on, so that we can focus on the fact that even the red-hot topic of immigration, which the noble Lord, Lord Liddle, mentioned, is not a uniquely UK issue. Almost every country throughout Europe—even the countries losing migrants—is concerned about the effects of the totally free movement of labour doctrine applied to the modern Europe, which is quite different from the one in which it was originally formulated.
Thirdly, it seems to me that if negotiation with a reformed Europe is the aim, the reform part of it should, in a sense, come first or certainly go very closely with the negotiation. We could otherwise end up finding ourselves negotiating—as we did yesterday—with a changing body: something that does not exist anymore and is being changed before our eyes.
Fourthly—and I think many people throughout Europe recognise this—we must address the fundamental issues. Even the former president of France, Nicolas Sarkozy, who I gather wants to be president again, said the other day that, unless 50% of the competencies of the European Union are returned to the nation states, the system will explode. He is just one voice among many who recognise that the system is overcentralised; it is an EU model for the 20th century and we are in the 21st. New technologies are challenging the very nature of the single market through new supply chains, global value chains. All kinds of new technologies—machine-to-machine, digital fabrication and so on—are changing the nature of trade totally, and therefore the nature in which the single market has to work. Thirdly, unemployment throughout the eurozone is much too high. Fourthly, there is the chronic euro problem, which is by no means solved. It is currently a dilemma between those in Germany who want a unified political system to run the euro and those, also in Germany, who do not want to pay for it. That is far from being resolved.
We are told that there cannot be any treaty change to meet those fundamental needs, but I say to your Lordships that treaty change is inevitable and that, in due course, a new intergovernmental conference will have to be convened. I hear that view coming from all quarters. I have even heard it from the excellent think tank that the noble Lord, Lord Liddle, operates in, the Policy Network, which has called for change in the treaty. I hear it from my good friends behind me, the Liberal Democrats. The noble Lord, Lord Maclennan of Rogart, said that he wants to see some kind of gathering to examine the fundamental role of things. I even hear it from very strong Europe builders such as Herr Schäuble, who says that we have to revisit the whole configuration, architecture and constitution of Europe. I hear the call for reform from all sides.
To my mind, that task is what the best brains, the diplomats and those outside government, in business, should concentrate on—disregarding Brexit and all that nonsense and bringing the 20th century European model into the 21st century. The best brains of Europe should be concentrated on that task.
Lord Robertson of Port Ellen (Lab)
My Lords, I am glad that my noble friend Lord Liddle has brought this debate before us. It is a debate that will dominate our politics for the next few months and perhaps for the next few years. Apart from the argument that has just taken place in Scotland, this is perhaps the most important debate of our generation.
My position is clear: I believe that leaving the European Union would be disastrous. Some of us have just spent the last two and a half years in the referendum campaign in Scotland, alongside Conservatives and Liberal Democrats, arguing against Scotland leaving the union that is the United Kingdom. We all did so in spite of our totally different politics. We did so with passion, commitment and sincerity against a well funded, well organised and highly emotional separatist campaign. At the end of the day, we won the debate and the referendum. The three parties which believed in the union campaigned—occasionally uncomfortably—together.
What did we all say during that whole campaign? “We are better together”. That was our slogan and our powerful case to the people of Scotland. We spoke of years of successful integration in a union that works for all of us. We all argued about the costs of breaking up and going it alone in a complex, multilayered and interdependent world. We all warned about creating new barriers and borders when our single market was so integrated. During the referendum campaign, we all echoed the statements made by small and large companies across the land attacking the break-up of the union and the effects it would have on jobs in Scotland which depend on the big market of our neighbour. During the campaign we all said that we had the best of both worlds—decision-making in all key areas at home but part of a bigger unit where we had an equal voice. We repeated that separatism would leave our country outside, isolated, when all the big decisions were taken elsewhere. These decisions affect our citizens—their companies, their jobs and their future.
Together, we used all of these arguments relentlessly, though some of us had never really agreed on anything else before. We all of us denounced and derided the nationalists who said that the European Union was essential but that our union should be destroyed. We made all these arguments consistently and constructively, with passion and effect, and every one of them applies to the European Union that we are part of today. Because we took the argument out, despite the fact that we were campaigning for a no vote we avoided the negativism that would automatically come from arguing for no. Very few people who heard Gordon Brown’s speech in the last stages of the referendum, and very few of the millions who watched it on YouTube afterwards, could fail to see the passion for this union.
Maybe there is not the same degree of passion about the European Union and maybe there is a disenchantment creeping in sometimes with something as big as that, yet the arguments remain the same. Those arguments succeeded in Scotland against the nationalist bandwagon and persuaded people to come out in a campaign where 97% of those eligible registered to vote and where the turnout was 84% across Scotland but over 95% in some areas. Those arguments penetrated into people’s minds and, despite the ocean of yes posters and the near hysteria of the yes campaign, people listened carefully to our constructive arguments for the union that we are in and that we benefit from.
If we make the arguments for the European Union cogently enough and face people with the alternatives to what we are in at the moment, I have no doubt that the British people will come to the same conclusion as the Scots.
Baroness Ludford (LD)
My Lords, I welcome this debate, initiated by the noble Lord, Lord Liddle, and I have pleasure in taking part. I also look forward very much to the maiden speech of my noble friend Lady Smith of Newnham, who is a considerable authority on EU affairs. I remind the noble Lords, Lord Liddle and Lord Howell of Guildford, and the House that the comments directed towards coalition policy should, in fact, be directed towards Conservative Party policy. Government policy, as expressed in the 2010 coalition agreement, is that:
“We will ensure that the British Government is a positive participant in the European Union, playing a strong and positive role with our partners, with the goal of ensuring that all the nations of Europe are equipped to face the challenges of the 21st century”.
I can but agree with my party leader, Nick Clegg MP, who yesterday described as “idiotic” the suggestion by Mr Owen Paterson MP that the Conservative manifesto should commit them to an exit—a Brexit—from the EU. Mr Clegg said:
“It would be an act of economic self-harm to jeopardise 3m jobs in that way”.
Perhaps I have set the record straight.
It is staggering that Europhobes should see the EU as the graveyard of sovereignty but would be quite happy to be like Norway, having to follow all EU rules but with no say in them. It would be the ultimate expression of powerlessness: EU regulation without representation. We cannot win all battles in Brussels but we can have a decent chance if we have a voice. It is the basic Liberal Democrat contention, which we have consistently followed for seven decades, that Europeans are better together. I had written that before the two previous speakers, so great minds think alike. My party has been consistent on this. We have not only peace but greater prosperity, security and stability by being part of a union which has, at its heart, a guarantee of the rule of law, democracy and human rights. The 20th century surely taught us that. We cannot meet the threat of cross-border crime and wider security threats unless we co-operate with our European partners. As my noble friend Lord Wallace of Saltaire said, as a Liberal Democrat, in a speech at Chatham House, these threats,
“are shared with our neighbours and partners—they’re not challenges to Britain on its own”.
We cannot meet those threats through “exit or isolation”. He insisted, not only that,
“any foreign and security policy which denies the central importance of European engagement will have a large hole at its core”,
but that that security co-operation should encompass energy, the environment, conflict prevention and many other matters, as well as cross-border policing.
Yesterday, I read something which shocked me to the core. A Daily Mail article deplored the lack of welfare regulations on duck farming—presumably in the light of the bird flu incident—and, specifically, the lack of EU legislation on duck farming. You could have knocked me down with a feather; a duck feather, of course. Even the Daily Mail recognises that sometimes we do need EU-wide standards to safeguard health, security, the environment and free trade. The serious point is, of course, that the mantra should be “Europe only when necessary”. I am proud that Liberal Democrats in the European Parliament, working with the Government, helped to secure an exemption from EU accounting rules for 100,000 smaller British firms, saving them hundreds of millions of pounds in administration costs. Liberal Democrats insist on effective and objective impact assessments before new proposals by the European Commission or European Parliament amendments are put forward. Much could be done to tighten up the scrutiny of new EU regulation. National Governments should stop policy laundering through Brussels and gold-plating on implementation. It is a great pity that the European Commission pressed on with the European public prosecutor proposal after 14 national Parliaments rejected it.
The big picture is that the UK has a huge stake in the EU single market. We must be constructive and engaged in pressing for the opening up and liberalisation of these half a billion consumers to British businesses, especially digital industries, the energy market, transport and other services. We cannot do that if we are simultaneously trying to unravel a key element in the single market: the right of free movement to work, not to claim benefits. In an increasingly multipolar, globalised world, the UK and its EU partners have the collective strength to promote our values and secure respect for them around the world, including in Washington. An active and engaged UK in the European Union is the best commitment we can make on the centenary of the First World War.
The Lord Bishop of Coventry
My Lords, I, too, am grateful to the noble Lord, Lord Liddle, for securing this debate, although I enter it with some trepidation in such company. I am constrained to do so by the story of Coventry, from where I come, and by the originating Christian contribution to the possibilities that some form of common life might have for Europe and, thereby, for the world. When in your daily life you see the scars of warfare upon a city, when you hear the testimony of those who lost homes and families on one night in November 1940, when each year you are joined by Germans in the commemoration of your city’s 500 dead, and when you join them as they remember their city’s thousands of dead, you know that peace counts and that reconciliation is indeed a precious gift, and you give thanks for the project which has had peace as its fundamental purpose.
I am not qualified to proffer an economic cost-benefit analysis of the UK’s membership of the EU. However, as a citizen of Coventry, I should like to register the deep thanks of my city to those who sought to make war in Europe, as the Schuman declaration put it,
“not merely unthinkable, but materially impossible”.
I should like to go further and say that somehow the debate about Europe, if it is to reinspire the generations, will need to appeal to something higher than money.
“Self-interest can never be a satisfactory foundation for a permanent alliance of nations”,
argued Bishop George Bell, who, even in the early days of the war, began to spell out a vision for a reconciled Europe. “Without a vision, the people perish”, said the ancient Jewish prophet.
The originating vision for Europe involved both a sense of responsibility for other peoples and nations within Europe and a responsibility for the world beyond Europe. “What can Europe do for me?” is a legitimate question but it is too small a matter to ignite the human spirit. “What can I do in Europe and through Europe for a more peaceful and prosperous, free, fair and better world?”. That is the sort of question that I would like the debate about Britain’s membership of the EU to be addressing, such as was suggested by the noble Lord, Lord Liddle.
None of this is to suggest that we should take an uncritical view of Europe as it has become. Certain characteristics of European integration—not least its democratic deficit—remain matters of profound concern, and the unease evident in many parts of Europe about its present form is an indication that a rebalancing of national sovereignty and European authority is necessary. But even here it is worth reconnecting with the original vision for a reconciled Europe, which was of “a community of communities”.
Behind that proposal lay a rich seam of Christian theology known technically as the doctrine of koinonia, or communion, in which people and churches place themselves in an ecology of interdependence, which, in promoting the common good of the whole, also serves the particular good of the parts. Indeed, I venture to suggest that this theology of, if I may put it in this way, the “covenanted mutuality of the autonomous” that is shared by Anglican, Protestant and Orthodox churches may at this point of European history complement the more distinctively Roman Catholic notion of subsidiarity, with its implication of organic unity that has been so influential on the development of Europe up to this point.
I conclude with two hopes for our national debate. The first is that it will be lifted from an exercise in accountancy to matters of higher human importance—virtues such as peace and reconciliation, responsibility and mutuality that can put the soul back into Europe. The second is that, learning from the Church of Scotland during the referendum debate, there might be a role for the churches of the UK to create the sort of safe and neutral spaces in which informed and serious debate of this kind can take place.
I am heartened in voicing my hopes on the same day as Pope Francis addressed the European Parliament, calling on its members to make Europe recover the best of itself and,
“to work together in building a Europe which revolves not around the economy”—
I would say not just around the economy—
“but around the sacredness”—
the transcendent dignity—
“of the human person, around inalienable values”,
so that Europe can be,
“a precious point of reference for all humanity”.
Lord Dobbs (Con)
My Lords, our identity is defined by our culture, not by institutions. This morning I was fortunate enough to go to the National Gallery to see some of the glories produced by that extraordinary Dutch artist, Rembrandt. It was a small reminder, among so many, that we Europeans have been the most successful peoples in the history of the world. Indeed, for 2,000 years we were the world. We bound more books, we parsed more poetry, we made more music and, in the process, we framed more freedoms than anyone else.
However, recently something has gone wrong. We have lost our sense of purpose. Why is that? President Juncker has an answer. For him, it seems, it is the fault of the people. This is what he said recently:
“We all know what to do, we just don’t know how to get re-elected after we’ve done it”.
Those are haunting words. They imply an appalling lack of leadership and a serious disconnect with the peoples, which puzzles me because, if the EU is not for the peoples, who on earth is it for?
Tragically, the single most powerful factor propping up the current hopelessly arthritic structures of the EU right now is not ambition, and least of all is it success. It is fear: fear of the unknown, fear of admitting failure, and fear of what might happen if the nettle is grasped and the eurozone is reorganised, yet fear of endless economic stagnation if it is not. But fear is a pretty miserable basis for building the future. Surely we can do better than that.
In a remarkable intervention today while on a visit to Strasbourg, the Pope, as we have heard, described the EU as,
“a ‘grandmother’, no longer fertile and vibrant”.
It might also be described as a bit of a dinosaur—all muscle-bound body and a tiny head, but with one idea echoing inside it: that of ever closer union. However, the dinosaur has entirely forgotten what that means. It was an idea launched through the treaty of Rome, which called for an ever closer union,
“among the peoples of Europe”.
I repeat: the peoples, not the institutional fixtures and fittings. In that ambition, at least, the EU seems to have succeeded. It has united the people—in dismay and growing disenchantment. The EU must change or it will be changed by the peoples.
Earlier this year I asked this House to consider an EU referendum Bill, and I recognise some familiar faces. It was never going to pass—not through this House —but the debate was necessary in order to throw light on this mighty issue. And it worked beyond my wildest dreams. Labour Members of this House rose as one to deny the people their say. They did not even wait until the white vans had pulled up in their driveways. They said, definitively, “No”. I shall be eternally grateful to a noble friend on the Liberal Democrat Benches who, at the time of the crucial vote, rose in his place, cast aside his party’s habitual coyness, pointed to the Division Lobby and cried, “This way to kill the Bill!”. His party, to a man and a woman, were counted through.
And so, through the fog of confusion, came clarity. This side of the House, the Conservative side, demands a referendum; every other party opposes it.
As grateful as I am to the noble Lord, Lord Liddle, for securing this debate, he and I could argue for a thousand years, I suspect, until we were old men, and still, I fear, we would never agree.
Baroness Ludford
My Lords, the noble Lord said that every other party opposes a referendum. I restate, for the sake of clarity, that the Liberal Democrat position, as expressed in the European Union Act 2011, is that there should be a referendum if there is a significant transfer of powers to the European Union. The Liberal Democrat spin on that is that that should be an “in or out” referendum, so we are in favour of a referendum under certain conditions.
Lord Dobbs
I thank the noble Baroness for that intervention. We hear the words—we have always heard the words—and yet we saw what they did when the time came to put their necks on the line.
I am grateful to the noble Lord for this debate. We need these debates. We need to clarify the issue. It is time to take this agonising issue—because we do not agree and we will never agree—out of the hands of us agonised politicians and give it to the people to decide. It is their future, and it must be their decision.
Lord Radice (Lab)
My Lords, I congratulate my noble friend Lord Liddle on his most eloquent speech in a most necessary debate. I do not mean that in the way that the speaker before me has suggested.
In 2011, during the passage of the European Union Bill, which has just been mentioned, I moved an amendment whose purpose was to lay a duty on Ministers to put the case for British membership of the European Union. I did not really think that it would be passed, but I said that because, with honourable exceptions, Ministers had, over many years, been extremely hesitant about arguing the case for Europe. Indeed, that criticism can be made about Labour Ministers as well as Conservative Ministers.
When I was speaking, I exempted two then Conservative Ministers from my strictures. I shall quote one of them because what he said then is still relevant. David Lidington is, miraculously, still Minister for Europe. He has lasted a very long time and he is an excellent one. He wrote, in answer to a PQ—when got at, I think, by Eurosceptics—that, first, British membership gives access without barriers to the world’s most important trading zone. Secondly, it underwrites employment for about 3.5 million UK workers, who are reliant upon exports to EU member states. Thirdly, it enables the United Kingdom to influence developments within the EU. Fourthly, it gives the UK greater leverage and negotiating power. I say: well said, David Lidington.
On the last, very important, point, at a time when the Prime Minister is calling for greater impetus behind the far-reaching TTIP—the Transatlantic Trade and Investment Partnership—negotiations between the EU and the USA, we should remember that we are represented at the negotiating table only because we are a member of the EU. That is a very important point, which I think Mr Cameron has forgotten.
As Prime Minister, Mr Cameron has a special responsibility to sustain our membership, but unfortunately for this country, instead of making the case for British membership, he has behaved like Ethelred the Unready offering danegeld in the vain hope of winning the support of Eurosceptic Back-Benchers and of impressing UKIP voters and members that he is on the right track, although there is a fat chance that he will be able to do that.
Of course, there were good things in the Bloomberg speech, but the Prime Minister unwisely promised an “in or out” referendum on the basis of renegotiated terms if the Tories won the election. That has cast a dark cloud of uncertainty over the British economy and British politics. Now the Prime Minister, feeling threatened by UKIP by-election successes, has raised expectations about curbing EU migration into Britain, which is just not realistic but infuriates our partners and therefore risks making Brexit more likely rather than less likely.
I end by quoting a leader in the Financial Times of 21 November. It ended by saying:
“The Prime Minister needs to start leading his own party and stop following another”.
He can begin by making a positive case for British membership of the European Union. Yes, reforms are needed, but, Mr Cameron, we are better together and we need to say so loudly and clearly.
Baroness Smith of Newnham (LD) (Maiden Speech)
My Lords, I have recently completed a three-year collaborative research project on national parliaments and the European Union after Lisbon. Two chambers stood out in our findings—the Folketing, renowned for holding Danish Ministers to account on European issues, and your Lordships’ House, which is internationally recognised for the depth of its expertise on European matters. It is thus with some trepidation and humility that I stand today to make my maiden speech. It is only the kindness and friendship that have been extended to me since I arrived five weeks ago that make me think maybe it will be all right, really.
I am taking the risk of speaking in this Chamber on Europe today partly because my first political memory is of the 1975 referendum. I went home from school at lunchtime and saw on the news that there was to be a vote on whether we should stay in the Common Market. I am not sure I really understood what that meant, because I was only six years old. That memory—staying in the Common Market—stuck with me, as, I am afraid, did wine lakes and butter mountains. The key thing about that debate is that it was intended to put an end to the question mark over British membership of the European Community.
That issue remained with me, and Europe has become a key part of my professional and political life. I cut my own political teeth in the 1980s, campaigning for an inspiring and committed pro-European, Shirley, now my noble friend Lady Williams of Crosby, whom I was privileged to have as one of my supporters when I was introduced into your Lordships’ House. At that time, Britain’s membership of the European Community was again contested because the Labour Party was committed to withdrawal.
I am delighted, therefore, that today the noble Lord, Lord Liddle, has brought this debate to the House, talking about the case for British membership. Thirty years on, the official position of all three main parties and the Green Party is that we believe that Britain is better off inside the European Union, even if there should be some reform of it, and even if public debate sometimes belies this position.
In my case, the study of languages at A-level and politics at university led to a doctorate on elections to the European Parliament, supervised by my noble friend Lord Wallace of Saltaire, my other supporter when I was introduced to this place. So, academics and politics came together. I spent some time then living in Germany and in Hungary before pursuing an academic career following the European Union. As an academic, I am acutely aware of the enormous benefits to research and innovation and, especially, to higher education that accrue from Britain’s membership of the European Union.
My own university, Cambridge, has seen research grant income from the EU rise from £14.4 million in 2007-08 to £52.8 million in 2013-14. That is 13% of its research grant income. The UK secured £5 billion in Framework Programme 7 funding from 2007 to 2013. In 2013, the UK higher education sector received £1.2 billion, according to Universities UK. Moreover, the UK hosts 23% of all European research council awards, more than any other member state. The Russell group of 24 leading research universities alone hosts 18% of those grants, more than Germany.
I apologise to the right reverend Prelate the Bishop of Coventry for talking about the economic side of things, but there are also the political and collaborative aspects which European funding seeks to bring about. Networks are important to academics to develop research links and an understanding of the foibles of other member states—their laws and individual approaches, their strengths and weaknesses. That is important because collaborative research is often an iterative process, not a one-shot game. Trust, respect and reciprocity are essential, but they must be earned, not demanded. As in academe, so in politics: it is vital to develop networks and alliances to build relations with like-minded colleagues in like-minded countries, irrespective of party. To have influence in Europe, it is essential to engage and build up effective relationships with partners on whom one can rely in a crisis or when seeking a reform that this country richly desires.
We in the UK need to persuade our partners in Europe of our strong bilateral contacts across Governments, parliaments and parties, and we need to persuade people that the UK’s membership of the Union is important. I look forward to working with colleagues in all parts of your Lordships’ House to ensure that the case for British membership of the European Union is made, and that it is made effectively.
Lord Empey (UUP)
My Lords, perhaps I may take the opportunity to congratulate the noble Baroness on her incisive and informative maiden speech. I am certain that her knowledge of European affairs will not go unused in this House as Europe is one of the subjects that has the capacity to get the blood flowing in the veins of your Lordships—as they may have noticed already. The noble Baroness enjoys a distinguished academic career. Having studied at both Brasenose College and St Antony’s, Oxford, she now holds the significant post of director of the European Centre at the University of Cambridge. Lecturing in international relations allows the noble Baroness to bring contemporary knowledge to your Lordships’ House for the many debates and discussions we have on this subject, and today is no exception.
The noble Baroness has two more distinctions that I wish to mention. She is the seventh “Smith” to be a current Member of this House, and I can assure her that she is in very distinguished company. She is also a serving city councillor in Cambridge, and as a former city councillor myself, I welcome the expertise that local representatives add to our deliberations. I have absolutely no doubt that the noble Baroness will bring her widespread experience at the local government level to our debates as well. We wish her good fortune as she branches out on a new and, I hope, rewarding part of her career.
I turn now to the debate secured for this afternoon by the noble Lord, Lord Liddle. I always listen carefully to his contributions, but I must say that I was somewhat dispirited by his passionate promotion of the objective without any apparent recognition of the collateral damage that the passage of time has done to the initial ideal. Anyone who was around at the end of the war could not but have realised that things had to change. Europe had been laid waste in the 20th century and our predecessors naturally had the instinct to do something to ensure that it did not happen again. To a very large extent, that particular objective of our predecessors has, so far and thank God, been achieved.
However, the EU is like any bureaucratic organisation —something to which the noble Baroness, Lady Smith, has just alluded. When we initially entered into the relationship, we were dealing with six nations of a very similar nature to our own. They were close by, they were developed countries, and there were a lot of similarities. The European Union of today is a totally different creature. It is vast in its expansion and the differences between one nation and another have grown dramatically, so the idea that you can simply apply the same rules today that were applied at the EU’s initiation is just not realistic. It is like applying the same rules to trains when they were steam driven as we do to our modern electric ones; it does not work. The disparity between the nations is such that what we are actually doing is taking young and perhaps qualified people out of the underdeveloped parts of the Union and bringing them here and to other developed countries. That cannot be consistent with the objective of levelling everyone up instead of levelling them down.
My anxiety is that to dismiss, as some seem to be doing, the vast movement of populations that has taken place—millions of people, not thousands—and to imagine that that has had no significant impact on the ordinary people of this country is totally unrealistic. I think that that attitude is the recruiting sergeant for the UKIPs of this world. It is what encourages them and helps them to gain ground. Let us look at some recent elections. Those who stood on a solidly pro-European platform have been almost obliterated. If we genuinely want co-operation—I want to see co-operation between the peoples of the European Union—it has to be done in a way that brings the people along with it. It should not be a source of division. If we want it to work, it should be a source of pride and achievement. But this country has a vast deficit with the rest of the European Union. We have hitched our wagon to a star that unfortunately is not rising at the moment because the European Union economy is stagnant and is becoming a smaller and smaller proportion of our trade. Sadly, when this country joined the European Union, we treated our former trading partners such as New Zealand and the Caribbean countries shamefully. We swept them aside overnight, and that is a source of worry for me.
My final point is this. The noble Lord, Lord Liddle, must reflect on the fact that last week his own party spokes -person, the shadow Home Secretary, made a speech about immigration in the other place. But she must remember that she was part of a Government who took the decision to allow free and open access to this country by the accession countries. That fuelled massive levels of immigration that we have not been able fully to absorb. If you fill a place up, what happens is that services become pressurised, and that starts agitation. We can see it happening in other countries. Marine Le Pen did not exist as a political force a number of years ago, and yet it is clear that in her party and others throughout the European Union there are the stirrings of the very forces which led us to the position in which we ended up in 1939-40. This debate has to be treated seriously. We cannot dismiss the concerns of the people in an arrogant fashion. We have to listen and realise that there is a problem, and we should put our minds to how to resolve it.
Lord Smith of Finsbury (Non-Afl)
My Lords, as one of the other seven “Smiths” in your Lordships’ House, I join in the warm congratulations to the noble Baroness, Lady Smith of Newnham, on her fine maiden speech. It was deeply felt and knowledgeable, and I hope that we will hear much more from her in the House over the coming weeks and months.
I want to reflect in the short time allowed on the vital importance of our membership of the European Union to our environmental protection, stewardship and improvement. Some two and a half months ago I stepped down as chairman of the Environment Agency here in England. It is responsible for overseeing much of the framework of environmental standards and protection that we have. Overwhelmingly, that framework rests on a series of European directives that drive better performance, endeavour to keep standards high, and have largely been responsible for the improvements we have seen in our environment here in the United Kingdom over recent years. Quite frankly, we would be lost without them. It would be little short of an environmental catastrophe if, heaven forbid, we were to leave the European Union.
Of course, not all European directives are perfect. Would I have drawn up the rules governing nitrate-vulnerable zones in precisely the way that has happened if I had been seeking a truly common-sense approach to a worthwhile purpose? Of course not. There is certainly scope for improvement—but, taken as a whole, the range of environmental directives in place are powerful tools to enable real benefits to be achieved for people. Safeguarding the environment is, after all, every bit as much about people as it is about birds and insects and fish. It is about the air we breathe, the land we live on and the water we depend on for life.
I will take just three examples: first, the industrial emissions directive. It is no accident that over the last 20 years sulphur dioxide emissions in this country have fallen by 70%. Nitrogen oxide emissions are down by nearly 40%. Even particulates, where we have made less progress, are down by 15%. These are real benefits and real improvements that have been brought about by sensible regulation that has driven better technology.
Secondly, the transfrontier shipment of waste directive has made it far more difficult for us to dump our waste, especially our electrical and electronic waste, on the developing world, where all too often in the past it fuelled crime, poverty, exploitation and injury. These are sensible rules applied across Europe and they matter globally because it is Europe that has put them in place.
Thirdly, the bathing water directives. Thirty years ago we were labelled as the dirty man of Europe. Beach after beach on many of the most popular parts of our coast were failing European standards because of raw sewage being discharged on frequent occasions. The directives have driven change. They have forced clean-up and have now delivered the cleanest beaches and bathing water we have had in decades. As a result, they have helped both public health and the tourism industry. So when people rail against interference from Europe, this—I would remind them—is interference that we have signed up to; it is interference that we have helped to put in place; and, in the case of this range of environmental directives, these are bits of interference from which we have substantially benefited.
Surely it makes sense to tackle these issues on an international, continent-wide basis. After all, the environment knows no national boundaries. Pollution of the air and water does not stop at the frontier. These are continent-wide issues and they require continent-wide responses. Thank goodness we have the structures in place and our membership of the European Union in place to enable that to happen.
Lord Newby (LD)
My Lords, for the benefit of the House I remind noble Lords that we have a lot of speakers and that when the clock is at five that is time up. Even if all noble Lords from now on were to speak for just half a minute beyond five minutes, that would mean not only that my noble friend would not have her full time to respond to the debate, but the noble Lord, Lord Liddle, would have no time to respond, either.
Lord King of Bridgwater (Con)
My Lords, I thank the noble Lord, Lord Liddle, for introducing this debate and the argument for making the case for Europe. We all appreciate him initiating this debate and, speaking first from our side, I also congratulate the noble Baroness, as her namesake did before me, on a most interesting and excellent maiden speech on what I think is her major topic—which was very convenient for her.
I make it absolutely clear, as somebody who has always supported our membership of the European Union, that I believe that this is the right time for a fundamental reassessment of the state of the European Union, our position in it and the importance of the negotiations on which we are about to embark. I believe, very much as my noble friend Lord Howell said, that this is not just a matter for us with a British interest; it is acutely in the interests of all the nations of Europe at the present time to stand and take stock of what is actually happening. I have found that there is huge ignorance about what Europe really looks like at the present time. I have quizzed some of my noble friends on this Front Bench before on how many members there are now in the European Union—hardly anybody ever gets it right—and the developments that are taking place.
I come to this because for six years of my life I represented the United Kingdom in the Council of Ministers in Europe, because before I did Northern Ireland and defence I was doing environment, transport and employment. There I was, sitting in the Council of Ministers of nine member states, all really with a similar standard of living and level of economy, with the possible exception of Ireland. There was very much a feeling that Ireland, with a population of 3 million joining a European Union which at that time was getting on for 300 million, would have the advantage and that its economy would be brought more to the level of those of the other countries, which is exactly what happened.
Then I take stock of what has actually happened now. The enlargement started quite gradually. In 1981 Greece came in, Spain and Portugal in 1986, Austria, Sweden and Finland in 1995—but in 2004 came this vast expansion. Estonia, Latvia, Lithuania, Poland, the Czech Republic, Slovakia, Hungary, Slovenia, Malta and Cyprus, followed—as we remember well—by Romania and Bulgaria in 2007 and Croatia in 2013. Waiting in the wings as candidates are Serbia, Montenegro, Macedonia, Albania and, if it remains as a candidate, the largest of all by far—Turkey. That is 28 going on 33 and undoubtedly, if one looks at eastern Europe, there is the possibility of one or two more.
I was brought up to believe that if Europe expanded, if we were going to move as we did and support the enlargement, it could not just be the same Europe that it had always been—and this is where the important point arises. Can ever closer union coexist with ever greater enlargement? I think the particular problem—a point made very clearly by the noble Lord, Lord Empey —is that it is happening at a time of quite exceptional international instability. We have stopped talking about the problems of immigration. The problem now is of almost mass migration out of certain countries. If you look at the membership of the boats that are sinking in the Mediterranean, are those people Iraqi, Syrian, Lebanese, Egyptian or Libyan? Look at the refugees at Calais who are coming from Eritrea, Ethiopia, Somalia and Yemen—different countries that are practically ungovernable; almost completely failed states from which huge numbers of people are deciding to get out.
That situation, along with the very porous boundaries of the Schengen agreement—there is no doubt about how all these people are arriving in these different places —is putting an additional serious pressure on the national attitude to the European Union. Those of us who believe that there are considerable benefits from our membership of the European Union cannot just sit there echoing the phrases, “Not an inch” and “No surrender”—phrases that the noble Lord, Lord Empey, knows well—to your European policy, believing that that is the right thing to stick by. Unless people wake up and realise that there needs to be a fundamental renegotiation, in the interests of all the countries of Europe at the present time, popular attitudes will become absolutely demanding of far greater change than might be in the interests of the people of this country.
Lord Giddens (Lab)
My Lords, I, too, congratulate the noble Baroness, Lady Smith of Newnham, on her excellent maiden speech. She will be a formidable addition to your Lordships’ House. It is a double pleasure to welcome another academic into this House—it is a triple pleasure to welcome another Cambridge academic —and not another deranged politician, as I think the noble Lord put it.
I speak as a strong and committed pro-European. The European Union has helped to bring peace and reconciliation to a continent with a history of devastation. Unlike the noble Lord, Lord Empey, I believe that peace project is certainly not finished, and here I also diverge from the noble Lord, Lord King. One hundred thousand people died in the conflict that followed the break-up of Yugoslavia. The incorporation of Serbia into the EU is an absolutely crucial task for the near future. Russia might already be working to destabilise that process. Will the Minister confirm that the British Government absolutely would not consider blocking further EU enlargement as a way of advancing their agenda in Europe, as some papers have reported?
I am also a committed pro-European so far as Britain’s continuing membership of the EU is concerned. The world today is massively more interdependent than ever before. Britain can have far more real control—in other words, real sovereignty—over its affairs acting in concert with other EU states than it ever could acting alone, as 60 million people confronting a world of 7 billion.
The rise of UKIP is not without its benefits for those of us who hold quite opposing views. Its success will force a public debate on Britain’s future in Europe, which is a debate that we absolutely need to have. Those of us who believe that the UK’s future necessarily lies in Europe should, as my noble friend Lord Liddle said, mobilise and put our case forcefully. He also said that we should do it with passion, and I support that. The rise of UKIP has coincided with a surge of support among Britons for staying in the Union and helping to reshape it; indeed, there may be some kind of causal connection there.
The recent Ipsos MORI poll that my noble friend Lord Liddle quoted actually had stronger results than he mentioned. It showed support for Britain’s membership at its highest level for almost a quarter of a century. If you look at those who actually expressed opinions rather than those who said “don’t know”, 61% of respondents who expressed a view endorsed continued British membership, compared to 26% who wanted to leave. That is an interesting and remarkable result.
A detailed and proper public debate will oblige Eurosceptics to say what they are for, not just what they are against. The risks are enormous. Were the UK to leave, this time it would almost certainly lose Scotland. The US would bypass this country and deal directly with the EU. Some say small is beautiful, especially in the age of the internet, or else they argue that we should turn to the Commonwealth. If that is so easy, why have we not done it already? Germany, which of course is in the European Union, has twice the level of trade with India that the UK does. Power and size do matter and the influence of geopolitics is still all too real. Without the European Union, we would live in a G2 world dominated by the United States and China. The UK should play its full part in providing that necessary counterbalance.
In conclusion, I was very interested in what the noble Lord, Lord Howell, said—what he says is always interesting. As I took it, he was suggesting that there should be a more bipartisan approach at this point to the debate in this country. I think that could be really important for the national interest, and if that is what the noble Lord meant, I heartily endorse it.
Lord Rodgers of Quarry Bank (LD)
My Lords, it is 40 years ago almost to the day when, on 30 November 1974, Helmut Schmidt, Chancellor of the Federal Republic of Germany, spoke to a Labour Party conference at Central Hall. He strongly supported Britain’s continuing membership of the European Economic Community. It was, as I remember, a tour de force, helping to swing towards a yes vote in the forthcoming referendum.
However, in Volume II of The Official History of Britain and the European Community, Stephen Wall tells a story of how the British Foreign Secretary was less enthusiastic about Europe than the German Chancellor. On his appointment, Jim Callaghan summoned Michael Butler, the Foreign Office Assistant Under-Secretary responsible for European matters. After the preliminaries, Callaghan said, “They tell me, Michael, that you really care about Europe. Well, that’s all right, as long as you remember that I really care about the Labour Party”.
Now, 40 years later, the story has come full circle. The Chancellor of Germany, Angela Merkel, strongly supports Britain’s continuing membership of the European Union and patiently leans towards David Cameron’s problems. But in turn, the Prime Minister lacks the strength to make it clear to the voters that it would be an unqualified disaster—the expression used by the noble Lord, Lord Robertson, earlier—for Britain if the country were to leave Europe.
It is immensely sad that over half a century and more, with few exceptions and some ups and downs, the leaderships of the Conservative Party and the Labour Party have never been more than half-hearted in campaigning for the European Union and its predecessors. Political parties now attach great importance to rapid rebuttal, especially at election time. But there have never been any rapid-rebuttal government procedures in answering the drip-by-drip critics on factual European Union matters. So, amid the disappointments and uncertainties, I welcome this debate and greatly applaud the content and tone of the speech of the noble Lord, Lord Liddle. I hope it will echo round his party and that his party’s leader will listen.
There are many ironies arising from the parliamentary debates on Europe 40 years ago. It was said by the opponents of joining the European Community that membership of the six or the nine was not membership of Europe but of only a small part of Europe—by implication, a bigger Europe would be better. But now that we have 28 members of the European Union, opponents complain about the free movement of labour that was the essence of the original treaties and the anticipated consequences of enlargement.
Forty years ago, we lived in a bipolar world, dominated by the United States and the Soviet Union. We, the United Kingdom, knew where we stood. But today we live in an unpredictable, open world with sophisticated communications technology and growing, complex terrorism. It is inconceivable that Britain’s security at home and abroad would be enhanced by severing our relationship with the European Union.
To give him credit, the Prime Minister does not want to leave the European Union. But there are limits to what our partners in the European Union will stand, given unrealistic and unilateral demands. It is time for Cameron to swallow hard and tell the public unequivocally that he and his Government want to stay in the European Union, and to tell his partners plainly that that is his intention.
Lord Stoddart of Swindon (Ind Lab)
My Lords, I made my first speech against joining Europe in 1962. It was in Woolhampton, when I was the prospective candidate for the Newbury constituency—which, incidentally, I did not win. In that year, Hugh Gaitskell made a great speech at the Labour Party conference. This is part of what he said about joining the Common Market, as it then was:
“it does mean … the end of Britain as an independent … state … the end of a thousand years of history”.
Those were prophetic words indeed, because he foresaw that Britain would be joining what would eventually become a single state. That, in fact, is already happening: it already has the trappings of a single state. Its central policy is “ever closer union”. Of course, “ever closer union” means that Britain will become a province in a huge European country.
This issue transcends party politics. It is not about party, it is about our country and who rules our country —who governs Britain. That is the real issue, because without that we are simply a pawn in the European construct. It is not about Tory or Labour or Liberal, it is about—and I emphasise this—who makes the decisions. Is it our Government and Parliament or is it 27 other nations?
Those who support the Motion are largely those who urged the United Kingdom to scrap the pound and join the euro. They said that we would be sidelined, that we would hit the rocks if we did not adopt the euro. Of course, what has happened? It is the euro that is just about hitting the rocks. Fortunately we did not join. How wrong the people were who urged us to join, because it would have been a disaster for this country, a complete and utter disaster. Many noble Lords who have spoken have eulogised the EU. They have mentioned all sorts of good things that it has brought. However, we could have got those without being members of the European Union by negotiating with other countries.
Of course, it is also difficult to make an economic case for Europe. On trade, for example, the current account adverse balance for 2009 to 2013 is £280 billion. That means that Europe has sold £280 billion more to us than we have exported to them, so that is not very good news. Nobody else but the members of the EU have to pay for trading with the EU. Our contribution during this Parliament will be £52 billion net and about £85 billion gross, and rising. We are therefore not getting very much for our money.
I have already said this, but the big issue is who governs Britain. Is it Parliament, through institutions built up over the centuries, or is it a centralised empire, governed by an unelected bureaucracy and 27 other countries whose policies are often inimical to our own? Gaitskell believed in Britain and so do I. I believe that we still have a great place in the world outside the EU.
Lord Haskel (Lab)
My Lords, during the short break last week, I read a book by a Swedish journalist named Göran Rosenberg. The book, A Brief Stop on the Road from Auschwitz, described a journey that he had recently made, following in his father’s footsteps from the ghetto in Lodz, Poland to Auschwitz, to a slave labour camp in Germany, to a Red Cross resettlement camp and ending up in a small town in Sweden. At the same time as I was reading this book, there were events going on to mark the centenary of the outbreak of the First World War, which reminded us of all those horrors, as the noble Baroness, Lady Ludford, told us. At the same time, there were some mean-minded nationalistic politics going on, both here and in Europe. All that reminded me why I have been a committed supporter of our membership of the European Union since its birth. It is a means of ensuring a civilised, decent life for our children and grandchildren instead of the poisonous and divisive Europe that our parents and grandparents knew. This view may have gone out of fashion, but it will be back, just as extreme politics comes back.
In my case for Europe, therefore, I make no apologies for putting the human and political arguments first and the economic arguments second. Economics is a means to an end, not an end in itself, as the right reverend Prelate the Bishop of Coventry put it. Looked at from this perspective, the EU is a good deal. The figures from the noble Lord, Lord Stoddart, are misleading. It costs us about 1% of our annual spend of taxpayers’ money. For this we get access to a huge single market and all the benefits of inward investment and trade that it brings, as other noble Lords have explained. It helps us to compete in today’s global economic environment where you must have allies. This is a world in which you cannot go it alone unless you have a portfolio of successful companies creating goods and services that are competitive with the best in the world and that are welcomed and not discriminated against.
This logic is so powerful that its detractors, particularly in the press and in the blogosphere, resort to misstatements. They are cheerfully pedalled again and again, sometimes even with a glass of beer in their spokesmen’s hands. Eventually, these misstatements develop a life of their own, with claims such as loss of sovereignty because 75% of our laws are made in Brussels. The House of Commons Library tells us that the true figure is 25%. There has also been the claim that EU membership stands in the way of our trade with the Commonwealth and Asia. I say to the noble Lord, Lord Empey, that it does not.
Another claim is that the cost is high, but 1% of our government spend is marginal. Another is that we are being overrun by immigrants from new members of the EU. My noble friend Lord Liddle replied to that. In reality, we should be protecting the integrity of our benefits, healthcare and education systems rather than blaming the immigrants from the EU who help service them.
Playing games with our EU membership has dangerous consequences. As multilateral institutions like the World Trade Organization weaken, and as the nature of trade changes, as the noble Lord, Lord Howell, explained, it becomes even more critical for a country like ours to be aligned economically with the EU rather than going it alone in a globalised world. More important, however, is the risk of losing the civilising influence of co-operation, the risk of taking us back to inflicting the terrible journeys and experiences that European nationalism inflicted on our parents and grandparents.
Lord Maclennan of Rogart (LD)
My Lords, we must all be grateful to the noble Lord, Lord Liddle, for initiating this debate. It is an opportunity to state the positive about the European Union, which most of the media have resigned from doing. They have largely focused on splits, rows and, sometimes, failures to achieve objectives. I feel that the European Union is essential to the prosperity and peace of the continent. In my earliest memories, during the bombing of Glasgow in 1941, my grandmother was blown from one end of the kitchen to another, so it is a great achievement to have the almost 70 years of peace that we have had in the European Union. We have also seen democracy growing in the additions to the early Union in eastern Europe. Poland is growing in strength and democracy. It is interesting that its former Prime Minister Tusk is now seen as a leader of the European Union.
Our trade with Europe constitutes some 48% of what we export. That seems an enormously powerful stimulator of manufacturing and organising for a wide population of 510 million. We heard from other noble Lords about the influence that we can exert over the decision-making in the rest of the world—and of course in Europe itself. We in this country have about 1% of the world’s population and about 3% of its GDP. How would we seek to hold the ears of other Governments if we did not operate as a collective unified voice? China and the United States would regard us as trivial. I do not agree with the noble Lord, Lord Stoddart, that we can pretend in this day and age that we are still an imperial power.
A great deal has been said about immigration in recent months and weeks. The fact is that 2.2 million people from this country live in the European Union. If we were to expel the 2.3 million immigrants who live here, or make it more difficult for them, we could see barriers erected against our own citizens who have chosen to live, work and retire abroad. Some 79% of the citizens of Europe who come here are in employment, according to the Eurostat figures. The average age of those people is 34. Some 32% of them have university degrees. They come here with skills. They are not sucking away public money; they contribute tax. That is a huge benefit.
I do not believe that the European Union is incapable of improvement. I would like to see the European capital markets union grow so that the City of London could become a centre for the whole of the European Union’s finances; I would like to see greater liberalisation of services adding to the GDP of this country; and I would like to see the negotiations going on with China and the United States bring greater benefits through equally prosperous integration.
Lord Birt (CB)
My Lords, the case for the UK remaining in the EU has rarely been better made than by the Prime Minister in his landmark speech of just two years ago, which I reread over the weekend—though the powerful and compelling introduction to this debate by the noble Lord, Lord Liddle, was a close contender. At the conclusion of his speech, the Prime Minister observed:
“You will not always get what you want. But that does not mean we should leave … Britain’s national interest is best served in a flexible, adaptable and open European Union”.
I do not seriously doubt that the Prime Minister continues to believe that. A former Prime Minister, the sagacious Sir John Major, concurred with that when he spoke in Berlin earlier this month. He said:
“I have not a shred of doubt that the UK is far better off inside the EU as an active member”.
Now, the single currency was misconceived. The eurozone is stagnating. Subsidiarity was agreed at Maastricht but not wholly enacted—there is no good reason why the working hours of British doctors should be set in Brussels. The single market is incomplete. Some sectors remain closed to British service providers. While freedom of movement is in every way in our interest, it must be manageable. Unique in Europe, a 7% growth in the UK’s population in a single decade places an enormous strain on our public services. These are all legitimate matters for any British Government to pursue, and to do so alongside our natural allies in Europe—of which there are many. We have strong, principled arguments and we are very likely one day to win them. However, I do not agree that we should negotiate with the EU under the shadow of an axe. As Herman Van Rompuy colourfully put it,
“How do you convince a room full of people, when you keep your hand on the door handle?”.
Our country is in an ill temper. That is no surprise: we have experienced the worst ever global economic crisis. Real wages in the UK fell 8% in the five years from 2008. We have all seen how polarising the Scottish referendum was. In a referendum on Europe, we risk a bad-tempered, irreversible decision, scapegoating Europe ludicrously for all our ills. In the process, we further risk being distracted from the critical but hard and thankless task of reducing our enormous deficit and our still accumulating burden of debt. The UK is at heart an internationalist not a nationalist nation—a key and enthusiastic participant in the UN, NATO and the EU, pressing for peace, promoting prosperity, and at the forefront of fighting Ebola, poverty and climate change. We must press for economically liberal and progressive reform in Europe, but it is preposterous to think that we would be better off as a nation outside Europe, standing alone.
Lord Lea of Crondall (Lab)
My Lords, I begin with the interesting contribution made by my noble friend Lord Robertson of Port Ellen. Taking the analogy of what we have been watching north of the border, I think that there is a scenario where our leaving the EU would rather strengthen the likelihood that Scotland would be in the EU as an independent country and we would no longer be Great Britain. I do not know where UKIP would be if we no longer had Great Britain, but it would be Little England plus Wales. I do not even know how this would affect Northern Ireland. Certainly the notion that our leaving the EU would have no domestic consequences is a point that my noble friend has provoked in the debate.
There are one or two fallacies in the debate that are not helped by the prism of the Daily Mail, from which a lot of people get their information. We cannot do much about that—at least, there could be things to do about it, but they would not go down well with Thomas Paine or John Stuart Mill, given freedom of the press, although some people would describe that in different terms, as I think William Cobbett would do. The first fallacy is that our great companies are in Europe and—I say this to the noble Lord, Lord Howell of Guildford—it is our great companies in Europe that are exporting to the rest of the world. This dichotomy or antithesis between selling to Europe and selling to the rest of the world is ridiculous.
On Monday of this week, I was part of meeting with senior representatives at Congress House on European works councils. All the great companies of Europe have European works councils. They look at world market share and try to get some minimum standards agreed between them. The idea that Europe is not interested in exporting to Latin America or Africa is a ludicrous fallacy. It is food for thought for those people who are not in day-to-day contact with how industry actually works—they used to be the Conservative Party. I know that the City of London may have its own reasons for making these fallacies the standard belief, but we ought to be clear about the facts.
The second fallacy at the present time is that we are the most successful economy in Europe and therefore we do not need Europe. We have a bigger growth rate at the moment because we dug the biggest hole. I have the latest GDP figures—the actual level of production and output—for the last complete year. Europe equals 100, Britain is 106, Sweden is 127, the Netherlands are 127, Germany is 124 and Denmark is 125. That is the measure of success of an economy, not some propaganda put from Downing Street to the Daily Mail.
The evolution of Labour Party policy was touched on by the Liberal Democrat Peer, the noble Lord, Lord Rodgers, and by the noble Baroness, Lady Smith of Newnham—I, too, congratulate her on her maiden speech. It is true that Jim Callaghan said what he said in the earlier period, but I remember an afternoon with Helmut Kohl, Jack Jones and Alan Bullock in Bonn in 1976 when we were on the Bullock committee. Jim Callaghan was clearly seeing the opening for the Labour Party to change its policy, which came to fruition in 1988. The reason why it came to fruition—apropos the weekend’s press, as if the concept of the working class had just been invented by somebody—was that, because Europe was increasing workers’ rights, we got the Labour Party overwhelmingly to change and to become pro-Europe. No historian is going to challenge that. I will have to stop there.
Lord Inglewood (Con)
My Lords, I preface my remarks with the fact that I have recently become an unpaid director of Full Fact, which is a fact-checking organisation. I do not think that it is a declaration that I need to make, but I would rather do so because it bears on some of the things that I am going to say.
This afternoon, I would like to follow up some remarks that I made last week in the debate about whether this country should opt back in to the European arrest warrant, in which I was principally speaking as chairman of the Select Committee on Extradition Law. It seems to me that the political controversy around the warrant is a microcosm of the debate that would surround any possible referendum on EU membership, although I think that the recent suggestion that we might go down the route offered by Article 50 of the Treaty on the Functioning of the European Union is foolish, since it appears to give a veto to the EU over whether we would be able to remain in it.
The interesting findings of the committee’s special report on extradition law were in paragraph 19, which says:
“Alternatives to the EAW were discussed but the Committee notes that there are credible and substantive legal and political questions about their viability. It may be that these questions could be satisfactorily answered but so far it is unclear whether the proposed alternatives are legally, let alone politically, achievable”.
This is an extremely complicated and esoteric topic and a long way from most people’s ordinary lives. Certainly anyone to whom I talked about it over the weekend—outside the House, away from London, away from Westminster—seems to have been entirely bemused. The arguments on each side hardly seem to touch each other and the proposals as far as they were concerned might have been made in different languages. The smell of snake oil hung in the air.
Whether my own private view—and I supported the Government on this—is correct does not really matter or gainsay my point, because I may be wrong, as my immediate family frequently tell me I am. The underlying reality is, as we all know, that everyone, whatever side of the debate they are on about the future of European Union membership, thinks that it is a very important matter for the country. As I said in the debate on the European referendum Bill earlier this year or last year, I have been concerned for some time that the public must be able to handle the goods before they buy. It seems to me that there is an overriding need in this debate for misleading advertising puff to be identified for what it is. Almost certainly we shall see that it is to be found on both sides of the argument.
The character of the debate around whether to opt back in to the European arrest warrant clearly left the wider public little, if at all, the wiser since, as I said, the protagonists might as well have been speaking different languages, both of which were quite different from ordinary English. This is a recipe for snake-oil salesmen on whatever side of the argument. The rules of consumer protection in this country put the vendor of physical snake oil into the courts. Are the Government concerned about political snake oil and what do they propose to do to protect the electorate from it? After all, if you take and drink real snake oil, it certainly does not do what is on the bottle and it may do you positive harm.
Lord Lennie (Lab)
My Lords, I add my congratulations to the noble Lord, Lord Liddle, on bringing this debate to the House and on his passionate contribution and persuasive case for our remaining within Europe.
One of the most puzzling aspects of the British debate over the European Union is how often our arguments on this subject are disconnected from our major national challenges of economic growth, recovery and creating prosperity. We debate Europe’s responsibility for intrusive regulation, but not its creation of export potential. We decry Europe’s responsibility for migration to Britain, but take for granted its investment in Britain. In the so-called metric martyrs case that dominated my native north-east for years, we looked on in disbelief as “Europe” tried to force market traders to use kilograms, but we paid no mind at all to the infrastructure investment coming our way.
In the north-east, the live debate on European membership has real dangers. We are a region hungry for growth. We desire investment and we are keen to attract employers and to retain the ones that we have. What would it benefit us to turn away from our closest and biggest trading partners? We can see what being in Europe has achieved for the north-east over the past 30 years. In Nissan, we have a major exporter and employer whose success is based on access to European markets. Six thousand are directly employed, the same number again is employed in the automotive sector in Sunderland alone and many thousands more are employed across the region. What does Nissan have to say about the possibility of our leaving the EU? The chief executive says that it would,
“reconsider our strategy and our investments for the future”.
Across the region, exports are crucial to the north-east. The excellent review by my noble friend Lord Adonis on growing the north-east economy points out:
“The export of goods accounts for a larger proportion of GVA in the North East than any other UK region, some 29% of total GVA in 2010”.
The north-east is often the only region with a positive balance of trade. We have 1,500 exporting companies and half of that trade is with Europe. This focus on trade helps to explain why inward investment has created 5,000 jobs a year in the north-east. This is where the debate really needs to be.
I do not suggest that all investment in Britain would halt and all exports would cease if we detached ourselves from Europe, but if business investment looked a little riskier and if opportunities for export were reduced, that would have real consequences for jobs, families and the whole of the north-east region. The hard-won gains that we have made, helped by investment from NSK, Hitachi and our 1,500 exporters, would be put at risk. The growth that we need for the future and the 20% increase in foreign investment that the North East Local Enterprise Partnership is targeting would be that much harder to achieve.
In the north-east, we have been watching the debate carefully. For the past year, businesses and trade groups have quietly spoken of the risks of leaving a Union that supports trade, exports and investment. Those who believe in national independence over co-operative union have derided those warnings and said that they were fantasy or self-interested propaganda. They were no such thing and it would be unforgivable to ignore them now.
Lord Taverne (LD)
My Lords, I, too, congratulate my noble friend Lady Smith on her excellent maiden speech. She is clearly going to be a great asset to this House. I especially want to congratulate the noble Lord, Lord Liddle, on a magnificent speech. I hope that his think tank, Policy Network, will give it the widest possible circulation.
I, too, was going to quote the occasional warm words that the Prime Minister has issued, especially in his Bloomberg speech. I was going to quote the same words, but I will add one other quotation. He said:
“There is no doubt that we are more powerful in Washington, in Beijing, in Delhi because we are a powerful player in the European Union. That matters for British jobs and British security”.
He added that the status of an outsider, like Norway or Switzerland, was no alternative. He then set out the areas in which he said the Union needs reform: competitiveness; flexibility; greater subsidiarity; and democratic accountability through a greater role for national parliaments. Subsequently this agenda was adopted by the European Council, so what more could he ask for? But that is no longer enough.
I agree that if Mr Cameron should become Prime Minister again after May, the odds are getting stronger by the day that he will take Britain out of the European Union. His speeches have become more and more Eurosceptic. He has apparently licensed his Cabinet colleagues to indicate their preference for Brexit and he appointed a declared Europhobe as Foreign Secretary. Why has he changed course and what is his real policy? It is appeasement of UKIP and his Europhobe Back-Benchers. As the Financial Times observed in a recent editorial, he has placed the interests of his party and his own survival as Prime Minister before the interests of the country.
The central issue is now immigration, which was not even on the Bloomberg list. We do not yet know what he will say in the long-trailed, great speech, but the Prime Minister has recently talked of quotas, caps and emergency breaks. With his concentration on rhetoric rather than diplomacy, which Sir John Major wisely advised him to abandon, he boasts:
“I will not take no for an answer”.
Both the leaders of the Nordic countries at the Helsinki conference and Angela Merkel have made it clear that caps and quotas are non-starters, as they contradict a basic principle of the single market. However, encouraged by his speeches and his actions, what Europhobes now expect from renegotiation is a British opt-out from the treaty commitment to the free movement of labour. Anything less will be seen as only a cosmetic change.
What if Mr Cameron is Prime Minister again after May, perhaps as the head of a minority Government supported by a substantial UKIP presence, the DUP and perhaps an assortment of allies on particular issues? He has pledged to conclude renegotiations before the referendum in 2017. What if there is no deal by then? It is not inconceivable. There would have to be a deal not for Britain especially but for the EU as a whole and many other countries want different changes. It will be no quick and easy negotiation. The date does not help, as there will be federal elections in Germany and the presidential election in France. Would he still recommend a stay-in vote without a deal? His party would never let him and, if he tried, he would be replaced. Anyway, he has declared that to recommend a stay-in vote without a deal is out of the question. Suppose he gets a deal. What if his party rejects it as cosmetic? There would be a new Conservative leader and the Conservative Government would then passionately argue in the referendum for out. A 2017 referendum, with a public mood of widespread xenophobia and anti-immigration feeling, nurtured by a significant UKIP presence in Parliament and a stridently anti-European press, would be a very different campaign from that of 1975.
Consider what Brexit would mean for British influence in the world. It would break up the United Kingdom. Why should a pro-EU Scotland want to stay in a Britain that was no longer in the EU? Even if the United Kingdom survives, Britain’s voice would no longer count, as the Prime Minister has admitted, in the United States, the Commonwealth or China. If Mr Cameron becomes Prime Minister again, the course on which he has set would make him the Prime Minister who did more to destroy British influence in the world than any of his predecessors in history.
Lord Bowness (Con)
My Lords, I congratulate the noble Lord, Lord Liddle, on introducing this debate and making the case for our membership of the European Union. I hope that the Minister will feel able to endorse the need to make the case without qualification because, whatever we seek in renegotiation, it is important that our wish to remain a member is without qualification. This is particularly important as exit is now openly discussed as a possible, if not preferred, option, and some members of the Government seem openly to contemplate the possibility of campaigning for a no vote if in their view the negotiations are unsuccessful.
A former member of the Government has suggested that we invoke the provisions of Article 50, giving notice to leave at the commencement of negotiations. Will my noble friend confirm that this procedure would in fact be a decision to exit with or without a replacement agreement within a maximum of two years and without reference to the British people?
We welcomed the states of eastern and central Europe as members. We accepted their immigrants’ contribution to our economy, but now we refer to that as if it had all been a great mistake and one which we will not repeat. That is not a way to win allies in the European Union. We are ready to accept doctors and other professionals trained and educated at the expense of other poorer member states but would consider denying less skilled working men and women working benefits. Until the rules change for everyone, that would be discrimination against—if I may use the phrase—hard-working EU citizens.
Policies are not always popular with voters, and we have to give a lead. Foreign aid is a case in point. But my right honourable friend the Prime Minister has declared it to be his proudest achievement in office, and it has a budget coincidentally very similar to the net contribution of the UK to the EU. We have come a long way, since the Prime Minister rejected the idea of a referendum, to voluntarily donning a straitjacket and pledging an “in or out” vote by the end of 2017, despite the fact that it will be extremely difficult to complete negotiations—including, as has been mentioned tonight, an IGC involving treaty change—within the timescale. That will be particularly difficult since we have chosen to leave the European People’s Party, depriving us of friends with any influence.
What do we want that involves treaty change? Competiveness and less regulation do not require treaty change or an “in or out” vote. So what are we seeking? Some change to the status of Norway or Switzerland, which is effectively a decision to leave? Or changes to fundamentals such as the freedom of movement? I beg my noble friends on the Front Bench to realise that we have to stop playing to the prejudices of those whose only agenda is for Britain to leave the European Union. It has not been successful so far—it has taken us to Clacton and Rochester, and it may take us further down a road we do not want to go.
The European Union has been the most successful voluntary union that the world has seen, and the United Kingdom should be playing a leading role, whether for example in promoting energy security and alternative sources of energy or ensuring that the combined military resources of the member states are used to the greatest effect. However, I do not intend to take time arguing the economic case.
There is, however, another case—what I could perhaps describe as the moral case—and that is the desirability and need for a strong united European Union including the United Kingdom. Some argue that the European Union founded to ensure peace in Europe is no longer relevant and that war between any of the 28 member states is unthinkable. But we are seeing the unthinkable very close to our borders. Nationalistic tendencies are to be found in a number of member states and, it is reported in today’s press, are funded perhaps by Russia. Peace and stability in the Balkans owes much to the prospect of membership, where it remains a spur for reform; and reform, stability and democracy on our borders are very much in our interest.
There are not likely to be many, if any, new accessions in the next five years but the negotiations must go on. There may be transitional arrangements, including free movement, but the basic principles must remain, and we must not kill the hopes and aspirations of those countries that seek membership. To have transitional provisions which are dependent on a country achieving comparable levels of GDP before migration is permitted is to deny people the opportunities others enjoy.
A UK exit would be a major blow, not for us only but for the European Union. However, we may be deluding ourselves if we believe that the 27 other member states will agree anything merely to retain our membership. Let us remember that we have been fortunate in recent times not to experience invasion, occupation or dictatorship. For those who have, the ideals of freedom of expression and movement, democracy and much more are the hallmarks of the EU and the institutions which guarantee it. It is time for us to have the humility to recognise this, to make our case for membership with our own British people and to work with our friends, not treating them as our opponents.
Lord Phillips of Sudbury (LD)
My Lords, in the light of what I am going to say, I should make clear that I am strongly in favour of our continued membership of the European Union. In the 1970 general election, the first one I fought, in Clacton, I was in favour of it. I was in favour of it in the referendum of 1975, I fought the first European elections in 1979 and I have always been strongly in favour of it. But the European project is in crisis. If we carry on as we are, we will find that the people of this country have ceased to support our continued membership, and that will not be confined to this country. The recent by-elections and the rise of UKIP here—and to some extent of the Scots Nats in Scotland—are very clear writing on the wall.
You may say, “What has that got to do with it?”. I spent a day in Clacton canvassing, partly for old times’ sake. I was shattered by the degree of hostility not so much to Europe or immigration but to the whole state of politics in this country. Millions upon millions of our fellow citizens feel that they are in some way outside the political tent. They feel virtually anonymous, civically speaking. They feel overlooked, ignored and anonymous. There is a terrible feeling outside London of the metro-centric nature of our modern society. Whether you are talking about this place, or the media, or big business, there is a feeling in the country—and it is evident in a hundred polls, and in a hundred perceptive pieces of research—that the ordinary person in the ordinary community is of no account, until someone wants something from them.
That is certainly the impression I got across the doorsteps of Clacton. I emphasise that it was not racist stuff. It was not anti-EU stuff, except occasionally. It was a sense of rejection, disaffection and disconnection. Unless we do something about this—and it is not easy to know quite what to do—and unless we attack this citizen ignorance and disaffection, I believe that the European project will become unsustainable. In a democracy, if the majority of those who are democrats cease to connect with a central tenet of their society and their democratic culture, then it is not sustainable.
I read the other day that the total membership of our political parties is under 1%. There are fewer members of all our political parties than there are members of the Royal Society for the Protection of Birds. In the Hansard Society’s most recent democratic audit, its single most powerful point was the sense of powerlessness on the part of our fellow country people. Of the 18 to 25 year-olds, in another recent poll—I think it might have been for the Hansard Society—only 23% felt fairly involved or connected with any political party. Under a quarter of 18 to 25 year-olds now vote. We have 3 million people who are not registered to vote. All in all, I believe that the health of our beloved country, and its democratic institutions, has not been as bad as this certainly in living memory but going back, I suspect, a long way.
I will add just one more point, which is something that we could and should do now, and that is citizenship education. Our society is inexorably complex. We know what complexity is in this place. Many of us cannot cope with the legislation we are supposed to deal with. Think of ordinary 16 and 17 year-olds. How are they supposed to relate to all of this? We do not help them. Citizenship education is collapsing, and so, too, Europe is perhaps the most ignored aspect of all. I hope we will take this issue and deal with it.
Lord Pearson of Rannoch (UKIP)
My Lords, those who favour our membership of the European Union tend to do so, as we have heard, because they believe it has brought peace to Europe, because it enhances our position in the world, and because it is good for trade and thus prosperity. Those of us who want to leave it do not believe any of that.
I start with peace. The EU can take no credit for peace in Europe, which was, of course, secured entirely by NATO. Furthermore, the EU is largely responsible for the present bloodshed in Ukraine. While the Prime Minister and other Europhiles were voicing their dream of the EU stretching from the Atlantic to the Urals, Russia made it plain that she could not tolerate Crimea passing under Brussels and eventually NATO. In the spirit of compromise in 2010, Mr Putin offered a free trade deal from Lisbon to Vladivostok but the EU responded by offering its own trade and association agreements to Georgia, Moldova, Armenia and Ukraine. The EU also spent €496 million funding some 200 front organisations, largely in Crimea and eastern Ukraine, to promote closer co-operation with Brussels. I accept that Russia’s annexation of Crimea was illegal under international law but Crimea has a largely Russian population and was given to Ukraine only in 1954 by Khrushchev. I ask the Minister this question. Was Russia’s annexation of Crimea that much more illegal than our own invasion of Iraq, which has had such catastrophic consequences? Does she think that Ukraine would be in its present tragic position if the EU had not tried to absorb it?
Another fallacy about our membership is that we depend on it for trade, and that millions of jobs would be at stake if we left, as we heard from the noble Lord, Lord Liddle, who threatened us with a 10% levy on our car industry. German, French and other EU manufacturers dominate car manufacturing. They, not politicians, will ensure that the UK-EU trade in cars in both directions continues to be tariff-free after we leave the EU. The UK imports twice as many cars from the EU as it exports to it, with 1.4 million imported and 0.6 million exported. Of the total 1.7 million cars imported to the UK in 2011, 83%—1.4 million—were from the EU and EU manufacturers have a 53% share of the UK market. It just is not going to happen. If we leave the stifling, failed political project of the EU, we would continue to enjoy the free trade upon which some 9% of our jobs depend. We are the EU’s largest client, so it needs our free trade much more than we need its. As the world’s seventh largest economy, we could also have our own free trade agreements with the rest of the world—the Commonwealth, the Anglosphere and the markets of the future.
In this respect, I draw your Lordships’ attention to a groundbreaking new study published recently by Civitas, entitled Where’s The Insider Advantage?. This finds that we have not actually benefited from our membership of the single market at all, either for our exports or for inward investment. This new study reminds us of one published in 2006 by the French think tank, the Conseil d’Analyse Économique et Social, which reports to the French President and which came to the same conclusion for France—there was no advantage from the single market in exports or in inward investment. The French think tank’s solution was, of course, “more Europe” whereas ours is “no Europe”.
I come to my last question for the Minister. I have asked it before but have not so far received an answer. Why does this planet need the EU at all? I can understand that other international bodies have an ostensible purpose—the United Nations, NATO, the World Trade Organisation and so on—but what is the EU now for? It is pointless or damaging for peace. Its diplomacy is expensive and irrelevant. Its euro is a disaster. Its economy is stagnant and will get worse. It interferes in every aspect of our lives. I can see the point for its 80,000 vastly overpaid bureaucrats but what is the point of it for the rest of us? Has it not just become an emperor without clothes? I look forward to the Minister’s elucidation.
Lord Howarth of Newport (Lab)
My Lords, the Prime Minister’s proposal to hold a referendum on Europe in 2017 has nothing to do with any foreseeable state of affairs in the European Union at that date and everything to do with the intractability of Europe in British politics. If the British people do vote on Europe in 2017, it is improbable that they will take their decision in a calmly reflective frame of mind. Europe is so emotive. For Europhiles, membership of the European Union is an article of faith; for Eurosceptics, membership of the European Union is a continuing source of irritation and not infrequently of anger. They resent the pooling of sovereignty and they resent being ruled, as they see it, from Brussels.
Unless the bread-and-butter case for Britain’s continuing membership of the European Union is clear and compelling, which it is not, as has been lucidly and rationally explained by Roger Bootle in his book, The Trouble With Europe, it is entirely possible that a majority of our compatriots would vote to come out. The establishment would, with the possible exception of one of the major party leaders, no doubt advise the British people to stay in. However, there is no longer the habit of deference that caused the British people to overcome their misgivings in 1975 and vote yes. It is quite possible that a majority of Britons will, echoing Churchill, say they are for the open seas.
Free movement of people is a great preoccupation at present but I suspect that there will be concessions on that because other countries have problems with this issue. The crucial issue is the euro. Britain opted out of the single currency but it cannot escape the consequences of the single currency. The deflationary bias, the catastrophic consequences of a single monetary policy across so many disparate economies and chronic banking and government debt crises are all dragging down the economic performance of the European Union and that of the United Kingdom. As the 18 member countries of the eurozone meet separately to determine their stance on major economic issues, Britain is increasingly marginalised within the EU and yet has to live with the consequences of decisions in which we have had no part. We have found ourselves in a situation which it was a cardinal principle of British diplomacy for hundreds of years to avoid, where the major continental powers combine in their own interests regardless of the interests of Britain.
It is hard to foresee that the minority of non-eurozone countries will be able to combine to counterbalance the power of the eurozone while maintaining a coherent European Union of 28 countries. It is hard to foresee that the countries of the eurozone itself will be able to resolve their political tensions simultaneously to satisfy the requirements of Germany for fiscal rigour and its reluctance to pay for the costs of fiscal laxity elsewhere while easing social hardship and averting baleful political pathologies. Can we foresee that there can be a viable European Union in which all the member states agree on issues of trade, the environment, crime, migration and defence while financial and fiscal issues and associated political issues are decided by the eurozone countries in a deepening political union?
Damage limitation will mean that there is no answer to that question by 2017, nor will Britain by that date, with or without the other non-eurozone countries, have devised an alternative strategy or found a “better ‘ole” to go to. It would be wiser not to cut short the diplomacy by that date by having an in or out referendum.
What is clear is that Britain will not join the single currency. However, for the single currency ultimately to survive, the eurozone will have to move to political integration and a federal state. The European Union will continue to be dominated by the eurozone. The political leaders of the eurozone countries have invested so much in that project that they will maintain the single currency for some years to come. If British policy is to be more than passivity and drift, Britain will have to establish new terms of membership in a substantially reformed European Union—that is Mr Cameron’s policy but it is hard to see how meaningful reform can be achieved given the requirement for unanimity for treaty change—or find a way to split the European Union into two separate unions, but we have no allies for that, or leave altogether. Perhaps a looser association will be possible but we should ask ourselves what pattern of engagements will make sense for Britain in a globalised world in which the European Union is a diminishing force.
Lord Willoughby de Broke (UKIP)
My Lords, the noble Lord, Lord Inglewood, will remember that in our debate on Monday a week ago the noble Lord, Lord Hannay, accused us Eurorealists of being ideologues and went on to say that Europe is not a religion. You could have fooled me. The noble Lord, Lord Howarth, who has just spoken, said quite rightly that for some Europhiles the EU is an article of faith. The high priests of this quasi-religion, the Commission and the Brussels Eurocracy, press on with their dangerous project regardless of the damage it is doing to the peoples of Europe. They are sacrificing the future of millions of Europeans on the altar of the EU and the euro.
You have only to look at Italy, Spain, Portugal and Greece, where unemployment is at 25%. Far worse than that is the youth unemployment; it is anything between 40% and 50%, depending on the country. What does that mean for this generation of school leavers and university leavers? It means that they have no future. I suppose that the high priests will say to them, “At least you need not worry about the work-life balance because there will not be any work”, but the Eurochickens now are coming home to roost. All over the EU, political parties have sprung up to oppose the notion of the central priesthood in the EU, the notion of ever-increasing centralisation and of further unity. Let us look at all the countries: in Finland they have the True Finns; in Italy, the Five Star Movement; in Greece, Syriza; in Spain, Podemos—a very new party which is leading the polls there; in France, Marine Le Pen; and even Germany, the motor of the European Union, has the Alternative für Deutschland.
That may all be very unpalatable to the Europhiles but those are the facts. In addition, of course, I have mentioned UKIP, my own party, which won the European elections and just got its second MP in Rochester. Talking of Rochester, I must congratulate the Liberal Democrat party on its performance in defeating the Monster Raving Loony Party by some 200 votes; it must be very satisfied with that. I am afraid that we have tied ourselves into an outdated and failing EU trade bloc. While the rest of the world is growing, the EU is failing. It is shrinking. It seems odd that our future should lie in this failing organisation. The idea is totally bizarre. I am grateful to the noble Lord, Lord Stoddart, for reminding the House—no one else did—that one of the principal reasons why we believe we should get out is that we would regain the right to make our own laws and to rule ourselves. Parliament would once again be sovereign, not Brussels.
My noble friend Lord Pearson asked what is the point of the EU. Surely the point of the EU is our strong voice in Europe. Let us look at the results of our strong voice in Europe recently. The Prime Minister was slapped down this summer by Angela Merkel and François Hollande on immigration; Jean-Claude Juncker was elected as president of the European Commission over the Prime Minister’s objections; we have recently been slapped with a £1.7 billion fine on top of our already enormous £20 billion annual contribution to the EU; and most recently we had the humiliating judgment by the European Court of Justice that the salaries of our bankers should be decided in Brussels, not in Britain.
I will finish by reminding your Lordships that there are 193 members of the United Nations and 165 of them seem to manage very well without being in the EU. Sometimes I wonder how they do it. The ice is cracking under the EU and the ship is sinking. We should get off it before it sinks completely.
Baroness Morgan of Ely (Lab)
My Lords, it has been a fascinating debate and I thank my noble friend Lord Liddle for introducing it. This debate has been stimulated by some careful, moderate and intelligent thought to contrast with the uninformed hysteria that we have been hearing in recent months—and in recent minutes. I have one clear message for those who might be tempted to pander to anti-EU rhetoric—the same message given by my noble friend Lord Liddle: you will never beat UKIP on Euroscepticism, so you would do much better to take a stand and make the idealistic, pragmatic and self-interested case for the UK’s continued membership of the EU.
We must not lose sight of the idealistic reason for the establishment of the EU and how, despite the fact that my generation has no memory of war directly affecting our country, it is undoubtedly true that our membership of the EU has helped to keep the peace in what was once the bloodiest continent on the planet. There is no one better to remind us of that than the right reverend Prelate the Bishop of Coventry.
The EU is a bedrock for the preservation of human rights, respect for law and for a basic level of the provision of social justice. Although I agree with the right reverend Prelate that we need to make an idealistic case for the EU, and I agree with the noble Lord, Lord Robertson, that we need to make an emotional case, in our increasingly materialistic and atomised society, people also want to know how the EU is going to benefit them directly, and an appeal to the high ideals of the EU is simply not going to cut it with many of the general public. We need to step back, look at the direction in which the world is travelling and identify how the UK can maintain any semblance of influence in our fast-changing world.
We are undergoing the most profound geo-economic reordering of our generation. The economic crisis has sped up a shift of power from West to East. It is not just economics that is driving this but population growth and demographics. By 2050 projections indicate that the population of Europe will be only 7% of the global total. The population of the UK will be a mere 0.8%—even lower than that quoted by the noble Lord, Lord Maclennan. I will be 83—if I am lucky to live that long—so this matters. We must ask ourselves seriously how we in the UK intend to make our voice heard in a world where such a profound shift is happening.
How do we maintain the European social model that is so highly respected in other parts of the world when we have an ageing population—a model that needs to be paid for in the face of global shifts? As the noble Lord, Lord Dobbs, indicated, the Pope today described the European continent as a grandmother, no longer fertile and vibrant. But I would argue that grandmothers can provide experience, instil values and provide leadership. The Eurosceptics’ answer is to put up the barriers and retreat into a protectionist model, isolating ourselves from our nearest neighbours. They argue that we can still have a relationship with our continental colleagues through membership of the EEA, and also through negotiating with each country throughout the world individually. Do they really think that little Britain could negotiate a stronger trade agreement with the USA by ourselves, rather than singing in a chorus of the EU with the powerful bargaining mandate of the largest single market in the world pressing the case on our behalf? Can they not see that to pay for our social model our best chance is to pool our intellectual ability across the continent in order to produce innovative products here in Europe that we can sell across the globe and that will help to fund the lifestyle that we have learnt to enjoy?
The EU research funding that the noble Baroness, Lady Smith of Newnham, talked about in her maiden speech, on which I congratulate her, is critical to the development and rollout of these innovative products. R&D spending in the EU is around 1.9% of GDP. In the US it is 2.9%. However, China is catching up fast and has leapt from spending 0.9% to 1.7% of its GDP on R&D in recent years. There is no question that our international influence would be curtailed without our membership of the EU. We need to speak to China, India and Russia with one voice to exert maximum negotiating pressure.
The first priority of Government must be the protection of its citizens. However, due to the interconnected world in which we live, we need to understand the inadequacy of our traditional notions of how we protect our people. We cannot hope to stop terrorist attacks without co-operating with intelligence services elsewhere. It would also be madness to desist from involvement with the European arrest warrant. This has led to the swift return to Britain of fugitives from justice, including 49 of the 65 most wanted fugitives on the run in Spain. We talked earlier today about preventing Iran from developing a nuclear weapon capability. It is the EU and our British representative that have taken the lead in this negotiation. That would be impossible if we were outside the EU.
We cannot simply cross our fingers and hope that the Ebola virus will not reach our shores. We need to tackle the problem where it is happening, ideally again through pooling our energies with other EU member states and NGOs so that we do not have 28 member states all establishing their own administrative networks in the developing world, but channel these resources through one route. We cannot tackle climate change without a global commitment to cut carbon emissions. This, again, is being led by the EU. Common Europe-wide laws to protect the environment, as mentioned by the noble Lord, Lord Smith, and cut carbon are more effective than separate national policies, as pollution does not stop at boundaries. EU laws have forced manufacturers to meet standards that cut carbon emissions—from cars to TV sets. UKIP and the Tory Eurosceptics are deluded in talking about traditional notions of sovereignty. Security, public health and the environment are all issues that can no longer be addressed from within the boundaries of any individual member state.
Two other major themes are dominating the European debate—the economy and immigration. EU membership gives us access to and influence in the biggest trading bloc in the world, with a market of more than 500 million citizens. Leaving the EU would pose the biggest threat to the prosperity of this country. It is simply not in our economic self-interest to leave.
If we want a serious debate about whether it is beneficial to be a member of the EU, we have to have a serious debate about what the alternative is and what our relationship with our prime export market would look like from outside the EU. People who advocate that we leave the EU cite Norway and Switzerland as examples of what our relationship might look like. Norway is about the 10th highest contributor to the EU budget, paying around €340 million a year, despite not being a member. Therefore, outside the EU, the UK would probably still need to contribute around €2 billion a year to the budget, while having no say on the rules and regulations that we would have to follow to access the single market.
Lord Pearson of Rannoch
Perhaps I can put on the record, just for once in your Lordships’ House, that we have never advocated being like the European Economic Area. We have never advocated being like Norway. We favour our own free-trade agreement with the world, under the World Trade Organisation—possibly more along the lines of EFTA—but not the EEA or the “fax democracy”, or whatever it is called.
Baroness Morgan of Ely
That is even madder than I thought, then.
What we have to think about is the importance of the EU in protecting consumers and restricting unfettered capitalism, which has allowed bankers’ bonuses to spin out of control. If we are not doing it in this country, I am glad that someone else is doing it. A common competition policy has protected consumers from monopolies and multinational companies. This has been seen most visibly in the airline market, which has enabled millions across Europe to enjoy cheaper flights.
It is EU laws which have allowed social protection for the workers in the EU, including a minimum of four weeks’ paid holidays for full-time workers, a right to parental leave, extended maternity leave, a new right to request flexible working and the same protection for part-time workers as for full-time workers.
Labour wants to tackle immigration head on, and we have put forward clear ideas about how we would like to see reform in this area.
The Government’s promise of a referendum following a renegotiation by 2017 is random and has caused severe uncertainty, as emphasised by my noble friend Lord Howarth. As my noble friend Lord Lennie outlined, Nissan’s future in the UK, along with that of other manufacturers, depends to a large extent on EU membership.
The Prime Minister does not seem to have grasped the fact that there is a need for unanimity in order to change the treaty. He still has not told us what he wants in a reformed EU. It is irresponsible to put the interests of party above those of the country. That is the only point on which I agree with the noble Lord, Lord Stoddart.
Baroness Ludford
The noble Baroness talked about party. Can I emphasise that Mr Cameron is speaking as leader of the Conservative Party, not as Prime Minister?
Baroness Morgan of Ely
Thank you. At a time when we have been told that the recovery is brittle at best, the constant agonising over our long-term future in the EU is extremely damaging. It is time for the Government to act and behave in the best interests of the nation and to commit to our long-term membership of the EU.
The Minister of State, Foreign and Commonwealth Office (Baroness Anelay of St Johns) (Con)
My Lords, I also join other noble Lords in congratulating the noble Lord, Lord Liddle, on introducing this debate. I particularly congratulate my noble friend Lady Smith of Newnham on her excellent maiden speech.
The debate of the noble Lord, Lord Liddle, has proved again that the question of the United Kingdom’s membership of the European Union remains one of the most important and divisive issues in British politics. There has been passion, commitment and enlightenment —by some definition. Others might disagree on the definition, but I have seen enlightenment. However, that has led to very different conclusions. There is an election next May and I suspect that we will see a lot more of that debate to come.
We have heard noble Lords such as my noble friend Lord Phillips of Sudbury and the noble Lord, Lord Howarth of Newport, but particularly my noble friend Lord Inglewood, posing the question of how we make sure that the electorate can make up their mind correctly. My noble friend Lord Inglewood asked what we in the Government were going to do to protect the electorate from political snake oil. Let us not talk down to the electorate but respect them and listen to them. Let us keep to our principles and say what we really mean. Noble Lords today have certainly said what they really mean, which is refreshing.
As the Prime Minister outlined in his speech to Bloomberg in October last year—to which the noble Lord, Lord Liddle, referred in part—the world is changing and the EU must respond and reform. We have made it clear as a Government throughout—my right honourable friend the Prime Minister continually makes it clear—that we have achieved much without treaty change. There is much more that we can and must do without treaty change. We have work ahead. We need change to ensure: that the EU becomes more competitive in international markets, through smarter regulation, a deepened single market and more free trade agreements; that the EU becomes more democratically accountable by strengthening the role of national Parliaments in EU legislation and ensuring that the European Council sets the strategic agenda; and that the EU does more to protect the interests and the rights of member states, both inside and outside the eurozone.
We have made already progress by reducing the EU’s seven-year budget for the first time in the EU’s history, reforming the common fisheries policy and exempting the smallest businesses from EU red tape. My noble friend Lord Howell asked how reform will come about. We must be bold. My noble friend Lady Smith of Newnham made clear that we must form alliances, just as my noble friend Lord Howell said. Indeed, the Government are not alone in seeing a need for reform. Many other European Governments agree, as do many representatives of industry. We have been engaging in those alliances. My right honourable friend Philip Hammond has been spending a lot of time this summer and last week on finding a way forward, travelling throughout Europe, meeting his counterparts and making alliances, out of which come practical, pragmatic changes.
Let me quote a couple of EU heads of government. The Italian Prime Minister Matteo Renzi said:
“We want better Europe, not more Europe … A very balanced Europe, against the red tape of bureaucracy”.
As my noble friend quoted, the Dutch Prime Minister Mark Rutte has called for:
“Europe where necessary, national where possible”.
We agree. As my right honourable friend the Foreign Secretary has travelled through Europe, he has been building a strong coalition, which we need to continue to build.
My noble friend Lord Bowness posed a question against the background of what is happing now, both within government, Parliament and some think tanks—not one of the think tanks of the noble Lord, Lord Liddle, I hasten to say. I am sure that an article in the press yesterday spurred my noble friend to ask: “What about Article 50?”—the treaty of Europe. He wanted to know what the Government thought about that and what the implications were. Whatever others say, they do so in a personal capacity and there will be a lot more of that from every single political party—and from none—as we go forward to the next election. The Government are not considering invoking Article 50. We are clear that Europe must change to be more competitive, flexible and democratically accountable, and we believe that we can work with our EU partners to achieve those reforms—so Article 50 does not come into it.
The noble Lord, Lord Liddle, was very clear, as were others around the House, in putting the economic case for membership of the European Union. Of course, I know that the noble Lords, Lord Stoddart, Lord Pearson of Rannoch and Lord Willoughby de Broke, totally disagree with the way in which those figures have been produced. I agree with the noble Lord, Lord Liddle. The EU is the world’s largest and wealthiest common market. Through our membership of the EU, British businesses have free access to this market, its goods and its skilled labour. Some 40% of UK exports go to European markets and four of our top five export destinations are EU member states. The other is the US, with whom the EU is currently negotiating a free trade agreement. TTIP would not be negotiated now were it not through the EU. Around the world, the UK is seen as the gateway to Europe where we are the top destination in the EU for foreign direct investment.
I agree with my noble friend Lady Ludford about the advantages that membership of the EU gives to the UK with regard to global influence. The noble Lord, Lord Radice, kindly referred to David Lidington. I was grateful for that. He was right to quote him and I appreciate the work that my right honourable friend is doing.
I agree entirely that remaining a member of an EU with 28 member states gives the UK a stronger voice in international affairs. It gives us, for example, more influence when negotiating free trade agreements with key international markets such as India, China and the US, to which I have already referred. I agree with the noble Baroness, Lady Morgan of Ely, that it gives us a stronger voice when we are talking about security and matters such as the fight against Ebola, which is not only a threat to millions of people and their security in west Africa, but elsewhere in the world.
My noble friend Lord Maclennan of Rogart, along with the right reverend Prelate the Bishop of Coventry, made a point of reminding us of the importance of the EU. Every day we think of the EU it reminds us that its birth was after a period of conflagration in the early part of the last century. Since then we have been working together and arguing. Boy can we argue, and why not? We do that in Parliament so why not in Europe? We can argue and come to sensible, pragmatic decisions where we can make concessions to each other. We can go on working together without raising a gun. That is what is important.
It is important for us to stand together in defence of our democracy and the rule of law. It is vital that we do so, for example, in the cases of Ukraine and Syria. I heard what the noble Lord, Lord Pearson of Rannoch, said and I fundamentally disagree with him over Ukraine.
Baroness Anelay of St Johns
I will not take any response to that. I need time to get through this. I find the noble Lord’s allegations that the EU is in any way responsible for the action that Russia took in Ukraine simply unacceptable.
The noble Lord, Lord Liddle, recognised the need for fairness, but the Government believe that the EU must focus on the areas where it can add the most value, such as increasing competitiveness, reducing the democratic deficit and ensuring fairness both in and out of the eurozone. I know that we will have disagreements about some of the implications of that; I listened very carefully to noble Lords. I will take competitiveness first; here, the EU needs to do more to facilitate jobs and growth. We know this because we have undertaken the largest ever analysis of the impact of EU membership on a member state. The balance of competences review was an enormous undertaking and I pay tribute to all those who took part, including someone who is sitting very close to me.
This review, due to be published by the end of the year, highlights the concerns of businesses and Governments across the EU that it is not doing enough to ensure smarter regulation. Through the balance of competences review, stakeholders across Europe told us that the EU needs to change and improve its regulatory processes. My noble friend Lady Ludford referred to the need for better regulation and the noble Lord, Lord Smith of Finsbury, made the point that not all regulation is bad: it depends on how it is framed, how it affects you and also, as we have seen from the Deregulation Bill currently before Parliament, how you change it when you know that it is out of date or having the wrong effect.
Of course, we have all read newspaper stories about EU red tape—a burden that is felt most by small and medium-sized enterprises. After all, SMEs employ two out of every three members of the EU workforce. We cannot forget them. The fact is that a 25% reduction in EU administrative burdens on businesses could lead to an estimated increase of 1.4% in EU GDP—equivalent to €150 billion. Smarter regulation helps us all.
We also need to strengthen the common market. For example, the services sector accounts for 70% of EU GDP and over 90% of new jobs, but it makes up just over 20% of intra-EU trade. We need to ensure that British businesses online are able to access customers in all 28 member states without facing legislative or regulatory obstacles.
My noble friend Lord King was absolutely right to draw attention to the fact that the number of members has changed over the years. As we now reach 28, with others seeking accession—I will turn to the question asked about accession by the noble Lord, Lord Giddens, in a moment—we need to ensure that our systems are not only robust for now but for the future. We need to ensure that British citizens can use their skills and qualifications when moving to another member state. I will also refer to migration in a little while.
In addition to strengthening the common market, the EU must continue to negotiate free trade agreements such as the Transatlantic Trade and Investment Partnership to benefit businesses in all member states by giving them access to other important global markets. But as I have mentioned, alongside the need to increase competitiveness, there is a need to redress the growing democratic deficit at EU level.
While the European Parliament has a legislative role, it cannot recreate national accountability at a European level. National Parliaments play a crucial role in holding their Governments to account, with systems of parliamentary scrutiny based on their individual democratic models and traditions. In her maiden speech, my noble friend Lady Smith of Newnham drew attention to that. We must remain true to the principle of subsidiarity. Whenever possible, action should be left to individual member states and their national Governments and Parliaments—giving them a stronger say in EU legislation.
Against the background of all this work that we need to do to reform the existing EU of 28 member states, the noble Lord, Lord Giddens, asked a pertinent question—was the UK in favour of further EU enlargement? He will know that I have been asked questions at this Dispatch Box over the last few weeks about the background to previous enlargements, and how previous Conservative Governments have worked with that; how we welcomed new members on the basis that we update the EU practices in order to reflect what they can bring to the EU and how they can work effectively within the EU. We must address the concern that many citizens in the UK currently have—and not just here but around the EU—about the impact of enlargement or we risk losing public consent.
I meet people from across the boundaries and beyond the EU who dream of joining the European Union. It is important that if their dream comes true it does not become a nightmare because we have failed to explain the case to the British public or, more importantly, failed to reform the EU to make it possible for enlargement to take place in a way that does not damage the interests of any country. We are therefore proposing reforms to the transitional controls, which need to be addressed ahead of any further accessions that might well take place.
Much mention has been made of migration, which has been discussed strongly, not only in this House but in the press and across the media. It has been raised by many noble Lords today, including the noble Lord, Lord Empey, and my noble friend Lord Maclennan of Rogart. I have already answered questions at the Dispatch Box regarding work that the Government are undertaking, in negotiation with their partners in Europe, to ensure that we can have a more robust system that will not prevent free movement or undermine the principle of free movement, but recognises that free movement is not and has never been a right without responsibilities and conditions. It has never been a completely unconditional right. It has been linked to the right to move to work.
The noble Baroness, Lady Morgan, referred to Labour Party policy. Over the last week the Government have looked to the Dano judgment regarding the German position on benefits that may or may not be claimed. We are looking very carefully at all the technical details before we fully announce what changes might be possible that are not already being undertaken. We believe that the option of living and working in other EU member states is a clear benefit of EU membership for UK nationals. However, we need to ensure that it is not used merely as a way to claim benefits. That underpins the work that has taken place both in Germany and here.
The Prime Minister set out a number of domestic measures that we are taking across government to ensure that we maintain free movement in the way that it was originally intended, but also to ensure that our controls on accessing benefits and services—including the NHS and social housing—are robust. That includes measures to prevent EU jobseekers and involuntarily unemployed EU workers from claiming jobseeker’s allowance for longer than three months unless they have a genuine prospect of work, and measures to ensure that EU jobseekers will be unable to access jobseeker’s allowance until they have been resident in the UK for three months. In July that restriction was applied to those seeking to claim child benefit and child tax credit.
The measures also include: strengthening the habitual residence test, which all migrants have to satisfy to claim income-related benefits; introducing an earnings threshold to trigger an assessment of whether an EU national has work that can be treated as meaningful and effective; amending regulations so that new EU jobseekers are unable to access housing benefit, even if they are in receipt of income-based jobseeker’s allowance; and quadrupling the maximum fine on employers for not paying the minimum wage from £5,000 to £20,000.
The Government are taking action. We believe that membership of a reformed EU is in the UK’s national interest—but reform there must be. The EU needs to become more competitive and needs to continue to sign free trade agreements with key international partners. It needs to draft smarter regulations that support, instead of hinder, SMEs. It must consolidate the common market, especially in new areas, such as the digital field. We have not done that properly yet. It needs to remain flexible and embrace our continent’s diversity and individuality, and it needs to respect and protect the democratic mandate of our national Parliaments. All those changes would be beneficial for this country. It is in our national interest and in the interest of our security, but it is also in the interest of all 28 states.
Lord Liddle
My Lords, I thank the noble Baroness for her very comprehensive, robust and intelligent response. She might be surprised by how much I agree with what she said. I also thank the noble Baroness, Lady Smith, for her excellent maiden speech. I am sure that we shall have many debates on this key issue of our times and that she will make a notable contribution to them.
I also emphasise that my passion for making the case for Europe and for remaining a member of the EU, which I think is shared by many Members on this side of the House—not all, but many—does not blind me to the need for reform. There are fundamental problems of divergence, of legitimacy and of economic performance—mind you, we have some of those same problems in our country as well. It is as the noble Lord, Lord Phillips, said: there is a crisis in politics. That is not just about the EU, but it affects many EU member states. There are profound structural reasons for it that we do not properly understand. We have to debate all these things.
I will make two points of substance. First, I do not believe that the way we get reform in the EU is by making threats. That is where I think the whole UKIP approach is completely wrong. Secondly, the Government would do well to listen to what was said by the noble Lord, Lord Rodgers of Quarry Bank. The best thing the Prime Minister could do, if he wants to have influence in the EU, is to make it clear that he thinks that we must remain a member, even though reforms are necessary. He could do a lot worse than repeat the words of Sir John Major: although lots of reforms are needed and there are lots of problems and frustrations with the EU, it is in Britain’s national interest that we remain a member.
Care Sector
(10 years ago)
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Baroness Kingsmill
To move that this House takes note of working conditions in the care sector.
Baroness Kingsmill (Lab)
My Lords, I am delighted to have the opportunity today to throw some light on this difficult and not very well publicised area of employment. Care workers are probably the most invisible members of the United Kingdom’s workforce. I have recently written a review of their working conditions and I was shocked. In the past, I was an employment lawyer for many years. I knew very little about the care sector and I am very grateful to those Members of the House here today who know an awful lot more about it than me.
Although I knew very little about the care sector, as a former employment lawyer I knew a lot about employment. This was my fourth report on employment conditions in various sectors of the economy. The previous one was on the fashion industry and the unhealthy terms and conditions of catwalk models. I have to tell the House that there are far fewer people working as models in the United Kingdom than there are care workers and yet you would not have thought so, given the amount of publicity that particular report received. It became known as the “skinny models” report and it was all over the press. This report, however, on the terms and conditions of care workers, passed almost unnoticed. When I sought some media attention for tonight’s debate, they said, “Give us the news element of this”. What they really meant was, “Tell us some ghastly story about some hideous happenings in a care home or about people who have been badly treated”. That is what creates the attention around this sector. I am, therefore, particularly grateful for the opportunity to throw a little more light on this area and for other noble Lords to add their experience to the debate.
We all know that care is not a glamorous occupation. It involves dealing with vulnerable people on a daily basis, entering the homes of elderly and disabled people in distant locations, providing intimate care and support and, often, prompting the taking of vital medication. Engaging with elderly people with dementia, Alzheimer’s and multiple conditions, in short bursts throughout the day, is a difficult occupation which none of us would find easy to do on a daily basis. These activities do not take place in high-tech hospitals with white-coated doctors and eager students. They do not take place in a colourful playroom with engaging staff and constant activities until the users are collected at the end of the day. They take place in people’s homes and care homes where there are multiple residents with multiple conditions.
Care plays a vital role in our society. Care workers deliver the support needed to people nearing the ends of their lives, to people who are disabled and to people with chronic illnesses, enabling them to live comfortably and in a dignified way. Yet it is the poorest people in our economy who are dealing with our most vulnerable people. The people in this sector are paid less than those in any other of our economy. They are looking after our most vulnerable citizens, in many cases in the most awful of circumstances, yet we value them the least and pay them the worst. Their conditions of work are among the worst.
Care workers are undervalued, underpaid, undertrained and underregulated. There are between 1.5 million and 1.8 million people working in the care sector and we do not know who they are at all. There is no register of care workers in this country. They come and they go, they ebb and they flow, we do not know who they are or where they come from. There is no system of regulation at all. I compare and contrast this with, for example, the care of children, where there are limits. Childminders have to be trained, are limited in the number of people they can care for, and have status. They are not particularly well paid either, but they have career progression and an opportunity to acquire qualifications and improve themselves.
Care workers do not have the status of childminders and they certainly do not have the status of nurses, although they often undertake in people’s homes many of the services that nurses provide in hospitals. They are subject to no regulation or registration. When I was looking into it, I often heard people saying, “I am just a care worker”. It sounded so unfair because there are, among them, some incredibly dedicated and committed people who love what they do and love the people they are taking care of.
However, their work is far more complicated than they give themselves credit for. They often have to deal with complex feeding methods. They have to learn how to use hoists for moving clients, but they are not taught this; they have to learn it on the job and many of them suffer injuries while doing so. They learn how to dress wounds, how to administer medication and, above all, how to provide vital emotional and domestic support for vulnerable people. It is certainly not a job for the faint-hearted and it is certainly not just a job. However, as I said, they are subject to some of the worst conditions of any workers in the United Kingdom. Their wages are almost universally either the national minimum wage or no more than 15% above that minimum. Frequently, even the national minimum wage is ignored, with employers refusing to pay domiciliary workers for the time it takes them to travel between clients.
Many care workers do not know what hours they will be working from week to week. Zero-hours contracts, which we have all read about, play a huge role in the sector and destabilise workers’ lives. Qualifications are patchy, the Care Quality Commission’s requirements have been reduced, and the provision of care has been increasingly focused on the independent sector. Training varies considerably, with no real common framework for care workers. The workforce tends to be older women or migrant workers. Many older women who have never really been in the workforce before but have been bringing up families and have been in so-called caring roles for most of their lives think that, when their children leave home or no longer have the dependence they once had, they can do something that they are good at. They feel as though they have no choice—that this is the only thing they can do—and often that is the case.
The same applies to migrant workers. Frequently, agencies bring in migrant workers from different countries. In many cases, they are subject to the most minimal checks on who they are and what their background is. In many cases, English is not their first language, and indeed often they do not speak very good English at all, yet they are looking after people who are anxious and vulnerable and who need support. That is not to say that brilliant care is not often given by these very same people, but it makes for a risky situation if people cannot communicate properly with those who are looking after them.
It would be very good if there were more young people in care work, but young people rarely enter this sector. There is no career progression and no status, and it is badly paid. It would be very good if we could get career progression going in this area, but at the moment younger people are not interested because it does not exist.
The truth of the matter is that care is in crisis. The exploitation of workers in the care industry has highlighted how badly they are treated, and it has highlighted the severity of the situation regarding their ability to deliver quality care to some of our most vulnerable citizens. Poor conditions for workers often lead to poor quality of service for clients, and this is particularly the case with the elderly and the disabled.
It has to be said that the pressure of austerity measures on local authorities has led to years of underfunding and to chronic conditions for care workers and service users alike. Throughout my work on the review that I have recently undertaken, the call from all sides and from all parties was for greater funding in the care sector. Underfunding the care sector is a false economy. If we truly valued care, there would be less need for vulnerable people to go to hospital, with both a benefit for the public purse and a benefit for the service users, who would avoid the trauma and uncertainty of a hospital visit.
Let us not forget that the care industry is big business. Research from Skills for Care estimates that it is worth about £43 billion to the UK economy, and it is growing as the population ages. Care for the elderly is a lucrative industry. Despite this, it is characterised by a plethora of small businesses dependent on diminishing local authority budgets. Even the largest provider, Four Seasons Health Care, has only a 5.2% market share.
It is a sector that has been beset by scandal. Companies such as Southern Cross Healthcare, which operated 750 care homes and employed 41,000 staff until it closed in 2012 with huge debts, have left the industry with a bad a reputation for poor financial management. Many smaller providers are also just hanging on by the skin of their teeth, threatened with closure. The sector is haunted by the spectre of abuse, such as the horrific case last year of the Orchid View care home. Given that it is likely that most of us will spend the last two years of our lives in receipt of some form of paid care, it is a sector that merits a brighter light being shone on it, and I am particularly grateful for the opportunity to do so this evening.
Baroness Gardner of Parkes (Con)
My Lords, I am very grateful to the noble Baroness, Lady Kingsmill, for bringing up this subject. It is something in which I have taken an interest for some time.
I am not a qualified solicitor, but I sat for many years as a lay member on industrial tribunals, which are now of course called employment tribunals. I was therefore fascinated when it was mentioned how badly paid these people were, with no pay for their travel time between jobs. A noble Lord who spoke earlier said that they should take their case to an employment tribunal, and that without doubt the employment tribunal would give them the right to be paid. That is all very well, except that all these people are working as individuals, usually for an agency, and the agency determines everything.
I have been trying to help a particular woman who has worked for many years caring for elderly people, usually for five, six, seven years. She has just finished seven years with someone who died in their 90s. When they died, the son came over from America and said, “We will not need you any more now she is dead”. He never offered to pay a penny of notice or said anything to her whatsoever. He just vanished, and she was left with nothing. I have spoken about this to various people in this House, such as the noble Lord, Lord Whitty. He said, “She must have had a contract of employment”. There was no contract of employment, as she was considered self-employed. The elderly lady had someone else to care for her five days a week and this carer’s responsibility was to go in on Friday night and stay through till Monday morning. I worked out that that was 48 hours or more. She was paid £100. It turned out that was around only £2 an hour—I had to use my calculator—for two full days in which she had to get up many times during the night to look after that woman. One talks about people being vulnerable, but a lot of old people also get very difficult. This was such a case. But this carer is such a caring person that she would say, “She does not mean to be difficult”. The carer really did her best for this woman.
Having lost that last person, the carer decided she would join a system that the councils use, whereby they are associated with a particular employment agency. I did a lot of phoning to various employment agencies to see which would be a good one to go to. The differences that came up were quite interesting. The important thing was that the workers had to have had training. The noble Baroness mentioned that there is no such thing as a national standard of training. There is none. When you ask the agencies, “What do you mean by training?”, they tell you, “You have got to pay for it,” and the carers pay from £25 to £40 for this. When the workers get the training, it is simply a bit of paper that applies to that particular agency. They cannot use it to go to any other agency. If they want to go to another agency, they have got to do that agency’s training. Someone here who does a lot to help people into employment said to me, “That is the way they lock them into that agency. If they have got to pay for new training, they are not going to leave their place of work, because that is the one that approves them”.
When I asked the agencies what things they trained their workers in, I was told they wanted to be sure a carer knows how to get a patient in and out of the bath, or how to cook a little meal—all the things that are practical. They only ask you in a written question what you would do in an emergency if, say, a person is unconscious on the floor. It seemed very unsatisfactory to me, to say the least.
They asked her to sign on with the company and I asked her to show me a copy of the paper. “They do not give you a copy”, was her reply. I told her to ask for a copy. How would she know what the conditions of work are otherwise? I then asked about travelling between jobs. The answer was that you are sent to client A for an hour and then you are sent to client B, but they might be an hour apart in travel terms. There is no pay at all for the travelling time. I have spoken to local authorities about this in a meeting in one of the Committee Rooms. They said that they should not really be using these agencies unless they know that they are paying proper wages.
Time is running out because I have only six minutes in which to speak, unlike the wonderful speech we have just heard. I come to the most important thing, and it is worth spending the last minute on it. We need a nationally recognised standard of training. The training should not be too complicated or difficult for people to achieve, but it should cover the essentials. Someone with the qualification should be able to go anywhere in the country, and it should be accepted. That would be a great help.
There is a great deal to this subject. I am a retired dentist. No one can just help out in a dentist’s surgery any more. The staff all have to be fully and extensively trained. Every field in care or health requires training that is recognised nationally, and that is what we need in this sector. When we have that, it will mean that we would be able to help the very large number of people who are going to need care in the future.
Lord McKenzie of Luton (Lab)
My Lords, we should thank my noble friend Lady Kingsmill for initiating this debate, but more importantly for her work and that of her team in producing a significant review of working conditions in the care sector. The review was commissioned by Ed Miliband to see what could be done to tackle exploitative working practices in the sector and so improve the quality of care within the existing care budget. The review seeks to do this as well as produce a vision for the longer term that does not have this funding constraint. Like, I suspect, a number of noble Lords in this debate, I have an elderly relative in receipt of domiciliary care, and the messages and analysis in this report ring very true.
Care work is in crisis and care workers need to be treated fairly and to be valued if they in turn are to deliver quality services to their clients. As my noble friend has stressed, care workers are undervalued, underpaid, undertrained and underregulated. This leads to high rates of staff turnover, and for clients, constant changes in carers, erratic timings of visits, missed appointments and no continuity of client engagement. The review has been produced at a time when much else is going on in the world of caring. We are in the era of dramatic cuts to funding for local authorities; demographic change, which the LGA say has run at about 3% of the service budget for the past four years; implementation of the Care Act and the Better Care Fund; the consequences of the Supreme Court judgment that changed the definition of “deprivation of liberty”; and changes in technology that are enabling people to live more safely at home.
The spending pressures on local authorities are having a profound adverse effect on the sector. A National Audit Office report issued just last week sets out the stark facts. Real-terms reductions in government funding to local authorities for the period 2010-11 to 2015-16 amount to 37%. If council tax is included, the reduction is 25%. Moreover, local authorities with the highest levels of deprivation have seen the greatest reductions in their spending power. The NAO report shows that local authorities’ main response to reductions in government funding has been to reduce spending: in the four years to 2013-14, on employees by 15%, and on running costs by 6.7%, although they have tried to protect spending on statutory services for vulnerable people. Notwithstanding this, over the period of this Government, adult social care expenditure is estimated to fall by 8.7%. But those authorities that have been suffering the biggest reductions in spending power—the most deprived—have seen budgeted spend on adult services fall by nearly 13%. Those at the other end of the spectrum have seen a fall of just 1.2%. This is an ugly inequality, which must be addressed.
The Local Government Association’s Adult Social Care Funding: 2014 State of the Nation Report concludes that adult social care funding has been kept under some control through a combination of budget savings, the NHS transfer and at least £0.9 billion of savings by other departments. It considers the medium term to be particularly challenging, with an estimated funding gap over the period to 2020 of £4.3 billion. It also says that the Better Care Fund, to help develop better integration with health, will not provide an immediate solution. These budget pressures are undoubtedly being visited on those who need adult services as well as those who are working in the sector. In 2013-14 there was a 5% decrease in the total number of people receiving services and an increase in the number of authorities tightening eligibility criteria. Delayed discharges from hospitals are at their highest rate ever.
In terms of service levels, as my noble friend’s review highlights, there is increasing use of 15-minute visits, a practice that drives poor-quality care and exploitative working practices. The review stresses that such a limited time means that carers are simply unable to give the human interaction that service users need. We agree with this, and given the opportunity, will work with councils and care providers to bring this practice to an end.
The review also confronts us with the shocking statistic that between 160,000 and 220,000 care workers are paid less than the minimum wage. This is often due to failure to pay workers for time spent travelling between care visits; this can be made worse by incompetent management who are not always familiar with an area and arrange schedules that zig-zag across the town. Equally to be deprecated is the growth in compulsory zero-hours contracts, which create financial instability for carers and an environment in which bad employer practices are likely to be unchallenged.
We have already set out our plans to ban the use of exploitative zero-hours contracts and to improve enforcement of the minimum wage. Fines for non-payment of the minimum wage should be increased to £50,000 and we will champion the living wage through “make work pay” contracts. We have also signed up to the CQC being given an inspection role in the commissioning of care. There are other recommendations in this splendid review which we still have under consideration.
On funding, my noble friend has already shown how there is room to improve workforce planning and commissioning to generate savings. Obviously, the big challenge for the future is to raise standards and save money by the better integration of health and social care. We are committed to a £2.5 billion transformation fund that will cover both the NHS and social care and includes money to pay for 5,000 home care workers.
My noble friend Lady Kingsmill has given us a glimpse of the future and a vision of the professionalisation of care work—a cause towards which we should be proud to work.
Baroness Brinton (LD)
My Lords, I congratulate the noble Baroness, Lady Kingsmill, on securing this important debate. I want my focus to be slightly more positive by picking some of the good examples in the sector, particularly in training and skills, to show that there is a way out of some the problems that the sector faces at the moment. However, I start by reiterating the point made by other speakers: the care sector has some of the most dedicated staff in the UK workforce, who have the incredibly responsible job of helping to look after the most vulnerable adults in our society.
The vast majority of the 1.5 million staff do it very well, but sadly the small handful who abuse their clients and our trust are the ones who capture the headlines. My mother had domiciliary care for a decade until she moved into residential care about 18 months ago. I have seen, at first hand, carers and their managers at work. During that time, nurturing relationships have been created and sustained and her carers have travelled with her on her difficult journey. In other visits and meetings outside the family, I have seen some less good practice but also some unusual places—I will come on to the healthcare assistants in geriatric wards and prisons later.
In the main, those services that are excellent are often unseen; problems, many of which seem to be appearing more frequently, are the result—I believe—of pressure from above which comes from two sources. The first is the still very small pool of people prepared to work in the sector, and the second is the funding packages for social care that cause organisations to take short cuts. Some local authorities now offer ridiculous hourly rates to organisations that do not cover travel time, annual leave and training in particular. I am afraid to say that the tri-borough in London is one of those and Bradford is another, so it is not just a London problem. I ask my noble friend the Minister: what can the Government do to ensure that the living wage and the overheads that healthcare organisations ought to be paying should be included in a contract from local government?
I want to reflect briefly on the social care workforce demographics for 2012, which I think is the most recent year for which we have figures, and Skills for Care’s report, The Size and Structure of the Adult Social Care Sector and Workforce in England, because some interesting points come out of them. I suppose it is no surprise that over 80% of the workforce are women but it is worth highlighting that for managers it is still 80% women, which is encouraging and shows that there is not a glass ceiling there. However, that is not reflected in the black and minority ethnic data, which show that 18% of the workers are BME but for carer staff the figure rises to 29%, while for managers it drops quite considerably. Will my noble friend the Minister say what support is being offered to junior BME staff by employers or Skills for Care to help them progress their careers and get through that glass ceiling?
Interestingly, the data also show that 82% of staff are British, 4.5% are from the EU and 13% are from non-EU areas. Given the debate that your Lordships’ House has just had, if UKIP wanted to repatriate non-British workers, we would have an urgent and immediate shortfall of 17.5%, which rises to nearly 20% among front-line carers.
There has been considerable focus on the qualifications of the care workforce over the past 10 years, much of it introduced by the previous Government and continued by the present one, and with some considerable success. There has been the development of the national vocational qualifications—NVQs—at levels 2 and 3, as well as the national occupational standards, where each standard is a unit of care that demonstrates that the worker can effectively look after that particular thing; it might be bathing an elderly patient or working with them to try to bring back some memories. At the higher level there is certainly work on dementia care as well.
One difficulty was that the focus of the previous Government was on NVQ level 3, the equivalent to an A-level, rather than level 2, which left many in the sector concerned about those staff with no qualifications at all. The data show that almost half the workforce are now qualified to level 2, which is great news, and over 15% to level 3, both of which are improvements. But 37% of the workforce have no qualifications at all. We want anyone in a caring role, or who is managing carers, to have the national occupational standard—NOS—qualifications to at least level 2 to guarantee a minimum level of understanding about the care that is being given, and for the safety of the clients and patients. Inevitably, the majority of people without qualifications are direct carers. I ask my noble friend the Minister: what incentives can the Government provide for small businesses particularly to help train their staff, especially those who have no qualifications at all, given that there is an excellent national framework and many employers offer these qualifications?
This raises a further point. The future workforce projections to 2025 show that the workforce will need to grow by 800,000 in the next 11 years. If we do not have training and recruitment plans in hand, we will not be able to provide the skilled workforce we need as our ageing society needs more and more assistance.
To end on a positive note, I mentioned earlier the geriatric ward in a prison, the number of which is increasing. One healthcare assistant I met was just beginning training to qualify as a nurse because her employer realised the benefit of a proper progression pathway. That is the way this business should be going in the future.
Lord Lipsey (Lab)
I, too, thank the noble Baroness, Lady Kingsmill, for initiating this debate and for her excellent report. There is another vote of thanks that I want to give, which on my part is even more heartfelt: I want to thank the 700,000 people working in the residential sector in particular for what they do for our elderly people.
Of course I know that there are a few bad apples in the barrel. The most profoundly frightening statistic that I have come across in some time is one that says that 54% of people fear going into a residential home because they think that they will get poor or even cruel care—that is the newspapers for you. Then I think of St Luke’s Hospital in Oxford, where my 92 year-old mother is. It is a special place. It is not a special place because it is a special building; to call it workaday would be generous. Nor is it in a special place: it is in a suburb of Oxford. It is special because of the people who work there. There is a highly educated and absolutely delightful couple from Botswana; the Nepalese Gurkhas, with whom the home has a connection; the Filipinos; and the eastern Europeans—a staff of people dedicated to care.
The number of care workers in residential homes is going to have to increase by about a third by 2025 to cope with the demands. Where are they going to come from? I understand why our politics is turning the way that it is on immigration—of course I do. However, weight has to be given to the fact that not only are we providing a home for people from abroad but they are providing services that we as a society desperately need—services that there is not, at present pay rates, a huge queue of British people dying to perform.
My point is that in most areas of public life there is quite a lot of controversy about what needs to be done—sometimes partisan and sometimes not. However, the Kingsmill report has to be taken with Camilla Cavendish’s wonderful report, with bits of the Burstow report on the residential sector and the earlier reports that have been mentioned today. They nearly all say essentially the same thing: the pay is too low. The too-low pay may have even come below the minimum wage and does not approach the living wage. Care workers are forced, often illegally, to pay for their uniform and for training and to spend time on duty even if they are not actually working at the time. Training is inadequate and career prospects are poor. It is hard for a care worker to graduate to becoming a nurse. To me, it is quite wonderful, despite all this, that we have a workforce at all, let alone one that is as conscientious as the great majority of it is.
There is total consensus on what is needed. Why does it not happen? The reason is money. I will give three examples. There is a huge shortfall in the amount paid in fees by local authorities for people in residential care—it is way below what would be an economic rate. Laing and Buisson calculated that for 2008-09 the total sum involved was £540 million. Unfortunately, it will not even give a Member of the House of Lords the current figure that it has calculated for use in this debate; I suppose that it makes its money by selling it. The figure is not likely, however, to be any smaller than that, so the fees are already inadequate. There is going to be an additional problem because, when the Dilnot report takes effect, those who are paying for themselves are going to find out what the council is paying for its own residents and they will say, “Why should I pay more than them?”. That will put more downward pressure on the fees, so the homes will not have the money to pay their staff properly.
Secondly, there are huge demographic pressures, with the number of 85-plus year-olds in 2030 likely to be more than twice what it was in 2011. We live longer, which is great for us, but somebody has to pay. Thirdly—and this annoys me, so I will not labour it—it is very distressing that the Government prefer to cut council budgets, even when those council budgets are the only thing that keeps care going, rather than cut their own budgets, because they feel that they would get the blame for that. No money, no improvement for care workers. Indeed, it will get worse. In addition to the cost of all this, we have the cost of Dilnot, which I on the whole support, although it is a much lower priority to pay better-off people a share towards their care than to provide the basic care that the poorest in our community need.
At the end of the day, there has to be more money for care. When that money is forthcoming, there has to be better treatment for the workforce as a key priority. I hope that this debate and the unanimity that I expect to diffuse it will persuade the Government that eventually, however reluctantly, they and particularly the Treasury will have to face up to this unpalatable fact.
Lord Birt (CB)
My Lords, we are all grateful to the noble Baroness, Lady Kingsmill, for, in her words, shining a brighter light on this critical set of interlocking issues. I declare an interest as a business adviser to a fund that invests in care homes as well as in many other sectors.
The care of the elderly is an issue about which we all have strong feelings. Those have been expressed many times already. I shall not easily forget, just a small number of years ago, my own father’s last chaotic and distressing months tumbling from hospital to home, to care home, back to hospital, back again home and, finally, to a hospice. It was a journey for the most part marked by high standards of care but absent any trusted guide whatever. He was but a baton passed clumsily from hand to hand.
A fortnight ago, I spent a morning in a care home and was inspired—others have spoken of this—by the utter dedication and kindliness of the staff there, who meet the whole gamut of human and bodily needs over 24 hours a day, seven days a week. It truly is a challenging set of tasks. Some help patients who have severe dementia, while other patients are,
“sans teeth, sans eyes, sans taste, sans everything”.
Almost all those staff were immigrants to the UK. To echo the noble Baroness, Lady Brinton, and the noble Lord, Lord Lipsey, without these immigrants, whatever would we do? The care and nursing sectors in the UK face severe skill shortages. Major businesses are forced to recruit in huge numbers in the Philippines, Romania, India and other countries for the skills that the UK labour market is simply not supplying. Why cannot we manage our education and skills sector so that it produces skills—they are skills—on the scale that we need?
We would all agree that we want the highest standards in the care sector for our loved ones and finally, no doubt, ourselves. Yet we know from excellent investigative journalism—I am sure that we have all seen it and it is very painful—that standards are not always high. The CQC, quite rightly, is increasingly vigorous and rigorous and it is raising the bar. As a result, staff numbers are increasing and costs are rising. Were the Labour Party to assume office and raise the minimum wage, costs would rise higher still in the sector. Yet around two-thirds of those in care homes are funded by local authorities. Local authorities, as we have heard many times in this short debate, are themselves straitened and have been reducing not raising fees by some 5% in real terms over the past three years.
In the home that I visited—the noble Lord, Lord Lipsey, just made the same point—the local authority was paying fees significantly below the actual cost of providing the very services that it and we would expect. This simply cannot continue. It is not viable or sustainable as a policy. The great majority of care homes are privately owned. The returns for those investing in the sector are dangerously low. The whole system is in extreme financial tension and we lack sufficient incentives to ensure that provision will increase, as the noble Lord, Lord Lipsey, has just said, as need grows, which it will. There appears to be a policy vacuum. Whoever forms the next Government simply must provide a holistic policy and financial overview of the care challenge. That must involve the NHS. Everyone can see that unnecessarily filling a hospital bed is vastly more expensive than providing a place in an appropriate care home.
We need an overview from the Government of how best to provide effective, civilised, seamless care to those in the final stages of their lives, whether at home, in care or in hospital. We need appropriate structures—we do not have them—processes and incentives, a single point of responsibility at local level and the right governance in place to ensure that the system is working as it should and as we would all wish. Finally, we need not only to determine the proper balance between state and private funding but to be clear that, where the state accepts financial responsibility and rightly requires high standards, then in turn it must also will the means as well as the ends.
Baroness Howells of St Davids (Lab)
My Lords, I, too, congratulate the noble Baroness, Lady Kingsmill, on raising this debate and giving a very thorough insight into her report on what is happening in the care field. I have a particular interest in carers because so many immigrants from the early 1950s and 1960s from the Caribbean, when they were invited to come to support the mother country, found work in the caring sectors and were happy to do so. It is no secret that I have been a tireless campaigner for better services for black communities, but today I speak for all citizens of the United Kingdom.
I was very struck in October by a Statement read out in this Chamber by the Parliamentary Under-Secretary of State in the Department of Health. It was entitled Five Year Forward View. This Statement brought to our attention how the proposed plan would make the service better and fit for purpose. The Government claimed to have recognised the challenges facing care and declared that continuing with a comprehensive tax-funded NHS was intrinsically doable and that there were viable options for sustaining and improving the NHS over the next five years.
The Statement also claimed that the challenges of an ageing population can be met by a combination of increased real-terms funding efficiencies and changes to the models of how care is delivered. Much was said of the value of greater integration, of releasing hospital beds by combining primary community and specialist tertiary sectors alongside national urgent and emergency networks. The Statement went on to say that this would give older people in particular the personal care we would all want for our own parents.
That is very laudable, but what has been done? What has happened? When the Statement talked about reducing variations in quality in the wake of the tragedy of Mid Staffs, they were all very grand words. Can the Minister tell the House what has gone wrong? We are told that the economy is doing well, so cash should not be a problem. Did the Government really mean to downgrade the workers who carry out some of the most important work; the sort of work that is meant to have a real impact on those receiving care?
The trade union Unison cites that there are a number of appalling examples of exploitation. Employment rights are not properly observed and bogus self-employment presents a big problem. Employers operate with relative impunity in an unregulated sector. This is not care; it is an abuse in this century not only of those needing care but of those giving the care. They need to be cared for so they can offer good care.
Those who are engaged in caring know what a difficult task it is. They do it because they care. To them, the patient is first but needs time. The report highlights that the sick, elderly and disabled people who rely on care services are increasingly facing a 15-minute visit from carers. What can you do in 15 minutes? If the person is well and healthy you might do something, but if they are not, 15 minutes can never be enough to bathe, dress and feed a patient. Some people may need 15 minutes, but others need a lot more.
I recently met carers who have had nervous breakdowns because of the strain of getting to places on time. Caring is natural, but we need to help. We need not only to train carers but to be aware of their circumstances and to give them more. I urge the Minister to put his weight behind the recommendations of the Kingsmill report. Most of those needing care are those who have paid into the health service. It is not a charity. Those who advocate 15 minutes per patient are those who live inside the radar of the healthy, the employed and the respectable. They have no idea of what it is like to be in the other camp.
Unless you have been a carer you have no idea of what is happening. I cared for my husband for seven years, and I assure noble Lords that the man I married was not the man I was caring for. Being unhealthy, unemployed and treated as not respectable so that any old thing will do is not good enough for citizens of the United Kingdom. Care workers should be treated fairly, and I trust the Minister will revisit the five-year plan because patients and carers deserve better.
This country can do better and must take heed of the report and implement the recommendations as soon as possible. As lawmakers, we are guilty of failing the most vulnerable, those most in need. I say this not because I want to make noble Lords feel bad but because I have seen carers, some of whom have retired from nursing, who have had to take breaks because of the strain of caring. Those who are caring and those who are dependent on them need our help. If not, we are very guilty as lawmakers.
Baroness Chisholm of Owlpen (Con)
My Lords, I thank the noble Baroness, Lady Kingsmill, for initiating this debate and the noble Baroness, Lady Howells of St Davids, for the thought-provoking words we have just heard. This is such an important issue. Our ageing population is growing, which is going to lead to an increase in demand for residential and home care, day centres and meals—but care workers look after people of all ages.
As a former nurse, I know only too well the invaluable service that care workers perform in our communities throughout the country. They carry out some of the most important work in society, caring for those who are elderly, frail, disabled both mentally and physically, and in some cases suffering from addiction problems. Their work is physically and emotionally demanding, often undertaken in unsocial hours. As a nurse, I know that looking after someone can be and is a rewarding experience, but it can also be a deeply emotional, draining and lonely one.
I would like to turn briefly to those carers who perform this vital role unpaid, and how important paid care workers are to this group. As the noble Baroness, Lady Kingsmill, pointed out, across the UK there are more than 1 million paid care workers. But they are in the minority compared to those who do this work for no pay. It is estimated there are 6.5 million unpaid carers; three in five people will take on this role at some point in their lives. These selfless people are estimated to be saving the state £119 billion a year, and they can be anyone of any age who provides unpaid care to family or friends who could not manage without this help. But these carers need care themselves to be able to continue in this role. They are twice as likely to be permanently sick or disabled from their demanding work. Many face depression. There is a clear moral and economic case for supporting carers, and this support usually comes from paid care workers.
Voluntary carers are the first line of prevention. It has been well documented that they experience disproportionately high levels of ill health, but increasing support for them improves their health and well-being, as well as the health outcomes of the recipients. I am proud to be part of a Government who have initiated the Better Care Fund, which is integrating health and social care across health sectors; but we must have a joined-up approach for our voluntary carers and paid care workers. Research shows that providing good-quality support for voluntary carers prevents an escalation of demand on statutory services. Local authorities can reduce spending on care by more than £1 billion per year by spending on breaks, information and support for carers. When support is required, voluntary carers depend on high-quality care for recipients with care needs. They will forego assistance from care workers unless they feel the care received is of the high standard expected.
Anecdotally, I was told about care workers who went from appointment to appointment by bus. They had no access to a car and were frequently up to two hours late, causing distress to the person they were looking after, and, where present, distress to relatives. So it is imperative that paid care workers have the right attitude, are well trained and supported, and given the right tools for their job; that they know the needs of the person they are caring for, and are paid appropriately for their time and not the cheapest rate possible.
Under a new scheme that came into effect from October 2013, it is now simpler to name and shame employers who break national minimum wage law. But cases from the care sector can take longer to investigate than comparable cases from other sectors because of issues around travelling time and on-call pay. I am pleased to see that the Department of Health is clear that social care employers should pay home care workers for travel time between clients. The department is looking to ensure that the statutory guidance that accompanies the Care Act states that local authorities must have evidence that conditions and fee levels are appropriate.
The challenges faced today to give high-quality care are enormous. The care certificate for new healthcare assistants and social care workers is being introduced from 1 April 2015. This surely will go some way in developing the required behaviours, competences and skills, to enable them to provide high-quality, compassionate care.
We all want the most vulnerable in our communities to receive the best possible care, and this will be possible only if the authorities are committed to making sure that the care workers they employ are of the highest standard. For this to be the case they must value them by the training they are given, the information given on the recipient of their care, and the financial reward they receive for their work.
Baroness Andrews (Lab)
My Lords, it is a real privilege to take part in this debate. Like so many other noble Lords, I am extremely grateful to my noble friend for creating the opportunity for us to have this debate but even more so, obviously, for the force and clarity with which she presented the evidence and the recommendations of the report. She said that while writing the report she was shocked. I was certainly shocked when reading it.
This is a report that sets out a long-term and sustainable future for care workers and deals with the historical failures and the immediate challenges. In summary, it graphically describes a largely poor, privatised workforce marked by low status and low wages, who work in intensely personal and stressful conditions, in uncertainty and insecurity, with poor and unco-ordinated training, few national standards, a weak and fragmented regulatory environment, irresponsible procurement and poor workforce planning and management skills. That summary of working conditions could have been written as an account of early industrial Britain, where rights and effective regulation were won, but largely by men and for men. The difference is that we are not dealing with history but very much with the present and with a workforce that is largely female, highly fragmented and comprises a high proportion—70%—of immigrant workers. They are not dealing with machinery or factory processes. As many noble Lords have said, they are dealing with the most frail and elderly and the consistently lonely in our society, many of whom have chronic and complex conditions which require highly skilled under -standing as well as compassion. Many of them are confused and lonely and the visit by the care worker is often the highlight of their day because it is about emotional as well as physical support. When one considers that the visit can be rationed to 15 minutes, it diminishes the carer just as much as the client and is a recipe for bullying conditions as well as for neglect.
Andrew Smith said in a recent debate in the other place that luck and money were only too likely to decide people’s quality of care. My family were very lucky. My mother was looked after by a wonderful collective of Welsh aunties in her residential care home—Cartref Aneurin Bevan—who were not only affectionate but highly skilled and gave all the time that they could to these wonderful elderly ladies and gentlemen. They were typical of the kindness and selflessness that we have always relied on and which, unfortunately, we have always exploited. This report shows that this is no longer sustainable. It has never been sustainable but we have neglected to challenge it. Changing this is not just about finding the money because the crucial failure is the failure to value the sector, to promote and articulate the workers’ skills and to understand that this is the front line of healthcare, not just community care.
This is a notoriously low-paid sector, as the Low Pay Unit recently documented. As we have heard, wages have been driven down by the failure of providers to pay more than 200,000 of these workers the minimum wage, the refusal to pay travel costs and by the fact that a fifth of workers are on zero-hours contracts and there is very little career progression or incentive. What makes the failure to enforce the minimum wage more intolerable—which makes me angry—is that there are mechanisms in place to limit the exploitation of care workers that are simply not being used.
Astonishingly, HMRC, having revealed the extent of the breach of the minimum wage regulations, has stopped carrying out proactive investigations of compliance in home care. One in five councils responding to an ADSS survey did not even know whether their providers paid the minimum wage. The only recourse care workers have is to ring up HMRC’s pay and rights helpline. I am fairly sure that that does not go down well with their employers. So can the Minister tell me exactly what he and his department are doing to galvanise HMRC into doing its simple duty of rooting out this total failure? Will he agree to meet HMRC and BIS to take the concerns in the report forward? Does he agree with me and other noble Lords that we should aim for a living wage and not a minimum wage? All this means that this is a sector that sets records for vacancy and turnover rates. A culture of uncertainty means that thousands of care workers do not know where their next paid work will come from and where clients face a stream of strangers in their houses. The Minister in the other place said that it would not survive without migrant workers, who account for about 17% of the workforce. Perhaps the Minister can say whether he endorses that opinion, which was so clearly expressed.
As my noble friend Lord McKenzie has shown, all the problems have been exacerbated by cruel cuts in funding. Without acknowledging that reality, it is difficult to see how the Care Act, with all its good intentions, and the guidance will bring about the changes that we want to see. In contracts that in reality are bound to be driven by price, how will the guidance be able to enforce the intention that local authorities’ contract terms, conditions and fee levels will not compromise the ability of care providers to pay at least minimum wages? Does the Minister agree that the guidance would be much more effective if it simply said that councils “must” act to end illegal practices rather than “should”? There have been some very good changes—I count the care certificate among them—but without the implementation of the recommendations in this report we will not see the scale of changes that we need to see.
Baroness Wheeler (Lab)
My Lords, I, too, congratulate my noble friend Lady Kingsmill on her excellent report and on securing this debate. At a time when your Lordships’ House will shortly begin focusing on the regulations that will underpin the implementation of the Care Act from next April, discussing now the key role of the social care workforce in bringing about the changes that we want to see in health and social care in the future is both crucial and timely.
My noble friend’s report paints a grim picture of the low pay and working conditions of the 220,000 home care workers in England who are illegally paid below the national minimum wage, and those of residential care staff, day care and community-based staff, who together make up more than 1.3 million of the total social care workforce. This is in the context of the latest data from the Office for National Statistics, which show that in 2014 British workers overall have suffered the sixth straight year of falling real pay, taking earnings back to levels seen in the early 2000s.
My noble friend and other noble Lords have ably covered the key issues raised in the report—low pay, the terrible impact of zero-hours contracts, the impact of staff shortages and high turnover on the quality of care, and the vital importance of improving training and career pathways for social care workers. Like the noble Baroness, Lady Chisholm, I want to highlight the impact that this situation has on carers because, above all, carers need to know that their parent, child or partner are in the good hands of caring, motivated and competent care staff.
We know that, as our society ages and people live longer with complex health needs, the pressure on families to provide care and support will continue to grow. If families are able to take on these caring responsibilities, and often juggle them alongside paid work that is vital to the family budget and other family commitments, then sufficient, reliable, affordable and good-quality care services will be the linchpin that helps them hold it together. Care workers are at the heart of these services in both home and respite care. The skills, suitability, empathy and reliability of staff are at the core of good-quality care. If care is poor because care workers are undervalued, not properly trained, unreliable or stretched too far by their employers, then carers have to step in, often at the expense of their own health, their career, their relationships and their ability to cope.
If you are a carer for people with dementia, autism or mental health issues, for example, high staff turnover is a particular problem because the person you are caring for can become distressed by change or by being looked after by people they do not know. It also takes time for families to build trust with someone new. One respondent to the recent Carers UK survey reported having 22 different care workers in 12 months. As she put it, “They all have to be trained by us to care for our daughter, and it takes hours”.
As noble Lords have said, there is good-quality care out there despite the pressures, low pay and low status. I am myself a carer for a disabled adult with a long-term health condition, and our experience of domiciliary agency care is that it is of a very high standard. We know the majority of the care worker team that comes in for the week, providing essential personal care for my partner, who is paralysed down his left side following a stroke. Our experience is of having a caring service from care workers who seem to have exactly the sort of attitude, empathy and approach to clients, to disability and to me, as a carer, that we so often call for to be the norm across health and social care. Most of our care workers are women in their mid-to-late 20s—mostly a migrant workforce—and they do a great job in difficult circumstances. We have to remember that personal care—washing, dressing, safe care and dealing with continence care—is intimate care and needs respect and understanding on the part of the care worker. That is what is delivered in our case.
However, the flip-side of this, of course, is the long hours and low pay for care workers that have been highlighted today, involving conditions such as non-payment if a call is cancelled—which seems to be one of the most unfair practices since cancellation is not the care worker’s fault—and pressure to carry on from early morning to late at night if there is staff sickness or shortages and nobody else to cover. Keeping consistent staff so that carers know them, providing better training, giving staff more time to carry out tasks and paying staff more are the four most important things that carers highlight in their responses to the Carers UK survey. As one of the respondents commented:
“Employ people you’d want to look after your family and pay them for the important job it is”.
UNISON’s Time to Care report shows the staff’s frustration at not having the time to do the job they want to do, and many are providing unpaid care just to get the job done. As one contributor said:
“I’d always stay and be late for my next client or, if it was my last call, I would still stay and not get paid for it, as I could not leave someone that needed me”.
Good care that meets the needs of the person they look after can improve carers’ ability to work, spend time with their family members, look after their own health and have a life of their own outside the caring role. It means dignity, respect and a better life for the person they care for.
Lord Curry of Kirkharle (CB)
My Lords, I will be brief. Other Peers have spoken eloquently and very adequately covered this subject. I, too, am grateful to the noble Baroness, Lady Kingsmill, for leading this debate. My wife and I have a personal interest in this subject. Our daughter had a severe learning disability; she had to be fed, dressed and toileted. She could not speak and latterly had two full-time carers. Hoists were required to lift her out of bed, et cetera. Sadly, she died last year, aged 42.
In 1990, we formed a business with charitable status in the north-east of England to provide care and support for people with learning disabilities, which I chaired until three years ago. At that time, we merged with a larger organisation, Prospects. It is a Christian organisation and I am currently vice-chair of that company. We employ more than 600 wonderful people to care for people with learning disabilities across the United Kingdom. We provide residential care, domiciliary care with personal budgets, and a range of other services for local authorities.
Our biggest challenge by far is recruiting, retaining and adequately rewarding our staff—our carers. The tragedy is that we compete in a market with the stacking of supermarket shelves. The responsibilities bear no comparison. Having to recruit staff on low wages to care for vulnerable people is an unacceptable model. We want to pay the living wage and fully intend to do so, but not only is the relentless economic pressure on this sector driving providers out of business but it is proving difficult to maintain the high standards we want to provide.
The tendering process adds to that economic pressure. Some of our contracts pay £12 an hour. This is to cover not only salaries, management and overhead costs but food, living expenses and training. The sums just do not add up. In some companies in our sector, staff turnover is 20%. Training costs are huge and recruitment costs are high. Dependency on agencies when staff leave adds to the economic pressure because of the high charges we have to pay for agency staff.
I am not making a political point when I say this: this Government and the next have no alternative but to bear down on public expenditure, but every year longevity and costs increase. We need a different model. I hope that the Minister will give this matter his serious attention. We are stretching the loyalty of some of the most amazing people in our society to the absolute limit.
Lord Kennedy of Southwark (Lab)
My Lords, like other noble Lords who have spoken in this debate, I congratulate my noble friend Lady Kingsmill on securing this important debate today and on the review that she undertook into the working conditions in the care sector, which certainly deserves more attention in the media. The review is an important marker that highlights some of the most pressing issues surrounding working conditions in the care sector and how unacceptable these conditions are. It is for government to take action to deal with the worst excesses. The noble Baroness, Lady Gardner of Parkes, highlighted some of those in her contribution. My right honorable friend in the other place, Mr Andrew Smith, highlighted some of these issues in the Westminster Hall debate held on 14 November—as my noble friend Lady Andrews mentioned.
In my remarks this evening I want to talk about the working poor, the problems that they face and the fact that the care industry has lots of people working in it who can be described as working poor. Maybe some years ago it would have been suggested that poor people are those who are unemployed and have no job. We have also talked about and identified pensioners who are in poverty, but this concept of working poor and the fact that this is growing should be a matter of much regret and shame. My right honourable friend Andrew Smith quoted Winston Churchill, who spoke in the other place in 1909. He said:
“It is a serious national evil that any class of His Majesty’s subjects should receive less than a living wage in return for their utmost exertions … where you have what we call sweated trades, you have no organisation, no parity of bargaining, the good employer is undercut by the bad and the bad by the worst; the worker, whose whole livelihood depends upon the industry, is undersold by the worker who only takes up the trade as a second string … where these conditions prevail you have not a condition of progress, but a condition of progressive degeneration”.—[Official Report, 28/4/1909; Commons; col. 388.]
Things have without doubt improved since 1909, but there are unfortunately numerous examples such as those referred to in this debate where bad practice exploits workers and people are treated very badly, and it is the duty of government to protect workers from this exploitation. I would say that the Government will have to be a little more proactive in this area to convince me that this is something they are truly committed to delivering on.
Returning to the point I made about the working poor, this sector employs the vast majority of people in the private sector or in the voluntary sector, amounting to about 76% of the total workforce of approximately 1.15 million, with nearly two-thirds working in private establishments. It is a matter of much regret that the sector has high levels of non-compliance with the national minimum wage, to which my noble friend Lady Andrews referred, and I hope that the noble Earl will tell us what will be done to make good this terrible wrong.
The growth in zero hours contracts in this sector, to which my noble friend Lord McKenzie of Luton referred, is generally encouraging exploitation of workers and making life difficult and unstable. Some people may like the ability to fix their employment hours week by week or day by day but I contend that it is a significant minority. According to the latest report by the Joseph Rowntree Foundation, insecure, low-paid jobs are leaving record numbers of working families in poverty, with two-thirds of people who found work in the past year taking jobs for less than the living wage—and a large number of those jobs will be in this sector.
The living wage is calculated at £7.85 an hour nationally and £9.15 in London, which is much higher than the legally enforceable but still breached minimum wage of £6.50 per hour. While not all these issues are in the noble Earl’s area of responsibility, I hope that he can see the perfect storm of people working in a sector where the majority of staff are on low wages, the problems that that can bring in not being able to provide an income to be able to look after yourself and your family, and the reliance on the benefits system. We should add to that the housing crisis, where we have low-paid workers who are not able to get a foothold on the property ladder and are unable to get into social housing, so they are forced into the private rented sector. Then we have banks refusing to lend to people, so access to affordable forms of credit is more difficult or not available at all. People are pushed into more expensive and unsuitable forms of credit and, as I said earlier, we have the perfect storm, because these things come together: they are not in isolation.
The care worker being exploited by an unscrupulous employer and not paid even the minimum wage will be the same person who is struggling to make ends meet. They will be the same person who goes to the bank and is unlikely to get the financial products they want at an affordable price. They may also, through desperation, purchase financial products that are totally unsuitable: payday loans, logbook loans and other unsatisfactory rip-off products. They are also more likely to live in an area that does not have an abundance of free cash machines—they will pay to get their own money out—and are more likely to live in poor accommodation.
As I said, not all of those things are in the noble Earl’s immediate area of responsibility, but as a member of Her Majesty’s Government I am sure he will agree these are serious matters that a joined-up and collective approach by government needs to address. In conclusion, I look forward to the noble Earl’s response, and that of my noble friend Lord Hunt of Kings Heath.
Lord Hunt of Kings Heath (Lab)
My Lords, I, too, pay tribute to my noble friend Lady Kingsmill for her speech and for her report, which were both profound in their analysis of the crisis in care work and of what needs to be done. As she said, we know that people who receive care are very vulnerable. The fact is that the current situation means that in many cases they are not being treated with the care and attention that they deserve. All too often, their only source of support, care workers, are, as my noble friend said in her report,
“exhausted, unable to plan their own lives through insecure contracts, and unable to spend enough quality time with the person in receipt of care”.
As she says, they are invisible,
“under-valued, under-paid and under-trained. They don’t have the status of Nurses. They don’t have the status of Child-Minders. The sector is subject to weak regulation”.
The noble Baroness also said:
“The low status of Care Work and poor treatment of workers has led to a vicious downward spiral into one of the most difficult sectors for workers, with widespread exploitation”.
It is clear that the demographics that we face mean that the challenges in the care sector are going to grow. Our population is projected to continue ageing. The number of people aged 80 and over in the UK is projected to more than double to 6 million by mid-2037. As the noble Baroness, Lady Brinton, said, we will need 800,000 more people in the workforce to attempt to cope with the extra demand that is bound to be placed on the care sector. She, my noble friend Lord Lipsey and the noble Lord, Lord Birt, made the telling point about our absolute reliance on people from other countries to provide many of the care workers whom we need. That reliance will clearly continue, but we could do more to grow our own workforce. However, we will not do that without tackling the fundamentals identified by my noble friend.
I very much agree with my noble friend Lady Howells. She said that recommendations made by my noble friend Lady Kingsmill are eminently sensible and doable, including introducing a licence to practise for care managers—indeed, for all care workers. How many times have we called for the regulation of care workers in your Lordships’ House? Surely the noble Earl, Lord Howe, will be able to tell us that the Government now recognise that this is something that has to be done.
We need to enforce the national minimum wage and encourage the living wage. My noble friend Lady Andrews asked the Minister about HMRC’s weakness in monitoring and investigating cases where workers are paid less than the minimum wage. We look forward to a response. However, the point that I put to the Minister is that it is not just that workers in this industry do not receive what is due by law, but, because HMRC is not being proactive, we are essentially penalising the good companies—such as that of the noble Lord, Lord Curry—for doing the right thing. That is why it is important that HMRC must have a much more aggressive role.
My noble friend Lady Kingsmill says that we should ban exploitative zero-hours contracts and the 15-minute care slots, introduce a care charter, improve training standards and progression and, overall, improve the oversight and regulation of working conditions. All those things are surely right. We should also listen to my noble friend Lady Wheeler and the noble Baroness, Lady Gardner of Parkes, who focused on the role of social care personal assistants who are directly employed by service users. We would all recognise that personal budgets have a lot going for them, in giving people who are being cared for more control over their own lives. Many of them do the right thing, but Unison has shown, on a number of occasions, evidence of personal assistants being exploited by the people who have the budgets. We need to see some action in that regard.
We cannot talk about the plight of care workers without talking about funding. Many noble Lords referred to funding issues in local government and they are surely right to do so. My noble friend Lord McKenzie pointed out that local authorities are not just hugely challenged financially but are seeing their statutory responsibilities grow. Those of us who debated the Care Bill for many hours will understand that it is in this very sector that local authorities are going to see statutory responsibilities grow considerably, starting in the next few months. It is particularly worrying that the local authorities that are under the greatest pressure face the greatest reduction in spending power, due to the changes in formula that the Government have introduced.
My noble friend Lord Lipsey has challenged us to go beyond simply talking about local authority funding to thinking about the whole situation of the future funding of care. The noble Lord, Lord Curry, also drew attention to that. As we are shortly to debate many statutory instruments relating to the implementation of the Care Act, we are bound to come back to some of the fundamentals of funding long-term care in the future.
The noble Earl has never really responded to the point raised by my noble friend. It is a matter of a year or so until self-funders discover that they are subsidising people funded in homes by local authorities. We have yet to hear an answer from the Government about how the system will cope when people realise that they are paying much more than what a local authority pays for a similar service. As the cap operates, it will soon become apparent to them that the cap is not £72,000 at all but much larger. The cap will be based on what the local authority pays, but the self-funder will have to pay much more than that to reach the £72,000 cap. We are in for some interesting debates on that over the next few weeks. There is no doubt that the issue of funding will have to be tackled. There is also no doubt that part of the answer has to lie in a much more integrated approach between health and social care and the integration of budgets, which this side of the House is very much committed to.
It is not just a question of funding, however. My noble friend was right to say in her report that, if you look at the evidence of a weak and fragmented regulatory environment, irresponsible procurement practices by local authorities and poor workforce planning and management skills within care providers, there is still much that can be done that is not a question of resources. Through its leader, Ed Miliband, my own party has recently said that a Labour Government will legislate to give employees the legal right to a regular contract if they are working regular hours; to refuse demands that they must be available over and above their contracted hours; and to compensation when shifts are cancelled at short notice. We are also pledged to make CQC inspect the commissioning of care. I think that that answers the point raised by the noble Baroness, Lady Chisholm, about ensuring that local authorities check up on employment practices relating to care workers.
As my noble friend Lord Kennedy said, my noble friend Lady Kingsmill has done a noble service in shining a light on a hugely important question. We owe a huge debt to those working in the care sector—those paid to work there and those who volunteer. Despite the lousy conditions, every day many of them go the extra mile, as many noble Lords have mentioned. Surely the better we appreciate and support the contribution of the care workforce, the better the care will be. My noble friend has done a signal service to this nation with the report that she has produced and I hope very much that the Government will respond positively to it tonight.
The Parliamentary Under-Secretary of State, Department of Health (Earl Howe) (Con)
My Lords, I begin by congratulating the noble Baroness, Lady Kingsmill, on securing debating time for this Motion and on her opening speech. I thank all noble Lords for their excellent and thoughtful contributions.
I say immediately that working conditions in the care sector are very important for the well-being of our nation. We know that there are issues of concern and the Government are taking action. The White Paper, Caring for our Future: Reforming Care and Support, and the Care Act set out clearly what care and support system we want to achieve. Everything we want to achieve will depend on the competence, commitment and sensitivity of care workers. The positive relationships that are formed with people needing care are essential to providing good care.
The Department of Health is committed to ensuring that there are the right numbers of people with the right skills, knowledge and behaviours to deliver the quality, compassionate care that people need. We know that the recruitment and retention of care workers is fundamental to this. In that connection, I listened with great care to the noble Lord, Lord Curry. We published the recruitment and retention strategy in May 2011 in conjunction with Skills for Care, which worked to address the issue of how we attract and retain more people in social care. A refreshed recruitment and retention strategy was launched in September this year. Skills for Care leads the DH recruitment and retention working group, which will progress the implementation of the recommendations in the new strategy.
We have done three things straightaway. We have doubled the number of social care apprenticeships starts; we have launched a new care ambassadors service; and we have launched and piloted a values-based recruitment toolkit for the sector. Our aim is to continue this important work by supporting employers.
Registered managers, referred to in the noble Baroness’s report, have a vital front-line responsibility, and it is imperative that they are supported and do not feel isolated. We have worked closely with the National Skills Academy for Social Care to launch a national programme of support for registered managers.
The noble Baroness, Lady Kingsmill, proposed that we should introduce a licence to practise. I am afraid I need to make it clear to her that we do not think that a licence to practise is necessary or desirable. The idea of compulsory statutory regulation can seem an attractive means of ensuring patient safety, but our view is that regulation is no substitute for a culture of compassion, safe delegation and effective supervision. Putting people on a centrally held register does not guarantee public protection. Instead, the key is for employers, commissioners and providers to make sure that they have the right processes in place to ensure that they have the right staff with the right skills to deliver the right care.
Systems and processes are already in place to provide public assurance, including Care Quality Commission registration requirements and the Disclosure and Barring Service, which are being enhanced with the new chief inspectors. Under the leadership of the Chief Inspector of Adult Social Care, the CQC has put in place specialist inspection teams that subject care providers to more effective scrutiny and result in a rating that celebrates outstanding care as well as identifying where there are problems. Therefore, I cannot agree with the noble Baroness’s contention that the CQC’s requirements are somehow weaker than they were.
Better skills and training are an important part of raising standards overall. Camilla Cavendish told us that social care support workers and healthcare assistants do not have consistent training and do not have a clear status or standard job titles. I can tell my noble friend Lady Gardner that we are on track to introduce a care certificate for new healthcare assistants and social care support workers from 1 April 2015. This means that there will be specific standards for the training of new care workers.
My noble friend Lady Gardner expressed concern that employers and agencies train only for their own organisations and my noble friend Lady Brinton asked about the support that exists to enable staff to build their qualifications. Skills for Care has produced a range of training materials that are recognised across the sector. I mentioned the care certificate that we are introducing. In general, I would say that we are committed to working with employers to ensure that this part of the workforce receives high-quality and consistent training to enable them to deliver the best standards of support and care to patients and service users.
My noble friend Lady Brinton asked specifically about BME staff. The department has worked with the National Skills Academy for Social Care to produce training and development support for BME staff to enable them to progress to higher levels within the sector. As regards incentives for small businesses to train staff, which my noble friend also asked me about, small social care businesses are able to apply to Skills for Care for funding to help train their staff. The department provides £12 million to Skills for Care for this very purpose. However, it is incumbent on small businesses to ensure, like bigger enterprises, that their staff are appropriately trained and competent to carry out their role.
The noble Baroness, Lady Kingsmill, called for a care contract to be held between local authorities and care providers setting out working conditions and employment law. The statutory guidance to the Care Act which we launched recently is clear that when local authorities commission services they should make sure that care providers comply with national minimum wage legislation. The statutory guidance is also clear that, in most circumstances, very short home care visits are not appropriate to deliver intimate care needs. In addition, new fundamental standards will come into force next year. These new standards cover staffing and will allow the CQC to prosecute those providers that are responsible for the most serious failings in care. The CQC has an enormously challenging task in transforming its approach to the regulation and inspection of providers of social care.
We are also asking employers and employees working in care to sign up to the social care commitment, pledging to improve the quality of the workforce. My noble friend Lady Brinton once again asked what can be done to improve rates of pay in the sector, a concern also raised by the noble Lords, Lord Lipsey and Lord Kennedy. Under the Care Act, local authorities will be required to shape their whole local markets to ensure that they are sustainable, diverse and offer high-quality care and support for people in their local area. The Act is clear that a local authority’s own commissioning is a key driver in shaping the market. Ultimately, local authorities, not the Government, are responsible for the commissioning of services. However, when commissioning, a local authority must ensure that it promotes a sustainable market that delivers high-quality services for all local people. The department has developed statutory guidance to support local authorities to meet these new duties when commissioning and we are working with the Association of Directors of Adult Social Services, the Local Government Association and other partners to develop a set of commissioning standards which will, again, help local authorities to improve in this area.
The noble Lord, Lord Lipsey, asked specifically what we are doing to make sure that local authorities pay fair fees, while the noble Lord, Lord Birt, drew attention to the disparity in some instances between the actual costs of care and the fees paid by local authorities. We are clear that local authorities should have regard to the cost of care when setting prices. The Care Act sets out a duty on local authorities to have regard to the importance of sustaining the market as a whole, as I mentioned earlier, to meet the needs of local people. That will include where the local authority commissions services itself, considering the impact of how it contracts with individual providers, including the price it pays in fees. Contracting is of course a local matter, with fees paid to providers best left, in our view, to local negotiations in an open market that reflects local conditions.
My noble friend Lady Chisholm spoke powerfully and knowledgeably about the role of unpaid carers. I would say to her that the Government fully recognise the role of unpaid carers, who do an invaluable job in providing care for their loved ones. My department agrees that unpaid carers need support in the form of breaks. There are examples being provided by local authorities and charities, but as my noble friend knows, the Care Act is ushering in a significant new set of rights, effectively putting—for the first time—their needs on an equal footing with those of the individuals they look after.
We agree with the noble Baroness, Lady Kingsmill, that low pay can be a concern for some working in this sector. It was a concern also raised with particular emphasis by the noble Lords, Lord McKenzie and Lord Curry. The Government do not directly employ care workers, but let me be clear: non-compliance with the national minimum wage is not acceptable. That is why we are working across government on enforcement activity. I can tell the noble Baroness, Lady Andrews, that HMRC is responsible for ensuring that staff receive the minimum wage and it takes that role seriously. It has set out the action it has taken in the care sector in a report published last November. While the CQC does not itself enforce national minimum wage legislation, where its inspections uncover evidence that suggests the employer may not be paying the minimum wage, we would expect the commission to pass that intelligence to HMRC for its consideration. HMRC is continuing to carry out enforcement action in the social care sector. It will investigate all complaints made by care workers that their employer is not paying them the national minimum wage. Between April 2011 and March 2013, HMRC undertook a targeted enforcement exercise in the care sector. The work investigated complaints relating to 224 employers. Evidence of non-compliance was found in nearly half the cases and resulted in payments of more than £1 million in arrears to care workers.
I can tell the noble Lord, Lord McKenzie, and the noble Baroness, Lady Andrews, in particular that we are taking a tough approach to naming and shaming any providers who do not comply with our national minimum wage laws, with a more robust scheme now in place for cases opened after October 2013. Cases involving care workers often take longer to investigate than comparable cases in other sectors for a number of reasons, but we anticipate that the first examples of care providers to be named under the new scheme will appear in the next few months. Social care providers who have not paid the national minimum wage previously will be required to pay workers the money owed to them, to pay a penalty for failing to meet their legal obligations, and to change their practices to ensure future compliance.
The terms and conditions of employment for social care workers are essentially a matter for local employers within the existing requirements of employment legislation. However, it is important that the Department of Health continues to work with local authorities to ensure that the providers they commission services from have a high-quality workforce with fair terms and conditions. That brings me to zero-hours contracts. These contracts, when used responsibly, may be appropriate in some circumstances and can offer flexibility and opportunities to both the employer and the individual. The Government are committed to ensuring that zero-hours contracts are used fairly and have included provisions in the Small Business, Enterprise and Employment Bill banning exclusivity clauses in employment contracts that do not guarantee any hours. The Bill was introduced into Parliament on 23 June. Following feedback from stakeholders on the ban on exclusivity clauses, the Department for Business, Innovation and Skills is consulting further on how to prevent unscrupulous employers evading the exclusivity ban.
The noble Lord, Lord McKenzie, spoke powerfully about 15-minute visits. Short care visits are not normally adequate for the needs of service users. We know that care workers find 15-minute appointments demotivating because they are unable to complete their tasks within the time and develop meaningful relationships. We will continue to learn from the best employers and commissioners about how this situation can be improved. A focused peer challenge that will use elements of the commissioning standards will be piloted with two reviews by ADASS and the LGA in the coming months. We agree that in most cases very short visits are incompatible with high-quality care and the Care Act sends a clear message: commissioning services without properly considering the impact on people’s well-being is unacceptable.
However, it would be inappropriate to introduce a blanket ban on 15-minute home care visits since they may be appropriate in certain circumstances; for instance, when checking medication has been taken. A more fundamental culture shift towards a focus on outcomes through guidance and support is, we think, the way forward. Ultimately, local authorities are responsible for the commissioning of services, as I have indicated, but we agree, as does ADASS, that inappropriately short home care visits should be discouraged.
My noble friend Lady Brinton asked about the repatriation of foreign workers. I will need to write to her about that. Turning to a point raised by the noble Baroness, Lady Kingsmill, in relation to Southern Cross, the new Care Act establishes the CQC as the financial regulator for the largest social care providers. It will look at the finances of these providers and, where financial failure is likely, it will warn the affected local authorities to ensure that there is no gap in care services. The regime will not prop up failing providers but ensure continuity of care services for those affected, which surely is the most important consideration.
In response to some of the remarks made by the noble Lord, Lord Birt, with which I agree for the most part, it is worth reflecting that an effective market has been operating in social care for the best part of 20 years. Increasingly, private providers and third-sector organisations have provided services. They have done so effectively but, as in any market, some providers leave and others join. Exits can happen for any number of reasons but what we do not want to see is the kind of disruption to the market that the Southern Cross debacle could have led to had it not been managed successfully.
Delivering high-quality care is dependent upon a range of factors and uppermost is having a workforce that has the right attitudes, values, skills and qualifications. I hope that noble Lords will accept from my remarks that we have a programme of work in hand that is aimed at improving working conditions. We are working across government to tackle non-compliance with the national minimum wage. We are also making it clear that commissioners of services should ensure fair pay, terms and conditions and compliance with the national minimum wage when commissioning services, and we are ensuring set standards of training are introduced. These are surely the key pillars on which to ensure an attractive and fulfilling career can be built for this vital sector of the workforce.
Lord McKenzie of Luton
I apologise for interrupting the Minister. Is it the Government’s view that in determining whether or not the national minimum wage has been paid, the time spent travelling between client visits should be included?
Earl Howe
It is certainly our view that the time spent travelling between assignments should be paid-for time. But that, as I have indicated, is a matter for the local commissioners to ensure is borne out in contracts; it is not something that we as a Government can enforce. However, it is something that will be looked at very carefully in the ways that I have described.
Baroness Kingsmill
My Lords, I am delighted by the response to this debate. I did not expect that there would be as many speakers as there were, and I am very grateful to those who have stayed late and made such valuable contributions. I have had a number of tweets; I happen to know that people are watching this debate and many of them are going to be very pleased by the universal support, encouragement and appreciation that have been given to social workers.
Although every speaker has spoken warmly of the contributions that those care workers have made, the fact is that we are exploiting their dedication and commitment. We are looking at a group of workers who through their commitment and dedication have invited their own exploitation. We all know what needs to be done. My noble friend Lord Lipsey pointed out that there have been many reports prior to my own that have said more or less exactly the same thing in different words. We know what needs to be done. We know how to fix it.
I tried extremely hard in my report to make recommendations that were not going to have serious financial impacts, because we are all very much aware of the limitations on government spending, both for this Government and probably the next. But the fact remains that there is a case for priorities and we are not making a priority of these most vulnerable people. I am very grateful to other noble Lords who pointed this out.
Truthfully, this is a dysfunctional market. It was interesting to hear the noble Earl talk about the functioning of the market, but the fact is that it has all the characteristics of a dysfunctional market. I sympathise hugely with the noble Lord, Lord Curry, whose efforts to create a proper working environment for the care workers in his employ are being increasingly frustrated by his inability to recruit and retain proper staff.
Although, as I say, I tried to keep my recommendations to those that would cost little money, the fact is that we need more money. We need more money and the only source of that money is the Government, so we must find a way of finding that.