Grand Committee

Tuesday 9th December 2014 Grand Committee

Tuesday, 9 December 2014.

Arrangement of Business

Tuesday 9th December 2014 Grand Committee

Announcement

15:30

[The Deputy Chairman of Committees (The Countess of Mar) (CB)]

My Lords, if there is a Division in the House, the Committee will adjourn for 10 minutes.

Single Source Contract Regulations 2014

Tuesday 9th December 2014 Grand Committee

Motion to Consider

15:30

Moved by

[Baroness Jolly]

That the Grand Committee do consider the Single Source Contract Regulations 2014.

Relevant document: 15th Report from the Joint Committee on Statutory Instruments (Special attention drawn to the instrument)

[Baroness Jolly (LD)]

My Lords, in moving that the draft regulations laid before the House on 29 October 2014 be considered, before I begin I should make the Committee aware of the report by the Joint Committee on Statutory Instruments. I will return to this later in my speech.

Before addressing the draft regulations, I would like to set out the context for this fundamental reform to Ministry of Defence procurement. Open competition remains the best way of ensuring value for money for the taxpayer but there are inevitably occasions where there is only a single provider of a capability we require. Equally, there are situations where we need to maintain critical national industrial capabilities or, indeed, control over intellectual property. This may be achievable only by placing contracts with UK companies without a competitive process. Clearly, in the absence of the disciplines of the marketplace, we need rules governing single source procurement to protect the taxpayers and to ensure our Armed Forces get the most out of every pound spent on defence.

The current framework—the so-called Yellow Book—has remained unchanged for 45 years. It fails to address inherent failures in single source procurement and the lack of competition undermines market pressure to reduce costs and improve efficiency. The lack of an alternative supplier means that we cannot walk away without also walking away from the capability we need. Our suppliers know this, which undermines our ability to drive a hard bargain. Put bluntly, this does not serve the best interests of the taxpayer, nor does it encourage industry to maintain a competitive edge in export markets.

In the Defence Reform Act 2014, the MoD set out the new statutory replacement for the Yellow Book, which we are calling the Orange Book. At the core of this lies the principle that industry should get a fair price in exchange for providing the MoD with much greater transparency on its costs and with the protections we need to ensure value for money. This new framework requires single source suppliers to operate on a truly open book basis. Before we sign a contract, suppliers will be required to provide us with extensive information outlining their pricing assumptions. Suppliers will be required to maintain extensive records on cost and performance and to share these records and explain them to us. Even before the DRA received Royal Assent, the MoD had been consulting with industry and Parliament on the draft regulations. While the Act establishes the principles behind the new framework, the regulations give the detail. This gives us the flexibility to adapt the new framework if required.

I should stress that in developing the regulations we have been consulting closely with the defence industry. We have listened carefully to the views of industry and—where appropriate—we have made changes to the regulations. It is simply not in our interests to have a system that is unworkable for industry.

By developing the draft regulations early, we were also able to take Parliament’s view on board. Here I thank noble Lords for the excellence of their scrutiny, and in particular I thank the noble Lord, Lord Tunnicliffe, for his interest and expert engagement on these issues. I have had many detailed conversations with him on these very complex questions and have always found his insights extremely useful. Following a meeting with him last week, I wrote to inform him how the regulations had changed since they were issued in January 2014. It might be useful if I read out this letter.

The letter states:

“At the meeting which I had with you on 3rd December, you raised a number of technical issues on the Single Source Contract Regulations which MOD officials responded to during the meeting. In addition, you asked for a note outlining the key changes made to the draft regulations since they were provided to Parliament prior to the House of Lords scrutiny of the Defence Reform Act in January of this year. I agreed that I would send you a note outlining these changes prior to the debate in Grand Committee.

As you are aware, the regulations were laid in draft before Parliament on 29 October 2014 following extensive consultations with stakeholders and legal scrutiny and assurance. The vast majority of the changes from the version provided in January were made for legal drafting reasons rather than policy changes. These changes reflect the high level of internal legal assurance, input from legal advisors representing the defence industry following consultation, and scrutiny by the Counsel for Joint Committee of Statutory Instruments (JCSI). It would be onerous to list all of these changes: most were made to make the regulations clearer and more effective, to avoid repetition and to fill in the detail, in particular, with regard to reporting requirements. Individual regulations and parts have also been re-ordered.

The main changes of note primarily for legal drafting are as follows.

a. To provide a better definition of the contract end date (Reg 4).

b. To make better provision for calculating the value of a contract (Reg 5).

c. To provide for qualifying defence contracts and qualifying subcontracts made under framework contracts (Reg 9 and Reg 60).

d. To remove duplication in regard to information required from contract reports (Reg 22-Reg 30).

e. To re-work the provisions, e.g. with reference to the obligation to provide supplier-level reports under Reg 34-Reg 39 (Reg 31 and Reg 32).

f. removal of duplication in regard to information required from supplier reports (Reg 33-Reg 45).

In addition, a number of changes have been made for policy reasons. The main changes made are as follows.

(a) The Coming into Force (CIF) date (Reg 1) has changed from ‘1 October 2014’ to ‘on the day after the day on which they are made’. In practical terms this means, subject to Parliamentary approval, a few days after debates in both Houses have concluded. This change was made because, given the detailed and technical nature of the regulations and restraints on Parliamentary time, the Oct 2014 date could not be met.

(b) The definition of ‘defence purposes’ (Reg 3) has been changed from the previous draft which referred to contracts where ‘Secretary of State for Defence is party to the contract’ to the current wording for contracts that are for ‘the purposes of defence (whether or not of the United Kingdom), or related purposes’. This has been done because a strict legal interpretation of the Act requires us to define defence purposes, and the original definition was a description of circumstances rather than a definition. Legal advice is that the new definition achieves the same policy effect.

(c) The introduction of a two-tier approach to value thresholds for qualifying defence contracts (Reg 6). Between CIF and the end of March 2015, the value threshold for a qualifying defence contract is £500m. After this date, this drops to £5m. This ensures the most material contracts are caught as soon as possible, while limiting the number of early adopters to a practical level, which will assist the Single Source Regulations Office (SSRO) to prepare for increasing volumes of qualifying contracts from April 2015.

(d) The introduction of two new regulated pricing methods (Reg 10). The ‘estimate-based fee pricing method’ allows for a form of cost-plus contract where the profit is agreed in advance rather than being proportional to costs. This removes a financial incentive on suppliers to increase their costs so as to receive a greater profit. The ‘volume-driven pricing method’ allows for availability contracts where the price is agreed as a price per unit output (e.g. £x per flying hour).

(e) The initial profit rates (Reg 11). The SSRO will recommend its first set of profit rates by 31 Jan 2015, and the Secretary of State will publish the final rates in the London Gazette by 15 Mar 2015. Between the CIF and the end of March 2015, there is no profit rate published in the London Gazette. During this period, transitional rates will be used which are those recommended by the Review Board for Government Contracts (the arms-length body who currently recommend profit rates for single source contracts, and who are being replaced in due course by the SSRO).

(f) The introduction of a minimum threshold for subcontracts to be considered when making an adjustment under step 3 of the calculation of the Contract Profit Rate (see section 15 of the Act) (Reg 12). The step 3 adjustment ensures that suppliers do not get multiple layers of profit by virtue of subcontracting to other suppliers within the same corporate group. Although simple in theory, in practice calculating this adjustment is complex and resource intensive, so we have introduced a value threshold of £100,000. Subcontracts below this value are not to be considered when making a step 3 adjustment.

(g) Greater contract-level reporting requirements for the ‘Interim contract report’ (ICR) (Reg 27). To avoid duplication, the information asked for in the ‘Quarterly Contract Report’ (QCR, see Reg 26) was removed from the ICR. The QCR is, however, only required for contracts above £50m, meaning contracts between £5m and £50m did not provide all information we wanted. Additional information requirements have been thus been added to the ICR for contracts between £5m and £50m.

(h) The introduction of a two-tier approach to the value thresholds for supplier-level reporting (Reg 31). As soon as a supplier signs a QDC in excess of this threshold, the supplier reporting requirement outlined in Part 6 applies to all the business units involved in single source procurement within that supplier’s corporate group. The value has been set to an initially lower level of £20 million until 1 April 2017, when it rises to £50 million. This is to expedite the introduction of the new supplier-level reporting and overhead recovery requirements.

(i) Increased supplier-level reporting information requirements (Regs 40-44). The ‘long-term overhead report’ (Reg 48 in the previous draft version provided to the House of Lords) has been replaced by the ‘Strategic industry capacity report’. Additional information requirements have been identified which support the MoD in getting value for money from single source procurement.

(j) Maximum penalties (Reg 50). The Act requires the regulations to set out maximum civil penalty amounts for reporting failures (see section 33(1)). These have now been included.

(k) Qualifying Subcontracts (Reg 58). To be a qualifying subcontract, the majority of the work done under a single source subcontract has to relate to qualifying defence contracts or subcontracts (current or prospective). This is to exclude subcontracts that are predominantly to support competitive contracts, for which there should be sufficient market pressure to encourage the supplier to get value for money from their subcontracts”.

Although the form and wording of the regulations have evolved since January, there have been limited substantial changes to the underlying policy. The regulations describe how the new framework will operate. It would be onerous to go into this in detail but I will draw the Committee’s attention to a few key elements.

First, I note that one of the main functions of the regulations is to set out the scope, frequency and nature of the information required from our suppliers. The Committee will understand why this needs to be spelt out in detail to remove any ambiguity.

Secondly, I will highlight our intention to bring the new framework into force with effect as soon as it has been cleared by Parliament. However, this will be implemented in two phases. Between the coming into force date and the end of March 2015, the value threshold for a qualifying defence contract will be £500 million and above. After this date, this threshold will drop to £5 million and above. This phased approach maximises the benefits from the new system while limiting the number of early adopters to a practical level. This will assist the SSRO to prepare for increasing volumes of qualifying contracts from April 2015 and will allow it the opportunity to issue guidance on the new framework.

15:45

As from April 2015 onwards, we estimate that between 100 and 200 single source contracts a year will be subject to the Orange Book. The MoD has been working hard to engage with the early adopter projects, which are likely to be the first to sign qualifying defence contracts over the coming months. We recognise that this reform represents a step change in how single source procurement is carried out.

We are also developing written guidance and training courses for MoD staff who are directly involved with the new framework, and we are engaging with industry through a variety of different channels to make it aware of how the changes will affect it and to encourage it to respond accordingly and in a timely manner.

Considerable progress has been made in establishing the independent regulator—the SSRO. The chair was appointed in May 2014 and non-executive directors in October. The SSRO has been consulting with stakeholders, especially in industry, on how the new framework will work. While the requirements imposed by the statutory legislation are clearly defined, we have assured stakeholders that we will adopt a pragmatic attitude with regard to implementation.

On the report issued by the Joint Committee on Statutory Instruments, I will first thank the committee for its careful scrutiny of the draft regulations. Given the complexity and scope of the regulations, it would be surprising if this distinguished committee did not find some points of difference. However, I am encouraged that the issues raised by the committee are modest in scope, which is a reflection of the extensive process of drafting review which the regulations have gone through. The department’s reply is on the JCSI website. I will address the committee’s points, but I stress that none of them impacts on the effectiveness of the regulations or creates ambiguity for the users of the regulations.

The JCSI has identified that Regulation 5(3)(i) is defectively drafted. That regulation refers to the date a particular assessment is made under Regulation 12(1). In fact, 12(1) sets out the circumstances in which an assessment must be made under 12(2) and 12(3), so the actual assessment is made in 12(2) and 12(3) rather than 12(1). Thus the reference to “12(1)” should more correctly read “12(2) or (3)”.

That is a very minor, technical point. We are of the view that there is no danger of users being misled or confused by our intended approach, and no ambiguity is created. We therefore agree that this point is cleared up as soon as convenient when the regulations are next amended. However, I stress that until this amendment is made, there will be no impairment to the effectiveness of the regulations.

The committee has also identified that the “firm pricing method” in Regulation 10(4) and the “target pricing method” in 10(11) are identical in that they both provide for the allowable costs to be estimated at the time of contract let. That was covered in the MoD memorandum. The committee is correct that the two pricing methods do not differ in terms of when the price is estimated, but they differ substantially once the price has been agreed.

For firm price contracts, the price remains constant, whereas in target price contracts an adjustment is made to the price at the end of the contract. Actual costs are compared with estimated costs, and the price is adjusted to share any gains or losses between the parties. These target price contracts are commonplace, typically accounting for 40% of the value of MoD single source procurement.

In preparing the DRA, we wanted to ensure that this commercial model was still available. This is expressly allowed for under Section 16 of the Act. As with all commercial models, it is necessary to specify in the regulations how the price of these target price contracts should be determined. We could have said that they are initially priced using the same approach as firm price contracts, or we could have done as we did: namely, specifying a target pricing method. From a practical perspective, there is little to choose between these two options. However, our approach has benefits, which I will explain.

Different pricing methods may be used for different components of a contract, as in Regulation 10(3). It is not uncommon for a contract to have one component priced using the firm price method and another priced using the target price method. Although the initial price of both components is determined in the same way, the subsequent reporting is different and the final price will differ, depending on which method is used. Including target pricing as a distinct pricing method allows the two components to be separately identified later in the draft regulations, such as in Regulation 22(2)(k), which requires that the total price be broken down by the different regulated pricing methods used for that contract. As this is a practice with which users are already familiar, it is our view that significant confusion would result were they not separately defined pricing methods. We therefore propose no change to the regulation, on the grounds that it is helpful to the users of the framework and does not in any way reduce the effectiveness of the regulations.

The committee also draws attention to Regulation 11 and the interim rates. Again, the MoD responded to this point in its memorandum; we noted that these are transitional provisions, the vires for which are in Section 42(1) of the Act. Regulation 11 determines the profit rate used on single source contracts, which is described in Section 17 and further expanded on by Regulation 11. Three of the six steps require the use of standard profit rates, which must be published by the Secretary of State by 15 March each year. In normal circumstances this will be an annual process, but for the first year after coming into force it would have required the Secretary of State to have published the rates before the Act received Royal Assent. The Act required transitional rates to apply between its coming into force and 1 April 2015. If there is any doubt as to the vires required to make these transitional arrangements, it is covered by the “supplementary” or “incidental” aspect of Section 42(1). Rather than setting out these transitional rates in Regulation 11, they could have been put in the relevant commencement order, the vires for which would be Section 50(10). However, we chose to put them in the regulations as that is easier for users.

The transitional rates used are the most recent recommendations made by the Review Board for Government Contracts, an existing arm’s-length body whose duty it is to recommend profit rates for use on single source contracts, albeit under the old non-statutory Yellow Book regime. The review board’s functions will be taken over by the new SSRO. I note that the committee stated that,

“there must at … least be doubts”,

about the MoD’s approach, which suggests that different but valid views are possible. The committee appeared to prefer that these interim rates should be established through a commencement order. We do not agree; it is better for users to have all these elements contained in a single place: namely, the regulations. We therefore propose to make no change to the regulations.

The last of the committee’s four points relates to the use of the words “within the relevant year”. The committee points out that in a strictly legal sense we do not need to repeat that phrase, which is defined in Regulation 13(1), in its paragraphs (2), (4) and (5). While technically correct, these words are harmless and do not impair the meaning of the regulations. However, the MOD agrees to make a suitable correction when the regulations are amended.

In summary, with regard to the points raised by the JCSI, the MoD has obtained legal advice and is confident that the regulations are entirely fit for purpose as drafted. We have considered the JCSI report very carefully and are proposing to make two amendments at an appropriate time. We are confident that the regulations as drafted are fully effective in achieving our objectives.

In conclusion, the changes we are introducing to single source procurement are long overdue and represent a significant enhancement to how we procure for this key part of our defence capability. This is a fundamental reform developed over a considerable period of time and following extensive preparation. We expect that the benefits will fully emerge only over the longer term but are entirely confident that these benefits will be both substantial and wide-ranging. I commend the regulations to the Committee.

[Lord Tunnicliffe (Lab)]

My Lords, I thank the Minister, the noble Baroness, Lady Jolly, for that introduction. I would just like to say a word about the role of the Official Opposition in this process. The Act and the regulations are enormously complex and, in taking the Bill through, we took a decision to have most of our conversations with the Government not on the Floor of the House, and to make sure that the clarifications and so on that emerged were read into Hansard during the subsequent debates. That worked very well.

The problem with taking that forward, of course, is that the regulations, I think, are actually longer than the section of the Act that they refer to. Therefore there were as many concerns of detail in the regulations as there were in the Act, and I thank the Minister and her officials for finding time to talk to us about the regulations and for her letter. It was important to read it into the record because Hansard, in a sense, lives for ever—one has only to walk down our corridors to realise that—whereas, splendid as the letter is, I will probably lose it and probably nobody else will actually see it. Having it in the record is therefore worth while. Therefore I thank the Minister for that repetition, long as it necessarily was.

On the general thrust of the Act and the regulations, I commend the Government for bringing them forward. I believe that it has taken them something like five years to work on this issue. I see nothing political about it, and the Ministry of Defence is now equipped with a piece of legislation that gives it some sort of equality of arms when working with large manufacturers —to which, for reasons of sovereignty, we have effectively ceded monopoly power. So far, I am happy with where we are. I accept that the divisions the noble Baroness set out in the letter were technical policy matters. We have checked through the letter and are happy with it.

Unfortunately, in a sense, the Joint Committee on Statutory Instruments came through with its report a little late. I am not criticising that committee. The accident of timing, together with the demands of my wife, meant that my attention rested on the report only on Monday morning. I thank the Minister for taking it on board and responding to it.

I hope that I will be forgiven for my rather halting presentation. There are four relevant issues, the first of which relates to Regulation 5(3)(a)(i) and the Joint Committee’s concern about the reference to Regulation 12(1). As I understand it, the Government entirely take this point and will correct it in a subsequent regulation. The Committee will today not be well served by me going on about it any further.

The next point that the Joint Committee raised was essentially a drafting point. I think in a sense the committee was complaining that there was repetition. The problem with repetition if you are a lawyer is that you create synonyms, and synonyms are bad news because it is a feast for lawyers to work out which interpretation to take and gain the edge. The problem arises because of the shape of Regulation 10. In some ways, if the different methods of contract had been set out plainly with reference to pricing, it would be clearer. Despite the explanation given by the Minister, I still think that this particular regulation is—how shall I put it?—a little messy and inelegant. However, I accept that it probably has no substantial impact.

16:00

The area that is somewhat worrying is the assertion by the committee that Regulation 42(1)—concerned with interim figures—was in fact not powerful enough. In private discussions I have asked whether 42(1) was in effect a Henry VIII clause, and people say it is not because it does not change primary legislation. It is something less powerful and the committee is essentially saying that it addresses the whole essence of Section 17 of the Act, which gives no opportunity for the interim regulations.

I do not want to press the matter further simply because the number of contracts to which this refers is going to be limited. However, if you have one set of lawyers—and let us face it, that is what the JCSI is saying—asserting that they do not believe Regulation 41 gives you the power to do this, and the ministry has another set of lawyers who say that we do have the power to do it, it will be a lawyers’ fest if that turns into a row. I always like to help the Government not to encourage lawyers’ fests, because the last group of people in this world I want to see get richer are lawyers. It seems the Government are not willing to take the committee’s point on this beyond doubt. I think the Minister mentioned that it could have been handled in Section 50(10); perhaps it should have been. Equally, I recognise that the whole relevance of this regulation, inasmuch as 42(1) is called into question, dies in the spring of next year. In that sense, let us hope that we do not have a row with a big bully supplier before then.

I think that the final concern of the JCSI was a somewhat fine point, which is really code for, “I had to read it a lot of times to start to understand it”. Since the Minister is saying that that fine point is taken and will be addressed in subsequent revisions, I will say that I am content not to pursue the matter further at this point.

I would like just a little bit of a moan about the two documents. It may be a moan that is impossible to satisfy. Such intercomplexity—if there is such a concept—may be absolutely inevitable for a document such as this. For my own entertainment I tried to trace down the cross-referencing and it bored me to tears—so I do not see why the Committee should not have a minute or two of it.

Section 16(1) in the Act demands Regulation 10. Then there are Sections 18(2)(a) and 18(2)(b). Every time the Opposition say, “We don’t like ‘may’, we like ‘must’”, we are told that the drafting convention is that “may” means “must”. However, for the first time in history, “may” apparently really means “may”, and the may in there says, “We are not going to bother with a regulation to cover 18(2)(a) and (b)”. That is a joy, but I would be gratified if the Minister would confirm that that is the decision.

To find the regulation referred to in Section 18(2)(c), you have to go to Regulation 13; for Section 18(3), Regulation 18; for Section 21(1), Regulation 17; and to find the regulations relating to Sections 21(4), 21(5) and 21(6), you go back to Regulation 16. I do not believe that there is a bear of little brain out there who actually understands that lot. In a sense, I think the Ministry takes that point, because it is committed to providing training, guidance material and even—perhaps the Minister can clear up this point—training for industry to help it understand this.

The only problem with that is that there will then be a difference between the guidance and the Act and the regulations. We have to go back to what the Act and these regulations are for. On my reading, they are to stop big industry bullying government and to create a legal framework that says to big industry, “This is the only way we can do business”. The problem with that is that big industry has deep pockets, often created by us, the taxpayers. With those deep pockets, if there is a dispute, industry would, again, have an army of lawyers, and one area that may emerge is the complexity of the relationship between the Act and regulations, and then the guidance.

In some ways, I wish that these regulations had come along a little bit later. They could have done a little more tidying up and included some cross-referencing, and could have perhaps taken longer to consider the JCSI’s comments, which could then have been taken account of in resubmitted regulations. In general, I am happy and can assure the Minister that what she has said today will be studied by my much more expert friends in the Commons before they have their own discussion tomorrow. We will therefore perhaps get another view of how acceptable these regulations are. However, in the review that I have done so far, I am concerned about undue complexity but am content that the key issues that the JCSI has brought up are going to be subsequently corrected.

However, I would like to ask the Minister about the whole issue of transparency, which is in a sense subsequent to the regulations. We have shone a light on this mysterious area by virtue of having a Bill. I suspect that none of us other than those working in the Ministry of Defence has thought about this problem at the very top of our minds before, but that has caused us to research this and to suddenly realise that you do not know when these things are happening. If you google them, you would get more out of the rather boastful BAE Systems press releases assuring its shareholders that it has done a good deal as opposed to it coming out from government.

I may not have been listening or not reading every Written Statement, but I ask the Minister in what way Parliament will know how the Act is working. How will it know which of the various pricing mechanisms that we have very carefully gone over are being used? There is a final price adjustment, which is an important part of that. I have looked into the Act and the schedules and note that the SSRO has to give an annual report. However, the requirements of that annual report are very thin. Basically, it has to account for its budget and so on. Do the Government have any ideas on keeping Parliament informed about how the Act and regulations will be used?

It is worth stressing for the record that we are talking about something in the order of £7 billion-worth of expenditure per annum—a very considerable sum of money. Everyone who has been involved in defence procurement has been deeply uncomfortable for years, and probably decades, about whether the taxpayer was getting value for money with these contracts because of the sheer difficulty of seeing into them and the limited powers we had from the Yellow Book. I applaud the emergence of the Orange Book and I look forward to getting a copy, if only for the colour.

[Baroness Jolly]

I thank the noble Lord for his interesting and valuable comments and I shall address the points he raised as far as I can. We shall be in touch with him on any unaddressed points.

On his comment about the regulations being difficult for a lay audience to understand, and that the way they are laid out bears no relationship to the Act and that the cross-referencing of the two proved quite a challenge, we have done everything we can to make them as clear and comprehensible as possible. However, inevitably, they are highly technical and dry. They relate to a complex and specialist subject and it is necessary that they are accurate and precise. Everything in the regulations addresses specific issues in providing for the new framework for single source procurement.

When we had our meeting last week we discussed the intention that industry would probably not use the regulations but that the SSRO would produce specialist toolkits to guide industry through the morass of legislation and regulation. So, although those of us who enjoy reading these sorts of things might have had a problem, the department is doing all it can to smooth them out.

On the issue of training for industry, extensive briefing material has been provided. We have discussed this extensively in consultation with industry. We are providing workshops, briefing early adopters—including industry—and much of our guidance is on the internet, visible to industry and transparent.

“Mays” and “musts” is a good House of Lords regulation issue. I can confirm that the “may” in Section 18(2)(a) and (b) has not been used in the regulations. “May” does not mean “must”. I hope that the noble Lord is happy about that.

I thank the noble Lord for his comments and I hope that I have answered the main points raised during the debate. I further hope that Members of the Committee appreciate the Government’s commitment to improving this key component of our approach to procurement. This is a fundamental reform to a system which is well overdue for change. We continue to work with the SSRO and industry to ensure that implementation of the new approach is pursued as effectively and smoothly as possible.

Before I finish, I will not only repeat my thanks to the noble Lord, Lord Tunnicliffe, but thank the officials who not only had to teach me the intricacies of single source procurement—

[Lord Tunnicliffe]

Before the noble Baroness sits down, does she have any comments about the future of transparency? I think she does.

[Baroness Jolly]

My Lords, it is important that we should understand how any taxpayers’ money is being spent. How will Parliament know? The SSRO will publish an annual adherence report that will be laid before Parliament—helpfully, the officials, who I am praising to the hilt, have told me this—in the usual way. It may be that the noble Lord and I will have to google for press releases.

[Lord Tunnicliffe]

I know that it is extremely difficult to pick up on this point at the moment. I wonder whether, if the Minister can add a little more, she will write me a letter and place a copy in the Library.

[Baroness Jolly]

I will willingly do that and pop a copy into the Library. Finally, I commend the regulations to the Committee.

Motion agreed.

Electricity Capacity (Supplier Payment etc.) Regulations 2014

Tuesday 9th December 2014 Grand Committee

Motion to Consider

16:16

Moved by

[Baroness Verma]

That the Grand Committee do consider the Electricity Capacity (Supplier Payment etc.) Regulations 2014.

Relevant document: 13th Report from the Joint Committee on Statutory Instruments

[The Parliamentary Under-Secretary of State, Department of Energy and Climate Change (Baroness Verma) (Con)]

My Lords, this draft instrument—the supplier payment regulations—forms part of the implementing secondary legislation for the Government’s capacity market scheme, which is part of the electricity market reform programme. The powers to make this implementing secondary legislation are found in the Energy Act 2013, which, following scrutiny in this House and the other place, received Royal Assent in December last year, with cross-party support.

The capacity market will address our medium-term electricity needs and ensure that there is sufficient electricity supply towards the end of the decade and beyond. It is one of the two key schemes brought in by electricity market reform to incentivise much needed investment into our energy infrastructure. The other, the contract for difference scheme, is not the subject of today’s debate.

The capacity market will help keep the lights on by driving new investment in gas and demand-side capacity, as well as getting the best out of our existing generation fleet as we transition to a low-carbon electricity future. In brief, the capacity market will achieve this by making a regular capacity payment to providers who are successful in capacity auctions. In return for this payment, providers must meet their obligations to provide capacity or reduce demand when the system is tight, ensuring that enough capacity is in place to maintain security of electricity supply.

The supplier payment regulations will sit alongside the Electricity Capacity Regulations 2014, called the principal regulations, and the Capacity Market Rules 2014. The principal regulations and rules, which received parliamentary approval in July this year, brought the capacity market into force on 1 August and, as a result, the first capacity auction will be held later this month for delivery in 2018-19. Those successful in this and subsequent auctions will be awarded capacity agreements entitling them to capacity payments. This will be paid for by a charge on all electricity suppliers. It should also be noted that while the first capacity delivery year will be in 2018-19, the Government are committed to supporting the growth of the demand-side response sector. As part of this, two transitional auctions, just for this sector, will be held in 2015 and 2016 for delivery in 2016-17 and 2017-18. This tailored support will help grow the demand-side and storage industries and ensure effective competition between traditional power plants and new forms of capacity, thereby driving down future costs for consumers. As with payments made during the capacity delivery year, payments made under the transitional auctions will be funded by a charge on all electricity suppliers.

When we debated the principal regulations, I highlighted that the Government would be bringing forward a second set of regulations on the supplier payment arrangements for the capacity market to align the legislative framework for the capacity market and contracts for difference. The supplier payment regulations were not brought in at the same time as the principal regulations, as they are technical provisions which we wanted to get absolutely right. It was not necessary for them to be in force prior to the first capacity auction.

The supplier payment regulations, which suppliers, industry and consumer groups have been consulted on throughout their development, include an obligation on all electricity suppliers to pay a “capacity market supplier charge” from 1 April 2015. As I have mentioned, this charge will fund the capacity payments to those successful in capacity auctions. The first capacity payments will be made in 2016 and 2017 to those successful in the transitional auctions, and to those with a capacity agreement for the first capacity delivery year in 2018-19. In addition, the regulations include a small additional levy—known as the settlement costs levy—to cover the operating costs of the government-owned Electricity Settlements Company, whose role it is to calculate, determine and administer the payments from suppliers to those who are successful in the capacity auctions.

The regulations determine how much each licensed supplier will be required to pay for the capacity market. The amount payable by a supplier will be calculated on a supplier’s share of the market, based on how much electricity they were supplying between 4 pm and 7 pm on working days between November and February in the relevant delivery year. This approach seeks to achieve a balance between the objective of incentivising reductions in electricity use, at times when demand is high, and that of remaining predictable and manageable for electricity suppliers who have to pass these costs on to their customers transparently. The regulations will facilitate the flow of payment from all electricity suppliers to those successful in capacity auctions. On receipt of capacity payments, capacity providers are then obliged to provide capacity or reduce demand when required. This therefore ensures security of electricity supplies.

While further amendments will be made in early 2015 to the principal regulations, mainly to enable the Government to meet their commitment to allow interconnected capacity to participate in the capacity market from 2015 onwards, these regulations complete the secondary legislation framework for the capacity market. I beg to move.

[Lord Grantchester (Lab)]

I thank the Minister for her explanation to the Committee of the electricity capacity regulations. She referred to the Energy Act 2013, of which these and other provisions are the consequence. Many days were spent in this very Room debating the issues pertinent to the regulations before us today and we remain supportive of the role of the capacity market mechanisms, as part of electricity market reform. However, one or two curiosities remain from these regulations and I would be grateful if the Minister could clarify them today.

The Minister has made it clear that each supplier will pay the capacity market on a forecast of their share of net demand between 4 pm and 7 pm on working days in winter, and that this will be reconciled using actual demand data once they become known. What degree of accuracy in that forecast is specified in the regulations or is there an element of incentivisation included, such that suppliers do not overbudget the market for cash-flow purposes, resulting in higher consumer costs? How will this element be monitored and any sanction calculated or even applied for, should there be excessive demand forecasting, and what happens if there is then a dispute concerning the calculation of actual demand? What dispute-resolution mechanisms have been proposed?

The regulations also make it clear that should a supplier default on payment, this contribution to the capacity market must be made up through further contributions from the remaining non-defaulting suppliers. What degree of allowance for this can a supplier rely on in undertaking his or her forecasting? Have the Government calculated a fair cost element to each supplier of carrying this additional risk and how significant this may become?

In her remarks, the Minister referred to the inclusion of interconnectors. I remember our debates and the encouragement for the inclusion of this innovation, to contribute to the UK’s security of supply. In anticipation of such future inclusion of interconnected capacity, Regulation 3 of the principal regulations is amended in the definition of “providing electricity”. It is obviously disappointing that interconnectors could not take part in the capacity mechanism from the very beginning. With the first round of auctions taking place on 16 December, as she said, the potential for some of these interconnector projects, which could well be in place by 2020, is significant. The impact assessment also notes that a greater degree of interconnection could help to reduce the role of the capacity market in future, yet the capacity market is needed to enable access from interconnectors. How does the Minister see this conundrum playing out as we move to the more contractual counterparty model used for contracts for difference?

The position of existing nuclear power is also somewhat curious. It is included in the list of qualifying plant for the capacity market yet these nuclear plants have already been built, are already generating and are receiving revenues for electricity that will not be hit by carbon pricing. Has the Minister reflected that nuclear plants can now enter the capacity market, even though industry is intended to finance the cost of upgrade and life extension work? As the Minister knows, subsidy will find its way back in the end to bills that the consumer pays.

The Explanatory Memorandum also mentions that as the capacity market is intended to be a transitional measure, regular reviews of the capacity market will take place. Has the Minister any view on how often these regular reviews and audits should be taking place? As each year’s auction will clarify progress on a number of eventualities and be subject to demand-side and storage transitional arrangements, as mentioned in the Minister’s remarks, does she envisage that they would best be undertaken yearly?

The Minister will also be aware that carbon impact policies do not apply to plants producing less than 20 megawatts. This will give a cost advantage to plants conveniently bidding on providing 19 megawatts. Will the Minister outline the rationale for that defining level as oil plants, being perhaps among the most polluting forms of generation, will tend to be at a sub-20 megawatt level? In the expectation of her fulsome replies and clarifications, I am in support of these regulations today. In the spirit of Christmas, I look forward to congratulating the Minister on a successful auction next week. We will have the joy of experiencing it in the announcement of the results by National Grid early in the new year.

[Baroness Verma]

I start by thanking the noble Lord, Lord Grantchester, for what was, I think, his general support for the draft regulations. Of course, he reminded me of the hard work that the Committee undertook during debate on what became the Energy Act 2013. I was extremely grateful for the noble Lord’s participation in ensuring that the level of scrutiny that took place really did enhance the Bill as it moved through to become an Act.

As always, the noble Lord, Lord Grantchester, asked a large range of questions and before I continue, if I fail to answer any of the questions that he posed, I will of course read Hansard carefully, and I undertake to write to him and place a copy in the Library.

The noble Lord asked about the period of reviews. Reviews will be undertaken yearly by Ofgem and every five years by the Government. It is important that we ultimately deliver the right formula to ensure a value-for-money cost to the consumer. I know that ultimately the noble Lord and I share the primary object of ensuring that not only do we have enough supply but that it provides value to the consumer.

16:30

The noble Lord also asked what suppliers thought of mutualisation of the costs in the event that one supplier fails to pay. We have consulted with suppliers on charging arrangements and they accept that mutualisation is necessary in order to provide the necessary certainty that capacity payments will be made to providers. This reflects cost recovery mechanisms in similar organisations elsewhere. It is not unique to the proposal we are putting forward here.

The noble Lord asked what dispute mechanisms were in place in relation to the data used or the calculations carried out. The majority of data used for settling the capacity market comes from existing industry processes established by the balancing and settlement code. So, again, we have evidence available from resources already in place.

The noble Lord also asked about electricity suppliers’ charges being based initially on their own estimates. The payment methodology ensures that, in all instances, 100% of the necessary costs can be collected. This is an important objective. We opted not to create a penalty on suppliers for inaccurate estimates because of the additional complexity that that would create. The challenge, of course, as the noble Lord is aware, is to achieve this in a fair manner. We do not want to have unintended consequences on suppliers just because a new mechanism is being put into place.

16:32

Sitting suspended for a Division in the House.

16:44

[Baroness Verma]

My Lords, I will continue with my responses to the noble Lord, Lord Granchester. He asked about interconnectors. As he mentioned, we announced the interconnected capacity, which will participate in the market from 2015. We will bring forward amending legislation and an impact assessment in the new year that will address the points the noble Lord raised about interconnectivity.

The noble Lord also asked about existing plant such as nuclear and asked why it was being allowed to partake in the auction. The purpose of the capacity market is to ensure that we have secure energy—that the lights do not go off. That means that we need to ensure that all forms of capacity are able to take part in the system. However, it is open to best value: of course the capacity market is there to generate competition, but also to ensure that we have enough supply to keep the lights on. I think the noble Lord will of course agree that those established technologies have a lot of upfront costs when they build, so a lot of other costs are associated with the traditional sector and we should not exit them out just because they have already built and are partaking. However, nuclear offers a low-carbon energy supply, and I think the noble Lord will agree that that is also a necessary need to fulfil, as well as ensuring that the lights stay on.

The noble Lord asked about carbon impact policies and the advantage for plants that are bidding at the 19-megawatt ratio. I would like to reassure the noble Lord that we will be reviewing the outcome of the first auction to ensure that it is a fair process and that we do not unintentionally benefit one form of supply over another.

This debate has been important and I do thank the noble Lord for his questions, which have allowed me to illustrate the fairness of the system—but again, as with all things, we will make sure that we are reviewing the process as we go along. I would also like to put on record that I hope that the noble Lord gets an opportunity over the Christmas period to take some time off and rest, because I know that he works extremely hard, as do his colleagues, in challenging the Government—which is only right and enables us to produce better legislation. I commend the draft regulations.

Motion agreed.

Keeping and Introduction of Fish (England and River Esk Catchment Area) Regulations 2015

Tuesday 9th December 2014 Grand Committee

Motion to Consider

16:51

Moved by

[Lord De Mauley]

That the Grand Committee do consider the Keeping and Introduction of Fish (England and River Esk Catchment Area) Regulations 2015.

Relevant document: 13th Report from the Joint Committee on Statutory Instruments

[The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord De Mauley) (Con)]

My Lords, in introducing these regulations I disclose an interest as owner of a stretch of a tributary of the River Thames and an interest in a lake used—among other things—for fishing.

Diseases and parasites of fish in the wild can, of course, adversely impact fish stocks. Non-native invasive fish species also pose a significant threat to native species through predation and competition as well as being potential carriers of diseases and pests, with additional potential impacts on the biodiversity of habitats. These present risks to the environment and to commercial and recreational fishery waters, so the stocking of fish into inland waters for recreational angling and other purposes has to be balanced with appropriate safeguards for aquatic environments.

Under these regulations a new permitting scheme will enable the regulatory body and the Environment Agency to adopt a risk-based approach to managing the introduction and keeping of fish in our rivers, lakes and waterways. This will reduce burdens on the angling and freshwater fisheries sector and help promote growth in the rural economy. The legislation, subject to the approval of Parliament, will be made under Section 232 of the Marine and Coastal Access Act 2009. These regulations would repeal Section 30 of the Salmon and Freshwater Fisheries Act 1975 in relation to England. We will shortly also modify the Prohibition of Keeping or Release of Live Fish (Specified Species) (England) Order 2014 so that its scope excludes inland waters, to prevent the duplication of legislation.

The proposed regulations introduce a new permitting scheme which would replace the existing legal requirements to obtain the consent of the Environment Agency for each separate introduction of any fish into inland waters, and to obtain a licence for the keeping and release of non-native fish in inland waters. These regulations would make it an offence to keep fish or introduce fish other than in accordance with a single permit granted by the Environment Agency. The Environment Agency will also have the power to impose conditions on the permits relating to matters such as the number of fish introduced and minimising the risk of fish escaping from inland waters.

The new permitting scheme will enable the Environment Agency to adopt a risk-based approach to managing the introduction and keeping of fish. Under this proposal, species that are high-risk are given greater scrutiny while the movement of low-risk species will be allowed to take place more freely. This is a significant improvement on the current system. The Environment Agency will also be able to revoke and vary permits if information comes to light that changes the level of risk the fish pose to the environment. The regulations also provide more effective enforcement powers to enable the Environment Agency to remove illegal non-native fish where they are found in rivers, lakes and waterways.

The Government consulted on these proposals both in 2009 and as part of the water and marine-themed Red Tape Challenge in 2012. As explained in the accompanying Explanatory Memorandum, most respondents supported the proposals. These regulations would produce a small annual saving for industry and additional savings for the Environment Agency.

The Keeping and Introduction of Fish (England and River Esk Catchment Area) Regulations 2015 will also apply to the Border Esk region of Scotland. Freshwater fisheries are best managed on a river basin catchment basis, and England’s Environment Agency has managed fisheries in the Border Esk region for many years. Under similar arrangements, Scotland manages freshwater fisheries in the River Tweed catchment, which is shared with England. The Scottish Government are fully aware of these regulations, which maintain this policy approach, and are in total support of them.

In summary, the Government consider that the approach set out in these regulations will provide a more efficient and risk-based way of protecting local fisheries and biodiversity. They will reduce the regulatory burdens on the angling and fish trade industry. To this end, I commend these regulations to the Committee.

[Lord Grantchester (Lab)]

My Lords, I thank the Minister for his explanation of the regulations before the Committee today. I declare my interests as a farmer in Cheshire—the River Weaver defines the farm’s boundary on one side—and as a co-owner of a holiday home in south-west Scotland with fishing rights, although I do not personally partake in the catching of little fishes. I know that there have been many expressions of anxiety concerning the Scottish Government’s upheaval of the governance and jurisdiction structure of inland fishing in Scotland, but that is not a subject for debate today.

Nevertheless, as far as these regulations are concerned, it is good to see that co-operation between the Scottish and United Kingdom Parliament is healthy and continuing. As the Minister stated, these regulations replace the current controls on placing fish into inland waters with a new permitting system, requiring all introductions and subsequent keeping of fish to be permitted by the Environment Agency. Transporting fish for introduction must also be permitted. The main objective should be achieved, which is to support the economic value and growth of the angling sector while ensuring adequate risk-based protection for the aquatic environment from risks associated with the use of invasive non-native fish species. Such high-risk species will be given greater scrutiny, while low-risk fish movements will be allowed to take place, as the noble Lord said, much more freely, albeit against the background of full disease control and other measures the Environment Agency will rightly be concerned with. That a permit is not necessarily set in stone for all time but will run until varied is surely the right approach.

Your Lordships’ Secondary Legislation Scrutiny Committee inquired why the department had taken so much time since the public consultation concluded in March 2010 to come forward with these quite modest and uncontroversial regulations. It is interesting that the answer was that the election in 2010 gave rise to the regulations having to be fully evaluated against the new Government’s priorities, and that further delay then flowed from the requirement to reconsult under the water and marine Red Tape Challenge initiative. It is very fortunate that the noble Lord brings these regulations before the Committee today, a mere few months before maybe further inevitable delay as a result of the much anticipated change of Government at the general election next May.

I ask the Minister to provide comfort to the Committee. Is he confident that, following this change in licensing, there are adequate plans in place to deal with any outbreak, emerging disease or damage that could result from any eventuality in the future? Are there enough resources to remove any introduction from the environment affected and to tackle any problems resultant from illegitimate action or trade? I note that one of the contentions expressed in the consultation was that this new scheme might lead to an increase in illegal activity.

17:00

Can the Minister also confirm that the threshold of 0.4 hectares set for the size of the inland waterway will remove any inclusion of garden or domestic ponds from these regulations? I understand that the Committee may need to look further, in due course, at another regulation covering trade in ornamental species.

I note that in the regulations there is no mention of cost recovery. Indeed, paragraph 53 of the Explanatory Memorandum states that at present there are no charges for the issuing of consents and currently no intention to introduce these charges. Nevertheless, while the size of the cost savings from the introduction of this new scheme is very small, and the costs to business and administrative costs are largely immaterial, can the Minister comment on whether the Environment Agency will necessarily look at cost recovery to every service it provides and how it will assess whether to introduce cost recovery in each instance? Meanwhile, I am happy to support the regulations.

[Lord De Mauley]

My Lords, I thank the noble Lord, Lord Grantchester, for his helpful and positive points on the regulations. As he points out, we are committed to protecting our environment, including the native fish and fauna in our rivers, lakes and waterways, while at the same time reducing burdens on industry, where these have been identified, in line with our invasive non-native species framework strategy for Great Britain.

The noble Lord asked three questions. First, in relation to the introduction and keeping of fish in garden ponds, I confirm that the statutory instrument will apply to inland waters such as lakes and rivers, which includes small lakes and large ponds over 0.4 hectares, as he said. The keeping of non-native fish in ponds below that size will be regulated through the Prohibition of Keeping or Release of Live Fish (Specified Species) (England) Order 2014. However, he will be comforted to know that the keeping of common non-native ornamental species such as goldfish does not require a licence.

The noble Lord also asked about cost recovery. In the first year of the scheme, the costs to the Environment Agency will modestly increase. Savings will take effect fully in later years, while future funding decisions will be for the next comprehensive spending review. That is about as far as I can go today. As time goes forward, we will look at cost recovery in different areas. No decisions have yet been made and there will be more consideration of that issue.

Lastly, the noble Lord asked whether I was confident that adequate plans and resources were in place to cover outbreaks of diseases. He puts his finger on one of the most important matters that we address in Defra. We constantly keep an eye on this and, indeed, Ministers meet regularly to discuss it with representatives of all the various bodies that help us with animal and plant diseases, invasive non-native species and so on. We try to look at these matters holistically and in the round. We now take a more strategic approach than we did in the past and I am confident that we have a comprehensive plan and resources in place to do that. Of course, that is not to say that we will never face another disease or pest again, and the business of Defra is in responding to crises. However, in this regard, I can say that this new risk-based permitting scheme, managed in an effective and efficient way by the Environment Agency, will ensure we continue to protect our local fisheries and the environment while allowing the angling and fish trade industries to flourish.

Motion agreed.

Water Industry (Specified Infrastructure Projects) (English Undertakers) (Amendment) Regulations 2014

Tuesday 9th December 2014 Grand Committee

Motion to Consider

17:05

Moved by

[Lord De Mauley]

That the Grand Committee do consider the Water Industry (Specified Infrastructure Projects) (English Undertakers) (Amendment) Regulations 2014.

Relevant document: 14th Report from the Joint Committee on Statutory Instruments

[The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord De Mauley) (Con)]

My Lords, these draft amendment regulations before the Committee today will amend the Water Industry (Specified Infrastructure Projects) (English Undertakers) Regulations 2013. The SIP regulations, as they are known, concern the provision of large or complex infrastructure for the use of water or sewerage undertakers.

The main purpose behind these amendments is to give Ofwat the power to include conditions in an infrastructure provider’s project licence that allow for matters or questions to be referred to the Competition and Markets Authority for determination. This will give infrastructure providers the same right as water and sewerage undertakers to require Ofwat to refer its price control decisions to the CMA.

Extending Ofwat’s power to include such conditions will ensure that any potential future disputes between the Water Services Regulation Authority—Ofwat—and an infrastructure provider are resolved promptly. That should minimise the time-related costs of such disputes, which are ultimately met by customers, and will help to keep water and sewerage bills as low as possible.

The SIP regulations came into force in June last year and implement Part 2A of the Water Industry Act 1991. They give the Secretary of State and Ofwat the power to specify, by notice, large or complex water or sewerage infrastructure projects in certain circumstances: in particular, where the specification of the project is considered likely to deliver better value for money for taxpayers and customers.

Once specified, the relevant undertaker has to procure competitively a separate infrastructure provider to finance and deliver the project. After the successful bidder is designated as “the infrastructure provider”, Ofwat may then grant it a project licence, regulating it under a bespoke regime set out in the SIP regulations. A separate Ofwat-regulated infrastructure provider provides an objective means of testing whether the financing costs of a project are appropriate and reasonable, and allows the Government to target any financial support more effectively.

Following public consultation, the Secretary of State specified the Thames tideway tunnel project as an infrastructure project on 4 June this year. Thames Water Utilities Limited, as the incumbent undertaker, subsequently put the delivery and financing of the bulk of the tunnel works out to tender on 10 June. The tendering process is under way and expected to conclude in the summer of next year. This is the first and currently the only infrastructure project to be specified under the SIP regulations.

The proposed amendments would bring Ofwat’s powers relating to licensed infrastructure providers into line with those which already apply under the Water Industry Act 1991 as regard English water and sewerage undertakers. They would allow Ofwat to include certain conditions in an infrastructure provider’s project licence, giving the infrastructure provider the right to ask Ofwat to refer certain questions relating to its project licence to the CMA for determination. The proposed amendments would give an infrastructure provider the same right that water and sewerage companies already have to require Ofwat to refer its price control decisions, such as on interim determination of price limits or an increase in allowed revenue, to the CMA.

Without the proposed amendments, the only way for an infrastructure provider to challenge Ofwat price control decisions would be to seek judicial review on a point of law before the High Court. This is a time-consuming and expensive process, the costs of which are ultimately met by customers.

The statutory consultation on the draft regulations ran for six weeks, between 28 July and 8 September 2014. Its purpose was to inform those who represent interests likely to be affected by the regulations. The consultation was based on the GOV.UK website, and it was open to members of the public to submit their comments. Invitations for comments were also issued by e-mail to 324 interested organisations and individuals, including the CMA, Ofwat, the English water and sewerage undertakers, the Consumer Council for Water, Members of Parliament in London and the Thames Water region, members of the Greater London Assembly, and the Mayor of London. Five responses were received and a summary was published on the GOV.UK website last month.

We have noted the range of views and comments received on the proposed amending regulations and those relating more generally to the Thames tideway tunnel project. As a result, we have adopted some drafting points raised during that consultation in the amending regulations and are proceeding with the draft regulations. I commend them to the Committee.

[Lord Grantchester (Lab)]

My Lords, these are the regulations we have all been waiting for. I thank the Minister for his introduction to the instrument before the Committee concerning the amendments to the Water Industry (Specified Infrastructure Projects) (English Undertakers) Regulations 2013.

From this side of the Committee, we support these changes to the SIP regulations. As the Minister has explained, their purpose is to bring Ofwat’s powers to include conditions in an infrastructure provider’s project licence into line with those which exist for a water or sewerage undertaker. With this inclusion, Ofwat is able to refer any disputes over price determinations to the Competition and Markets Authority on request by the licensed IP, in the same way that a water or sewerage undertaker already can. In the absence of such conditions, as the Minister said, the only route of challenge against an Ofwat determination would be by an application for judicial review on a point of law—a costly and time-consuming activity.

The SIP amendment regulations concern infrastructure providers in their activity of financing and delivering large and complex projects, most notably the Thames tideway tunnel. The SIP regulations are entirely sensible. The public consultation recently undertaken produced the five responses to which the noble Lord referred. The purpose of the consultation was not to review the merits of the tunnel but to consider amendments to the SIP regulations. Although most of the points raised were on aspects of the tunnel project itself, and not relevant to the consultation, nevertheless the respondents were supportive of the draft SIP amendment regulations on the grounds that the availability of an appeal route in common with other water industry companies will help lower perceptions of project risk and keep the cost of procuring a proposed IP as low as possible. It would so remove a distinct disincentive to invest and enable any potential future disputes to be resolved promptly.

I am sure that the use of the CMA to adjudicate will be helpful in convincing consumers that the decisions reached have their best interests at heart. The removal of an unnecessarily burdensome process for the appeals should also help to deliver lower costs for consumers. I see no reason to delay further the Committee’s agreement to these regulations.

[Lord De Mauley]

My Lords, I am grateful to the noble Lord for his comments.

Motion agreed.

Conduct of Employment Agencies and Employment Businesses (Amendment) Regulations 2014

Tuesday 9th December 2014 Grand Committee

Motion to Consider

17:14

Moved by

[Lord Popat]

That the Grand Committee do consider the Conduct of Employment Agencies and Employment Businesses (Amendment) Regulations 2014.

Relevant documents: 14th Report from the Joint Committee on Statutory Instruments, 15th Report from the Secondary Legislation Scrutiny Committee

[Lord Popat (Con)]

My Lords, the recruitment sector plays an important role in the labour market by matching demand for jobs to demand for workers. The sector is regulated by the Employment Agencies Act 1973 and the conduct regulations. The legislation covers all employment agencies and employment businesses in Great Britain, providing a framework for contracts between agencies, hirers and work-seekers. It also restricts fee charging and ensures that temporary workers are paid for the work they have done.

However, the legislation does not currently regulate where employment agencies place advertisements for vacancies. The Government are concerned that some agencies may be advertising British-based jobs in other European Economic Area countries without advertising those jobs in Britain. This means that workers in Britain do not always have the opportunity to apply for jobs that are based here. We believe this is wrong.

In The Plan for Growth, the Government set out their ambition to create a competitive and supportive business environment that allows businesses to establish themselves, to grow and to employ people. An important part of this ambition is the need to achieve a strong and efficient labour market—a labour market that gives people opportunities to find jobs that are right for them and allows employers to access the type of labour that matches the skills they need.

To fulfil this, we need to achieve a labour market that is flexible, effective and fair, and which encourages job creation and makes it easy for people to find work and stay in work. The Government believe that overseas-only advertising undermines the fairness of the labour market. It reduces the job choices available to people in Britain and for businesses that are hiring it also limits their choice of candidates. We want to do something about this. We want to ensure that people in Britain have the opportunity to enter the workplace, especially the young and the unemployed. We want to create a level playing field for workers in Britain.

Overseas-only advertising is already potentially a breach of the Equality Act 2010. However, the proposed regulations would go a step further by creating a specific requirement to advertise jobs in Great Britain and in English.

The proposed change to the conduct regulations would require agencies to ensure that if they want to advertise vacancies elsewhere in the EEA, they must also advertise in Great Britain and in English. The new regulations would apply to all employment agencies and employment businesses in Great Britain that find permanent and temporary work for people. It will apply only to vacancies advertised in European Economic Area countries; UK Immigration Rules already favour native workers over non-EEA workers. Each position has to undergo a resident labour market test before it can be advertised outside the EEA. We are not proposing to stop agencies from advertising jobs overseas or in additional languages. They will still be free to do so if they wish, as long as the vacancy is also advertised in Great Britain.

In addition, in the rare circumstances where it would make little sense to advertise a vacancy in English in Great Britain—for example, if there is a genuine requirement for a native foreign language speaker for a particular role—a defence will be available. However, in general, if agencies choose to advertise jobs overseas, they would need to ensure that those jobs are also advertised in Great Britain, either at the same time or in the period of 28 days prior to advertising the vacancy overseas.

We believe that this will expand the range of job opportunities open to people in Great Britain and will also expand the range of people from which businesses can choose. The new regulations would be enforced by the Employment Agency Standards Inspectorate, which enforces the conduct regulations. Agencies would need to demonstrate, through record-keeping, that they have complied with the requirements to advertise the vacancy, or vacancies, in Great Britain and in English.

Subject to the proper parliamentary process and necessary scrutiny, it is our intention that this change will come into force by the end of this year. I hope that the Committee will therefore support this statutory instrument.

[Baroness Donaghy (Lab)]

My Lords, I shall be brief. On a quick glance, these seem to be sensible suggestions. I know how unpopular this is when it is blown up in the newspapers that British jobs are being advertised in Polish in Poland. I suspect that it is not as big a problem as newspaper controversies suggest. I am not convinced that the order will make much difference but, nevertheless, its spirit and intentions are good.

I have two questions. First, will the Employment Agency Standards Inspectorate be sufficiently well staffed to undertake the job required of it? Secondly, given the internet and the fact that people can pick up jobs wherever they are in the world, how much difference will this make in restricting the ability of employment agencies and businesses from getting their own way by the back door?

[Lord Young of Norwood Green (Lab)]

My Lords, I, too, welcome the measures brought forward by the Government today. It is important that jobs in the UK are advertised and made available to the people who live and want to work here. Indeed, we have already called on the Government to ban agencies from recruiting solely from abroad. However, Ministers are failing to go further to tackle the real problems in the employment agency sector and to halt the exploitation of Britain’s 1 million agency workers.

Agency working can provide flexibility that works for employers and employees, but the main recruitment industry body has warned that the number of rogue agencies has increased over the past three years. These agencies are associated with the worst elements of insecurity in our labour market, including the undercutting of wages and non-payment of the minimum wage. There is evidence that they are marketing agency workers to employers as a way to undercut wages of permanent staff, exploiting agency workers with unfair and illegal charges for travel, accommodation and taxes, in some cases leading to non-payment of the minimum wage, and engaging in tax avoidance schemes.

To reiterate, it is not only us who are saying this. The main industry body for the recruitment sector has warned that the problem of rogue agencies associated with non-payment of the minimum wage is getting worse. Regulatory bodies, including the Employment Agency Standards Inspectorate and HMRC, have also found evidence of non-payment of wages and of tax avoidance schemes. I would obviously welcome the Minister’s comments on that.

If we are in government after next May, we will crack down on employment agencies to tackle the worst elements of insecurity in our labour market. The next Labour Government will close loopholes which allow employment agencies to undercut the wages of permanent staff, ban employment agencies from recruiting only from abroad and force rogue agencies illegally exploiting their workers to clean up their act through measures such as the introduction of a licensing system.

We will not tolerate a world of work that is becoming more brutal because of the way in which cowboy employment agencies have been allowed to operate. They are undermining dignity at work, driving down standards and creating greater insecurity for families. I endorse the comments of my noble friend Lady Donaghy in relation to the internet and so on. I apologise for not being in my place at the start of the debate. I had not anticipated that we would get through the previous statutory instruments quite so quickly.

[Lord Popat]

I thank the noble Baroness, Lady Donaghy, and the noble Lord, Lord Young, for their brief contributions to this debate. In response to the point made by the noble Baroness about inspectors, we are doubling EAS resources this financial year, with a view to increased resources for the financial year 2015-16. These additional resources will be used for targeted enforcement in high-risk areas to protect the most vulnerable agency workers. The noble Baroness also mentioned internet advertising for jobs, which is not just in the UK but worldwide. Most internet advertising is obviously in English as well.

The noble Lord, Lord Young, mentioned the minimum wage. He is quite right that there are a few companies which abuse the system and do not pay the minimum wage. We have in fact boosted the resources available for national minimum wage enforcement. In the new year, we will have the Small Business, Enterprise and Employment Bill, which I will be taking through the House along with the noble Baroness, Lady Neville-Rolfe. We are going to increase the penalty for people who abuse or break the minimum wage law from £5,000 to £20,000 by secondary legislation. This penalty will be applied not per company or on a per notice basis, but on a per worker basis. So we are doing something to ensure that companies do not break the national minimum wage law and that their workers are correctly paid. We will wait for that Bill to come through but, having said that, we have made a couple of amendments recently to make sure that people are paid the minimum wage.

[Lord Young of Norwood Green]

What plans, if any, do the Government have for dealing with these rogue agencies that the main agencies within the recruitment sector are saying exist? Are the Government making any special efforts to shut them down?

[Lord Popat]

Most agencies comply with the regulations but, although it is not a widespread practice as such, I agree that there are a few which do not. Hence we have these regulations coming in and we are doubling the number of inspectors. We have inspectors available to monitor them and to make sure that they do not break the law. We want to make sure that there is fair play and that British agencies advertise jobs in Britain as well as overseas.

I will just cover another point that the noble Lord, Lord Young, made. The subject of overseas-only advertising was raised and how we know it is a problem. The Government have received some complaints about employment agencies advertising jobs in the European Economic Area countries but not in the UK. These regulations will ensure that all agencies based in the UK give work-seekers a fair opportunity to apply for jobs in the UK.

I hope that I have covered all the points—unless there are any further ones—but if I have left out something I will be very happy to write to noble Lords. This change will level the playing field for workers in Britain. It will ensure that they have equal access to vacancies advertised by agencies and that the small number of agencies who deny job opportunities to workers in Britain will be subject to enforcement action, as I mentioned earlier. I am delighted that the Committee is more or less in agreement with these regulations. I know that issues were raised about the minimum wage and internet advertising. I hope that I have covered those but if I have not, I will make sure that officials drop a line to noble Lords on those subjects. I commend these regulations to the Committee.

Motion agreed.

Committee adjourned at 5.29 pm.

House of Lords

Tuesday 9th December 2014 Lords Chamber

Tuesday, 9 December 2014.

14:30

Prayers—read by the Lord Bishop of Sheffield.

Introduction: Lord Evans of Weardale

Tuesday 9th December 2014 Lords Chamber

14:39

Sir Jonathan Douglas Evans, KCB, having been created Baron Evans of Weardale, of Toys Hill in the County of Kent, was introduced and took the oath, supported by Baroness Manningham-Buller and Lord Hennessy of Nympsfield, and signed an undertaking to abide by the Code of Conduct.

Digital Technology: UK Labour Market

Tuesday 9th December 2014 Lords Chamber

Question

14:44

Asked by

[Lord Holmes of Richmond]

To ask Her Majesty’s Government what assessment they have made of new technology and the digital revolution on the United Kingdom labour market.

[Lord Holmes of Richmond (Con)]

My Lords, I beg leave to ask the Question in my name on the Order Paper. In doing so, I declare my interests as set out in the register.

[The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Baroness Neville-Rolfe) (Con)]

My Lords, digital is a major contributor to the economy. Since 2008, output for the sector has grown more than three times as fast as the overall economy. Growth is expected to continue, with a predicted 1 million new digital jobs to be created in the next decade. The Government are committed to ensuring a strong, digitally skilled workforce to meet the challenges of our digital age.

[Lord Holmes of Richmond]

My Lords, the digital revolution is well under way, with the potential to make the agricultural revolution and the Industrial Revolution seem somewhat small beer. Does my noble friend agree that, across the whole of Whitehall and across the whole of local authorities, we need a relentless focus on digital if we are to realise every opportunity and every job for the UK labour market?

[Baroness Neville-Rolfe]

My Lords, I entirely agree with my noble friend. We have made a good start with a ministerial digital task force, which shows the Government’s relentless drive. Activity under way includes even top-level support: yesterday, the Prime Minister launched the National College for Digital Skills, which will start in London next year and spread to centres right across the country. That is in addition to all that we are doing in schools, training and higher education.

[Baroness Uddin (Non-Afl)]

My Lords, people who are deaf or autistic may require ongoing support to access the spoken word, for example, through online captioning systems such as the one offered by Ai-Media, which improves access for people whose disabilities are not necessarily physical. How will the Government promote the take-up of innovative new technology within the Access to Work scheme for people whose challenges are not related to mobility?

[Baroness Neville-Rolfe]

My Lords, I agree with the sentiment of the noble Baroness’s point. We published a digital inclusion strategy in April and we are working with lots of different partners across the UK, including Age UK, which has done terrific work to help older people access the internet and get savings. This is an enormous subject, and I very much look forward to the work of the Digital Skills Select Committee on all these points.

[Lord Kirkwood of Kirkhope (LD)]

Does my noble friend agree that central government has a cross-departmental responsibility to mitigate the risk of the future incidence of higher inequality as a result of our increasingly digital economy?

[Baroness Neville-Rolfe]

My Lords, I agree that we have a huge role to play. The key thing is to use the digital revolution to grow and improve the curriculum so that, for the long term, you tackle inequality and help people to access the improvements in digital that will make such a big difference to their lives, while, of course, helping those who find it difficult. That is important, as this House knows.

[Baroness Lane-Fox of Soho (CB)]

My Lords, only 30% of small and medium-sized businesses in this country are using the web to buy or sell products online, leaving 70% of the life-blood of our economy unable to take the benefits of being online. Would the Minister like to expand on what the Government are doing specifically for small and medium-sized businesses?

[Baroness Neville-Rolfe]

I thank the noble Baroness for the opportunity to talk about the programme that we have set in train—the small business capability programme —which is helping 1.6 million small businesses to transact online by 2018; the work we are doing in employer-led reformed apprenticeships at every level, including the higher level; and, of course, the whole programme of reform that she has helped so much to push forward in Whitehall.

[Lord Allen of Kensington (Lab)]

My Lords, the Prime Minister said:

“It is our ambition to make the UK the most digital nation in the G8 and it is my mission to show the world that we’re getting there”.

I ask the Minister, in the words of the five year-old in the back of the car: are we there yet? What are we doing next? What is on the Prime Minister’s wish list?

[Baroness Neville-Rolfe]

I always think it is important not to boast about progress, but in Europe we are widely regarded as being very much at the leading edge. Interestingly, on some scores, we are even doing well versus the sacred San Francisco and Silicon Valley, with London emerging as a premier location for digital entrepreneurs, people choosing London for IPOs and UK venture capital markets improving. Our programme, led by my honourable friend in the other place, Ed Vaizey, is moving forward the strength we have in digital anyway. The jobs that we are creating in this sector are growing at an even faster rate than the rest of employment.

[Viscount Ridley (Con)]

My Lords, would my noble friend the Minister update the House on the progress that has been made with the GOV.UK website and digital government intervention, particularly the simplification and standardisation of how people access government websites? For example, passports and driving licence renewals are all getting much simpler.

[Baroness Neville-Rolfe]

My Lords, my noble friend puts it perfectly. All noble Lords just need to use GOV.UK to see the extraordinary improvements that have been made.

[Lord Mendelsohn (Lab)]

My Lords, many homes and businesses still lack access to basic broadband, especially in rural communities. Despite the Government’s strategy and commitment of £1.2 billion, the programme will be completed 22 months late. Can the Minister assure us that the rural communities will not be placed at an ongoing disadvantage in the current distribution of broadband, and in any future similar plan?

[Baroness Neville-Rolfe]

My Lords, as someone who used to campaign for the rollout of broadband, I am glad to say that good progress is now being made in the rollout of superfast broadband. In November, 1.5 million premises had access to it, and the number of homes and premises gaining access has doubled from 20,000 per week to 40,000 per week in August. Rural broadband has had a special scheme, which has allowed an extraordinary degree of investment in some very important rural areas, including Northumberland, where I holidayed, Oxfordshire, Northamptonshire and Cumbria.

[Baroness O'Cathain (Con)]

My Lords, this is a wonderful story about how skills will be increased, and how various businesses will have access to broadband. What about the 1.7 million people who do not have access to broadband and do not have access to a computer? The fact is, no matter how skilled they become and however many digital lessons they have, they will not be able to use those skills. Can we just have a programme for the extension of broadband so that everybody in this country has this opportunity?

[Baroness Neville-Rolfe]

My Lords, I have talked at length with my noble friend during the passage of the recent Consumer Rights Bill on this very issue. Of course, alternative means of access—including paper—remain extremely important.

Sudan

Tuesday 9th December 2014 Lords Chamber

Question

14:52

Asked by

[Baroness Cox]

To ask Her Majesty’s Government what is their assessment of recent developments in the Republic of Sudan.

[The Minister of State, Foreign and Commonwealth Office (Baroness Anelay of St Johns) (Con)]

My Lords, we are deeply concerned about the ongoing conflicts in Sudan. Reports of aerial bombardments in South Kordofan and in Blue Nile, and the lack of access for the United Nations to investigate allegations of mass rape in Darfur, are especially worrying. We welcome efforts to secure ceasefires and moves towards a political solution, including the peace talks mediated by President Mbeki, and support a comprehensive, inclusive and transparent national dialogue.

[Baroness Cox (CB)]

My Lords, I thank the Minister for her sympathetic reply. Is she aware that I have actually seen Government of Sudan Antonov bombers deliberately targeting hospitals, schools, markets and civilians trying to harvest their crops, forcing hundreds of thousands to hide in snake-infested caves, river beds and woods or to flee into exile in South Sudan and Ethiopia? According to the well respected Enough Project, such systematic attacks on civilians and the Sudanese Government’s aid blockade lay the foundation for a case of crimes against humanity by extermination. All this is happening with impunity. What actions are Her Majesty’s Government taking to challenge this impunity?

[Baroness Anelay of St Johns]

My Lords, the noble Baroness paints an accurate picture from first-hand experience. I respect that courageous experience. She asked about impunity. We press the Government of Sudan to hold all perpetrators of human rights violations fully to account for their actions. Impunity must not be accepted. In the United Nations Human Rights Council, we support the work of the independent expert on the human rights situation in Sudan. The UK is also a strong supporter of the International Criminal Court. We continue to call on the Government of Sudan to comply with the arrest warrants for the ICC indictees. I will be representing the UK at the next meeting of the ICC in New York later this week.

[Lord Steel of Aikwood (LD)]

My Lords, as the Minister knows, something like 100,000 people have fled both parts of Sudan over the border into Ethiopia during the past year. What extra help are the Government giving to that Government to try to cope with the influx?

[Baroness Anelay of St Johns]

My Lords, we are certainly aware of the extra aid that needs to be granted to these areas. We have been aware that more than 430,000 people have been displaced. DfID estimates that it will spend a minimum of £27 million on projects in Darfur alone. That includes funding to the World Food Programme and the Common Humanitarian Fund in Darfur. We are urging the Government of Sudan and the Darfur rebel movements to engage fully in peace talks. We are also engaging with the difficulty of access to the two areas of Blue Nile and South Kordofan, where access for humanitarian aid is, to say the least, perilous.

[Baroness Kinnock of Holyhead (Lab)]

My Lords, as Sudanese opposition groups are now increasingly speaking to each other and taking unified positions and many people are saying that they are now likely to welcome support and advice from the United Kingdom, and in view of the need to tackle the terrible insecurity in the region, is it not short-sighted, badly timed and very unhelpful that there have been cuts in the Sudan units in the FCO?

[Baroness Anelay of St Johns]

My Lords, I was able yesterday during the Question for Short Debate from the noble Earl, Lord Sandwich, in the Moses Room to put on record the fact that the Sudan unit has its resources carefully monitored. Whenever they need to be increased, they are. I gave a commitment that that careful monitoring and increase where necessary will be continued.

[Lord Jay of Ewelme (CB)]

My Lords, what efforts are we making to work with the Government of the Republic of China, who have a huge influence on both Khartoum and Juba, to bring pressure to bear on both Governments of Sudan in order to pave the way towards a degree of stability and economic development?

[Baroness Anelay of St Johns]

My Lords, the noble Lord, Lord Jay, raises an important point. Because of our cultural and historic ties with the area we have been involved in negotiations through the troika, with the United States and Norway, and had leverage through the EU. I can assure the noble Lord that we have also made representations with the Republic of China and diplomatic relationships are under way with regard to how we might all work towards peace in Sudan.

[Lord Bach (Lab)]

My Lords, we all wish the Minister good fortune in her important task later this week in New York. An agreement was signed in Addis Ababa last week by those aiming at unifying opposition to President Bashir. It is reported that a number of those signatories were summarily arrested on their return to Sudan. What representations have Her Majesty’s Government made about this latest example of unacceptable authoritarian conduct?

[Baroness Anelay of St Johns]

My Lords, the noble Lord, Lord Bach, rightly refers to the detention of opposition leaders and civil society figures who signed what is known as the “Sudan call”—the opposition trying to solidify. I assure him that we have voiced our concerns about the detention of the opposition and civil society figures and we have consistently asked for the release of political prisoners in Sudan. More than that, it is important that when people are held in the Sudan they are not maltreated.

Mesothelioma

Tuesday 9th December 2014 Lords Chamber

Question

14:58

Asked by

[Lord Alton of Liverpool]

To ask Her Majesty’s Government, following the decision of the High Court that the consultation on mesothelioma legal fees was unlawful, and the lack of new funding for mesothelioma research, what is their policy with regard to combating mesothelioma and supporting victims.

[The Minister of State, Ministry of Justice (Lord Faulks) (Con)]

The Government take the plight of mesothelioma sufferers seriously and are determined to improve their position. We have introduced significant changes through the diffuse mesothelioma payment scheme, established under the 2014 Act. By October 2014 the scheme had made 131 payments, resulting in £16.5 million being paid to sufferers or their families. The Government fully recognise the need to stimulate an increase in the level of research activity and continue actively to pursue measures to achieve this.

[Lord Alton of Liverpool]

My Lords, I thank the Minister for that reply. Does he recall that, during the passage of the Mesothelioma Act 2014, Ministers said that the levy on the insurance industry would be set at 3%? They said:

“Three percent. is 3% and we have no intention of moving away from it”.—[Official Report, Commons, Mesothelioma Bill [Lords] Committee, 12/12/13; col. 117.]

Why then has it now been set at 2.2%, representing a shortfall of more than £11 million? That money could have been generated and used to undertake sustainable research into a killer disease which will take the lives of another 60,000 British people. This is according to figures which the Government themselves have issued.

[Lord Faulks]

As the noble Lord will know, the Government responded to the amendment which he tabled during passage of the Act by saying that they were committed as a priority to helping to encourage research by the National Institute for Health Research. We set up a partnership of patients and carers to identify a top 10 list of questions for researchers to answer. The results were published yesterday, as he may know. We now feel that we have identified the questions and funding will be available if there are appropriate applicants. The problem with research is no longer—indeed, it never was—funding, but finding really conceivably successful applications.

[Lord German (LD)]

My Lords, both the House of Commons Justice Committee and the judgment of the High Court concerning the issue of legal fees in mesothelioma cases are critical of the way that the government review was carried out. It was found to be premature and did not follow the rules of the LASPO Act. We know that the incidence of this disease will peak and then fall away over the years, as the 30 year-old Acts concerning asbestos are put into place and have an effect. Given that there will be a withering on the vine of the numbers suffering this fatal disease, is it not now the time for this legal fees issue to be left alone and kept as it is, rather than coming back to it again and putting people through increased risk and increased delay?

[Lord Faulks]

My noble friend is right. We expect the peak to start declining and perhaps come more or less to an end in 2024. There is to be a review. There is no immediate timing for it but my noble friend is right in that the status quo is acceptable to the claimants. They are to receive damages. Research will continue, as I indicated, and the pre-LASPO regime for legal support will continue. This will ensure that lawyers are paid adequately, and we are told that they will not take cases unless they are paid adequately. The review will go on.

[Lord Giddens (Lab)]

My Lords, I watched a member of my family die of this dreadful disease. There are massive advances in medical technology which make it possible, in principle, to find a cure. As the noble Lord, Lord Alton, has indicated, that could mean saving the lives of some 50,000 people. To do this we are going to need an integrated research strategy, with the Government in the lead, co-ordinating with industries and with universities. Where is this strategy? The Government’s approach seems far too piecemeal and far too limited to do the job that is needed.

[Lord Faulks]

As I indicated, the strategy is to ensure that the right questions are posed so as to elicit appropriate applications. The funding is very much there, but there is no point in having it unless it is directed towards research which can feasibly produce the result which, I am sure, everybody in this House wants to achieve.

[Lord Wigley (PC)]

My Lords, will the Minister go further on that? There needs to be a certainty that the money is there but the top-level researchers also need to be aware of it so that the money and the level of the research capability are brought together. Is the Minister confident that that certainty now exists? What can be done to make sure that the best researchers in the land are aware of it and can get engaged with this problem?

[Lord Faulks]

I can do no better than quote what Professor Dame Sally Davies, the Chief Medical Officer and chief scientific adviser, said yesterday. She thanked all those who provided information and said:

“With their help I believe we have built a genuine consensus—and a real impetus. I hope the research community will now respond by generating new research proposals that will provide robust evidence to help people with mesothelioma”.

[The Lord Bishop of Chester]

My Lords, I encourage the Minister to answer the first part of the Question asked by the noble Lord, Lord Alton, about why the percentage of the precept was reduced from the promised 3% to 2.2%.

[Lord Faulks]

The position with insurers is that they have provided money. I will have to write to both noble Lords and the right reverend Prelate about what has happened to that particular sum. The question of the use of research funds is difficult. We think that research funds should be spent in the most effective way, and we think that publicly funding research is much more appropriate than hypothecating against insurers’ particular sums.

[Lord McKenzie of Luton (Lab)]

My Lords, would the Minister accept that throughout our deliberations on the Mesothelioma Bill the focus was on a 3% levy? It was 3% because the insurance industry insisted that beyond that it would have to be passed to consumers. By implication, if the levy is now 2.2%, presumably that falls into the pocket of the insurance companies at a time when compensation is not being paid at a 100% level, and, as has been asserted, there is insufficient funding for research.

[Lord Faulks]

It is absolutely not the case that there is insufficient funding for research. As I have said more than once, the case is that, at the moment, there is not a suitable number of applications for research. The funding is very much there. As to any question of insurers making some profit out of this, I will look into that. It is contrary to what the Government wish to achieve.

[Lord Howarth of Newport (Lab)]

My Lords, when the noble Lord, Lord Freud, brought in the mesothelioma legislation he did so undoubtedly in good faith. Yet, sufferers from this terrible industrial disease have now been failed not only by employers and insurers but by the Government themselves. Has the Lord Chancellor authorised the noble Lord to apologise on behalf of the Government for his decision to take up to 25% of compensation awards for costs—conduct which has been ruled by judicial review in the High Court to be unlawful? The noble Lord still has not explained to the House why the Government have failed to honour their commitment, given in terms by the Minister, Mike Penning, to set the levy on employer’s liability insurance at 3% of gross written premiums, which would have enabled better compensation and more funding for sustained research.

[Lord Faulks]

Compensation is full at the moment, as the noble Lord knows. I reject the allegation that the Government have done nothing. Not only are they promoting research; they have also, with their Big Tent meeting in June, encouraged much greater co-operation between lawyers acting for claimants to ensure that medical employment records are swiftly obtained. What is most important is that these claimants obtain compensation quickly and at as high a level as they can.

Railways: Pacer Trains

Tuesday 9th December 2014 Lords Chamber

Question

15:07

Asked by

[Lord Greaves]

To ask Her Majesty’s Government, in the light of the Autumn Statement, what is the timetable for the replacement of Pacer trains in the north of England; whether all the replacement trains will be new; and whether Pacers in other regions will also be replaced.

[The Minister of State, Department for Transport (Baroness Kramer) (LD)]

My Lords, I reaffirm the commitment made in the Autumn Statement. The details of how we will give effect to these issues are being considered as part of the development of the invitation to tender for the Northern franchise, which will be published early in 2015. Decisions on the possible replacement of Pacers elsewhere will be considered when the respective franchising competitions—for Great Western and for Wales and Borders—are being specified.

[Lord Greaves (LD)]

My Lords, I am grateful for that confirmation by my noble friend. Will she confirm that, when the Chancellor said that the franchise in the north would involve,

“replacing the ancient and unpopular Pacer carriages with new and modern trains”,—[Official Report, Commons, 3/12/14; col. 313.]

that means that at least some of the trains will be new? Is that a promise? While she is about it, will she take this opportunity to scotch the alarming rumours that the 30 year-old Pacer trains will be replaced by 40 year -old cast-offs from the District line on the London Underground?

[Baroness Kramer]

I have to say to my noble friend that that last accusation is a new one to me. Clearly, the Chancellor gave a commitment to replace these trains. We also know that this is a line that is due for electrification. However, I am afraid I cannot share the details with the House until we get to the invitation to tender, because they are still being worked out. It will not be very long to wait; it will be in early 2015.

[Lord Berkeley (Lab)]

My Lords, while all this is going on, the Government are doing the opposite and giving even more trains to the south. Indeed, today the Minister for Transport, Claire Perry, announced that there would be 10 new four-car trains to take people between Milton Keynes and London. Last week, I believe, new diesel trains were ordered and committed to go to Uckfield and between Ashford and Hastings. Is it not time that this trend was reversed and that the new diesels went to the Northern area? Perhaps the people of Sussex and Kent could try out some Pacers for a few years and see how they get on.

[Baroness Kramer]

My Lords, we are obviously anxious to phase out these Pacers rather than find them new homes. The noble Lord will be aware that we have orders from up and down the country for new rolling stock at significant levels; that includes the north—for example, on the east coast main line. An invitation to tender is coming very shortly in the new year. I cannot speak ahead of it, but I am reasonably confident that my noble friend will be happy.

[Lord Deben (Con)]

Does my noble friend accept that we in the east of England are extremely pleased that we have just had our first new trains since the beginning of time? Never before has anyone produced a new train for the east of England. Some people may rightly say, “Ah, but this is one of the most important scientific powerhouses of Britain”. Let us thank her and say that it would not have happened had it not been for privatisation.

[Baroness Kramer]

The railway has certainly been exceedingly successful since its privatisation, and that is reflected in the increased number of passengers. I am delighted at the drive that we have under way to bring on the kind of rolling stock that adds the capacity that we need.

[Lord Davies of Oldham (Lab)]

My Lords, I am sorry that the Minister had not heard that Transport for London is looking at the possibility that certain rolling stock, driven by electricity at the present time, can be converted to diesel. That is why the north of England is shuddering at the prospect that that is where these trains might well end up. After the Chancellor made his Statement, the first thing that the Government did was to delay the decision on the franchise for the north. That is a clear case of built-in delay to get rid of these wretched Pacers, when Northern travellers have among the worst conditions in the whole of the United Kingdom. Is it not clear that the only certain way in which Northern passengers will get taken for a ride is by the Treasury and the Chancellor?

[Baroness Kramer]

My Lords, your Lordships will be aware that this is a pretty small delay. You will also be aware that there was a great response to the consultation for this line. It was entirely right of the Government to take the time necessary to work through a lot of very thoughtful responses and to make sure that the invitation to tender achieves the best possible outcome for passengers.

[Lord Bradshaw (LD)]

My Lords—

[Lord Clark of Windermere (Lab)]

My Lords—

[The Lord Privy Seal (Baroness Stowell of Beeston) (Con)]

My Lords, it is the turn of the Liberal Democrats.

[Lord Bradshaw]

My Lords, will the Minister take notice of what has been happening in Scotland? When the new franchise was introduced, 30 new train sets were ordered immediately on that day from Hitachi. If she looks at the terms and conditions, she will see that these trains have been leased with the support of the Scottish Government—which is not what usually happens here—and they have done an extremely good deal, far better than has been achieved by Whitehall. Is it not the case that local control, be it in Scotland or London, produces far better results than are now produced in Whitehall?

[Baroness Kramer]

My Lords, this Government are very committed to devolution. The noble Lord will know that, with the Northern and TransPennine franchises, we have been working very closely with Rail North so that it creates a process by which a transfer can be made to Rail North to become, as it were, the specifier and monitor of franchises over time. However, it is a capability that is extremely demanding, as the noble Lord will know, and the evolutionary process of doing this hand in hand with areas that are interested in taking this responsibility to make sure that they develop the capability has to be the right way to go.

Criminal Justice and Courts Bill

Tuesday 9th December 2014 Lords Chamber

Commons Reasons and Amendments

15:14

Motion A

Moved by

[Lord Faulks]

That this House do not insist on its Amendment 74, to which the Commons have disagreed for their Reason 74A.

Lords Amendment

74: Clause 29, page 29, line 36, at end insert—
“( ) No female, nor any male under the age of fifteen, may be placed in a secure college.”

Commons Reason

The Commons disagree to Lords Amendment No. 74 for the following reason—

74A: Because it is not appropriate to prevent the detention in secure colleges of males under the age of 15 and females.

[The Minister of State, Ministry of Justice (Lord Faulks) (Con)]

My Lords, as noble Lords will be aware, the other place was not persuaded last week by the amendment that this House put forward to prevent girls and boys under the age of 15 being accommodated in secure colleges. It voted by a margin of 316 to 194 to disagree with the amendment.

The Government remain of the view that it is not right to prevent girls and boys aged under 15 benefiting from this pioneering approach to educating and rehabilitating young offenders. We are committed to this principle, recognising that girls and younger boys are already safely accommodated together on the same site in both secure training centres and secure children’s homes, which together with YOIs make up the youth custodial estate.

Noble Lords will remember from previous debates that no final decisions have yet been made as to who will be accommodated in the secure college pathfinder that is due to open in 2017. This decision will be taken closer to the time and based on the composition of the youth custodial population. Responsibility for individual placement decisions will remain with the Youth Justice Board, which decides on a case-by-case basis, and is informed by the advice of the local youth offending team, where each young person should be accommodated while in custody. I know that a number of noble Lords remain firmly opposed to secure colleges or, in any event, this secure college. The Government are aware of their concern and respect their views, although they do not agree with them. This amendment is not about secure colleges generally but about under-15s and girls, and I am sure that noble Lords will be focusing on this particular issue.

Noble Lords will be aware from previous meetings that I have held with interested Peers and from discussions in the House that more vulnerable groups—such as girls and under-15s, should they be placed there—will be separately accommodated in smaller living units at the pathfinder secure college, and can also be separately educated. Following earlier discussions with interested Peers, we amended our site plans to provide further protection, and additional and separate outdoor space for the more vulnerable young people accommodated at the pathfinder.

I have also previously made a commitment in this House that neither girls nor under-15s will be placed in the pathfinder secure college from its opening and that, should the decision be taken to place them there, their introduction would be carefully phased. My colleague, the Minister for Prisons, Andrew Selous, reiterated this same commitment to the other place last week. Nevertheless, despite these safeguards and commitments, the Government recognise that some concern remains. In particular, this concern is focused on the potential accommodation of girls and under-15s on the same site as older boys, and how the different groups would be kept safe and their different needs attended to.

To provide Parliament with further reassurance on these points, we are today committing to the Secretary of State laying a report before Parliament, and publishing that report, before either boys aged under 15 or girls are placed in the first secure college where they would be accommodated alongside older boys aged 15 to 17. This report will describe the arrangements in place at the secure college for the detention of girls and under-15s. In particular, it will set out the safeguards in place to protect these groups and the facilities and services available to meet their educational and rehabilitative needs and to promote their health and well-being. This report would therefore include detail on: the accommodation and supervision of girls and under-15s; how they will be educated and the focus of this education; the interventions available to tackle their offending behaviour; the provision for meeting their physical and mental health needs—a particular concern that I know has been expressed in the course of debate—and promoting their emotional well-being; and the safety arrangements at the site to ensure that neither group is at risk of intimidation or violence.

In producing this report, the Secretary of State would consult with the Youth Justice Board, Her Majesty’s Inspectorate of Prisons and Ofsted. The report would be laid before Parliament and published at least two months before the first occasion on which it was intended that boys aged under 15 or girls were to be placed in the first secure college to accommodate these groups on the same site as older boys.

[Lord Willis of Knaresborough (LD)]

On an important point at this juncture and before he goes any further, will the Minister give an assurance that, when that report is produced, its recommendations will not be implemented in any form until there is an affirmative vote on those recommendations in both Houses of Parliament?

[Lord Faulks]

No, I will not give that reassurance. I hope noble Lords will none the less welcome this significant commitment, which will provide considerable transparency on the Government’s plans for the accommodation of girls and under-15s in secure colleges. I also remind noble Lords that, in addition to this commitment, there is of course the ongoing scrutiny of secure colleges provided by the inspectorates, Her Majesty’s Inspectorate of Prisons and Ofsted. In light of this commitment, I take the opportunity to reaffirm that keeping young people safe in custody will be the top priority in secure colleges, just as it is elsewhere. The Government are confident that secure colleges will deliver a step change in the culture and outcomes of youth custody and that, with the right facilities and precautions, both girls and under-15s will be able to benefit from this new approach.

I hope that this further significant reassurance demonstrates the Government’s commitment to protecting properly these vulnerable groups in secure colleges, while meeting their specific needs and enabling them to access enhanced provision. I hope this gives the House confidence not to insist on its earlier Amendment 74. I look forward to hearing the views of the noble Lord, Lord Ramsbotham—and, of course, the views of other noble Lords. I hope that, with the assurances I have given, he will in due course be able to withdraw his Motion to insist on Amendment 74. I beg to move.

Motion A1

Moved by

[Lord Ramsbotham]

As an amendment to Motion A, leave out from “House” to end and insert “do insist on its Amendment 74”.

[Lord Ramsbotham (CB)]

My Lords, once again I admire the skilful advocacy of the Minister, this time in his presentation of a case that I totally reject, for reasons I will explain. I am grateful to him for providing me with an advance copy of his report proposal last night, but it does not answer the point made in Amendment 74, namely that boys under the age of 15 and girls should not be sent to a secure college under any circumstances. It is true that they are currently mixed in smaller secure children’s homes and secure training centres, but those are smaller places. Having small units within large units on a large site is not satisfactory, not least because the numbers of boys under 15 and girls are likely to be swamped by the vast majority of those older children who will be on the remainder of the site. What the Minister has outlined is not that Parliament will be given an opportunity to debate the issue, but merely how the Secretary of State will inform it once he has decided to send them there. Noble Lords will not be surprised to hear that I find that totally unsatisfactory.

I have a confession to make about the whole secure college proposal. For the first time in my life, I feel ashamed to be British because I am so appalled that anyone should have dreamt it up, let alone tried to blandish Parliament with spurious claims that an entirely untested and unevaluated proposal involving increased education will reduce children’s offending. All the available evidence, not least that the smaller the establishment the better when children and young people are detained—which I recognise from my experience when inspecting young offender institutions, secure training centres and secure children’s homes—points to the proposal to establish the biggest children’s prison in the western world being far more likely further to damage some of the most vulnerable and damaged children in our society with their multiplicity of problems and needs, not just lack of education.

I make no apology for yet again quoting some of Winston Churchill’s immortal words describing a decent criminal justice system. He said that the way in which it treats its crime and criminals is the true test of the civilisation of any country and marks and measures the living virtue in it. Would that he were here to pronounce his verdict on the proposal, because he would do it so much more effectively than I can.

In his letter dated 4 December, the Minister described the secure college proposal as a pioneering approach to educating young offenders and tackling stubbornly high reoffending rates. He is absolutely right to describe laying a proposal before Parliament about which no one, not even the proposer, knows any details, as a pioneering approach, but I hope that it is one that will never be repeated. I fear that those in both Houses who have voted for the proposal thus far have done so because they are attracted by the word “pioneering” and seduced by the blandished prospect of past failure being swept aside. But if anyone who voted in favour bothered to probe deeper into what the proposal actually meant other than the provision of more education, they would find nothing other than the assertion that the market will find the solution.

So far, the Secretary of State has awarded a building contract for a paper plan on a site with planning permission for an earlier young offender institution. One would assume that the education provider would have a say in the build of a new college with education at its heart, but no. Bidding for the educational contract has not yet started, nor do there appear to be any criteria against which competitors will be judged. One would presume that bidders would be required to compete for the delivery of a specified regime, but that, too, is far from the case. Rather than lay down a regime, the Secretary of State says that it will be the content of the as-yet-unknown winning bid. I admit that I cannot imagine any business daring to function like that or it would fail. But to personalise the point, would anyone consider sending any child with a multiplicity of problems to any school unless they had a very clear idea of how those problems might be treated?

Two weeks ago, the All-Party Parliamentary Penal Affairs Group, which I co-chair, and the packed audience at the annual Longford lecture, heard Nils Öberg, head of the Swedish prison service, describe how after long and careful scientific research into the characteristics, problems and needs of their young offenders, the Swedish authorities had concluded that the invariable multiplicity of young offenders’ needs could best be treated by trained experts in small, local establishments containing no more than 10. They knew that this was bound to be expensive because of the number of appropriately trained staff required—child-skilled staff do not come cheap—but they had a duty to secure the future for all Sweden’s children; a duty that applies in every civilised country, which ours still purports to be.

15:30

That is why I agree with the noble Lord, Lord McNally, that staff are the key factor in decent child detention, and disagree with the Secretary of State both when he says that educational outcomes are more important than staff selection for this damaged and vulnerable group and when he persists in suggesting sending boys under 15 and girls to his college. This is where it is abundantly clear that the Secretary of State has not done his homework. He claims that the market will provide a better result at less cost than the present arrangements. Children under 15 and girls will need a completely different staff from those responsible for the vast majority of boys over 15. These will have to be provided from the overall budget, which means that they are bound to be at the expense of the older children. That is precisely what happened in young offender institutions when resources had to be taken from those over 18 to ensure that the Youth Justice Board’s contract requirements for those aged 15 to 17 could be met, the resulting paucity of regimes for young adults being a national scandal.

Of course reoffending is too high and too many of our young offenders have appalling educational records, but on what evidence does the Secretary of State base his belief that a commercial contractor can succeed where others have tried and failed? Why has he not released any research, scientific or otherwise, proving that he is right and that every single organisation and individual in the country who knows anything about dealing with troubled young people is wrong? Where is any analysis that he has researched the multiplicity of the children’s problems, or specification of the number of expert staff who must be on the site to cope with them?

At Third Reading, I mentioned the need for healthcare, particularly mental health care, to be of equal status with education in deciding the ethos of the secure college. Since then, I have heard yet more evidence that healthcare provision is imperfectly understood in the Ministry of Justice. I have told the House of the number of children in custody with speech, language and communication needs, and the remarkable results that speech and language therapists can achieve with them. I was told last week by the Royal College of Speech and Language Therapists that young offender institutions were refusing to allow boys to attend therapy because their absence from education counted against the target of 30 hours’ education demanded by the Secretary of State. Until March this year, the Lucy Faithfull Foundation conducted sex offender programmes in a number of young offender institutions. The Ministry of Justice then instructed that its contract was to be passed from the Youth Justice Board to NHS England. However, sex offender programmes come under offender management, not healthcare, and now there is total confusion, with young sex offenders being denied programmes. You could not invent such stupidity.

I could go on and on, but I will come to the crunch. At Third Reading, I asked the Minister to refer the matter to the Prime Minister because the future of our children is a national interest. I also wrote to the Prime Minister, pointing out that the Secretary of State was bulldozing ahead with a pet proposal in defiance of not only all the evidence but of the Government’s own announced social justice policy. I asked him to examine the evidence and state publicly whether he backed his Secretary of State or whether he felt it sensible that the proposal should be withdrawn for further consideration. I pointed out, as I have done since Second Reading, that the Secretary of State had a perfectly valid reason for withdrawal because, thanks to the success of the Youth Justice Board in reducing the number of children in custody, the nature of those who were left was very different from the previous number, not least because of the multiplicity of their problems. I have not yet had a reply to my letter and ask the Minister whether the Prime Minister has responded to my question on Report.

When the time comes, I invite the whole House, both those in the Chamber and those waiting to be whipped, to cast aside party politics and approach this issue from the point of view of a parent, grandparent, uncle, aunt, close relative or friend of a child with a multiplicity of problems, whom the Secretary of State for Justice intends to detain in his proposed secure college. I ask your Lordships to ask yourselves whether, knowing what you do about the proposal, you could live with yourself if an errant child in your family or of your acquaintance was to be detained in such an establishment. I realise that there is no exact parallel, because while we all know children with learning difficulties or disabilities, or mental health or behavioural problems, I doubt whether anyone in our immediate ken has been subjected to unspeakable parental neglect, or sexual or domestic violence, or to a lifestyle at what passes for home that is best described as chaotic and dysfunctional. Of course these children have committed crimes, but that does not mean that they should not be decently treated.

Therefore, when your Lordships vote, I ask you to follow your conscience as opposed to party diktat. This is the last chance that we have of preventing something that I would contend to be a stain on our nation, whether or not it contains boys under 15, and girls. I beg to move.

[Lord Beecham (Lab)]

My Lords, unlike the Minister and the noble Lord, Lord Ramsbotham, whose vast experience of the custodial system in this country we all acknowledge, I will confine my remarks to the issue of under-15s and girls. I do not in any way depart from the criticisms of the general principle, but that has now been settled and we must accept that secure colleges will go ahead, provided the Government manage to enter into suitable contracts to build and operate them.

The Government’s proposal now to consult on and publish a report on this specific issue perhaps raises more questions than it answers. There are questions, going back to the original process, about which organisations or experts have supported the proposal to house under-15s and girls in an establishment of this kind. I am not aware of any. Perhaps the Minister can identify some. There is also the question, raised before by the noble Lord, Lord Ramsbotham, about whether the Government have considered similar schemes in, for example, Spain and the United States—similar in the sense that they are addressing the problems of this young age group but conducted on very different principles from that which the Government propose to put forward in the context of the secure colleges envisaged by the Bill. Moreover, there have been representations from a wide range of major, national bodies, such as the Children’s Rights Alliance, the Prison Reform Trust, the Standing Committee for Youth Justice, the Howard League for Penal Reform and, in a recent briefing, which some of your Lordships will no doubt have received, eight national women’s organisations concerned particularly with the problem of girl offenders in these institutions.

There are also questions about the proposed consultations that the Government will enter into. Will they take place after the go-ahead is given for the construction of that part of the college that would house these young people or is that element of the proposed building contract to be deferred until the process is completed by the consultation to which the Minister refers? If it is not, I fear that it will become pretty much a fait accompli. Once the provision is made it is hard to envisage that the Government would fail to use it in the way that is currently envisaged.

There are also questions about the nature of the consultation. The Minister has circulated documents saying that the Secretary of State will consult the Youth Justice Board, Her Majesty’s Inspectorate of Prisons and Ofsted. The Minister has said it this afternoon. One would expect that and it is welcome, although I note in passing that the Chief Inspector of Prisons has, in what unfortunately will be his last few months in office, just published a response to the questions about the rules of the proposed college. In that response he is clearly expressing concern about the provision for under-15s and girls as well. So one potential respondent to the consultation is already expressing those concerns, although the chief inspector will no longer be with us as he is leaving his office in the new year before the final decision is made.

Will that consultation be confined to those three important institutions or will it go wider? Will it, for example, embrace the British Medical Association, which published a report this year called Young Lives Behind Bars, dealing with the provision of custodial facilities and the treatment of young offenders, which raised a great number of concerns? Will it embrace the local authorities to whose areas these young people will go back? It would seem to be essential that the social services—children’s services departments in particular but perhaps also other departments; one thinks of housing and the like—should be consulted about the provisions that are to be made for their young citizens who will be for a period incarcerated in the new college. The question also arises as to whether the other bodies—for example, the probation service, however it is to function under the new regime—will be separately involved. Again, one might have thought that that would be a given but it is not explicit in the Minister’s paper that outlines the consultation process.

It seems to me that there are significant questions to be asked even about the limited process that the noble Lord has outlined. I concur with the views of the noble Lord, Lord Ramsbotham, that it is an inadequate response. I take the point that was raised in the intervention by the noble Lord from the government Benches, who—if I may respectfully say so—perhaps rather naively thought that the Government might have contemplated that the report would require parliamentary approval. I agree with him, it would have made a significant difference, but that is not, apparently, on the agenda. One has to ask again why the Government are so reluctant to put their report on this hugely sensitive area to the test of the support of both Houses in the event that the consultation concludes that it is desirable to proceed with this very controversial measure.

I join the noble Lord, Lord Ramsbotham, in hoping that Members will look at this one, now limited aspect of what has been a very controversial proposal and conclude that the Government have not made their case to proceed in the way that they propose to do, even with the very limited concessional gesture that the Minister has outlined. If the noble Lord seeks to divide the House, I will ask my colleagues on these Benches to support him but I hope, as he does, that that support will not be confined or indeed even governed by a political stance as much as a genuine concern for these young, vulnerable people, and doubts about the rationale for and the potential problems that might be caused by the Government’s proposals, if implemented.

[The Earl of Listowel (CB)]

My Lords, I wish I could support the Minister. I am most grateful to him for all he has done recently for 17 year-olds in police custody and for acting promptly on the concerns of parents for their 17 year-olds in custody. However, I fear I must support my noble friend, to whom I pay tribute for his campaigning and determination in pursuing the welfare interests of these young people—girls and boys.

I have consulted with the experts whom I trust the most and their view is identical to those of the many other experts who have responded on this issue: it is far better to keep girls and boys under 15 in small local units. In large part that is because family relationships can be better sustained and strengthened. In some cases these relationships are unhelpful. In general, however, one has to try to support them.

I recall visiting Dr Camila Batmanghelidjh at Kids Company. One of her young people was my guide. He showed me the scar on his back from a bullet and spoke of his time inside prison. We also talked of the great pains Dr Batmanghelidjh took in helping to reunite him with his mother. He spoke movingly of the experience of the renewal of his relationship with his mother and the importance to him in his rehabilitation.

The noble Lord, Lord Farmer, and another Conservative Peer, recently spoke about the importance of fathers—the “dad deficit”, as it is called. According to the OECD in its data on family formation, from memory, 15% of children in Germany live without a father in the home; 18% in France; 22% in the UK; and 25% in the US. The OECD predicts, however, that we will overtake the US in the next 10 to 20 years.

We cannot continue to overlook the value of sustaining family relationships. It is vital that girls and boys under 15 are housed in local, small units, where those relationships can be fostered and supported. I urge your Lordships to support my noble friend Lord Ramsbotham.

15:45

[Baroness Butler-Sloss (CB)]

My Lords, I am a patron of a secure unit in Exeter, the Atkinson unit, which at the moment has troubled children coming under Section 25 of the Children Act, but it used to have children from the Youth Justice Board. It is a very small unit, taking 10 to 12 children. From my frequent visits there I have had the opportunity to see how this very small unit works extremely well with young children—those under 15. I am very unhappy about the Government’s proposals that children as young as under 15 should go into a large group of children, many of whom will be over 15, from whom they can learn all too much. I therefore also support the noble Lord’s amendment.

[Lord Marks of Henley-on-Thames (LD)]

My Lords, the arguments on this issue have already been well developed today by other noble Lords who have spoken, as well as at earlier stages of the Bill. I do not propose to develop the position that I have taken earlier in the Bill’s passage.

We all know that the reason for this House’s amendment was that the virtually unanimous professional evidence is to the effect that it would be unsatisfactory to place a small number of girls and younger boys in a secure college with a very large number of older boys. The pathfinder college at Glen Parva in Leicestershire is proposed to hold about 320 young people. There are currently only about 45 girls and 40 offenders under 15 in custody throughout the secure estate. Even adopting for Glen Parva a very wide catchment policy—which would itself be undesirable because of the distances these children would be from their homes, although I accept that that is not always a negative—it is highly unlikely that more than about 15 girls and 15 boys under 15 could be placed in Glen Parva. In my view, that is entirely unacceptable. It would be intimidating and unsafe for either group to be in this tiny minority in this very large secure college.

The Government say that they will not put boys under 15 or girls into Glen Parva at its opening. In a sense that concedes the case. They nevertheless say that they wish to be free to put boys under 15 and/or girls in Glen Parva or other secure colleges in the future. They propose to go ahead with the building of the two houses for these groups at Glen Parva. The design for Glen Parva has those two houses for girls and younger boys cut off from the main site, but the children held in them would share the main health and education block and access to the main site with a very large number of older boys.

My noble friend says that the Government will not use secure colleges in this way until they lay a report before Parliament. However, originally they did not say who would write that report. It now appears from what my noble friend said that it is the Secretary of State who will do the consulting and therefore, presumably, the Secretary of State who will prepare and approve the report. However, it is the Secretary of State’s own plan to use Glen Parva. The Minister does not say whether it will be incumbent upon this or any future Government to follow the recommendations in a report, nor has he offered any effective form of parliamentary scrutiny. An offer of a chance for Parliament to debate the report, with no right to stop a proposal proceeding, is no safeguard.

I have made it clear to my noble friend that I would want to agree a compromise on this issue if it were possible to do so. In particular, I accept that there is no definition in the Bill of what is meant by “secure colleges” or what size they should be. They could be smaller colleges than Glen Parva and more specialist, so that an educational environment that was mixed in gender and age might not be so inappropriate. However, that is not what is proposed at the moment. If the Government were to offer not to put under-15 year-olds or girls into secure colleges without parliamentary approval, that would offer Parliament a chance to consider and vote on any new circumstances that might be said to justify the detention of these groups in secure colleges. However, when my noble friend Lord Willis asked the Government for such an assurance, he was categorically refused it. The noble Lord, Lord Beecham, says that he was naive to ask for it. I do not believe that it is a naive request; it is a justified and justifiable one, and the Government’s position can be sustained only if they accede to it.

To date, no opportunity for parliamentary scrutiny has been offered. In these circumstances, while I have listened very carefully to what the Minister has to say, I find it impossible to support the Government’s position.

[Baroness Armstrong of Hill Top (Lab)]

My Lords, I support the noble Lord, Lord Ramsbotham, largely because since this House last discussed secure training colleges, two secure training centres have been given notice of closure by the Youth Justice Board. One of those, Hassockfield, was in my constituency. What lessons have the Government learnt from the introduction of secure training centres? My recollection is that I opposed them when we were in opposition when the legislation went through in, I think, 1996. My Government said that they had to carry that through because the contracts had been signed. When Hassockfield opened, I was contacted virtually daily by the police who said, “The children in here are too young. They do not understand what it means to be in a secure establishment. We are being called every day and they’re ending up in police cells”. Indeed, they wrecked the place. So the initial contract, which was given to an American company, then went to Serco. Someone from the Youth Justice Board had to be in there full-time to sort out the regime, and since then Hassockfield and, I understand, the other secure training centres have not taken many children under 15 because the regime in a secure centre, even with what Ofsted says is now very good education, is not suitable for young children.

The other issue is about being near home. There was a tragedy at Hassockfield. I discussed it at great length with a whole range of people, and one of the reasons for that young boy taking his life, although by no means the only one, was his distance from home and his contact with home and his own community.

The Government are taking enormous risks with the safety—and the ability to change and handle their lives—of children in incredibly complex difficulties. In relation both to having one centre in the middle, to which children have to travel a long way, and to the issues of the age group and including girls, the Government need to learn the lessons of their own history in setting up secure training colleges. They should think about this again and look at the language used when the colleges were introduced. It was very similar to the language that Ministers used in this House today and in the Commons last week. If they do so they will recognise that they are making a mistake and that they really do need to rethink this policy.

[Lord Carlile of Berriew (LD)]

I will ask the Minister three short questions, but before I do, perhaps I may give a little reassurance to the noble Lord, Lord Ramsbotham, who moved the amendment. He encouraged Members of your Lordships’ House not to vote according to party diktat. As a Liberal Democrat, I can assure him that although we are given advice—sometimes strong advice—we do not deliver party diktat in my party. I am happy to be able to say as a Liberal Democrat that nobody in this party expects us to vote for a proposition to which we conscientiously object. That is why I shall be voting for the noble Lord’s amendment unless we hear a meaningful concession from my noble friend the Minister in the course of the minutes to come.

My three questions are these. First, the Government have said that they do not intend in the foreseeable future to use powers to allow the secure college estate to be used for under-15 year-old boys and girls. What does “the foreseeable future” mean? Does it end at the time of the next general election, thereby meaning that in the unlikely event of a Conservative Government being elected, the foreseeable future will be over and they will immediately decide to allow these facilities to be used for girls and young boys? If the foreseeable future does not end at the time of the forthcoming general election, why are the Government in such a hurry to allow these facilities potentially to be used for girls and young boys?

My second substantive question is about the secure college at Glen Parva itself. My noble friend the Minister and other Ministers have been kind enough to allow Members of your Lordships’ House to attend repeated meetings in which we have pored over the plans of this establishment. As the noble Lord, Lord Ramsbotham, said, those plans are entirely unsuitable for girls and young boys. The whole design of the place is founded upon the availability of the land, not upon starting with a designer’s brief to produce a secure college. That being the case, and that being the overwhelming opinion of all experts who have looked at this proposal—other than those who are within, as far as I can see, the Conservative part of this coalition Government—why do the Government not wait to obtain permission to send girls and very young boys to a secure college until there is a plan that has been properly consulted upon on a wider basis and fulfils empirical need?

Thirdly, why do we need this now at all? We know that the Glen Parva secure college will not open until, at the earliest, 2018. I do not think that I can remember a single year in my 30 years in one or other House of Parliament in which there has not been a criminal justice or sentencing Bill—or two, or three. Why can we not wait and have primary legislation based on proper evidence in the next Parliament? I doubt whether anybody from any Front Bench in this House would deny that there will be a criminal justice Bill in the first Queen’s Speech at the end of May. What is the hurry now? It is because of what I suspect will be the answer to those questions that I shall be supporting the noble Lord, Lord Ramsbotham.

16:00

[Lord Glenarthur (Con)]

My Lords, I had not taken a deeply close interest in what this amendment is about until I listened to what the noble Lord, Lord Ramsbotham, said. About 30 years ago, I took over from my noble friend Lord Elton as the Minister in the Home Office responsible for prisons. Subsequently, I have been a patron of the Butler Trust, which has done a lot to support the work of prison officers and prison staff of all sorts in the work that they do, not only in England but in Scotland, where I was the Scottish patron. One of the most disturbing elements I found in my work, not only in the prison world but in the Butler Trust world, was the parlous state of those young people who ended up in incarceration in one form or another. It disturbed me immensely.

What is proposed by the amendment makes sense up to a point, but I am increasingly concerned that one of the ways in which the Government would be wise to try to buy off the opposition to this is by moving from the current negative procedure to the affirmative procedure and using the opportunity that affords them to allow Parliament to debate what it is not otherwise being allowed to debate. In that case, the Government will have the support of many of us, but denying that opportunity is something I find extremely difficult to live with.

[Baroness Farrington of Ribbleton (Lab)]

My Lords, I do not understand to which procedure the noble Lord referred. I can see no example of the negative or the affirmative procedure. In any case, in your Lordships’ House we either accept everything or vote it down completely; that is not amendable.

I approach this as a parent and a grandparent and as somebody who has been on a police authority, a social services committee and an education committee. I have visited secure establishments. Let me reassure noble Lords who believe that those of us who are expressing concern are not concerned about reoffending. I am concerned about reoffending for the sake of other young people as well of as the young people themselves. I am deeply committed to extending anything that will help young people not reoffend. However, I ask noble Lords to imagine that they are members of a local authority considering this proposal. Placed on you by law would be a duty of care to the young people concerned. Negligence could well end up with proceedings being taken against you.

We owe it to those young people to ask about this. I accept that the argument about secure colleges is lost, except for these two groups. I remain deeply uneasy. I cannot possibly do anything other than accept the noble Lord’s Motion and sleep easy believing that we have fulfilled our duty of care.

I again ask the Minister, for whom I have respect: why on earth will we not be allowed to debate and offer detailed observations before any decision is taken? That is a simple proposition. If the Government are proved right, your Lordships’ House will listen and be fair, but we are not being offered that. I ask every noble Lord to say to the Government: at least convince me before you ask me to reject the Motion of the noble Lord, Lord Ramsbotham.

[Lord Lester of Herne Hill (LD)]

My Lords, I wonder whether my noble friend the Minister could add two further questions to the three asked by my noble friend Lord Carlile, which will help me in deciding exactly what to do. First, will he confirm to the House that neither the affirmative procedure nor the negative procedure is to be applied before the scheme is brought in? As it stands, the scheme can be brought in by the Minister without either. If that is right, will he then explain why the Government decided in the other place that they would ensure that the affirmative procedure would be used to the extent that the Government wanted to authorise the use of force, but not otherwise? Why is the affirmative procedure being used in that case but not in this?

My other question is this. I have looked in vain at the debate in the other place to see whether they had the opportunity to consider the extremely powerful points made by the noble Lord, Lord Ramsbotham, with an answer by the Minister. I cannot find anywhere in Mr Andrew Selous’s speeches on 1 December even the beginning of a reply to the noble Lord’s points. I ask that question because, before taking the solemn step of sending the matter back to the other place, it is important to know what happened. If I had seen a rebuttal of the points of the noble Lord, Lord Ramsbotham, that would affect the way in which I will behave, but I ask my noble friend the Minister whether I am right in saying that the noble Lord’s points simply went unanswered.

[Baroness Benjamin (LD)]

My Lords, I would briefly like to speak on Motion A1, which would ensure that girls and younger children are kept out of secure colleges as we know them. We know them to be tough, intimidating and challenging places. The children’s charity, the NSPCC, believes it would be unsafe, inappropriate and potentially damaging to hold girls and under-15s in such institutions, especially as they would be with many older boys. The main reason for this is that many of the girls in custody are highly likely to have experienced sexual abuse. Placing them in custodial institutions may be traumatising and damaging to their rehabilitation. Placing girls and young children in secure colleges will cause serious and unprecedented safeguarding risks that should be considered.

Every child deserves to have the best education on offer, to help them prepare for the future and to help them cope with life. But to reach their full potential, children need to feel safe and not intimidated or bullied. We know that these environments will be made up of the most troubled children in the country. There is a need to give these vulnerable children the confidence to reach their potential, to help them engage with their education and to give them stability and consistency. The evaluation report by Ofsted does nothing to address these serious safeguarding concerns. I ask my noble friend the Minister: how will these concerns be addressed? What type of facilities will be put in place to give children and young people the stability, safeguards and requirements that are needed to deal with their mental and physical health and well-being? I look forward with great anticipation to my noble friend’s response, and hope he gives full consideration to our concerns today. I will accept nothing less than a compromise.

[Lord Elton (Con)]

My Lords, I was the Minister responsible for the police and the probation service for one year, and Minister for the Prison Service for three years. I was a teacher for 10 years and have been a father for 50, as well as a grandfather for just a few. I find myself in a very uncomfortable position. I have a great loyalty to and a great length of service in this party. On the other hand, I come here not by appointment by any present power but through my father having preceded me, and I remain here on a vote not of my party but of the whole House. Therefore, I feel that I have to be thoroughly independent in this matter.

I must say to my noble friend that all those spheres of experience that I have chime with the advice that he is getting from all quarters of this House. It is not necessary for me to repeat in a humdrum way what has been so eloquently and inspiringly uttered by others, but I want to tell my noble friend that I cannot possibly follow him into the Lobby on this occasion.

[Baroness Williams of Crosby (LD)]

My Lords, I congratulate the noble Lord, Lord Elton, on what he has said and the courage that he has shown. There are just two other questions that I should like to ask the Minister. I was once upon a time, and for some years, a Prisons Minister.

The first question rests on the fact—noble Lords can check this—that young women are most likely to engage in serious self-harm between the ages of 16 and 20. Self-harm is much more common among women prisoners than among male prisoners; it is four times as high—so disproportionate is this attempt to raise sympathy and get attention. Is the Minister aware of these quite striking figures for the very high level of self-harm among young women, some of it serious self-harm, in the very age group that we are considering sending to secure colleges? What steps will be taken to ensure that any girl sent there has no previous record of self-harm?

My second question is quite different. We have all listened closely to the noble Lord, Lord Ramsbotham, and we respect his extraordinary integrity in this House on issue after issue. Is the Ministry of Justice determined effectively to rule Parliament out of a system of consultation, advice and help, which I believe that most of us in this House are crying out for? We have seen an astonishing list of dismissals of Parliament in the course of proceedings on this Bill. I find it very unfortunate, and I am not sure that it is what the Minister intended, but it is certainly the net effect.

Will there be any consultation with the House about who will be the author of this report? In the light of the Home Office committee on sexual abuse, one can see what an intensely controversial question that will be. Will there be any willingness to listen to the House on consultation after the plans have been put forward for submission to the ministry? Finally, will the Minister consider whether the response given by the Commons to our amendments—namely, “it is not appropriate”—is an appropriate argument or even an appropriate answer to the many issues raised by the deep concern of many of us, of all parties, in this House?

[Baroness Ludford (LD)]

My Lords, will the Minister briefly explain precisely why the Government feel unable to take the further step, which seems very reasonable to a lot of noble Lords who have spoken, of allowing parliamentary approval of that next step—for younger boys and girls to go into secure colleges? There is some bemusement over why the Government could not take that further step, as it seems unreasonable to withhold it. It would certainly help me in my decision in voting to understand the reasons why the Government feel unable to agree to that procedural step.

[Baroness Afshar (CB)]

My Lords, is the Minister aware that teenagers and pre-teenagers are the most racist groups, particularly those who are disturbed? Putting young, vulnerable minorities in the context of intense racism creates future terrorists. Has the Minister considered the cost to this nation of creating more enemies within its own people?

16:15

[Lord Storey (LD)]

My Lords, I apologise for not speaking before but I have faced two family bereavements. The Government ought to congratulate themselves that the number of young people held in secure accommodation has dramatically reduced. These young people obviously need education. Some 70% are special needs pupils; 20% are statemented. They are also terribly emotionally damaged. They are children; I am not talking about youths or young adults. A 12 year-old child can potentially be hundreds of miles away from the thing they need most—the love of their family and friends. Could the Minister say whether, if this custody provision—we are told it is Europe’s largest—goes ahead, any provision will be made for travel costs for those parents wishing and perhaps hoping to visit their children on a daily basis?

[Lord Faulks]

My Lords, this has been a lengthy debate in which we have had some important contributions from a number of noble Lords, some of whom have been with us for the whole journey of scrutiny and some of whom have made their first appearance today. I am sorry that more noble Lords were not able to participate in the very considerable number of meetings in which the Government explained what they were doing. We answered many of the questions which have been raised by a number of noble Lords for the first time today. We answered them in correspondence. We also had a number of meetings in which we went through the plans. While I do not wish any disrespect to those noble Lords who have asked a number of questions to which I have already given the answer in various contexts, I hope they will forgive me if I refer significantly to the debates that have already taken place at Second Reading, in Committee and on Report, and to various letters to all Peers. I will try to keep my remarks as short as is consistent with answering the general burden of the debate.

I was disappointed that my noble friend Lord Marks said that there had been no opportunity for parliamentary scrutiny. I accept that the scrutiny may not have satisfied him or other noble Lords that the plans are appropriate, but scrutiny there has been.

[Lord Marks of Henley-on-Thames]

I am sorry to interrupt my noble friend but he has plainly misunderstood what I was saying. I am not complaining about the scrutiny of this Bill. I am complaining about the lack of a parliamentary approval proposal from the Government before girls and under-15s can be placed in secure colleges.

[Lord Faulks]

I am grateful for that correction or clarification by the noble Lord. It is important to remember that the context in which the Government are approaching the secure colleges is, as my noble friend Lord Storey correctly pointed out, that we have a reduction in the youth estate, which is to the credit of the Government, the Youth Justice Board and all those concerned with the criminal justice system. However, we have a small number of young people who, for various reasons—and those reasons have been touched on by a number of noble Lords—present many different problems and issues and need to be detained in one form or another on the youth custodial estate.

We cannot be satisfied with the fact that 68% of young people reoffend after leaving custody. Nor can we be satisfied that education is not a greater focus of the efforts to turn these young lives around. In fact, it is 74% where secure children’s homes are concerned. For these reasons, we do not wish to exclude any groups from accessing the benefits that we believe the new model of custody will deliver.

I wonder how much there is, in fact, between the Government and many noble Lords who have spoken. The Government are indeed careful and wary, for all the reasons that have been outlined, before sending those aged under 15 or young girls to these secure colleges. That is why I gave a commitment to the House that we would not cause them, in any circumstances, to be sent there at the beginning. It is also extremely important to emphasise that they will be sent there only if the Youth Justice Board and the youth offending teams think that it is appropriate, because all those bodies and the Government recognise precisely the points that have been made, namely that these young people are extremely vulnerable and that it should only be—

[The Earl of Listowel]

I am grateful to the Minister for giving way. I have heard him make this assurance previously. I ask him to bear in mind the case of Joseph Scholes. This was a young man in care. He was in a children’s home. He was involved in a gang that stole a mobile phone. It was determined that he should be placed in custody. The court recommended that he should be placed in a local authority secure children’s home. There were not sufficient places available, so I think he was placed either in an STC, a secure training centre, or in a YOI. He took his life after that. Realistically, one has to recognise that the YJB and others are under severe financial constraints and will perhaps be even more so in future. While they may wish to do the very best for every individual child, if these spaces become available there will be great pressure for them to be used.

[Lord Faulks]

These institutions are important. Those who have seen the plans will appreciate that they are bright and barless. In answer to some of the points made, they also provide a separate, small group of 10 to 12 units for girls and under-15s, if they are placed there, to ensure a degree of separation for them. As for the provision of medical attention, there is to be, as those who have seen the plans will know, a rather sophisticated provision of mental health, provided by NHS England, as well as physical health and dentistry—which should in fact, I respectfully suggest to noble Lords, more effectively address health needs than they probably are in the community or in any of the other institutions that currently exist in the youth custodial estate.

I was asked a large number of questions, particularly by the noble Lord, Lord Carlile, and my noble friend Lord Lester, essentially saying, “What is the hurry? What is the foreseeable future? Why do you want to have this provision approved now? Can we not wait until there is a subsequent Bill?”. The answer is this: we have parliamentary approval to set up these secure colleges. I know that many noble Lords do not approve of this, but that issue is now no longer before the House. If the colleges are satisfactory and meet the approval of the inspections, we wish to allow those who may benefit—provided all the safeguards have been followed—to take advantage of that institution.

My noble friend Lord Lester asked where my friend the Minister, Andrew Selous, answered the points made by the noble Lord, Lord Ramsbotham. I refer him to cols. 101 and 102 of Commons Hansard, rather than reading it all out. During the course of his peroration, Mr Selous said that, as the father of three daughters, he would not wish to deny them the opportunity to go to a secure college. I would not, perhaps, go that far. However, the point that he makes is an important one. We should not, provided that the secure colleges are satisfactory, discriminate against girls having the possibility of taking advantage of what we solemnly believe will be a satisfactory educational provision.

Of course the noble Lords say that there should be an affirmative or a negative procedure. It will not be forgotten that this was a case in which there was a loss by one vote in your Lordships’ House, and then it was reversed by a significant number in the House of Commons. It might have been thought that the Government would simply ask this House to think again. We have been endeavouring to provide some assurance. The Secretary of State will indeed provide a report. As I have indicated, he can consult whomever he thinks is appropriate before providing a report as to why he thinks it necessary, if indeed he comes to that conclusion. He may well come to the conclusion that it is not appropriate; that remains an option.

I am sorry that there has not been an acknowledgement that the Government have tried to engage with interested Peers on this issue. I know that the noble Lord, Lord Ramsbotham, is extremely hostile to secure colleges as a whole, but we ask him to bear in mind the essential failure—we regretfully say—in the current arrangements to answer the real problems that have been identified in that relatively small number of people who are in the youth custodial estate. We urge him to ask himself whether it is really appropriate to deny this vulnerable but important cohort of people the opportunity—if it is appropriate, with all the safeguards that we have examined—to take advantage of those secure colleges. We want them—if it is appropriate—to have that opportunity. We can assure the House that these safeguards will be gone through and furthermore that there will be a report that will make the Secretary of State’s reasoning transparent.

[Lord Richard (Lab)]

My Lords, I plead guilty to the indictment framed by the noble Lord of not having taken part in any of the previous debates. Having listened to the debate this afternoon, I wish that I had. The noble Lord keeps saying “if it is appropriate” and that we must not deny young girls the great opportunity that these colleges might provide. Will the Government say that they will not put any girls under 15 in these establishments until the Government have established that these colleges work and would be of benefit to those children?

[Lord Faulks]

As I indicated, there are inspectorates —HM Inspectorate of Prisons, Ofsted, the Youth Justice Board and youth offending teams—and now we have a prospective report by the Secretary of State. The noble Lord, Lord Ramsbotham, said that the Secretary of State wished to put these people in the secure colleges. With great respect to the noble Lord, what happens is that if they commit offences and a court has decided that it is appropriate to send them there, subject to all the other safeguards, they will be sent there. The Secretary of State has nothing to do with them being sent there. His task is to provide appropriate establishments.

I respect the concern that noble Lords have quite rightly shown for this cohort—and I fully accept that they have exhibited it not just now but at various stages during the examination of these legislative provisions. They have expressed their view, those views will have been communicated to the Secretary of State, among others, and this House has made its position clear. Nevertheless, having considered the matter carefully, I ask the noble Lord to decide not to press his amendment.

[Lord Glenarthur]

My Lords, before my noble friend sits down, perhaps he would reconsider the issue of whether it is more appropriate to go to the affirmative resolution rather than the negative. I have sat on the Front Bench for many years with many of my colleagues here and have been through the same debate, but often it is wiser and more sensible to try to pursue something that allows Parliament to have that debate rather than simply to brush it aside. I understand the negative procedure only too well, and I hope that on this point my noble friend will reconsider.

[Lord Marks of Henley-on-Thames]

My Lords, before my noble friend answers that question, will he confirm to my noble friend Lord Glenarthur and the whole House that the present proposal is that there would be no parliamentary procedure at all apart from the laying of a report for consideration—no vote, no regulations and no SI is proposed?

[Lord Faulks]

I thought that I had made it reasonably clear that there will be the laying of the report. That is the limit to which I committed and I commit to it now. It is beyond what we committed before. It may not be enough for some noble Lords but none the less the report, informed as I have said that it will be, will enable Parliament to consider whether it is appropriate.

[Lord Ramsbotham]

My Lords, I am very grateful to the Minister for his summing up but, as he will no doubt understand, I do not find it convincing at all because he has answered absolutely nothing. We have heard nothing about the details of this college and we have never heard any evidence of why the Government think that it is appropriate. We have heard yet again about education, and about a healthcare centre, but we have not had an acknowledgement of treating all the multiplicity of problems that these children face.

We keep hearing the word “might”, because there is no evidence to show that this approach has worked. In the absence of that, it would be irresponsible of us not to press further. I am extremely grateful to all noble Lords who have taken part in this very stimulating debate. They have shown yet again not only the vast amount of expertise in this House but the degree of compassion felt for the people we are talking about. I was particularly struck by the noble Baroness, Lady Williams, questioning why it was that this Government chose to rule Parliament out of any consultation on these issues. Here again, the offer of a compromise was thrown down and rejected by the Minister. I feel that I have no alternative than to seek to test the opinion of the House.

16:31

Division 1

Ayes: 304

---

Labour: 167
Crossbench: 81
Liberal Democrat: 26
Independent: 10
Bishops: 4
Conservative: 4
Democratic Unionist Party: 1
Ulster Unionist Party: 1
Plaid Cymru: 1

Noes: 240

---

Conservative: 179
Liberal Democrat: 52
Crossbench: 5
Ulster Unionist Party: 1
Independent: 1

16:49

Motion B

Moved by Lord Faulks

That this House do not insist on its Amendments 97, 98, 99, 100, 101 and 102, to which the Commons have disagreed for their Reason 102A.

Lords Amendments

97: Clause 64, page 64, line 35, leave out “must” and insert “may”

98: Clause 64, page 64, line 37, leave out “not” and insert “decline to”

99: Clause 64, page 65, line 10, leave out “must” and insert “may”

100: Clause 64, page 65, line 13, leave out “must” and insert “may”

101: Clause 64, page 65, line 33, leave out “must” and insert “may”

102: Clause 64, page 65, line 40, leave out “must” and insert “may”

Commons Reason

The Commons disagree to Lords Amendments Nos. 97, 98, 99, 100, 101 and 102 for the following reason—

102A: Because it is appropriate to impose duties, rather than to confer discretions, on the High Court and the Upper Tribunal in connection with judicial review proceedings in which it is highly likely that the outcome for the applicant would not have been substantially different if the conduct complained of had not occurred.

[Lord Faulks]

My Lords, we turn to Part 4 of the Bill, and specifically the clause concerning procedural defects highly likely to have made no substantial difference to the outcome of a judicial review. I pay tribute to this House, and the expertise shown in many corners, which has been brought to bear on these clauses. We have heard from my noble and learned friend Lord Mackay of Clashfern, who brought his unrivalled experience to the debate. He referred to comments of a former Secretary of State, the noble Lord, Lord Adonis, who wrote in his book, Education, Education, Education:

“However, if Parliament was navigated quickly and unobtrusively, the same was not true of the courts. As soon as academy projects became public, opponents seized on judicial reviews as a means to stop them. Ultimately they failed, but only after years of lengthy, expensive and immensely distracting court actions”.

My noble friends Lord Horam and Lord Tebbit told us that judicial review does not exist in isolation and has an impact on projects in the real world that deliver employment to people and can significantly affect actual problems. There have, of course, been many contributions far less supportive of the Government’s proposals. For example, the House has heard from a number of distinguished judges with enormous experience of judicial review, including the noble and learned Lords, Lord Brown of Eaton-under-Heywood and Lord Woolf. We heard from the noble Baroness, Lady Campbell of Surbiton, of the important role that judicial review can have when used properly.

Throughout, the Government have listened carefully—more carefully than some of our more trenchant critics suggest. The amendments that we propose in later groups bear, I hope, testimony to that. In the case of financial information we have proposed an amendment, despite having won a substantial victory in the other place. However, I must say to the House that on the matter of this clause the Government have not been persuaded that any amendment is required.

When used appropriately judicial review is an essential part of the rule of law, by allowing for the lawfulness of public bodies’ actions to be tested in court. But it is an area that has been misused, with claims brought with no real prospect of success, and with a view to delaying and adding expense to perfectly lawful acts that are simply disliked. Such challenges place significant burdens on the public purse and strike at the economic development that the country badly needs.

The Government want to restrict judicial review, not abolish it—I must emphasise that. Rather, we want to restrict it to cases that have real merit. Judicial review should not be used as a campaigning tool. It should be concerned with unlawful activity that has or is likely to have a real effect on outcome.

Clause 64 is intended to filter out claims brought on technicalities highly unlikely to have made a substantial difference to the claimant’s position earlier and at a lower cost. Your Lordships’ amendments would, in the Government’s view, undermine the clause. The elected Chamber rejected the House of Lords amendment, voting by 319 to 203 last Monday.

As this House amended it, Clause 64 would permit the court to refuse permission or a remedy where it was considered highly likely that a complained-of flaw would have made no difference to the outcome for the applicant. The Government’s formulation would require the judge to consider an argument that it was highly likely that a complained-of flaw would have made no substantial difference to the outcome for the applicant, and to refuse a remedy or permission where he or she was satisfied that the argument was made out.

Although the clause introduced duties on the court, it retained significant judicial discretion—primarily, of course, in deciding when the “highly likely” threshold is met in a particular case, and where the court is of the view that there is any significant doubt that it is, it can act as it thinks fit. Indeed, we have deliberately avoided defining “highly likely” in the statute, meaning that the judiciary will determine how it will apply in practice.

In the House of Commons, in speeches pitched against the Government’s original position and in favour of the amendment made by your Lordships’ House, it was said that we would be putting the judge in the position of the decision-maker. I simply fail to understand this point. The judge is not being asked to second-guess the decision of the administrative body; he or she is being asked simply to consider whether it is likely that there would have been a substantially different outcome if the impugned decision or the conduct had not occurred. This is very much judicial territory. Judges perform such assessments in all sorts of different circumstances.

The second point made in the House of Commons was that the judge would not be able to come to a decision without a mini-trial or dress rehearsal. I do not accept that point either. At the moment he or she will have to decide in appropriate circumstances whether it is inevitable that the outcome would have been unchanged. Now the bar is slightly higher but the process by which the judge arrives at the conclusion will be very similar, if not the same.

The noble Lord, Lord Pannick, referred to public interest. Of course, public interest plays a part in a number of different legislative provisions in different contexts. But we believe that the threshold established in this clause does best serve the public interest. It will ensure that judicial review cases that progress beyond permission stage are not purely academic and are not based on minor technicalities highly unlikely to make any difference. We therefore think that this strikes the right balance. Indeed, the House’s amendments to the clause could serve to undermine the intended effect, and underestimate the significant safeguards built into the clause as agreed by the other place.

There is a balance between imposing appropriate duties to ensure that these reforms have the intended effect and preserving the important role of judicial decision-making. I strongly believe that this clause gets the balance right between allowing judges to decide matters of judicial review and nevertheless providing appropriate safeguards to ensure that inappropriate and meritless judicial reviews do not proceed further. I beg to move.

[Lord Phillips of Sudbury (LD)]

Before my noble friend sits down, will he be so kind as to give a little more information about the underlying justification, as he puts it, for the rejection of this amendment? That is, he put it in terms of abuse of the judicial review process, technicalities, academic applications and so on. Has he any statistics or indications as to the extent of that abuse?

[Lord Faulks]

No, I do not have any statistics, I am afraid.

Motion B1

Moved by

[Lord Pannick]

As an amendment to Motion B, at end insert “, but do propose the following amendment in lieu of those Amendments—”

Amendment in lieu

102B: Clause 64, page 65, line 46, at end insert—
“( ) The duties of the court or tribunal under section 31(2A), (3B) and (3C) of the Senior Courts Act 1981, or section 16(3B), (3C) and (3D) of the Tribunals, Courts and Enforcement Act 2007, are subject to the discretion of the court or tribunal to act otherwise where it considers it in the public interest to do so in all the circumstances of the case.”

[Lord Pannick (CB)]

My Lords, I am very grateful to the Minister. His door has been open in recent weeks to discuss matters of concern and interest with noble Lords who are concerned about this clause.

On Report, your Lordships voted by a majority of 66 to amend this clause to maintain a degree of judicial discretion. The Government lost that vote because they lost the argument. Judicial review is of central importance to the rule of law. It is the means by which citizens seek to establish before an independent judge that public authorities, including Ministers, have acted unlawfully.

17:00

The courts do not just grant remedies for the individual applicant. They state what the law requires so that Ministers and officials know what test to apply in future cases. This clause, if enacted in the form that the Government wish to see, would oblige a judge to dismiss a judicial review application at the outset, however important the issue and however strong the argument that the defendant, whether it is a Minister or a civil servant, has broken the law. Requiring a fair procedure, and requiring Ministers and officials to comply with the law of the land, is not a technicality. It is very disappointing that, despite the substantial majority in your Lordships’ House on Report, the Government have offered no concession whatever on this clause.

The issue before your Lordships’ House is a very simple and important one. There needs to be an element of judicial discretion. The absence of judicial discretion is not, to use the Minister’s words, a fair balance. During the one-hour guillotine debate in the House of Commons on all three of these judicial review issues—they were taken together—a Conservative Member of the House of Commons, Mr Geoffrey Cox, said that he could not support the Government because this clause will mean,

“that flagrant and absolutely unacceptable behaviour by the Executive could be condoned by saying, ‘Well, it made no difference.’ There are times when courts ought to mark a fundamental lack of due process”.

I agree. More importantly, so did Mr Grayling. The Lord Chancellor intervened in the debate and said:

“The ‘exceptional circumstances’ provisions would allow a judge to say, ‘This is a flagrant case and must be heard’”.—[Official Report, Commons, 1/12/14; col. 82.]

The Lord Chancellor made the same point at col. 72. That is precisely the defect of this clause. It contains no exceptional circumstances provision. It contains no power for the court to say, “This case must be heard”. The clause imposes an absolute duty on the courts to dismiss cases where it is highly likely that the defect would have made no difference, however flagrant the legal error and however important the issue from the perspective of the public interest. Since the Lord Chancellor in the debate recognised the obvious need for a degree of discretion in this clause, it is incomprehensible to me why the Government are so determined that the clause must be enacted with no degree of judicial discretion.

In those circumstances, I invite the House to ask the other place to reconsider this matter and reconsider it on the basis of what this clause actually provides, and the damage that it will do to the rule of law in this country. The Motion in my name now before the House adds a reference to the public interest. It is an improvement on the amendments approved by your Lordships’ House on Report in that it identifies the purpose—the essential purpose—of retaining a degree of judicial discretion.

On this issue of the rule of law, the House of Commons should be asked to think again. I beg to move.

[Lord Beecham]

My Lords, it is a measure of the importance of the matters that we are now debating, and upon which we will have to vote, that the noble Lord, Lord Pannick, made special arrangements to fly back this morning from Moscow at 5.45 am, Russian time. I do not know whether the Lord Chancellor has ever been to Moscow, but I suspect that Mr Putin’s views about holding government and other public bodies to account for the lawfulness of their decision-making would be closer to the Lord Chancellor’s than to the noble Lord’s.

After all, Mr Grayling has proclaimed that judicial review is,

“not a promotional tool for countless Left-wing campaigners”,

or, as he put it in the course of the 58 minutes that the House of Commons devoted to debating the amendments passed by your Lordships’ House:

“Judicial review was never intended to be a tool for pressure groups to seek to disrupt perfectly lawful decision making in Government and Parliament, it was never designed to be used as a political campaigning tool, and it was never intended to put the courts above the elected Government in taking decisions over the essential interests of this country”.

He went on to claim that,

“in far too many examples, that is precisely what it has become”.—[Official Report, Commons, 1/12/14; col. 70.]

Oddly enough, the Lord Chancellor failed to provide any examples of these malign abuses of the system, the essential interests of the country that he felt were under threat or indeed the identity of the so-called abusers. On Report, the noble Lord, Lord Faulks, at least condescended to cite an example. Members may recall shuddering with horror at the revelation that the building of a supermarket in Yorkshire was delayed by all of six months due to an application for judicial review—brought, incidentally, not by a left-wing or other pressure group but by a commercial rival of the developer. I do not blame the Minister at all for relying on this underwhelmingly persuasive case. He was struggling with a grossly inadequate brief—something that I suspect from time to time he has had to deal with over the years, though perhaps in less important contexts.

The Secretary of State for Justice, moreover, whose title looks increasingly like one coined by George Orwell, gives the game away in presuming that, “perfectly lawful decision making” is what is at stake. The implication is clear: what the Government legislate is ipso facto lawful. In the fantasy world in which the courts are besieged by meddlesome litigants pursuing left-wing causes—litigants such as the Countryside Alliance and the Daily Mail—the courts are deemed to be wholly incapable of sorting out the legal wheat from the campaigning chaff. Typically, though, Mr Grayling, in the amendments that he has produced, which were never spelled out or indeed debated in the Commons, ignores the basic requirements, already enshrined in law and practice, that permission from the courts is required both to bring a case to hearing and for third parties to intervene. The Government, themselves a possible defendant in these cases, seek to restrict the exercise of judicial discretion in their own interests, and on the basis of the flimsiest evidence of the abuses that they affect to detect in the working of the system and the decisions of the courts. In the unlikely event of Mr Putin becoming aware of the Government’s approach, he would be lost in admiration.

The Opposition support the amendments from the noble Lord, Lord Pannick, Motion B1 and Amendment 102B to Clause 64, which would preserve the court’s discretion to grant judicial review where the court considers it in the public interest to do so. I invite my colleagues and others to join the noble Lord in the Content Lobby.

It would be convenient if at this stage I indicated the Opposition’s position in relation to the other amendments. We support the noble Lord’s amendment to Motion C, dealing with Clauses 65 and 66, and his amendment to Motion D, which sets out in Amendments 107A to 107E what purport to be the Government’s concession in relation to the financial position of interveners. I remind the House again that interveners must obtain permission before taking part in any application. The Government’s amendments would oblige the court to order an intervener who has been granted permission to pay costs to any other party in any one or more of four instances. The instances are: under subsection (4A)(a) of Amendment 107B, where they act as a party, although the court already has a discretion in such a case; under subsection (4A)(b), where the intervention has not provided significant assistance taken as a whole, whatever that is supposed to mean; under subsection (4A)(c), where the intervention relates to matters not necessary to resolve the issue—although, again, if they did not, permission would presumably not be granted in the first place; and under subsection (4A)(d), where the intervener has behaved “unreasonably”, whatever that means in a context in which the court already has a discretion.

The potential for mandatory awards of large costs against interveners is self-evident and self-evidently chilling. In addition, I understand that the question of financial resources and the extent of any liability would be left to the Rule Committee to determine, subject only to a negative resolution. In this context, it might be thought that this is a highly debatable procedure for dealing with such an important issue in such an important area.

I do not need to enlarge on the weight of opinion opposed to these measures in the senior judiciary, past and present, or the wide range of opinion, including that of the Joint Committee on Human Rights and the Equality and Human Rights Commission, not to mention such subversive organisations as Age UK—I declare my interest as honorary president of Newcastle Age UK —Mencap, Mind, the National Autistic Society and many other highly esteemed and reputable organisations in the voluntary sector.

I conclude with a particular appeal to Liberal Democrat Members of this House, several of whom voted for the amendments in your Lordships’ House when we last debated this matter on Report, and several of whom joined some of us—from the Cross Benches and these Benches—in the Division Lobby in the vote just taken. Sadly, very few of their colleagues voted in support of this House’s amendments in the House of Commons. If anything has distinguished the Liberal Democrats—and particularly the former Liberal Party—it has been a sincere attachment to civil liberties and the rule of law. They have been vigilant in questioning, and, from time to time, opposing, policies of different Governments that were perceived to be in conflict with those legitimate concerns. I believe that many are troubled by what this part of the Bill seeks to achieve and by the Government’s amendments. There is nothing, of course, in the coalition agreement that refers to the measures we are now debating. If ever there was a case—with a general election only six months away—for this House to exercise its role in scrutinising and amending important legislation, and in making a judgment on the merits rather than according to political calculation, this is such an example. My appeal to Liberal Democrat Members—

[Lord Carlile of Berriew]

I am grateful to the noble Lord for giving way, and I know that what he is saying is being said in a constructive spirit, but he might like to bear in mind that lectures from the Labour Party on civil liberties are not popular in the Liberal Democrats. He might possibly just leave it to our own consciences to determine how we vote on this matter.

[Lord Beecham]

It is, of course, entirely a matter of conscience for the noble Lord and others, and I would not defend everything that Labour Governments have done in this area either. That is why I referred to the stance that Members of the noble Lord’s party took on proposals made by more than one Government. It is a perfectly fair point.

I hope that, in addition to Members of those Benches, there may be other Members—from the Conservative Benches, perhaps—who will follow the example not only of some Conservative Members of Parliament who voted for this House’s amendments in the Commons, but even, much to my surprise, of the two UKIP MPs. I would not normally be encouraging people to follow where UKIP has led, but in this particular case, they were for once on the side of the angels. I hope, therefore, that this House can support the noble Lord’s amendments and, in so doing, encourage the Government to rethink their direction of travel in this very sensitive area of the rule of law and of the way in which government in this country—not just central government, but local government and other executive agencies—carries out its important responsibilities.

17:15

[Baroness Campbell of Surbiton (CB)]

My Lords, I support Motion B1 in the name of my noble friend Lord Pannick. Noble Lords will know that I have expressed serious concerns about Part 4 at every stage of the Bill, and I remain deeply troubled. I know only too well how much vulnerable people, especially those who are disabled, rely on state services and how catastrophic it is when things go horribly wrong. I feel that in the other place the Lord Chancellor is still peddling the line that judicial review has been hijacked by pressure groups for political campaigning, citing again and again the example of Richard III. If political campaigning includes campaigning for justice and people’s access to justice, then I am very happy to plead guilty; I am one of those campaigners.

The Lord Chancellor also said in the other place that tough times mean tough decisions and tough love. I agree with that, but judicial review is even more critical in times of stress—in tough times—to ensure that the Government do not ride roughshod over their citizens. These reforms must be seen in the context of cuts to legal aid which already hinder access to justice for those at the margins of society, especially disabled people. This is not an issue about lawyers protecting their status or income. I am sorry, but it just is not. Where is the evidence? It is truly about weakening the ability of ordinary vulnerable people to hold public bodies to account and increasing the power of the state.

Clause 64, if not amended, would require judges to refuse judicial review if the outcome would be highly likely to be no different. It would remove their discretion. We need their discretion. The Government want to exclude judicial review for what they call “minor technicalities” —for example, the need for a bit more consultation. So much for due process. Removing judges’ current discretion would allow unlawful or dishonest decisions to go unchecked and public bodies to be let off the hook. It would also dramatically change the role of judges in second guessing what might have been. I cannot understand it. It cannot be right. The amendments made by this House to restore judicial discretion were rejected in the other place. I thank my noble friend Lord Pannick for his Motion and entirely support it. I seriously urge all Members of your Lordships’ House to think beyond the campaigning and those odd cases where it may have been quite ridiculous and to think about the hundreds of very vulnerable people who will need this over the coming years as, I have to tell the House, things are getting really tough for us.

[Lord Woolf (CB)]

My Lords, it is always important to listen to what is said by the noble Baroness, Lady Campbell of Surbiton. She has an insight into these matters that Members of the House who come from a legal background, as I obviously do, do not have personal experience of. It is very apposite that she should have said what she just said. I hope that the House will heed her plea.

Knowing that the noble Lord, Lord Pannick, would have to go to Moscow, I am bound to say that I had prepared for him not to be here, and therefore had prepared a much longer speech than I am going to give. But I would like to add just one or two things. As I am sure your Lordships understand, this is a very important issue. If noble and learned Lords have any ability to assist and advise the House, then it was clear in the earlier stages of the Bill that this was something they thought was wrong. They gave their reasons, and I played a leading part in that. The reason we did so was that we thought it was going to be bad for justice, for the citizens of this country and for the reputation of this country as a leading adherent of the rule of law. Judicial review is all about the rule of law. Every application that has any prospect of succeeding initially has to prove that something happened which the Lord Chancellor and the judges would regard as being unlawful. So if you are refusing relief in this situation, you are doing it with regard to something which has been illegal, or is in a position where there could be illegality.

The second thing to remember is that the procedure for judicial review is an exceptional procedure, designed initially by the judges, but then enacted in what was the Supreme Court Act and is now the Senior Courts Act 1981, in Section 31, which sets out the position as to the jurisdiction of the courts. That section makes it clear that heavy responsibilities are placed upon the judiciary with regard to its operation. The safeguards are there, because they have a very heavy responsibility of holding the balance. The amendment we are now considering is a small one. It is in relation to the first amendment, which I am addressing. As required by the Government, the judge—the word in question is— “must”. As required by the amendment, the word is “may”. The difference between us is “must” and “may”. As you have already heard, in the House of Commons—and I am going to come back to this—the Lord Chancellor misled the House. I have to say that. I am sure the Minister will accept it. He said to it that each of the amendments—

[Lord Faulks]

I am only interrupting to agree absolutely with what the noble and learned Lord said. The Minister has in fact written to say he was in error. The letter has, I believe, been placed in both Houses of Parliament, but there was a mistake and the noble and learned Lord is quite right to draw attention to that.

[Lord Woolf]

I am grateful to the Minister for making that clear. I was not aware that the Lord Chancellor had done so, and I thought it was very regrettable that he should have failed to do so. It is extremely important that the one Member of the lower House who has a statutory responsibility of a particular nature with regard to the rule of law and the administration of justice should have made that mistake, because he dealt very summarily and quickly with the position which was before this House in some detail. We have heard the relevant passages of what he said.

I recall that on, I think, 5 December—I have the reference to it if it is required—the Minister took care to say that there was a convention that the courts, Parliament and Government each respected each other and therefore did not unnecessarily criticise each other. I was well aware of that convention but I would suggest that it is much wider than that. It is a convention that, in respecting the other arms of government, each of them—I include the judiciary here as an arm of government—will not trespass on the other’s area of territory or a different part of the arm unless there are particular reasons for doing so. One can see why that should be so. In the courts, we are very particular indeed not to trespass on the privileges of this House and the other place—and they should be equally sensitive.

Knowing what had been done by this House, which appeared to me at any rate to be so clearly necessary, I read with great care what was said in the lower House. I must say that I was very concerned that the Lord Chancellor in the lower House had indicated the three reasons that noble Lords were told about by the noble Lord, Lord Beecham, when he read the speech, including one that clearly amounted to a reflection on the judiciary. I have heard many protestations that the Lord Chancellor greatly respects the independence of the judiciary. However, when he talked about its difficult task of administering judicial review, as it does, day in and day out—and the task of presiding over judicial review is allocated to earmarked judges, so we can be sure that the matter will be properly considered—he was concerned that it was never intended to put the courts above the elected Government in taking decisions over the essential interests of this country. That is one of the problems that the Chancellor was concerned about. I would gently suggest to the Lord Chancellor, if he is writing apologies, that that is another matter that certainly calls out for an apology. It is wholly inconsistent with his statutory responsibilities under the Constitutional Reform Act. That is something that, having been said, either persuades the House or does not. However, if the other place was misled as to the background, what is at first sight a very difficult decision to understand is explained. I suggest that, because the matter was not put fairly to the other place, that is another very good reason why the matter should be returned to it.

17:30

If you know about judicial review, you would know about its early history. One problem of judicial review during its early history was that it could be bypassed. Just as the present legislation applies only to judicial review, it is possible to take before the courts the same matter under an application for a declaration. If that happens, all the safeguards are bypassed. Therefore, the judges had to find ways to avoid litigants bypassing judicial review by going for a declaration. The declaration was imported into our system in England and Wales fairly recently, not least from Scotland, where it is used to great effect as a declarator. The declaration means that the court has power to declare before something happens whether it is unlawful or not. Unfortunately, perhaps, it is not used as much as it should be. As someone who had the task of defending the Government before the courts—for example, in planning applications —I was deeply concerned that, often during the course of a very long planning inquiry, points of law would arise and one had to wait until it was over before the position could be determined. With the benefit of a declaration, it could be determined. At the time of the application for permission to apply for judicial review, in many circumstances one will not know what the correct answer is. It is therefore important and in the public interest that issues are established, not only for a particular case but for the law as a whole in the process.

On looking at the proposal we are considering, it may be clear to your Lordships that it attacks not only the stage of the trial but also the stage where permission is being sought for leave to apply for judicial review. If it can be shown at that stage, to the satisfaction of the judge, that it is highly likely that it may not affect the applicant, he is then under a responsibility to stop the proceedings ever getting to a hearing. On the one hand, there would be an act which could be established as unlawful and yet, if this amendment as now encoded were to survive, the law could not be clarified.

Looking back over my experience, I could give many examples of cases where I might not have been able to ignore the effect of this provision when it would not be in the interests of justice to do so. I am not going to take up time, because there is not the time for me to do that, but I would readily do it if it were necessary. I suggest that it is obvious. Last week the Lord Chancellor lost a case which, at first sight, may have seemed very petty. The question was whether a prisoner could order a book. It was said that, because of a procedure initiated by the Lord Chancellor, there would be no access to that book. On 5 December, Mr Justice Collins, who has had great experience in these matters, came to the conclusion that the guidance which the Lord Chancellor wanted to be implemented as the practice in prisons was not lawful. No doubt there are still opportunities to appeal the matter. There are arguments that can be advanced against the judge’s decision, but if you read the decision you can see how important it is that the facts of the individual case are considered. You cannot have a blanket approach because there will be very similar cases where, in one, a certain view should be taken and leave to proceed not be given whereas, in the other, it should be.

I ask your Lordships to say that, in the interests of justice and of the rule of law, the matter should go back to the other place with the opinion of this House as sought by the noble Lord, Lord Pannick.

[Lord Deben (Con)]

My Lords, I do not want to disappoint the noble Lord opposite but it does not need to be a particular party to see that there is something deeply wrong with what is being presented today. I am sorry about the tone that he adopted. I think it was entirely wrong and he may have done his cause and my cause a great deal of harm as a result.

The Government have not distinguished themselves by the way in which they have listened to this House or by the way in which they have thought through what they have presented. I remember the comments of the late Harold Macmillan that it is a mistake to revolt on more than one thing at a time because it confuses the Whips. I am concentrating on this particular issue because it is the most important issue of all. I think my noble friend misunderstood something I said earlier as criticising him. I do not criticise him at all. I think he has presented the case in this House as well as humanly possible, with a courtesy which one would expect and which he has fully expressed. The trouble is that there is not a case for what is being proposed. That is the difficulty. I do not think I have ever heard so damaging an apology as the one which was revealed during the course of the speech of the noble and learned Lord, Lord Woolf—that the Minister got wrong the only argument of any importance that he presented and then tried to uphold in this House the decision of the other House which would not have come about except with the exercise of the Whip. That would have done credit to the Chief Whip on the Benches opposite during his period in the House of Commons. It is very serious indeed. We have to say no to the Government’s determination. We have to support the proposal of the noble Lord, Lord Pannick, because we have to give the other House an opportunity to reverse the decision that it made when it was not in full possession of the facts. That is the first thing we have to do.

My noble friend said that all that is happening is that the bar is being raised slightly higher. I am not a lawyer. I am proud of not being one and am keen to enter into this discussion because sometimes it seems as if the only people who understand these things are lawyers. I think that most normal people understand these things and they understand them very simply. With the greatest of respect, the bar is not being raised slightly higher. Its nature is being changed. What is being asked now is that judges must make a decision which does not seem to be a proper decision for the courts in any case. Decisions of courts should fundamentally be on the facts of the law—on what something means. But that is not the decision that is being asked for here. The judge is being asked to decide that somebody’s unlawful act was highly unlikely to have affected the people who would otherwise have been affected. That is a curious thing to ask a court to do. Surely a court ought to be asked to say whether a proposal is so unimportant or vexatious that it should not occupy the time of the court. That is a perfectly reasonable thing to say. If judges had constantly allowed people who wanted to argue how many angels danced on the point of a pin, then I would have accepted that we needed to do something about it. However, when my noble friend was challenged for the statistics on which this very serious proposal was based, he honestly said that he had not got any.

Your Lordships might reflect that if I were presenting a proposal to a board of directors of a public company and I said I wanted fundamentally to change the product they had—its constituents, the way it was advertised, the market for which it was being manufactured—I would have to present some figures. I would have to say how many people did not like the product and thought that it needed to be reformulated. I would have to say how often the product had poisoned people or upset their stomachs. I would have to produce some kind of basis.

[Lord Faulks]

I am grateful to my noble friend for giving way on this point. I said that I had no statistics; I did not say that I had no examples.

[Lord Deben]

I have listened carefully to the examples that my noble friend put forward, but has he any more? I do not think that any of them have been convincing so far. I am happy to give way to him if he is prepared to give us some new examples.

[Lord Faulks]

If the noble Lord had looked at the website in which all the examples were set out in the build-up to the Bill, he would have read them. I cannot read them all out now; it would be an inappropriate use of the House’s time.

[Lord Deben]

I am sure that most of my noble friends, and noble Lords generally, have seen those examples. I have to say to my noble friend that they are not very convincing. They are not sufficiently great to suggest that we should change the law of the land in this very particular way. That is my concern. I can see that it is easy to say, “Look, there have been a lot of judicial reviews that have not really been necessary”, or to say that we really need to shorten the time to build and to develop. I have a long history of being keen on building, developing and getting this country ahead of its neighbours, and of being unhappy about the way that we seem to take such a long time to do things. I am therefore a natural voter for this. I am on the side of the Government; I would like to be with them. However, this is not the way to do it. There are ways in which it could be done that would not break the fundamental reason for judicial review.

I come to my third point. During an earlier debate I said that the foundation of British law is that no one is above the law. I am a great enthusiast for King Charles the Martyr, but it was perfectly right to say that he should not be above the law. I think it extremely dangerous—I say this to my noble friend very carefully—if Ministers should feel it reasonable to break the law because it is not really very important, or because it does not really have much effect. Breaking the law, if one is in a position of authority, is ipso facto a serious thing to do. Having been a Minister for 16 years, I would expect my civil servants to tell me very clearly if I proposed something that would break the law. I would take that very seriously indeed. I do not believe that ordinary people will respect the law in the same way that they do today if they think that Ministers have a special arrangement, which is that when they do things somebody has to show that it was really serious, really upset somebody or really made a difference before the courts can adjudicate on it.

I come to my fourth point, which I must say is, to me, very serious indeed. We have to be very careful about legislating in a way that suggests that we do not have trust in the judges who make decisions. Of course, this might be thought to be a dangerous place to say this as there are so many judges here, but it is the thing that distinguishes us from many Administrations: there are very few people who will not say that the judges in this country make decisions without fear or favour. If judges have made decisions that judicial review cases should be heard, I would prefer to rely on them than on people who are parti pris—that is, the Ministers—who find those decisions embarrassing. Ministers of any political party ought to be embarrassed if they break the law. That is an essential part of defending the law.

17:44

The fifth thing I want to say is that I feel that the treatment of this House on these issues has not been what we have expected in the past. When I was Secretary of State I expected my Minister in the House of Lords to defend the Bill and to get the essentials, but to be free enough to be able to say, “Well, the House clearly doesn’t find it possible to accept this. Therefore, I’ll go away and see if I can find a way through”. I do not blame my noble friend for that. What I blame is what appears to me to be an increasing habit to say that that is not what we are here for. If we are not here to uphold principles of this kind, then we should not be here at all.

My real worry about this whole series of returns, having won the argument, having had a significant majority, having been advised by some of the best legal brains in the country, and having had—if I may dare say so to the noble Lord opposite—the support of large numbers of Conservatives and Liberal Democrats and almost every Cross-Bencher, is that, after all that, I hope, had I been a Minister, I would have tried to find a way through that was as simple as the one that has been presented by the noble Lord, Lord Pannick. This is a very generous amendment; for me, it does not go far enough. However, I shall support it. I hope that real Conservatives will support it because it is about the rule of law—that is really why I objected to the way that the noble Lord opposite spoke—which all of us in this House, irrespective of our parties, should support. That is why we are here. If we do not defeat this and insist on the amendment we will not have done our duty.

[Lord Morris of Aberavon (Lab)]

My Lords, I will not detain the House for more than a few minutes. I listened carefully to the last debate on this issue. There was nothing to add to the wide experience, in more than one capacity, of the noble and learned Lord, Lord Woolf, and of the noble Lord, Lord Pannick. In my non-ministerial years while at the criminal Bar, dealing with murders, rapes and frauds, the opportunities of polishing my talent in judicial review applications were few and far between. Hence, I did not speak earlier. However, what I want to say—it is a fundamental point—is that what I find offensive is the fettering of judicial discretion in a constitution that does not have the protection of a Bill of Rights. That is important.

The only point that I want to make in this debate is to show and illustrate, from my own experience, how government departments respond to an adverse finding in a judicial review. The Attorney-General’s office, for which I was responsible, has never, to my knowledge—certainly not up to my time—been judicially reviewed. However, the Attorney-General is responsible in Parliament for the Director of Public Prosecutions and supervises that office. By Act of Parliament, the Attorney-General appoints the director. He or she would be seen week in and week out, when significant cases would be discussed, although it is the director alone who takes the decision whether or not to prosecute.

Three important cases of death in custody—nothing, to my mind, having had a constituency next to a prison, would cause greater concern than an issue of that kind—were judicially reviewed as to the director’s decision not to prosecute. The court criticised the Crown Prosecution Service severely. What did I do? I immediately set up a non-statutory inquiry under a senior retired circuit judge, His Honour the late Gerald Butler, whom I located late on a Sunday night in the serenity of Cornwall and seduced him to do some additional work. His published report was extremely critical. I knew immediately that lessons had to be learnt and supported the work that I had undertaken to review fundamentally the Crown Prosecution Service. This was important additional evidence and it was essential to avoid a recurrence. Firm and speedy action was necessary. I hope that that brief example illustrates how one government department responded immediately to the findings of the court. The result was a huge transformation in the operation of the Crown Prosecution Service.

I have no reason to believe that any other government department does not take the findings of judicial review equally seriously; hence my firm belief in the unfettered judicial curb on the Executive—to ensure legality, to ensure that Ministers believe and act legally—and in the continuation of the long-standing judicial discretion which is the bastion for the maintenance of the rule of law.

[Lord Lester of Herne Hill]

Mr Geoffrey Cox, a Conservative Member of Parliament, asked the Secretary of State for Justice what he meant by “a minor technicality”, and he replied by giving examples of a failure of proper consultation. In my experience, a failure of proper consultation can be a very serious matter. I want to give just two examples of cases that I was involved in—one I won and the other I lost. One was about closing Barts Hospital. A judicial review challenge was brought on the basis that the Minister had not properly consulted before deciding to close the hospital. The judge exercised discretion in any event, and we lost. However, it was a very important exercise because it involved the court in calling to account what the Minister had done to see whether it was an abuse of power; it was not.

In the other case, involving a Labour Government, the consultation was about the Export Credit Guarantee Corporation and whether the new rules on anti-corruption had been properly consulted on. It turned out that the only people who had been consulted were large corporations. A small NGO, the Corner House, brought a challenge based on the fact that it was not a proper consultation, and it succeeded. As a result, the Minister had to do a further, proper consultation and to beef up the anti-corruption rules. I give those two examples to show that the Secretary of State for Justice simply does not appreciate how important a breach of procedural good government can be in a particular public interest case.

I want to say two other things. One is that the Joint Committee on Human Rights, on which I serve, has repeatedly pointed out that the Government have produced no evidence, as distinct from ideology, to justify the changes that are being contemplated and are now the subject of ping-pong, and they still have produced no evidence. The Constitution Committee, on which I also have the privilege of serving—not a left-wing, radical, subversive organisation—led by its chair, the noble Lord, Lord Lang, on 4 July asked the House to reflect on the wisdom of the Government pressing ahead with the reform to judicial process despite the warnings of the judiciary. In spite of the Constitution Committee ringing the alarm bell and repeating the warnings—I will not bore the House with the details—the Government went ahead. As far as I can see, neither of these reports was even referred to by Mr Grayling in the debates in the other place.

It is very important, if we have expert committees that are advising both Houses, that at the very least Ministers do them the courtesy of replying to them in the debate, and they have not done so. I cannot match the eloquence of the noble Lord, Lord Deben, or the eloquence and wisdom of my noble kinsman, the noble and learned Lord, Lord Woolf, in what they have said, but I very much hope that we will rise above party politics this evening.

[Baroness Lister of Burtersett (Lab)]

My Lords, like the noble Lord, Lord Deben, and the noble Baroness, Lady Campbell of Surbiton, I speak as a member of what was last week dubbed the sisterhood and brotherhood of non-lawyers. It is very important that non-lawyers speak in support of lawyers on these issues because, as the noble Baroness, Lady Hamwee, said at Second Reading of the Bill, “These are citizens’ issues”. We are talking about the most marginalised, powerless and voiceless citizens whose concerns are at stake.

I speak also as a member of the Joint Committee on Human Rights. We opposed the original clause on grounds of both principle and practice, including the argument put so powerfully by the noble Lord, Lord Deben, that we should not condone unlawful decision-making. This is of particular importance to the enforcement of the public sector equality duty, a point which has been made to us by the Equality and Human Rights Commission. I declare an interest as the honorary president and a former employee of the Child Poverty Action Group, which, as Sir Stephen Sedley has pointed out, was a pioneer in the use of judicial review to further the interests of children in poverty and their parents and played an important role in elucidating the law on social security to the benefit of everyone involved.

I will recount briefly a recent case that is relevant also to Motion D, in which the CPAG acted as an intervener. It was a judicial review against a decision to cut the funding for local welfare assistance schemes—which replaced the discretionary social fund—which we know, from a growing body of evidence, is causing real hardship. The decision has taken place without consultation and without first carrying out the review that had been promised to Parliament during the passage of the Welfare Reform Act 2012. As it happened, the Government settled the case—they clearly did not think that they would win it—and have now consulted. The CPAG’s solicitor said to me that if the Government’s version of the Bill becomes law, this intervention probably would not have been possible,

“because of the uncertainty around whether our charity would end up liable to pay costs. As a result, the Courts would have been ignorant of the broader issues at stake”.

Indeed, the case may not even have got permission because the Government might have argued that, even if they had consulted, their decision would have been highly likely to be the same. I hope that that does not prove to be the case. We do not yet know what the decision will be. However, in answer to a Written Question just the other day, I was told that they have had over 5,000 responses to that consultation. That is not a mere technicality; that is about listening to what local authorities and other citizens of this country think about this issue.

To echo the very powerful speech of the noble Lord, Lord Deben, at issue here are the accountability of the Government, the rule of law and access to justice—the very kind of principles that your Lordships’ House has traditionally upheld. I hope very much that your Lordships will uphold them again today.

[Lord Phillips of Worth Matravers (CB)]

The amendment proposed by the noble Lord, Lord Pannick, will do no more than bring the law into accord with the position as described, with apparent approval, by the Secretary of State for Justice in the other place. I hope the Minister will do what he has not yet done, which is to explain to this House why it is open to objection.

18:00

[Lord Cormack]

My Lords, I strongly support what my noble friend Lord Deben said in a truly remarkable, powerful and splendid speech. What he did not say—which I think that we can all say—is that the other place, of which I was proud to be a Member for 40 years, was misdirected by the Lord Chancellor. To misdirect a jury is not exactly a trivial matter but the Lord Chancellor has had the good grace and dignity to apologise. The fact is that the House of Commons made its decision having been wrongly advised and made it in a very short space of time. An hour was given up for debates on which your Lordships’ House had spent considerably longer.

Like my noble friend Lord Deben, I was somewhat concerned by the remarks of the noble Lord, Lord Beecham. He is not normally like that but he almost put me into a position where I could do no more than abstain. I say to him that no party has the monopoly over upholding the rule of law. I am inclined to vote for the amendment in the name of the noble Lord, Lord Pannick, because I am a Conservative and because, like my noble friend Lord Deben, I am proud of the part that the Conservative Party has played over the centuries in upholding the rule of law.

I say also to all my colleagues on these Benches that this is not a question of party loyalty or disloyalty. I was in the other place for the whole of the 16 years that my noble friend Lord Deben was a Minister. Of course, I was not a Minister for any of those years and frequently found myself at odds with things that the Government proposed. On a number of occasions I voted accordingly because I always tried to uphold the dictum that one’s order of priorities as a parliamentarian in the other place is country, constituency and party. In your Lordships’ House, we do not have constituency responsibilities but we do have national responsibilities.

If we believe that something is being done that is not in the national interest, we have an absolute duty to speak and to vote accordingly. If this House has any point or purpose—I echo in slightly different words something said by my noble friend Lord Deben—it is to say to the other place, “You have, we believe in all humility, got it wrong. Please, please think again”. We did that last time and the other place did not. It did not think again because it was wrongly advised by the very man who should have been advising them correctly.

Therefore, we have every right this evening to say, “Please reconsider and take a little longer in reconsidering”. We are not talking about the convenience of governance or about narrow party advantage, we are talking about something that is fundamental to the survival of a parliamentary democracy and to the rule of law. I very much hope that my noble friend the Minister, for whom we all have real regard, will be able to say something that will satisfy us, but I am bound to say that I am not overoptimistic. If he does not, I shall have no alternative but to go into the Lobby behind the noble Lord, Lord Pannick.

[Lord Phillips of Sudbury]

My Lords, when I intervened on the Minister and asked for the evidence or indications to underpin the need for this amendment, he, as the House heard, declined to give the same. It was important to add evidence or indications. I perfectly accept that a lot of the matters with which we are dealing in this amendment cannot be susceptible to simple adding or subtracting.

I want to make one point. I believe that we live in a time of democratic crisis. The public are voting for UKIP and, to some extent, they voted in droves for Scottish independence because there is a real breakdown of confidence in the main parties. We all know that there is a breakdown of trust in the great institutions of our state, in business and in us. We cannot brush aside the expenses tragedy of a few years back as if it is all forgotten and done with. It is not. I went to Clacton and canvassed. My goodness, it is not. There is a breakdown in trust. Of all the times to bring in a provision as contained in Clause 64, this is absolutely not the time.

Surely it is a simple point that the one thing that controls and contains any Government, however strong or however wrong, is the instrument of judicial review. I do not think that it is justifiable at all to reduce the extent and power of judicial review to any extent. That is the rule of law. If the proposal were to be brought forward, it surely could be brought forward with any semblance of decency only if the evidence for the need for it—the essentiality of it—was abundantly plain. We all know that it is absolutely as miles from that as it could be.

I am completely persuaded that there is only one thing to do tonight. I regret voting against a heavy whip but sometimes we all know that we have to do that, which is what this House is here for. I say again, we cannot take the step proposed by the Government to reduce the extent and power of judicial review.

[Lord Horam (Con)]

My Lords, perhaps I may add an element of balance to this debate, although balance may not be exactly the right word since I probably am the only person who is going to speak in support of my noble friend the Minister in order that the debate may be not wholly, completely 100% unbalanced but a little bit balanced. I want to explain to noble Lords what worries us. I am not a lawyer so I cannot comment on some of the technical points that have been made. I am worried that there is considerable abuse of judicial review.

My noble friend Lord Deben—who was kind enough to say on a previous occasion that we have never disagreed on anything even when we were in different parties, which is largely true—said, in relation to the example brought forward at the beginning of the Minister’s speech, that it was not very convincing. I remind the House of the example which is, I think, shocking and a defining example of how judicial review can be abused. That point is made by the noble Lord, Lord Adonis, in his book, Education, Education, Education. He wrote:

“As soon as academy projects became public, opponents seized on judicial review as a means to stop them. Ultimately they failed, but only after years of lengthy, expensive and immensely distracting court actions, mostly funded by legal aid with the real opponents—the National Union of Teachers and anti-academy pressure groups—masquerading as parents too poor to afford to pay legal fees”.

That is an example of some years ago.

My understanding is that that is happening today not only in education but in rail. For example, the Government have already had to spend £460,000 in outside legal fees to defend the judicial reviews against HS2. I am aware of judicial reviews in regard to roads. Development was rather scoffed at by the noble Lord, Lord Beecham, but in many instances it means housing projects and we need more housing in this country.

[Lord Cormack]

Is my noble friend really saying that the legitimate environmental concerns of people who have misgivings about HS2 should be overridden regardless? Surely it is entirely legitimate for those who have real interests to be able to pursue those interests by legal means.

[Lord Horam]

Indeed, but the point about judicial review is that it is a technical discussion about the process of law-making. Have the Government behaved illegally? Have they consulted properly? That is what judicial review is about. If you want to have an argument about HS2 it should take place in the Chamber quite openly. There are quite clearly profound differences of opinion about the process of HS2 but it is not judicial review that should be encompassing that. There should be an open debate about the merits and demerits of a particular project.

[Lord Carlile of Berriew]

Is the noble Lord really suggesting that the whole planning appeals procedure should be abandoned for government schemes? That is the clear implication behind what he said. As he said there are—I forget the adjective he used—many abuses anyway of judicial review, would he like to give us perhaps three examples of cases that have been an abuse of the process so we can have an evidence-based discussion.

[Lord Horam]

I am personally aware from my experience in this House and as the former Member of Parliament for Orpington of cases affecting Travellers and the green belt. My constituents were concerned about Travellers camping on green belt land. Ultimately, Bromley Council, which was the council in question—

[Lord Carlile of Berriew]

I want to challenge the noble Lord. Is he saying in this House that Travellers do not have the right to challenge the Government by judicial review? If so, we might as well throw away all our democratic values.

[Lord Horam]

No. What I am saying is that the judicial reviews raised by Travellers in Bromley were ultimately found to be completely meritless. They were meritless because Bromley Council, which has more Travellers than any other council in the country, had plans on how to deal with Traveller sites. Therefore, it was an argument about the nature of the problem of dealing with Travellers. It was not something that could be dealt with by judicial review. That is my point. The abuse of judicial review arises from the fact that questions of merit are being subject to judicial review simply because lobbyists and others are using judicial review as a route to object to proposals they do not like.

If I can complete the list of examples, it was not only green belt and Travellers—

[Lord Deben]

I have taken advantage of now being able to look up online in this House the suggestions as to why these cases are important. The first one is a case study on residential development in which the judge decided that there were two grounds of law which ought to be met. They were discussed and both were dismissed. Is my noble friend really saying that because it was inconvenient those two particularities of law should not be looked at? There is a second case put before us about a free school which is quite complicated but there were people who had a real issue. They are the only two cases to explain the argument that there have been more and more cases of judicial review. Frankly, there have been more and more cases of the Government interfering in the detailed arrangements of life and therefore it is not surprising that the number of judicial review cases has increased.

[Lord Horam]

I cannot comment on a churlish Government interfering more and more in the minutiae of daily life. That is something the Government would have to answer. None the less, the fact remains that the use of judicial review, where people are really arguing about the merits of a project, case or change in the NHS, in education or whatever, is fairly extensive. Indeed, I am told by friends and acquaintances in the lobbying industry that if you go to a lobbying company and say, “We are worried about this project and we want to object to it.”, one of the things it will tell you is that if you can afford an expensive lawyer it will find a technical means through judicial review of objecting to the proposal. That is a standard part of the package, I am told. It is hearsay, I fully accept that, but I am told that it is a standard part of the lobbying system in this country. They are the sort of examples I am aware of. It is not particularly statistical evidence but in this field that is rather hard to come by. None the less, it gives a flavour of what is happening out there in the ordinary world.

18:15

[Lord Berkeley of Knighton (CB)]

I want to make one simple point. Even if the noble Lord is right that there are some cases of abuse—there are in every sphere of life including the police or indeed Parliament itself—is it not worth paying that price for the man in the street or the small community to feel that they have some way of redress against large institutions, government and big business? Many people feel it is their only way of making their point. We should not deprive them of it.

[Lord Horam]

That is precisely why, as I understand it, my noble friend is introducing in a later amendment a de minimis clause precisely designed to exempt small communities. When there is a project and neighbours perhaps contribute £100 or £150 each to object to it, that would be entirely legitimate and I would be wholly in favour of it. That would not be stopped by this precisely because the Government have recognised that point and in a later amendment are introducing a de minimis clause.

[Lord Woolf]

That is not correct on the first amendment. There is no qualification being introduced by the Government.

[Lord Horam]

I totally agree. I said on a later clause. Here, we are dealing with a situation where the actual result would be highly unlikely to make any difference. The noble Lord’s point would not occur because obviously they would hope to win their case. Here we are dealing with cases where it would be highly unlikely to make any difference at all and therefore the point made by the noble and learned Lord, Lord Woolf, does not arise.

There is abuse which I think is doing the rule of law and judicial review damage. That is a real problem. How does this Bill affect that? There is a suite of measures here to deal with the treatment of interveners, financial transparency and lowering the bar slightly in meritless cases where it would make no difference to the eventual result. That is a complex series of measures and we do not really know—I do not suppose the Government know entirely—what effect they will have but clearly it is an attempt to remedy abuse. Remedying abuse in this case would serve the purpose of government. It would certainly help judicial review because it would diminish the impression that people have, rightly or wrongly, that it can be used and abused in the way I have described and is happening up and down the country. You could argue that it would not really detract from judicial review but in many ways would improve its performance. I say to my two Conservative colleagues that one aspect of being a Conservative is that very often you want to improve things for the sake of keeping them as they are. It is a classic Conservative position. I would not regard it in any way un-Conservative to be asking to improve these matters rather than defending the status quo, warts and all.

I think there is a serious problem here. The Government are addressing it. Noble Lords may disagree with the way they are addressing it. I think that the Government need some understanding of where they are coming from. In response to the views in the other place, they have listened and changed their position; not here, I agree, but in later amendments. I wholly agree that the discussion in the other place was truncated and in many respects very unsatisfactory, as has been pointed out. None the less, between the two Houses, we are beginning to get to a more rational and sensible position that acknowledges that there are problems and tries its best to find a way through without damaging judicial review.

[Lord Marks of Henley-on-Thames]

The Government have repeatedly characterised this clause as being concerned with cases involving procedural irregularities only. Indeed, the Minister used the term “technicalities” as a diminutive, which is inappropriate. Such terms are inaccurate in relation to this clause. At very best, they are inadequate. These are public law cases concerned with unlawful conduct of the Executive where an organ of government has ignored the law in taking or carrying out decisions.

With the greatest respect to my noble friend Lord Horam, I must say that his assertion that the system of JR is rife with widespread abuse is unsupported by the evidence. Nor does he take into account the fact that judicial review is, at its heart, about decision-making in accordance with law. Nor does he take into account the fact that, certainly over recent years, judges have made it very difficult indeed, in the exercise of their discretion, for unmeritorious cases to get permission to proceed.

I do not regard this clause as merely protecting government from the effects of minor procedural errors that have made no difference to decision-making. I regard it, as do other noble Lords who have spoken, as an attack on the rule of law and an attack on parliamentary democracy. To take the example given by my noble friend Lord Lester, where a statute is passed by Parliament, often after discussions such as the ones that we have had on this Bill, which requires that the Government consult before making a decision, it should not be open to government to flout that requirement imposed by Parliament and then claim an immunity from judicial review on the basis that a lawful consultation would have made no difference to the outcome of the decision-making so that permission and relief should be withheld. That is the heart of the point made by the noble Lord, Lord Deben.

The public interest amendment of the noble Lord, Lord Pannick, reflects an amendment that I moved in Committee. If carried, and if this House insists on it, a court will not be compelled to say, where a government department has acted unlawfully, that the decision would have been the same anyway and therefore permission to apply for judicial review must be refused and relief must be withheld. The court will instead be able to say that the decision was illegal and, before it can be properly made, the Government must follow the law—quite simply because that is what the law requires. That is the rule of law. That respects the will of Parliament. That gives effect to be principle of government accountability. This House has a constitutional duty to be very careful indeed when what is happening here happens—when the Executive seeks parliamentary sanction for breaking the law, as this clause does. I shall support the amendment of the noble Lord, Lord Pannick.

[Lord Mackay of Clashfern (Con)]

My Lords, the question in this particular amendment is a simple one. The courts have developed law in relation to situations in which the outcome would not be any different if the conduct complained of had not occurred. My understanding of the decision in that area is that the court may decide, if it concludes that the result would inevitably be the same, that the relief is to be refused.

The government Motion that is the subject of this substantial debate simply raises the question of whether that would be inevitable or “highly likely”. In the civil law, of which judicial review is part, the ordinary rule is that the balance of probabilities determines the fact. That is the question that was raised here and there is quite a lot to be said for that point of view. But the situation tonight is affected by the way the debate was conducted in the other place. It is not for us—it is certainly not for me and not for any of your Lordships—to criticise what happened in the other place. On the other hand, the Lord Chancellor has apologised to a Member of the other place for the mistake that he made, which is fairly fundamental to the consideration of this amendment. Therefore, for my part, I would like to see this amendment going back to the House of Commons, not necessarily to change the result—that is a matter for the Commons—but so that the debate should proceed on a basis that is 110% correct.

[Lord Faulks]

My Lords, I begin my concluding remarks, which will be short, by saying how much I agree with much of what has been said during the course of the debate. First, the Government and I have great respect for our judges and their capacity to deliver justice in the course of judicial review and in any other field. I also have, of course, profound respect for the rule of law. In particular, I respect the role of judicial review in upholding the rule of law. I do not for a moment believe that anything that we do in Parliament should provide any form of carte blanche to a Minister or any other public body in how they conduct affairs.

The Government very much appreciate the careful consideration of the Joint Committee on Human Rights and the Lords Constitution Committee and their respective reports. They were not referred to by anybody on either side during the course of the rather truncated House of Commons debate. I do not know the extent to which they were taken into account sub silencio, but they are important and I fully acknowledge that.

Nor do I suggest that failures of consultation are not—or are not capable of being—serious matters. It is not the Government’s contention that failures to consult should be regarded necessarily as trivial—far from it. The clause refers to “substantially” and the Government’s intention is to ensure that judicial review focuses on issues that might have made a difference, not mere technicalities. We do not consider that the clause will give public authorities carte blanche to act unlawfully. No decision-maker will deliberately do something unlawful on the basis that they might hope that they can survive judicial review on the basis of the inevitability of the outcome or the outcome being “highly unlikely”.

I accept what the noble and learned Lord, Lord Woolf, said about the importance of declaratory relief and how it can play an important part in ensuring that public bodies understand their rights and responsibilities. If a judge looking at a particular case considers it important that there should be a declaration, he or she is most unlikely to decide that the case should not go further forward.

However, as my noble and learned friend, Lord Mackay, so correctly said, there is nothing revolutionary about a judge looking at a case on the question of what the outcome would have been. In particular, I refer the House to the well known case of Cotton v Chief Constable of Thames Valley from 1990 and a number of other cases that had the same effect. It was decided that the courts should look beyond the narrow question of whether the decision was taken in a procedurally improper manner and consider the wider question of whether a decision properly taken would or could have benefited the claimant.

Much of the law in this area is concerned with consultation. While consultation can be very important, if it is a trivial omission, it is appropriate that the court should look and be capable of looking at a particular case and saying, “I do not think it is an appropriate use of public resources or an individual’s resources for a judicial review to proceed, notwithstanding the putative unlawfulness, if in fact it would have made no difference or was highly unlikely to make a difference”. That is why I agree with much of the rhetoric around this important point of principle because what the Government are inviting the House to approve is a minor change to the existing law. We are not abandoning judicial review. We are not inviting the Government, local government, Ministers or public authorities to ride roughshod through the law. We are simply saying that judicial review may be reviewed. Judges can be relied on to prevent abuse in this regard, but I suggest that it is not inappropriate for Parliament to say, “If you, as a judge, consider it is highly likely that it would make no difference, we invite you, on reviewing the facts and not fettering your discretion, to decide that the case should go no further”.

18:30

The noble and learned Lord, Lord Woolf, made some serious allegations about the Lord Chancellor’s regard for the rule of law, and that is a matter on which I think he has given evidence to the Constitution Committee. The Government believe that the reforms of judicial review are part of a natural improvement of the justice system. They do not fetter the independence of the judiciary or the very useful and fundamental role that judicial review plays. However, I do not think that anybody could realistically suggest that judicial review is not sometimes open to abuse. It remains valuable—indeed, more than valuable; it is critical—but I suggest that this reform is modest. It will satisfy the very public benefit and the public interest test that features—unnecessarily, we say—in the amendment put forward by the noble Lord, Lord Pannick.

[Baroness Butler-Sloss]

Before the Minister sits down, I wish to ask one question: how does he answer the second part of the comments of the noble and learned Lord, Lord Mackay of Clashfern?

[Lord Faulks]

It is a matter entirely for the House. The whole of the speech was before the House of Commons. It was clearly regrettable. The Lord Chancellor has written a letter which is deposited in both Houses. This House will take the view that it thinks appropriate.

[Lord Pannick]

My Lords, I am very grateful to the Minister. He has been put in a quite impossible position, not, I think, for the first time, and I sympathise with him.

There are two central points here. The Minister very fairly accepted that the Lord Chancellor inadvertently misled the House of Commons when it considered the amendment that was approved by your Lordships. The Lord Chancellor misled the other place on the very issue that is at the heart of this amendment. He wrongly suggested that there is an exceptional circumstances provision in this clause which confers discretion on the judge. That alone is reason enough for this House to invite the other place to think again, and to do so on the basis of an accurate statement by the responsible government Minister as to the terms and effect of the clause that he was putting before the House of Commons.

However, that is not all. The public interest amendment is essential to the rule of law. That a Lord Chancellor should regard the need for a fair procedure and legality as unimportant technicalities which should be excluded from judicial control is, to my mind, profoundly depressing and alarming. I say to the Minister that that is not a matter of rhetoric but of substance.

The noble and learned Lord, Lord Mackay of Clashfern, suggested that this clause is a development of the current law. However, the change is not merely to alter the test of inevitability to a test of highly likely; the vice of the clause that we are debating is that it imposes a duty on the court in all circumstances to throw out judicial reviews without retaining any discretion in the public interest. The Lord Chancellor and the other place should be invited to think again about the need to retain judicial discretion in the public interest, as Motion B1 states. I wish to test the opinion of the House.

18:35

Division 2

Ayes: 274

---

Labour: 163
Crossbench: 57
Liberal Democrat: 23
Conservative: 9
Independent: 8
Bishops: 3
Green Party: 1
Ulster Unionist Party: 1
UK Independence Party: 1
Plaid Cymru: 1

Noes: 205

---

Conservative: 147
Liberal Democrat: 47
Crossbench: 6
Democratic Unionist Party: 1
Ulster Unionist Party: 1
Independent: 1

18:48

Motion C

Moved by

[Lord Faulks]

That this House do not insist on its Amendments 103, 104, 105 and 106, to which the Commons have disagreed for their Reason 106A, but do propose Amendments 106B and 106C in lieu.

Lords Amendments

103: Clause 65, page 66, line 10, after “paragraph” insert “or, notwithstanding a failure to do so, the court in its discretion considers that it is nevertheless appropriate to grant the applicant leave to make the application for judicial review”

104: Clause 65, page 66, line 32, after “paragraph” insert “or, notwithstanding a failure to do so, the tribunal in its discretion considers that it is nevertheless appropriate to grant the applicant permission or leave to apply for relief”

105: Clause 66, page 67, line 1, leave out “must” and insert “may”

106: Clause 66, page 67, line 7, leave out “must” and insert “may”

Commons Reason

The Commons disagree to Lords Amendments Nos. 103, 104, 105 and 106 for the following reason—

106: Because it is appropriate to impose duties, rather than confer discretions, on the High Court, the Upper Tribunal and the Court of Appeal in connection with information about the financing of applications for judicial review.

Amendments in lieu

106B: Clause 65, page 66, line 21, at end insert—
“(3AA) Rules of court under subsection (3)(b) that specify information identifying those who are, or are likely to be, sources of financial support must provide that only a person whose financial support (whether direct or indirect) exceeds, or is likely to exceed, a level set out in the rules has to be identified.
This subsection does not apply to rules that specify information described in subsection (3A)(b).”

106C: Clause 65, page 66, line 43, at end insert—
“(3AA) Tribunal Procedure Rules under subsection (3)(b) that specify information identifying those who are, or are likely to be, sources of financial support must provide that only a person whose financial support (whether direct or indirect) exceeds, or is likely to exceed, a level set out in the rules has to be identified.
This subsection does not apply to rules that specify information described in subsection (3A)(b).”

[Lord Faulks]

My Lords, we now come to Clause 65 and its sister clause, Clause 66. As introduced, Clause 65 would do no more than see a person provide financial information with their application for judicial review. This will prevent others from sheltering from their proper costs liability at, almost invariably, the expense of the taxpayer. As introduced, Clause 66 would do little more than require the court to consider that information.

The House’s amendments to Clause 65 would allow an applicant to be granted permission where they had not provided financial information with their application for permission, with nothing more said about the circumstances in which that would be appropriate. Similarly, the House’s amendments to Clause 66 would mean that, even where that information had been provided, the court need not consider it, nor consider whether a person identified should have costs awarded against them. Therefore, conceivably, a person might control a judicial review’s course while sheltering behind a shell company, precisely to avoid proper costs liability, and the judge could be given no information about that.

We think that those amendments, although undoubtedly well intentioned, simply go too far. The Government have, however, been persuaded to table an amendment, even after the other place so resoundingly supported the Government’s original clause, to give noble Lords additional reassurance that the Government do not intend Clause 65 to apply inappropriately or unhelpfully. I trust that the Government’s actions with regard to this clause, and the amendment itself, will give noble Lords the comfort they need to support the Government.

We have been clear throughout that we intend an approach which strikes a balance between the court having the information it might find helpful when deciding costs and avoiding providing it with too much information. The amendment provides comfort on that, by requiring any procedural rules which give effect to the clause to include a de minimis threshold. When providing the court with information, an applicant would not have to identify any person who had provided contributions below that threshold.

I am sure that noble Lords will understand that we are not in a position to bind the hands of the procedural committees that will make the rules as to what the figure will be. That would be as inappropriate here as it would be with regard to any other procedural rule. I am comfortable that, whatever figure is ultimately adopted, it will ensure that the rules are not overly burdensome or require an excessive level of investigation. Quite simply, setting the threshold too low would result in flooding the courts with unhelpful paper that would not suit the Government’s purposes. I can happily confirm that the Government will, of course, take into account evidence and views appropriately as they come to a view on what figure is appropriate.

It is important to emphasise that nothing in Clause 65, which would make mandatory the provision of information on an application for permission, would require any level of financial resources to be available before permission can be granted. This is not about taking discretion away from the judges but about giving them the information to enable them to take fully informed decisions.

We have not tabled an amendment to Clause 66 as we are satisfied that it continues to strike an appropriate balance. The clause as the Government wish to see it would not require the courts to award costs against a person or a type of person. It simply does not affect the judge’s discretion as to costs, but it would place the court under a duty to consider the information that has been provided and whether persons identified in that information should face costs—something that they would inevitably do in any event. What decisions it takes having considered that information is a matter for the court.

For the sake of absolute clarity, I am happy to repeat that there is nothing obliging courts to make costs orders against a person identified in that information; we require only that the courts have the full picture. The alternative is to say that the judge should make an order with a less than full picture and with less than full transparency, and I am not convinced that that is desirable.

Perhaps I might make one further thing clear. These clauses and the amendment do not alter the court’s existing powers on costs. The common-law position would remain. More than mere funding will be required before a third party is made liable for costs; for example, those parties who are not only funding but are seeking to drive the litigation or to benefit from a potential remedy in the case might be ordered to pay costs. We are concerned that the courts have the wherewithal to identify who is driving litigation—that people cannot shelter behind matters—but, equally, small contributions to a fighting fund, where those individuals do not expect to control the litigation, should not bring with them an obligation to declare that you have put a modest sum into a fighting fund. Therefore, you would not inevitably be liable for costs. In fact, you would probably not be liable for costs anyway but you do not have to disclose that information.

I hope that the House will not insist on its Amendments 103 to 106 but will accept Amendments 106B and 106C in lieu. I beg to move.

Motion C1

Moved by

[Lord Pannick]

As an amendment to Motion C, leave out from “House” to end and insert “do insist on its Amendments 103, 104, 105 and 106”.

[Lord Pannick]

My Lords, the amendments that were approved on Report by your Lordships’ House by a majority of 33 arose out of two concerns about these clauses on financial information.

The first concern is that the judges would be prevented in all circumstances from granting permission to bring an application for judicial review unless the relevant financial information has been provided. As with Motion B1, on which your Lordships have just voted, so with this Motion C1 a degree of discretion is appropriate to permit the judge to decide that a case should be allowed to proceed in the public interest, even if some financial information has not been provided. An absolute bar is inappropriate in this context and the removal of all judicial discretion is inappropriate.

The second concern is about the effect of the provisions on people who contribute to the funding of a judicial review. The Minister’s helpful letter of 4 December to noble Lords explained that the Government wish to ensure that there is no “chilling effect” on contributions because of a fear by potential contributors that they will be ordered to pay the defendant’s costs. Therefore, as I understand him, the Minister has said that it is not the Government’s intention that those who provide small amounts of funds should be subject to costs rules, and that that will be ensured through rules of court.

As I understand it, the rules will state a threshold so that people contributing less than the specified amount would not need to be identified by the claimant and so would not be liable to be ordered to contribute to the defendant’s costs. That is all very laudable. The problem, however, is that the Minister has not told the House what the threshold level will be. If the level is too low, it will inevitably deter people from contributing to judicial reviews brought in the public interest because of the risk that the contributor will have to pay the defendant’s costs.

Funding judicial review has become much harder in recent years with the decline in legal aid. It is very regrettable that the Government should now wish also to impede the ability of claimants to fund judicial review applications by private contributions. I am not satisfied by what the Minister says unless he can assure the House that the threshold level will be sufficiently high that it will not deter modest or reasonable contributions to the funding of judicial reviews.

[Lord Faulks]

I am very grateful to the noble Lord for giving way. Perhaps he could assist the House by saying what he would consider a modest contribution.

[Lord Pannick]

I would suggest that one should look up the average cost of a judicial review application and say that if the individual concerned is contributing less than, say, 10%, 15% or 20% of the costs, then that figure would not lead to any cost implications for that individual. However, I am not the one who is putting forward this proposal; it is surely for the Minister to come forward to the House and tell us what his proposal is. This House voted on Report that it was not satisfied with the Government’s approach. The Government now come forward and invite the House to agree with the other place by reference to this new proposal, and I simply suggest to the House that the Government’s proposal cannot be adequate unless your Lordships are told what the relevant figure is. I beg to move.

19:00

[Lord Marks of Henley-on-Thames]

My Lords, throughout the passage of the Bill, my concern with these clauses has been that they would require any individual who was minded to support a judicial review application financially to disclose to the court his or her resources. That requirement is coupled with a requirement for the court, when considering questions of costs, to consider making a costs order against a supporter of an unsuccessful application, making use of the information disclosed.

With the greatest of respect to his argument, the Minister understated the effect of Clause 66. He said that the court would have to consider the information; what he did not take into account was that the court would be enjoined to consider making a costs order against the supporter. The inevitable effect of that would be to deter people from supporting judicial review applications financially. Group applications—for example, by groups of villagers or school parents—would then become very difficult indeed to fund.

This House’s amendments gave the court a discretion relating to financial information and costs orders. The Commons rejected our amendments and, in response to the concerns raised, my noble friend Lord Faulks and the Government have nevertheless introduced an amendment to provide that rules of court would exempt some supporters of judicial review applications from the financial disclosure requirement, provided their support did not exceed a level to be,

“set out in the rules”.

The difficulty, as the noble Lord, Lord Pannick, pointed out, is that the Government and my noble friend have given no indication of the level of support intended to be covered by their amendment. My noble friend and his officials—I am grateful to him and them for this—have met me and, I understand, others to discuss this amendment. I quite understand their position, enunciated by the Minister, which is that further work would need to be done to set an appropriate level. However, the Government are able to say nothing as to the level intended, except that it is likely to be a “few hundred pounds at most”. That is not satisfactory.

A very limited exemption for small-scale supporters would not significantly reduce the chilling effect of a disclosure requirement. It will not be anything like enough to enable groups to raise meaningful funds to support JR applications. I remind the House that most solicitors now charge about £250 or more per hour, even outside London. For the exemption to be meaningful, a supporter would have to be permitted to contribute several thousand pounds before financial disclosure was required. I accept the formulation put forward by the noble Lord, Lord Pannick, but that could be assessed when formulating the regulations on a percentage basis. I had in mind a figure of 20% as the starting point. I had in mind a figure of somewhere between £10,000 and £15,000 as a likely level below which disclosure would not be required. However, from the Government we have heard nothing, except that it would be figure of a few hundred pounds at most. That is not a significant concession.

What is necessary is that individual supporters providing small or medium sums, who are doing so genuinely to support the application—not as the real principals and not to try to control the litigation—should not be deterred from so doing by the costs threat involved in this clause. We need that as a statement of principle, but it needs to be a statement that shows that the principle has changed to meet the objective that I have just set out.

The Government’s stated aim in these clauses, restated by my noble friend, has been limited to ensuring that wealthy people do not use impecunious applicants to pursue litigation as fronts, with no risk in costs to themselves. He rightly used the argument of shell companies as supporting an argument that their promoters should not get protection. That is an understandable aim, properly expressed by my noble friend, which no one could sensibly criticise. However, I remind your Lordships that the court already has the power to require information and make costs orders against non-parties in such circumstances. However, if the Government wish to legislate to implement their stated aim, it would be entirely reasonable to expect them to limit the legislation to what is required to achieve that aim. That would mean a firm commitment to this House that the level set out in the rules would be such as to exempt from financial disclosure small and mid-range supporters of judicial review applications who were not seeking to control the litigation.

I have made it clear to the Government that I would be prepared to support the amendment in lieu if there were a clear statement that genuine supporters in this category who provided significant funds but did not wish to control the litigation would be protected. In the absence of such a statement, I feel obliged to support the Motion of the noble Lord, Lord Pannick, to insist on the Lords amendments. The Commons will then have to consider whether it is prepared to incorporate the sort of principle that I have enunciated to protect the financing of group litigation and incorporate it into an amendment in lieu when it is sent back to this House.

[Lord Mackay of Clashfern]

My Lords, I had understood the Government’s proposed amendment as conferring power on the rule committee to determine what the rules should be. There is, of course, an ultimate power but I would expect the rules to be fixed by the rule committee, after appropriate consultation and with a fair amount of knowledge of how the whole system works. This kind of amendment would deal with the sort of problem that the noble Lord, Lord Adonis, and I referred to in Committee. The Government’s amendment would be a sensible one to make and the Minister has explained the principle under which it would work. I am perfectly happy to leave that to the rule committee to determine, in the light of its great experience and knowledge of the situation.

[Lord Carlile of Berriew]

My Lords, I have listened, of course with enormous respect, to the noble and learned Lord who has just spoken but I do not agree with him. As my noble friend Lord Marks said a few moments ago, rules already exist to deal with the problems that are legitimately identified. What I want to say, in agreement with the noble Lord, Lord Pannick, and my noble friend Lord Marks, is about who the people are who sometimes contribute to group actions and would be chilled out of them as a result of the proposed changes.

I have to go back to my period as a Member of another place, representing a geographically large but population-small rural Welsh community. From time to time in that community, issues arose relating to judicial review. For example, many people wanted to challenge the closure of small primary schools or the changes made by the Conservative Government of the time to the structure under which primary schools could be governed. There were challenges to new roads and planning decisions, which had been made on faulty procedure by the local authority.

Who are the people who contribute to these group actions? They include people with small businesses who decide that the issue matters more to them than might at first sight be apparent. They do not, however, want to open up their private business to the courts—not because there is anything wrong with their private business, but because they think it might be made public and their neighbours might know that business. Some small farmers are much more affluent than their neighbours know; others quite the opposite. The affluent ones may want to make a disproportionate contribution to a group action, because it matters to them and because their families have been central to the community in which they live for several generations. Elderly people may not want to leave quite as much as their unworthy relatives would like to receive from their estates; they may feel that there are community issues that justify their descendants perhaps paying a small price by a contribution being made to a community group action of judicial review in the public interest.

Those are just three illustrations of the types of people who will feel that they are simply not prepared to give more than a few pounds to a group action, whereas in the past they may have given several thousand. So I agree with the point that has been made eloquently by others. Before we go down this road, we need some indication from the Government—they must have some idea—at least of the proportion of costs that would fall within these provisions. Until we have that, we could not conceivably be responsible in agreeing to a proposal that would have such a serious chilling effect, not only on judicial review but on the spirits of small communities such as the one I represented.

[Lord Rooker (Lab)]

I am a complete outsider on this, but I am now confused. The examples that the noble Lord has given I can recall from my own experience, not of judicial review but of group activities—the community. The noble Lord, Lord Marks, however, said that he would buy 15% to 20%. Now, 15% is six or seven people. That is not a group or a community. Twenty per cent would be five people funding. I am now at a loss. I realise that the Government should put something forward about the level, but I am confused by the idea of lots of people contributing for the community. The noble Lord, Lord Marks, said, “I could buy 15% or 20%”. That is not a group and it is not a community. That is a small tightly knit group of motivated people. So I am confused about which way we are going on this debate.

[Lord Carlile of Berriew]

The noble Lord, Lord Rooker, has, extremely uncharacteristically, if I may say so, missed the point. I am sure that it is my fault. We are talking about group actions that may involve a significant number of people—hundreds or thousands, maybe—to which a few individuals make a large contribution. They are making that contribution, often anonymously, to ensure that the matter is capable of going to judicial review for the reasons I gave earlier. We are not talking about 20% meaning that there are only five people involved in the action. We are talking about 20% of the funding that is collected, although there may be hundreds of people involved in the action.

[Lord Berkeley of Knighton]

My Lords, the noble Lord is quite right. In my experience—which I am sorry to say is rather larger than I would like—of local communities in mid-Wales fighting, for example, wind farms, a lot of households give a few pounds, but a judicial review becomes possible because one or two people who really do wish to remain anonymous give significantly more. Many of these people have been terrified by threats of being sued for costs. So I would implore the Minister to give as much clarity as possible on this point.

19:15

[Lord Thomas of Gresford (LD)]

My Lords, I am moved to continue with Wales because I acted for my community—the Gresford community—when there was a proposal to opencast mine part of Gresford colliery at a time when there were about 260 bodies still buried in it as a result of the 1934 disaster. Your Lordships will appreciate how people felt about that: they felt that there had been a stitch-up between the National Coal Board and the local authority.

Since the matter had not been properly advertised, we took it to judicial review. We could not, however, expect every member of the community to be involved, so a committee of about eight people was set up to instruct solicitors and counsel to appear on this judicial review. It is those eight people I am thinking about, who might be found liable for costs. I can tell your Lordships that even then—back in the 1970s or maybe the early 1980s—costs were a considerable issue for these people before becoming involved in this matter. The result was that the judicial review was successful. The county council advertised properly and the villagers —the community—then made contributions to the consultation that took place. Although the decision to permit opencast mining went ahead, it was with very stringent conditions. The National Coal Board was very concerned to keep to those conditions, so the work was carried out strictly in accordance with them and the land was replaced to such a degree that it is now the training ground for Wrexham Football Club. Your Lordships will appreciate that in that case a decision was taken that excluded a community which had the highest sensitivities about what had happened. The fear of costs was something that might have deterred that successful action altogether.

[Lord Brown of Eaton-under-Heywood (CB)]

I wish to support the Motion of the noble Lord, Lord Pannick, and resist the Minister’s Motion on rather a broader basis than perhaps has been suggested so far. The problem, or one of the problems, with the Minister’s Motion is that it leaves intact the central thrust of Clauses 65 and 66, which were of course objected to and disagreed with by the Commons on the basis set out in Commons Reason 106A:

“Because it is appropriate to impose duties, rather than confer discretions, on the High Court”,

et cetera. My deep disagreement with that basis of rejection is that I do not believe it is appropriate in this jurisdiction to impose duties and to narrow or eliminate discretions on the part of the judiciary.

In Committee in July, I suggested that it is difficult to think of any area of law less suitable than this one for this sort of legislative interference. We are here concerned with the inherent supervisory jurisdiction of the courts to hold the Government to account; to ensure that the rule of the law is observed when the Executive take action. Yet here is another example of the Government seeking to weaken those powers with the inevitable chilling effect, and in many cases making it practically impossible to bring a challenge. The fresh ministerial amendments still leave intact the provision that you cannot bring judicial review unless you give a whole series of particulars about how the process is to be funded.

In that same debate, the noble and learned Lord, Lord Mackay of Clashfern—my respect and admiration for him is second to none, not least since he had the sagacity 22 years ago to promote me to the Court of Appeal—rightly pointed out that it was the judges themselves who had originally sought to underpin the rule of court under which judges had previously exercised their judicial review jurisdiction by giving it legislative form. Thus was enacted the section of which the noble and learned Lord, Lord Woolf, spoke a little earlier: Section 31 of what used to be called the Supreme Court Act but, since the invention of a Supreme Court, is now called the Senior Courts Act. However, it must be recognised that Section 31 merely facilitated the exercise of the judges’ supervisory jurisdiction; in no way did it seek to constrain, limit or inhibit it. It imposed no duties on the judges and you will search it in vain to find such.

Now, though, in this clause, as in the one that we discussed a little earlier, the Government are intent on seeking to eliminate the judges’ powers and to impose duties upon them. I echo what the noble Lord, Lord Deben, said about the earlier proposal: this is an amendment of constitutional importance. In truth, it is not a party political matter. It is a question of where the boundary should be drawn between the Executive and the judiciary. The judiciary in this country, unlike its American counterpart, has always fully recognised the sovereignty of Parliament. We do not strike down primary legislation. Parliament, in turn, has not hitherto sought to whittle down the judges’ supervisory jurisdiction, and it is really inappropriate that they should now start to do so.

If the Government have their way on this or, on reconsideration later, on the previous or the next amendment, the constitutional balance will have shifted. The fact is that the Motions that the noble Lord, Lord Pannick, is advancing are ones that are truly worth fighting for.

[Lord Faulks]

My Lords, this has been a very useful debate. The questions of the information available to judges are difficult. Most judges would say that the more information that they have, the better, to enable them to exercise any discretion in any context. When it comes to making orders for costs, which can be extremely serious in their consequences, it is important that they have information. By the same token, the Government take the view that it is only fair that people who seek the remedy of judicial review, who will inevitably cause costs to be incurred—often by a public authority, so indirectly by the taxpayer—should not be able to hide behind shell companies. That much, I think, is agreed. Where there is still some disagreement is over whether those who want to contribute to a fighting fund or a potential claim—however one likes to characterise it—should have to disclose that information.

The amendment is regarded by some noble Lords as being unsatisfactory because the Government do not specify a particular figure or percentage. Although, as the noble Lord, Lord Pannick, quite rightly says, it is the Government’s amendment and he does not have to put anything forward, he said helpfully that it might be helpful if the figure was by reference to the overall costs of the judicial review. Our view, and I rely on the support of the noble and learned Lord, Lord Mackay of Clashfern, is that these are pre-eminently matters for the Civil Procedure Rule Committee. It is of course not a committee of which the Lord Chancellor—the subject of much criticism today and throughout the Bill—is the chairman or has control, but it has considerable experience.

The important thing, I suggest, is to consider what is really at stake here. I respectfully suggest that actually the noble Lord, Lord Rooker, put his finger on exactly the dilemma here: whether we are talking about people who are making small contributions to a community project or about quite large sums of money where there is a pooling of resources to take forward a claim. I shall try to characterise what we are trying to get at by these rules. We suggest that there is a difference between an amount of money that by most people’s standards would establish a vested interest in the outcome of a case and someone who, in support of a cause, wishes to make a small contribution to a fighting fund. It is the latter that our clause seeks to exclude. That is the difference. We have adhered to that as an approach. We are not seeking to exclude people who are making substantial sums. I respectfully suggest that £10,000 to £15,000, as referred to by my noble friend Lord Marks, is a substantial sum of money.

The amount that individual lawyers charge is of course often much criticised, but I am asked to give some idea about the sort of costs that may be involved in judicial review. For cases that proceed to a full hearing, the Public Law Project estimated in 2007 that, for a straightforward case, costs to a claimant could be in the region of £10,000 to £12,000—adjusted for inflation, that is £11,000 to £22,000. In 2012, Guildhall Chambers published information estimating this at £5,000 to £10,000. In relation to defendants’ legal costs, the Treasury Solicitor’s Department estimates that in 2013, in cases that it was involved in, the defendants’ costs ranged from £8,000 to £25,000 for non-immigration and asylum cases, and from £1,000 to £15,000 for immigration and asylum cases. For an oral permission hearing, the Treasury Solicitor’s Department estimates an average cost to a defendant for preparing and attending the hearing at around £1,000 to £1,500.

It is important to bear in mind that Clause 66 requires the court to consider the funding information and whether to make costs orders. Of course the noble and learned Lord, Lord Brown, is quite right: the funding must be provided for them to go on to consider how to exercise their power over costs. Importantly, though, whether to make any costs order against a third party, provided that the prerequisite is there, will be entirely for the court to assess. The clause itself, provided that Clause 65 is satisfied, does not affect the judge’s discretion. We think it is right that the judge, in exercising his discretion, should have regard to what information would reasonably be expected to make a proper judgment about whether costs should be paid.

There was a reference to the possibility that privacy would effectively be invaded by having to provide costs. The information would be made available to the court but not publicly available, in line with existing practice when the courts deal with information that concerns personal finances or is otherwise confidential. It is right that there is transparency in the more generally used sense, and that the courts are aware of the nature and extent of funding provided to a claimant from those directly party to, but not potentially controlling, the litigation.

The judiciary itself responded to the consultation on judicial review. So that I cannot be accused of misrepresenting what it said, I shall quote from paragraph 179:

“The court is already empowered to make costs orders against non-parties … We support the proposal that it should be mandatory for a claimant to provide details of how a case is funded … to assist the court in assessing whether to make a cost orders against a non-party. We welcome the acknowledgment that the court should retain full discretion in relation to the making of these orders”.

That is a point made by the noble and learned Lord, Lord Brown; he says that there should be no obligation on the part of those who are funding matters to provide information.

[Lord Brown of Eaton-under-Heywood]

My Lords, as I understand Clause 65, it involves an insertion into Section 31(3) of the Senior Courts Act. That will provide that no application for judicial review shall be made unless, as at present, the leave of the High Court has been obtained—that is fine. But then you insert these provisions—“unless the applicant has provided the court”. In other words, the court has no discretion left to grant leave to move unless this whole rigmarole is gone through and whatever it is ultimately decided has to be disclosed by way of the financial basis of the claim has been disclosed. That is the respect in which I suggest there is no longer going to be any discretion for the court to allow proceedings to go ahead.

[Lord Faulks]

That is entirely correct. The discretion would exist on whether to award costs. This is the discretion which is fettered, I entirely accept, to the extent that the Government think it is appropriate for it to be fettered because they consider that, because of what results from bringing a judicial review in terms of cost consequences, it is perfectly reasonable to provide within the realms of privacy the basis on which you are funding. That excludes those small contributors whom I have characterised, and whom I accept would be covered by the rules. Beyond that, however, we consider it to be an appropriate obligation. It is there to prevent what has been a potential evil. I will not go over the Richard III case again; the noble Lord, Lord Beecham, is relieved. Undoubtedly there have been cases where shell companies have been used; the case is lost; there is nobody for anybody to recover costs from and again the taxpayer loses. This can happen. This is not a draconian matter: we have made a concession which, I suggest, is a reasonable one. The rule committee can be trusted to come up, with its experience in the matter, with an appropriate compromise reflecting the principles that I have endeavoured to outline on the Floor of the House.

[Lord Marks of Henley-on-Thames]

I have two questions for the Minister. First, will he clarify that the figures for claimants’ costs—and it is, of course, the claimants’ costs that are important when considering financial information—are those related only to straightforward cases? Secondly, will he confirm that I am right in saying that the level that the Government intend as a matter of principle should be reflected in the rules is a level of only a few hundred pounds—in other words, very small contributions rather than significant contributions from larger contributors?

[Lord Faulks]

In answer to my noble friend’s first question, I did use the word “straightforward” and that is entirely correct; I adhere to that. On the second question, I am reluctant to give figures because, for the reasons I have given and in terms of what we are talking about, it relates to a small contribution to a fighting fund. That would not be £10,000 to £15,000. I do not think it is appropriate to go beyond that. That is a matter that I will leave to the rule committee: it will arrive at an appropriate figure in the light of its experience.

[Lord Pannick]

My Lords, this is a really puzzling matter. The Minister accepts that a threshold figure should be included in the rules below which a contributor to the funding of a judicial review should not be liable to be identified or pay costs. That is a vital concession, because without it, private funding of judicial reviews in the public interest would not be able to continue. However, the Minister is unable to say what the threshold figure will be; he is not able to state any criteria by reference to which that figure should be determined, and he is reluctant, in answer to the noble Lord, Lord Marks, to say more than that it will be a figure less —significantly less, as I understand him—than £10,000 to £15,000. That, I suggest to noble Lords, is quite unsatisfactory in relation to the Government’s attempt to persuade this House not to insist on its previous amendment.

The noble and learned Lord, Lord Mackay of Clashfern, said that the rule committee will deal with this in an independent manner. However, the rule committee will no doubt be heavily influenced by what the Government say is the purpose of this. I am not suggesting that the rule committee is bound by what the Government say, but the Government will have a very considerable influence, particularly when there are no criteria set out in the amendment. In any event, there is also—as emphasised by the noble and learned Lord, Lord Brown of Eaton-under-Heywood—a vital need in these clauses to retain a degree of judicial discretion in this sensitive context. The Government wish to impose absolute duties again and I, in this context, as in the previous context of Clause 64, suggest that judicial discretion should be retained. I wish to test the opinion of the House.

19:34

Division 3

Ayes: 210

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Labour: 146
Crossbench: 36
Liberal Democrat: 11
Independent: 6
Bishops: 2
Green Party: 1
Plaid Cymru: 1

Noes: 192

---

Conservative: 141
Liberal Democrat: 47
Crossbench: 2
Democratic Unionist Party: 1

19:46

Motion D

Moved by

[Lord Faulks]

That this House do not insist on its Amendment 107 and do agree with the Commons in their Amendments 107A, 107B, 107C, 107D and 107E in lieu thereof.

Lords Amendment

107: Clause 67, page 67, line 25, leave out subsections (2) to (6) and insert—
“( ) The High Court and the Court of Appeal shall have a discretion whether to order an intervener to pay the costs of a relevant party to the proceedings, and shall have a discretion whether to order a relevant party to the proceedings to pay the intervener’s costs.”

Commons Disagreement and Amendments in lieu

The Commons disagree to Lords Amendment No. 107 and propose Amendments Nos. 107A, 107B, 107C, 107D and 107E in lieu.

107A: Clause 67, page 67, line 22, leave out subsection (1) and insert—
“(1) This section applies where—
(a) a person is granted permission to file evidence or make representations in judicial review proceedings, and(b) at that time, the person is not a relevant party to the proceedings.(1A) That person is referred to in this section as an “intervener”.”

107B: Clause 67, page 67, line 30, leave out subsection (4) and insert—
“(4) On an application to the High Court or the Court of Appeal by a relevant party to the proceedings, if the court is satisfied that a condition described in subsection (4A) is met in a stage of the proceedings that the court deals with, the court must order the intervener to pay any costs specified in the application that the court considers have been incurred by the relevant party as a result of the intervener’s involvement in that stage of the proceedings.
“(4A) Those conditions are that—
(a) the intervener has acted, in substance, as the sole or principal applicant, defendant, appellant or respondent;(b) the intervener’s evidence and representations, taken as a whole, have not been of significant assistance to the court;(c) a significant part of the intervener’s evidence and representations relates to matters that it is not necessary for the court to consider in order to resolve the issues that are the subject of the stage in the proceedings;(d) the intervener has behaved unreasonably.”

107C: Clause 67, page 67, line 44, at end insert—
“and the proceedings described in paragraphs (a) to (d) are “stages” of judicial review proceedings.”

107D: Clause 67, page 68, line 3, leave out from beginning to “directly” in line 6 and insert—
“(a) a person who is or has been an applicant or defendant in the proceedings described in subsection (7)(a), (b) or (c);(b) a person who is or has been an appellant or respondent in the proceedings described in subsection (7)(d);(c) any other person who is or has been”

107E: Clause 67, page 68, line 8, at end insert—
“( ) If a person who is an intervener in judicial review proceedings becomes a relevant party to the proceedings, the person is to be treated for the purposes of subsections (2) and (4) as having been a relevant party, rather than an intervener, at all times when involved in the proceedings.”

[Lord Faulks]

My Lords, Clause 67 concerns those who intervene voluntarily in a judicial review and would see the court award reasonable costs against them—both their own and those their intervention causes a party—in most circumstances. Your Lordships’ Amendment 107 to this clause would provide absolute discretion to order an intervener’s costs against a party, or a party’s costs against an intervener, or not. That is effectively the current position, which in practice allows interventions to be made with very limited risk of any cost implications of how that is done, often with the taxpayer left to meet the bill.

As this House acknowledged during the Bill’s previous stages, the Government accept that Clause 67 as introduced caused concern, and we listened with care to the arguments raised. However, we think your Lordships’ amendments to the clause go too far, and so we have brought forward our own amendment in lieu. Our amendment strikes a proportionate and sensible balance: giving interveners the right incentives to ensure that they do not intervene inappropriately and more certainty about when they will face costs; giving taxpayers the protection they need; and giving the judges the scope they need to apply Parliament’s will to the circumstances of the case at hand.

Our amendment in lieu would place the court under a duty to award costs against an intervener if one or more of four conditions were met. The first condition is that the intervener has usurped a party’s proper role, perhaps because they want to drive the litigation without accepting the responsibility for costs which this entails. The second is where the intervener has simply not been of significant assistance to the court. Perhaps the intervener has argued at length, placing the parties at considerable expense, without advancing the court’s understanding of the issues. The third is that the intervener will meet a party’s reasonable costs of dealing with the intervention where a significant part of their arguments are not germane to the court’s consideration of the case. They may, for example, spend much of their time in court pressing the importance of a cause in which they are expert, or indeed their own importance, with only a small amount of time spent focusing on the issues really at hand. Finally, the court will be under a duty to order costs where the intervener has acted unreasonably.

Following the amendment in lieu, Clause 67 will continue to give the court significant leeway when it comes to making costs orders. First, it will be for the court to consider whether any of the four conditions has been met, so it will look at the facts in every case. Secondly, and importantly, the amendment preserves the court’s role in deciding whether costs were in fact caused by the intervener and incurred by the party reasonably. Thirdly, where the court is of the view that there are exceptional circumstances which would make the award of costs under the clause inappropriate, it need not make an award. I am happy to be entirely clear that the exceptional circumstances carve-out would remain in the clause in light of the Government’s amendment in lieu. In fairness, that was not particularly clear in the debate in the House of Commons. Nobody said anything to the contrary, but it was not emphasised with sufficient clarity. Finally, Clause 67 quite purposefully would not affect the court’s discretion to invite an intervener to participate in a judicial review, which would take the intervener outside the ambit of the clause.

In the Government’s view, your Lordships’ amendments to this clause went too far in undermining their intended effect and perhaps underestimated the significant safe-guards built into the clause as agreed by the elected House. As such, the Government continue to be of the view that the first presumption in the clause—that a party must not, unless there are exceptional circumstances, be made to meet the costs an intervener accrues when making their intervention—should be retained as it was introduced and without amendment.

Nobody doubts that interveners can and do make a valuable contribution in a number of cases. They make a valuable contribution and can assist a court in deciding a case, but equally we think that it is appropriate that interveners should pause long and hard to think about whether they can truly add anything to a case and to make sure what they add is proportionate and sensible and provides assistance to the court. They should not act simply as a cheer-leader because it is an issue about which they feel strongly, and repeat all of the arguments that have already been made by one party; they should not expand the scope of the case beyond that which is before the court; and they should not, as a matter of routine, simply join in the case because it is the sort of thing that they feel strongly about.

We encourage focused interventions, but we do not wish to deprive judges of the interventions that are appropriate, nor do we wish to deprive them of the discretion which they have. We simply ask them to make up their mind whether these four conditions are satisfied. If one of those four conditions is satisfied, then they must order costs, unless there are exceptional circumstances. Judges are best placed to decide whether they have been given assistance, and we do not seek to usurp that discretion. We think that interventions can be useful; they can also be overlengthy and expensive. This is a moderate compromise, and a reflection of the anxiety which has been expressed by a number of noble Lords, and indeed, some Members of the other House, and I ask that the House accepts the amendments of the Government. I beg to move.

Motion D1

Moved by

[Lord Pannick]

As an amendment to Motion D, leave out from “House” to end and insert “do insist on its Amendment 107 to which the Commons have disagreed and do disagree with the Commons in their Amendments 107A, 107B, 107C, 107D and 107E in lieu thereof”.

[Lord Pannick]

My Lords, I shall be brief, given the time, given that your Lordships’ House has debated this issue on two substantive occasions already, and because I apprehend that your Lordships’ House will be anxious to move speedily to a vote on this matter.

Judges have repeatedly emphasised how helpful they find the contributions of interveners to be. Courts already have ample powers, which they exercise to control who can intervene on what subjects and with what costs consequences. The Government have at no stage in the debates on this Bill in either House identified any cases whatsoever in which the courts currently lack adequate power to deal with abuse or misuse of interventions. This clause, even with the amendments approved in the other place, will inevitably deter interventions which the courts will regard, and do regard, as valuable in determining the results of judicial review. I simply cannot understand what the Lord Chancellor hopes to achieve by this clause. I suggest that this House should ask the other place to think again. I beg to move.

[Lord Faulks]

My Lords, it has been a short debate. The issues have been fully covered at previous debates and at previous stages. I am not going to prolong this debate, but the noble Lord, Lord Pannick, says that the Government have not identified any issue. I made a rather more lengthy speech at an earlier stage in which I did identify—or at least attempt to identify—what the Government were driving at by this amendment. It was indeed based—I have to declare an interest—on personal experience of lengthy interventions, which no doubt a judge with all good intentions envisaged being very minor, which turned out to be extremely major in terms of their volume. These involve lengthy skeleton arguments, volumes of authorities and lawyers no doubt seeking to justify their existence. This is not helpful.

Of course, judges are capable—it is perfectly true—of expressing their disapproval, of limiting those interventions by appropriate methods. None the less, those who are involved will have inevitably had to spend time in preparing the case, in the eventuality that all of these interventions will in fact be treated with considerable scrutiny. Perhaps the case may be lengthened.

We consider this is an appropriate compromise. It does no more than identify the sort of cases that judges should be looking at, and probably are looking at, to make an order against interveners in appropriate circumstances. There are exceptional circumstances and judges will know when they are helped and when they are not helped, but to suggest that all is perfect in the world of interventions is simply to ignore the reality.

[Lord Pannick]

My Lords, it is not an acceptable compromise for the Government to bring forward a clause, with amendments, which will undoubtedly deter the interventions which the courts currently find helpful. There are interventions from all numbers of persons and bodies, many of which have made representations to your Lordships that this clause will deter them from coming forward and assisting the court. I have seen representations from bodies ranging from Liberty to Buglife. They are concerned that they cannot, for financial reasons, seek to assist the court if they fear that, other than in exceptional circumstances, they are going to be liable to pay the costs under this provision. For that reason I respectfully suggest to noble Lords that we should ask the other place to think again about this vital matter. I wish to test the opinion of the House.

19:58

Division 4

Ayes: 160

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Labour: 125
Crossbench: 20
Liberal Democrat: 5
Independent: 3
Bishops: 2
Green Party: 1
Plaid Cymru: 1

Noes: 190

---

Conservative: 129
Liberal Democrat: 53
Crossbench: 5
Democratic Unionist Party: 1

Motion D agreed.

Care and Support (Deferred Payment) Regulations 2014

Tuesday 9th December 2014 Lords Chamber

Motion to Annul

20:10

Moved by

[Lord Lipsey]

That a Humble Address be presented to Her Majesty praying that the Care and Support (Deferred Payment) Regulations 2014 laid before the House on 31 October be annulled on the grounds that the Regulations are to come into force in April 2015 instead of simultaneously with the other post-Dilnot reforms in April 2016. (SI 2014/2671)

Relevant document: 14th Report from the Secondary Legislation Scrutiny Committee

[Lord Lipsey (Lab)]

At last, the big event of the day —the one you have all been waiting for. First, I declare an interest as an unremunerated president of SOLLA, the Society of Later Life Advisers, which is the body that accredits financial advisers who work with the elderly.

As there could be some misunderstanding, perhaps I may explain that there will be two separate debates and I will be making two separate speeches. This will not take any more of the House’s time, but I think it will make it a much less confusing debate than it otherwise would have been. I will speak, other noble Lords will speak, my noble friend Lord Hunt will speak, the Minister will speak, and then we will decide the first Motion; and then we will do the second one.

I turn to the first Motion, which is the fatal resolution. In a world of logical governance it would be taken for granted that the whole post-Dilnot package should be implemented in one—the new deferred payment scheme covered by these regulations together with other elements including the cap on how much people have to spend on care. The Government, however, have proposed that the deferred payment scheme should take effect in April 2015 and the cap and the rest of the measures in April 2016. By this new system, they have set a course for potential chaos. There will be chaos in local councils. The LGA says, quietly, that,

“the timetable is challenging for councils”.

A recent report by the National Audit Office says:

“It may not be feasible for local authorities to implement all the proposed changes to the indicated timetable”.

There will also be chaos for financial advisers whom, through SOLLA, I represent. There will be one development this coming April; the next the following year. How can they give coherent advice to older people on how to proceed in the gap year? As SOLLA has written to the Minister:

“This does seem to add a level of unnecessary complexity to an already difficult system”.

If advisers are struggling to understand the relationship between the two sets of proposals, how are older people themselves or their families supposed to understand? How are they to make the choices before them? It is batty—I can use no less a word. That is the unanimous view of all the experts with whom I have discussed the matter. My noble friend Lord Warner, who is a member of the Dilnot commission, has given me authority to say that, in the commission’s view, there should be one proposed date, not two.

Why? The answer is 7,600. This is the Government’s estimate of the number of extra people who would benefit in 2015-16 from the scheme taking effect in April 2015, rather than waiting another year for the rest of the package. The detailed calculations are set out in the impact assessment, pages 107 to 147. As there are 40 pages, your Lordships will be glad to learn that I do not intend to read them all out now. Broadly, this is the logic. There are 55,000 new self-funders going into care each year. Of these 25,000 are eligible for the new scheme. We will debate how 55,000 go down to 25,000 in my second Motion. If 40% of these take advantage of the scheme, that will be roughly 11,500 claimants in all. Take off the 3,900 who would get it under the existing, defective deferred payments scheme and the Government end up with an additional 7,600—the answer to the question, in their view—as a result of introducing the scheme in 2015 and not in 2016. That is a significant number.

I know it is difficult to take all these numbers in swiftly but I want to question whether this 7,600 estimate is anywhere near correct. The first law of statisticians—and I speak as chair of the All-Party Parliamentary Group on Statistics—is that if a number looks wrong, it probably is wrong. Having been involved in this subject for 17 years, I think it is, since the noble Lord, Lord Joffe, and I were on the royal commission, I have to say this number feels completely wrong to me. No one can take advantage of the scheme unless they know about it. Do you find people rushing up to you in the street saying: “Oh, it’s great. In April I’ll be able to take out a deferred payments scheme”? No, nobody will start to know about it unless the Government have planned some information measures.

Secondly, to take out a deferred loan to pay for your care in this scheme is exceptionally unattractive to most people. It means that their wealth is tied up in a home—probably an empty home, with no income earned on it. Meanwhile, they are paying interest on the loan that the council is making to them. Interest is rolling up at compound rates. So the circumstances in which it is possible to conceive of an older person wanting to do this are quite rare. I sympathise with the Government in making these estimates. It is not surprising that they completely changed the estimates from the first impact assessment to the second one only months later, because it is very difficult to get an exact number. However, I think that the 7,600 is an exaggeration in itself.

20:15

There is a further point. There is a schoolboy howler in this. Of course there will be additional claimants in 2015-16 if the scheme is introduced in April 2015; there is no question about that. What will the people who would have qualified if it came in in 2015 do if it does not come in until 2016? It is pretty obvious what they will do—they will wait. Suppose you are retiring in March 2016 and would like to do a deferred payment. If the scheme is not coming in until April, you may borrow a bit of money from your family or ask the home to let you pay it next month. You wait the month and then claim the scheme the following year. So it is perfectly true that, as a result of this, the figures go up by a certain amount—though not by 7,600—in 2015-16. However, that is then compensated for by fewer claims than there otherwise would be in 2016-17. It is just a transfer of people who are claiming—not an extra number, as the Government have claimed.

The Government recognise the logic of this. I refer noble Lords to paragraph 8.33 of the impact assessment, which allows for extra claims from those people already in homes who will qualify under the new scheme. I should be surprised if the early introduction of the scheme made a big difference to the total number of claimants and astonished if it came near to the Government’s estimate of 7,600 extra, at the cost of causing disarray in local authorities, distress to old people and despair among the best financial advisers. So why are they doing it? Why are they doing something so palpably absurd? The noble Baroness is not batty—of course she is not. The Care Minister Norman Lamb is not batty; I have a high admiration of him. I do not personally know the Secretary of State, Jeremy Hunt. I have not taken advice on his mental state, but I do not suppose that he is batty either.

I am drawn reluctantly to this conclusion. This is nothing to do with good orderly government, nor with helping elderly people. It is about the imminence of the general election and the Government wanting to say, truthfully or otherwise, that they have done something to stop people having to sell their homes for care. It is all about electoral votes and the group that the Government think might be attracted to UKIP when the election comes. I have been around democratic politics long enough to know that these things happen, but it would be sad if they happened without your Lordships’ House having had a chance to express its distress and dismay at what the Government have decided to do.

[The Deputy Speaker (Viscount Ullswater) (Con)]

I should advise the House that if this Motion is agreed to the second Motion in the name of the noble Lord, Lord Lipsey, cannot be called by reason of pre-emption.

[Lord Hunt of Kings Heath (Lab)]

My Lords, my noble friend has done a singular service in bringing these two Motions before your Lordships’ House. I take this opportunity to welcome back my noble friend Lady Wilkins, who is in her place. It is great to see her back in your Lordships’ House.

My noble friend made some very telling points about the scheme and the puzzle about the differentiation in numbers relating to the date of its introduction. I was particularly struck by his comments and concerns about the impact on local authorities, on financial advisers, and, of course, on old people themselves. I hope the Minister is in a position to answer my noble friend. He referred to the National Audit Office’s study of the state of readiness of local authorities. I had the opportunity of meeting with the Local Government Association yesterday. It is fair to say that it seems prepared for the introduction. However, its own report has pointed out some of the issues it faces: concern about an increase in total costs; measures around IT, workforce, information and advice, and market shaping; and feedback through direct conversations with its own members that suggests that other pressures on councils, including funding shortfalls and work on the better care fund, compounded with uncertainty on key advice and information, has delayed or otherwise impacted on its preparations in a number of areas.

We debate the introduction of the Care Act’s provisions by local authorities in the context of a huge squeeze on local authority funding. Remember that, since adult social care is probably local authorities’ biggest area of discretionary spend, there have inevitably been huge reductions in their resources. I remind the Minister that, as we have seen from the Autumn Statement, the Chancellor has said that he wants to keep the state permanently at the size it was in the 1930s—around 35% of GDP. If the Government are re-elected at the next general election, that is bound to have a huge impact on local authorities’ capacity to introduce and run the provisions in the Care Act.

I particularly want to talk about one issue relating to implementation. The Minister knows that local authorities will be liable to assess people’s eligibility as self-funders from 2016 onwards. That will then start the clock running to reach the 72,000 cap, at which point those self-funders will be eligible for local authority support. However, picking up my noble friend’s comment, it is clear that local authorities will not be able to assess all current self-funders in April 2016. In fact, I think some self-funders will not be aware of the provisions and therefore will not apply on the first date that they could. Others will apply, but the local authority will not be able to get round to assess them.

The question that I want to put to the Minister is this: will the introduction of the cap on individuals be retrospective? In other words, if I am a resident in a care home, it takes the local authority a year to come round and assess me because of lack of capacity, so will the Government backdate the assessment to the beginning of the introduction of the provisions in April 2016, or will the clock start to run only when the assessment has been made? The question also applies to those self-funders who did not apply on the first potential date when they could have done but were in a care home at that date. That is crucial. There is a risk, if it is not completely retrospective, that local authorities will ration people’s eligibility for this new system by simply delaying the assessments that take place. That is entirely consistent with the point raised by my noble friend. At the heart of his argument are the issues of capacity and the state of readiness of local authorities to undertake the considerable responsibilities that they have been given. It would really be helpful if the Government were able to state with confidence their assessment of the state of readiness of local authorities. What will happen to the thousands of individuals who, in my understanding of what these provisions mean, would be eligible right from the start of the new scheme? Will they have to wait until the clock starts for their assessment to take place?

[Baroness Jolly (LD)]

My Lords, the Government have made a clear commitment to introduce a universal deferred payment scheme from April 2015. The fulfilment of this pledge directly addresses the long-standing problem in the care system whereby people who have gone into residential care have often had to sell their homes at short notice in order to pay for care. This has often happened at a time when people need space to adjust to a change in lifestyle and circumstances and to make important decisions about their care and finances. This has been a well known source of distress to people—I am sure we would all identify with that—as well as making it harder for them to plan. The introduction of the universal deferred payment scheme directly addresses this issue and that is why we are proud to announce the new scheme from April 2015.

The first Motion that we are to debate calls for the regulations bringing the universal deferred payment scheme into force to be annulled on the grounds that the reforms are coming into force a year before other changes to social care funding. There are two compelling reasons why the Motion is misguided and any delay must be resisted. First, many thousands of people stand to benefit from deferred payments in the first year of the scheme alone. These people would otherwise be at risk of having to sell their homes to pay for care. Secondly, local authorities are confident that they will be ready to implement the scheme in full from April next year so there is no sensible reason why these people should not benefit.

The need to reform deferred payments without delay has been accepted for many years. The Commission on Funding of Care and Support, chaired by Sir Andrew Dilnot, supported extending deferred payments in part due to its finding that,

“the availability and use of deferred payment schemes is patchy”.

At the moment, offering deferred payments is voluntary for local authorities, with no common eligibility criteria. As a result, not everyone who wants and needs a deferred payment can get one. The Dilnot commission identified that one of the key reasons for this patchy provision across the country was the fact that local authorities were not able to charge interest on deferred payments and were thus forced to run the scheme at a cost to them. By allowing local authorities to charge a low rate of interest that will help them run the scheme on a cost-neutral basis, we are removing one of the clear disincentives of the old scheme. From April next year, local authorities will be able to charge up to 2.65% interest, which helps to keep the scheme financially sustainable and compares very favourably with equity release products, which can charge in the region of 7% to 8% interest. Through the regulations being debated today, all local authorities will be required to have a deferred payment scheme from April next year. There will be a universal offer across the country, ensuring that those most at risk of losing their home can benefit from the support they need to meet their care costs, wherever they live.

It has been suggested by the noble Lord that the universal deferred payment scheme should be delayed by a year and not come into force until 2016. We are sympathetic to concerns that local authorities could have found the implementation of the scheme challenging, but I can reassure your Lordships’ House that the timetable that we have planned is realistic, necessary and achievable. The Department of Health has worked closely with local government colleagues through the LGA and the Association of Directors of Adult Social Services to ensure that the sector is ready to implement the Care Act from April 2015. To pick up on a point raised by the noble Lord, Lord Hunt, we recognise that there will be a need for additional capacity to assess people and we are prioritising £335 million in 2015-16 to support implementation, including early assessments towards the cap. The latest survey of local authority readiness shows that progress towards implementing Part 1 of the Care Act from April 2015 is on track and that confidence is high and improving in almost all areas, including deferred payments.

It is important to note that the introduction of the universal deferred payment scheme from April 2015 will mean that an extra 7,600 people will be able to benefit from the protection of a deferred payment. This is in addition to the 3,900 people who would have benefited in the current regime anyway. This means that when the new scheme comes into force, we project a total of 11,500 new deferred payment agreements in the first year alone.

The noble Lord, Lord Lipsey, questioned the uptake assumptions in the impact assessment. The figures used in the impact assessment are based on a local authority with a well established scheme. All who qualify for deferred payment would also qualify for the 12-week property disregard so will come to their local authority anyway. Noble Lords will surely agree that, bearing in mind the confidence of local authorities in being able to implement the scheme, it would be hugely unfair to these people to wait any longer than is necessary to introduce this historic reform.

[Lord Lipsey]

I thank the noble Baroness for her reply, which the world will be able to peruse together with my speech in Hansard and judge whether she has answered all the points that I made. She and her department are obviously getting quite different information from local authorities, which is not surprising because local authorities want to tell the department that they can do it but they tell us that they cannot. There is no seeing which is the truth.

Despite what I said about the 7,600 figure, the noble Baroness did not address the substance of my remarks. Perhaps I could deal with this matter quite easily. I will have a bet with the noble Baroness. For every one by which the figure that finally emerges is above 7,600, I will give her £1 and for every one that it is below 7,600, she will give me £1. If that is agreeable, perhaps the House will excuse me while I book my Mediterranean cruise for next year because the figure will not be 7,600, as in due course we shall find out.

I do not want to press this Motion to a vote today. I am concerned about adding chaos to chaos. It would have been much better if we had debated this some months ago. I do not want to do a screeching U-turn at this stage. I fear that the Government have very far from convinced me and I hope that they have not convinced the House that they are doing the right thing.

Motion withdrawn.

Care and Support (Deferred Payment) Regulations 2014

Tuesday 9th December 2014 Lords Chamber

Motion of Regret

20:32

Moved by

[Lord Lipsey]

That this House regrets that the £23,500 asset limit proposed in the Care and Support (Deferred Payment) Regulations 2014 is at odds with Her Majesty’s Government’s pledge that no-one will have to sell their home in their lifetime to pay for care. (SI 2014/2671)

Relevant document: 14th Report from the Secondary Legislation Scrutiny Committee

[Lord Lipsey (Lab)]

My Lords, I imagine that the tummies of some noble Lords are starting to rumble, but I must detain the House a little longer. Inevitably, this is a complex matter. Let me start with the history of the deferred payments. I think that my noble friend Lord Joffe, who is beside me, and I were the people who invented them when we were involved in the minority report of the royal commission. We were against the majority view that all social care could be free because it was unaffordable and greatly benefited the rich. We thought it was right that people with means at the end of their life should dip into those means to pay for care.

However, we were very aware that a great deal of political heat had been understandably stirred up by one particular aspect; namely, that people could be forced to sell their homes to pay for care—homes which they hoped that one day their children would be able to live in. The Daily Mail, the Telegraph, and “Panorama” all have reported on this issue. We thought it was necessary to take the heat out of all that before a rational view on the future of care funding could be taken. We therefore recommended a scheme of deferred payments whereby in such circumstances the local authorities would lend people money to pay for their care, taking a charge on their homes which would be repayable on their death. The Labour Government accepted that but, unfortunately, we botched the implementation in 2002. Of the 55,000 self-funders who go into care each year, fewer than 4,000 sign up to the current scheme.

The next stage was the Dilnot commission, which recommended, as part of its package, a new universal deferred payment scheme. The Government immediately accepted this and proudly proclaimed, and continue to proclaim, that, under their scheme implemented by these regulations, no one will have to sell their home to pay for care. They probably meant it at the time, but the rats got at it.

As the Care Bill was going through the House last year, a proposal was smuggled out that meant the payment scheme was not universal in the true sense; namely, that it would be open only to those who had less than £23,250 in non-housing assets. Therefore, 30,000 of the 55,000 people who would otherwise have qualified for the scheme were disqualified by this measure. When this was pointed out to the House—it was headline news in the Telegraph and the Mail—the Government indicated a retreat. The noble Earl, Lord Howe, who alas is not here tonight, said the Government were,

“happy to consider a range of figures”,—[Official Report, 29/10/13; col. 1474.]

for the ceiling and No. 10 emitted similar emollient noises. Encouraged, the House decided not to amend the Bill. The Government by this stage had ratted on their original proposal of universal deferred payments. Now they are re-ratting, this time on their implied pledge that £23,250 would be increased. What is before the House now is, in effect, an extremely limited scheme from which in my opinion, and as we will see in reality, very few people will benefit.

Have the Government and the Prime Minister, who must have authorised the No. 10 briefings, lied? Perhaps I should rally to the best defence I can find. This scheme is universal, just not in the original sense that it was available to everyone. It is universal in that the same scheme—or broadly the same scheme—applies in every local authority. Indeed, no one will be forced to sell their house when this scheme is in place. Take a family of fairly modest means with £75,000 in non-housing assets. The Government expect them to run down those assets until they have got only £23,250 left in the bank. It would pay £500 in interest a year, if they were lucky. It is not enough to cushion them from the uncertainties of life, not enough for presents for the children and so on. Who in this House would ever be happy if they had only £23,250 in their old age to sustain them for the rest of their lives? None of us. Nobody of modest means will take advantage of that scheme and run their savings down to £23,250. The last government proposal I said was batty; I would say that anybody who did that would be pretty well crackers. I have never met an adviser to the elderly who would advise them to do so. They are not forced to sell their house; they can do something completely ridiculous that leaves them in penury for the rest of their days. That was not the intention of the minority of the royal commission or Dilnot and it is not the intention the Government wish to convey to the public at large.

We live in a time of some crisis with the political class, of which I am a long-established member. People out there worry that we use words in a different way to them. We use words that are literally true but, when you examine them under any form of illumination, they turn out to be weasel words designed to hoodwink. That is what the Government have done here. They have used words that are strictly and literally true to hoodwink the public as to what they are proposing. I think the use of clever language to disguise intent is desperately sad and is essentially part of the crisis we are facing in this country. It is for that reason I ask the House to regret that situation this evening.

The Minister will reply in a minute, but let me get my retaliation in first by dealing with two of the arguments she could use. A proper universal deferred payment scheme, she could say, would mean state support for the rich. I empathise with that. I would not want to be handing state money to the rich, but we are not talking about the rich here—we are talking about £23,250. There would have been a perfectly sensible course for the Government to take. Under the new means testing for social care you can be helped if you have up to £118,000 in assets—£23,250 is the present upper capital limit and £118,000 is going to be the new limit. The Government could have set the same limit for this scheme and aligned the two. That would have been perfectly logical and completely right. Instead, today they are saying that somebody who has accumulated £30,000 in savings and a house should be disqualified. How can they say that such a person is rich? That person has worked hard for what they have, has played by the rules and is being betrayed by a Conservative Government who claim that that is the kind of person to whom they want to appeal.

Secondly, the Minister could say that to change this would cost public money—a higher ceiling would mean spending more money. That is simply untrue because the loans would be made at interest—the interest on gilts—so in the long term the Government would get back every penny that they spend. Indeed, they have gone to great lengths to ensure that they do because people will be charged for the administrative costs of taking out one of these. There is no cost to the Government. It is true that there is a cash-flow cost because in year one the loans are paid out and then the repayments come back later—not much later because the average loan lasts only 18 months.

But there are plenty of ways that a similar saving could be made within the current budget for care without slapping middle England in the face. As I proposed earlier, they could have introduced this scheme a year later, boosting the public finances in a tight year next year. They could reduce the £144 to be allowed to individuals before they have to contribute to their care home fees—some six times the amount allowed for personal expenses to people under this scheme than applies to people who are getting means-tested benefits. I look forward to discussing this with my noble friend Lord Joffe, since we were responsible for it, but they could freeze the nursing cost allowance paid to everyone in nursing homes or reduce its amount for new claimants. We could debate the merits and demerits of these alternatives all night, but none of them is half as bad as the scheme that the Government are putting before the House tonight.

As happened when the royal commission was considering these matters—and we two stood shoulder to shoulder against the weight of the majority who came to loathe us for our unwillingness to dip into taxpayers’ pockets for paying for care—again, siren voices are being raised in favour of making personal care free for all. That was the recommendation of the recent Barker report for the King’s Fund. It even sometimes seems as if Andy Burnham, the shadow Health Secretary, has flirted with such an idea, but it is noticeable that it does not appear in the shadow manifesto that the party produced yesterday, and I am glad to hear it. That is one side of what might come out.

On the other side are the sane and sensible proposals of the Dilnot plan, albeit with a higher threshold than Dilnot recommended, of which universal deferred payments were an integral part. Tonight, with these recommendations, the Government are effectively demolishing a keystone of the Dilnot proposed universal scheme.

I am under no illusion that the Government are likely to give way on this tonight, but your Lordships, who so often have been the bulwark against arbitrary and misguided government, should have this chance to debate it and, unless the Minister says something wholly unexpected, if necessary, to vote against it. I beg to move.

[Lord Hunt of Kings Heath (Lab)]

My Lords, I again thank my noble friend for bringing us back to a very important part of our debate during the passage of the then Care Bill some months ago. We need to remind ourselves of the fanfare with which the Government introduced that Bill. As my noble friend said, there was an explicit statement that older people would no longer have to sell their homes to pay for their care. As he has carefully outlined, that is strictly true even within the provisions of the deferred payment regulations. But as he said, it is not in the spirit with which the Government actually announced this policy. Instead of a scheme that would have brought comfort to thousands of people, they have produced a very mean-spirited scheme that will clearly exclude many people who one would have thought should have taken advantage of its provisions.

As these are regulations, we tend to ask technical questions. I have two questions for the noble Baroness, on which she may want to write to me. On the impact of the relevant figure on pensions, how will a pension pot be treated in relation to the calculation of the non-housing asset? Do the Government expect the new flexibility in assessing pension savings contained in the Taxation of Pensions Bill to have any effect on this policy? Will those savings be counted towards the £23,250 cap? I would be very happy for the noble Baroness to write to me on those points.

My noble friend Lord Lipsey came to the crunch of the matter when he said that he did not expect a scheme to be available to the wealthy and the very asset-rich. I endorse that. My noble friend Lord Warner wrote to the right honourable Norman Lamb a year or so ago. My noble friend was a member of the Dilnot commission but is unable to be here tonight. He wrote:

“As a commission we accepted there had to be some eligibility criteria because this was never intended as a scheme that was available to the wealthy and asset rich”.

However, as he said, and as my noble friend Lord Lipsey said, being required to spend down to assets of £23,250 seems far too restrictive to deliver a viable scheme or to reflect what the Dilnot commission recommended.

Surely, even at this stage, the Government need to reconsider this scheme. It is very disappointing that the consultation has taken place, we had a very good debate on it and yet the Government have moved not one inch on this policy. If it goes ahead, it will be very disappointing for many thousands of people who had every reason to expect that they would take advantage of the scheme. The noble Baroness may say that we should not worry because local authorities will be able to offer schemes above the threshold of their own volition. However, I very much doubt whether many local authorities will take advantage of that. Therefore, I support my noble friend. I am delighted that he will push this measure to a Division tonight. We are very happy to support him.

[Baroness Jolly (LD)]

My Lords, I shall also have to take exception to the noble Lord’s second Motion today on the eligibility criteria. The eligibility criteria are not, as he has suggested, at odds with the overarching policy intention that people should not be forced to sell their home within their lifetime to pay for their care. Indeed, they ensure that protection and support is available to those who need it.

Noble Lords will recall that in my earlier speech I made reference to the conclusions of the Commission on Funding of Care and Support, chaired by Sir Andrew Dilnot. As I said, the commission supported the extension of deferred payments. More specifically, it recommended:

“Anyone who would be unable to afford care charges without selling their home should be able to take out a deferred payment”.

The deferred payment scheme that each local authority will be required to implement will achieve precisely this—it will provide protection to those at risk of having to sell their home to pay for their care.

It has been suggested that the eligibility threshold, which requires a person to have less than £23,250 in savings and assets on top of the value of their house to qualify for a deferred payment, has been set too low and will not achieve this aim. It has even been suggested that this policy would leave people unable to afford their basic living expenses. So allow me to shed some light on this debate by informing noble Lords that setting the threshold at this level means that 80% of people who develop a residential care need will qualify for either help from their local authority in paying for their care or a deferred payment agreement. This means that only the wealthiest 20% of people entering residential care—those who have savings and assets above £23,250 on top of the value of their property—will be asked to initially meet their own care costs before they receive local authority support. Crucially, anyone in this wealthiest 20% bracket would subsequently qualify for a deferred payment if their savings and non-housing assets fell below the £23,250 threshold. So if a person has a change of circumstances or has to spend down their savings to below £23,250, they would be eligible for the support and protection provided by a deferred payment.

[Lord Hunt of Kings Heath]

My Lords, can the Minister clarify this? Taking the case raised by my noble friend of an individual with £30,000 of non-housing assets, under her definition these classify this individual as being in the wealthiest 20%. Is that so?

[Baroness Jolly]

That is what has been assessed as wealthy. The £23,250 was set as a level below which you would be eligible for assistance.

While we want as many people as possible to benefit from the reforms, the eligibility threshold was set at this level because we wanted to focus the funding available for the scheme on providing protection to those at most risk of losing their homes. If we extended automatic eligibility for deferred payments to the wealthiest 20%, who can afford care without having to sell their home, it would mean having to take funding from elsewhere in the care and support system, where it could surely provide greater benefit. That is why the regulations that were laid before the House do not mandate that a local authority must offer a deferred payment to someone with assets of more than £23,250. This is necessary to ensure value for public money by targeting resources where they are most needed.

We have set these criteria so that people will be entitled to a deferred payment when they would be at risk of being forced to sell their home to pay for care. The criteria are also to ensure good value for public money and minimise the risk of bad debt. I trust that noble Lords agree that it is only right and proper that we should prioritise first, and help and support those most in need. There has also been some suggestion this evening that the Government have not been open about the £23,250 threshold, or that my noble friend Lord Howe, who is not in his place, was somehow disingenuous when he spoke on this matter in your Lordships’ House previously. The £23,250 asset threshold, discussed frequently during the passage of the Care Act, has been the subject of not one but two public consultations. First, it was discussed in the consultation on funding reform in July 2013; secondly, it featured in the draft regulations and statutory guidance published for consultation this summer.

These consultations have involved officials from the Department of Health proactively engaging with people, and travelling the length and breadth of the country to consult the full range of stakeholders, including service users, local authorities, members of the general public and the Care and Support Alliance. The policy has been developed in close consultation with an expert body, called the Paying for Care Transformation Group, whose membership includes a range of charities and third-sector organisations, including Age UK, Carers UK, the Care and Support Alliance, and Sense. Through this group we have ensured that the development of the universal payment scheme has been guided by the expertise and insight of those key organisations. It is hardly fair to say that we did not take a full range of views into account, or that the asset threshold is in any way a surprise.

On a point made by the noble Lord, Lord Hunt, about whether the pension pot should be included, that is covered in the statutory guidance on charging, but I am more than happy to write to him and place a letter in the Library.

The introduction of the universal deferred payment scheme will extend protection to those most at risk of having to face selling their home to pay for their care and support. The scheme will help provide reassurance and peace of mind to thousands of care recipients and their families who would otherwise be faced with making extremely challenging decisions at a most vulnerable time in their lives.

I hope that I have been able to provide assurance about the great benefits of the deferred payment scheme and how it will work from April next year. I hope that I have also convinced your Lordships’ House that these regulations should be allowed to come into force without further delay or hindrance.

[Lord Lipsey]

My Lords, I shall be much milder in winding up than I would have been had the noble Earl been in his place. I recognise the care that the Minister put into those remarks, but I am afraid that she inadvertently displayed her lack of background in the field and I am sorry if she was advised to use some of the words that she did.

The Minister said that this issue had been discussed frequently on the then Care Bill. I will remind noble Lords what happened. There was no mention of the threshold in the Care Bill. The Care Bill went through Second Reading. It went through Committee. When it got to Report, it was only because I did the sort of thing that, as a geek, I do—reading through the 700 pages that the Government had produced to accompany it, and not just the bit on deferred payments but the bit on the draft statutory orders—that I discovered this proposal. I raised it at the last minute on Report. The Government freely admitted that there could then be an amendment at Third Reading, which the House indeed discussed, and it was the assurances that the noble Earl, Lord Howe, gave that caused us not to take it further. When the noble Baroness says that it was discussed during the passage of the Care Bill, it was, but no thanks to the Government. They had hidden it away in those 700 pages. I am inclined to make the noble Baroness read all 700 tonight—she will sleep better and she will know the true history of this affair when she has done so.

The second substantive point the Minister made was that £23,250 is high enough—it seems reasonable that it should be denied to people with £23,350. I will not dissect the 80% thing at this moment. Does she realise that she is kicking her own Government in the teeth when she says this? Her Government do not think that £23,250 is enough. Following the recommendations of the Dilnot report, they are upping that figure to £118,000 next year. Incidentally, that is a higher figure than Dilnot recommended because they decided that Dilnot was not generous enough. Next year they will happily be giving state support to people up to £118,000, with the exception of one small group of people—those who might use deferred payments—who will be confined to the £23,250 of non-housing assets. So I hope that there will not be any boasting about the coming of the £118,000 in the months to come, because the noble Baroness has told us that she thinks £23,250 is enough.

Anyway, we have debated this long enough. I hope that those who think that £23,250 is rich will vote with the Government and those who think £23,250 is not very rich will vote with me and the Opposition in favour of this Motion.

20:57

Division 5

Ayes: 54

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Labour: 50
Crossbench: 3

Noes: 147

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Conservative: 103
Liberal Democrat: 40
Crossbench: 2
Democratic Unionist Party: 1

Childcare Payments Bill

Tuesday 9th December 2014 Lords Chamber

Second Reading (and remaining stages)

21:09

Moved by

[Lord Newby]

That the Bill be read a second time.

[Lord Newby (LD)]

My Lords, it is a great pleasure, even at this time of night, to introduce the Childcare Payments Bill, which introduces a new tax-free childcare scheme. The new scheme was announced by the Chancellor of the Exchequer at the 2013 Budget. Once it is in place, the Government will meet 20% of eligible working families’ childcare costs up to an annual maximum of £2,000 for each child. That is the equivalent of basic rate tax relief on childcare costs up to £10,000.

I am sure noble Lords will need no persuading that there is a compelling argument for the Government to support working parents with their childcare costs. Survey data from the Department for Education suggest that more than half of mothers currently not in paid work would prefer to be in paid employment if they could arrange reliable, convenient, affordable and good quality childcare. Likewise, around one-quarter of employed mothers say that they would increase their working hours if they could arrange appropriate childcare.

Sadly, it is the case that many parents find themselves in the difficult position of having to make a stark choice between work and family—between, on the one hand, staying at home to care for their children and, on the other, paying for the childcare to allow them to go to work. It is clear that many more parents than are currently able would like to work, provided they can find a successful way to combine work and family life. These are precisely the families that this Bill is designed to help.

To qualify for government support, a parent will simply need to register with HMRC to open an online childcare account. When they pay money into it, the Government will add a further top-up payment. So for every payment of £8 made by a parent, they will receive £2 from the Government, up to a maximum of £500 every quarter. The scheme will provide support for those with children up to the age of 12. This limit will be set out in regulations that the House will have the opportunity to debate after the Bill has received Royal Assent. However, the Government recognise that for parents of disabled children childcare costs can remain high well beyond their 12th birthday. Such parents face a range of additional challenges if they are to have a fulfilling working life alongside the need to care for their child. In recognition of this, the scheme will provide them with support until the September following their child’s 16th birthday.

Noble Lords will be aware that a scheme is already in place under which some parents can receive financial help from the Government with their childcare costs. This is delivered by means of an income tax exemption and a disregard of national insurance contributions provided by the employer-supported childcare scheme. The tax and NICs reliefs will gradually be withdrawn as the new scheme becomes available. The existing scheme has a number of serious shortcomings that mean it is far less effective than it needs to be. For one thing, as its name implies, employer-supported childcare is not available to those who are self-employed. Because it generally works through salary sacrifice arrangements, it is not available to those whose earnings are at or slightly above the level of the national minimum wage.

A further drawback is that whether a parent can receive support from employer-supported childcare is crucially dependent on whether their employer chooses to offer it. The fact is that less than 5% of employers currently offer the scheme. This means that over half of employees are simply unable to access it. Lastly, employer-supported childcare fails to pay any regard to the number of children that parents actually have. It can provide a higher level of support to a family with two adults and one child than it does to a lone parent with multiple children. That is obviously far from satisfactory.

The new scheme has none of the drawbacks of employer-supported childcare. As parents will engage directly with HMRC to open their accounts rather than via their employer, it will be available to anyone who works, provided they meet the relevant eligibility criteria. While around 500,000 parents are currently in receipt of employer-supported childcare, we estimate that up to 1.8 million families will be eligible for support under the new scheme. For the first time, self-employed parents will be able to receive support from the Government with their childcare costs. The Government estimate that around 200,000 self-employed people will directly benefit from the scheme. The level of support available to a parent under the scheme will be determined by the number of children that they have, rather than the number of parents whose employers operate the employer-supported childcare scheme. This will bring an end to the manifest unfairness of the current scheme, particularly to lone-parent families that have more than one child.

As well as being available to far more families than employer-supported childcare, the new scheme will give parents the flexibility that they need to allow them to return to work. They will be able to pay money into their childcare accounts when they want to and spend the top-up payments when they need to, such as over school summer holidays. In addition, other family members, friends and employers will also be able to pay money into the accounts if that is what they wish to do. Parents will also be able to withdraw money from their childcare accounts if they need to do so, with their contributions returned to them, and government top-ups returned to the Government. The scheme has been designed to be as simple and straightforward as possible for parents to operate and to minimise the need for them to engage with HMRC. That is fundamental to the scheme’s design.

A primary means of achieving this is the fact that parents will not be required to report changes in their personal circumstances in real time, as is the case for tax credits. Instead, the scheme will be based on quarterly entitlement periods, such that once a parent is eligible, they will continue to be entitled to support for that quarter, regardless of any changes in circumstances they might experience. This flexibility will be particularly valuable to those on lower incomes, who might meet the criteria for receiving government support for their childcare costs through either tax credits or universal credit. Parents will not, of course, be able to claim double support and will instead need to make a choice of which type of support best suits them. With that in view, alongside wider guidance and information, HMRC will provide an easy-to-use online tool for parents choosing between other means of government support and the new tax-free childcare scheme. Parents will be able to enter details about their personal circumstances quickly to see what support is right for them.

I should add that this scheme should not be considered in isolation but should instead be seen as one part of a far broader range of initiatives aimed at helping those with children that this Government have introduced since 2010. The main ones are: first, additional funding for 15 hours a week of free childcare for all three and four year-olds, saving families an additional £380 a year per child; secondly, additional funding for 15 hours a week of free childcare for all disadvantaged two year-olds, saving those families more than £2,400 a year per child; thirdly, an increase in the child tax credit to £3,295 a year, £450 more a year than at the election; fourthly, an increase, from 2016, in the childcare element of universal credit, from 70% to 85% of total childcare costs, to improve work incentives and ensure that it is worthwhile to work up to full-time hours for low and middle-income parents; and finally, the introduction of shared parental leave and statutory shared parental pay for those with children born after 5 April 2015.

I realise that there are concerns that the effect of these demand-side initiatives might simply be to drive up the costs of childcare. That is why the Government have also taken significant steps to increase the supply of high-quality childcare. The most notable of these are the introduction of childminder agencies to reduce bureaucracy for childcare providers and increase the choices for parents; consulting on proposals to relax planning rules to allow nurseries to expand more easily; and reforming the role of local authorities to improve access to government funding and encourage new entrants to the market.

Noble Lords will also be aware that in his 2014 Autumn Statement last week the Chancellor announced a further government initiative aimed at encouraging the supply of childcare. A further £2 million will be set aside to double the funding available for 2015-16 from the childcare business grant to support the creation of new childcare places. This grant has existed for some 20 months and provides funds to newly registered childcare businesses. To date, it has supported around 4,500 new childminders, who between them have the capacity to offer up to 32,000 new childcare places. I am sure that all noble Lords will welcome this expansion.

The Bill will deliver much needed support for working families. It marks a clear and significant improvement on the existing mechanism for providing such support and is a further tangible demonstration of this Government’s support for parents and their children. I commend it to the House. I beg to move.

21:20

[The Earl of Listowel (CB)]

My Lords, as treasurer of the parliamentary group for children I warmly welcome the Minister’s presentation of the Bill and, indeed, the contents of the Bill. The subsidy will be an improvement on the existing voucher scheme, and the extra support for parents is very welcome.

The Minister made the case for this change. I was reminded of it recently by listening to Professor Melhuish of Birkbeck College, University of London. He presented strong evidence that high-quality early years care improves the educational outcomes of young people. Even if a child has a poor primary school, if they have had high-quality early years education then they are still likely to be doing well at the age of 11, and there will still be a significant difference in educational outcomes to the age of 16. Such provision is therefore very important.

I also thank the Minister for the investment that the coalition Government have been making in this area. He described in detail what has been achieved. I was grateful to the coalition Government for reconsidering their proposals on the ratios of early years educators to children. The Minister at the time raised the important point that as we invest a great deal in early years care in this country, although it is more costly here than it is in many other nations, how can we ensure that we get best bang for the buck in terms of taxpayers’ money? I hope there will be an opportunity after the election of a thorough strategic review of early years provision to look at why we are where we are.

I welcome what the Minister said about stimulating the supply side, which is so important, and the measures that are being taken, but perhaps more could be done to stimulate it. In particular, it struck me how important nurseries attached to schools are. It is important that there is a lower turnover in staff in nurseries than there is in much other provision. In high-quality provision it is crucial to have staff who can build relationships with children and parents. Of course, the staff in such provision are generally more highly qualified than in other provision. We must address the low pay that dominates this area. It is very disappointing that we invest so much yet many of the people who do this really important work are so poorly paid.

I welcome the Bill. There are a couple of issues on which I would like help from the Minister. I shall try to be as brief as I can so I shall curtail what I might have said. The first issue is that the scheme will not address the additional childcare challenges and costs faced by families with disabled children. The Minister may have made a remark on that and I missed it. The recent independent parliamentary inquiry into childcare for disabled children found that parents with disabled children face significant extra challenges finding and paying for childcare. A survey of parents was undertaken to support the inquiry. More than 1,000 parents with a disabled child responded, and 38% reported paying £11 to £20 an hour for childcare, with a further 5% paying an astonishing £20 an hour. This is in stark contrast to the £3.50 to £4.50 paid by the parents of children who are not disabled. Three-quarters of the parents who responded to the inquiry also said that they had been forced to cut back or give up work entirely because they could not access affordable childcare which was appropriate and met the needs of their child.

Although the tax-free childcare scheme will provide some additional support, the inquiry highlighted the limitations of the scheme for families with disabled children. I understand that the Government are looking at ways in which they can better support parents with disabled children through the scheme by raising the maximum cap for such families above £10,000. This would be helpful for a small number of parents with very high costs, but most of the families affected would not be helped by this step because very few families can afford to spend that amount on childcare.

A better option is to raise the amount of the top-up from 20% for such parents. I am grateful to the Family and Childcare Trust for its briefing in my preparation for this Bill. It has estimated that increasing the top-up to 40% for children who receive disability living allowance would cost just £25 million each year. The Government will spend more than £750 million each year on the new scheme. Surely £25 million is an affordable figure in the light of the help that this step will provide for parents with disabled children. Does the Minister agree?

The inquiry also heard that out-of-school activities were a key means of social inclusion for disabled children and young people. As the tax-free childcare legislation covers costs only for childcare used to enable parents to work, it is regrettable that in its current guise it will not help many families pay for such childcare. In the long term we must create a level playing field in childcare for disabled children. There are a number of schemes run by local authorities that support childcare providers to offer places to children with additional needs through training, specialist support and adaptation, and subsidise the difference between the typical fee and the actual cost of care for a disabled child. It is heartening to hear about parents who have struggled and looked through many areas and finally found a place for their child. However, such cases are rare. Funding constraints mean that such schemes are rare. The most effective way in which the Government can support disabled children to access affordable childcare is to learn from the successful approaches developed by local authorities and scale up those schemes nationally.

The second area to which I would like the Minister to give his attention is the tax-free childcare scheme. This scheme must work alongside the childcare element of tax credits and, for a time, the employer-supported childcare voucher scheme that is being phased out. Families will not be able to claim childcare support under tax credits and tax-free childcare at the same time. Many families will find it difficult to identify which childcare support is best for them and will potentially miss out on much needed financial support. The Minister referred to the sort of support that these families can have in his opening remarks.

The Government estimate that at least one in 10 families claiming the childcare element of tax credits will be better off claiming support under the new scheme. As a result, it is very likely that there will be substantial movement between the two schemes. Many parents, particularly those with fluctuating incomes and uncertain working hours, such as those who are self-employed, work overtime or have a zero-hours contract, will find the sheer complexity of the schemes difficult to navigate, potentially leading to the loss of greatly needed financial support.

The Government need to make sure that families are transferred smoothly between each childcare scheme, with a full information campaign and an online childcare support calculator—which I think the Minister was describing—to help the parents affected make the right choice. From my own experience of joining health visitors in meeting with vulnerable mothers and parents I know just how important reliable and clear guidance can be to these families. I therefore hope that the Government will support professionals working in early years, children’s centres and family information services to play their part in guiding parents through the different options for childcare support, as they are ideally placed to offer advice to families from all walks of life.

Finally, I wonder if I could invite the Minister to join me on a visit to a children’s centre—a nursery in Newham with a very good reputation—that I will be making on the morning of Friday 9 January. I am sure that he would be very welcome to join me if he were able to make the time available. I look forward to the Minister’s response.

21:28

[The Lord Bishop of Sheffield]

My Lords, from these Benches I warmly welcome the Bill, which will provide much needed assistance towards childcare costs for many middle-income and low-income families. I also welcome the careful expansion of the availability of childcare. However, there are two areas which I shall mention briefly where further attention may be needed.

The first concerns the equity between this provision and the provision for families in receipt of universal credit. The Children’s Society estimates that by the time universal credit is fully implemented, around half of children may be living in families in receipt of universal credit. Some of the parents in the statistics quoted by the Minister who want to return to work will certainly be in this category. The challenge of childcare costs, for those returning to part-time and low-paid work, is significant.

My questions relate to equity in the administration of support rather than the quantity. I warmly welcome the intention to develop an easy-to-use online tool to help parents to determine the best help available. How will the Government ensure that universal credit and tax-free childcare complement each other effectively? Will the Government consider making childcare accounts available for families in receipt of universal credit? Will they consider making childcare payments from universal credit on the basis of costs incurred rather than payments made? Will they ensure that families have at least a month to report their childcare costs under universal credit and so receive their full entitlement, which is so important?

My second area has already been mentioned and relates to families with disabled children, where childcare costs can be higher. I warmly welcome the extension of support to parents of disabled children up to age 16. Will the Government consider making this Bill even more effective by providing a higher rate of support through the tax-free childcare scheme for children with disabilities, reflecting the higher general costs of childcare for such parents? These questions are in the context of a warm welcome for the proposals in this Bill.

21:30

[Baroness Eaton (Con)]

My Lords, I start by applauding Her Majesty’s Government for the commitment that they have shown to helping families through a broad range of measures, which include, but are not limited to, greater flexibility in parental leave and the expansion of assistance with childcare costs. I and many others on these Benches particularly welcome the early steps that have been taken to tackle the biggest family policy challenge that we and many other western countries face, which is our epidemic levels of family breakdown. The wider family policy landscape is highly relevant to the Bill receiving its Second Reading here today, because the financial help with childcare that the Bill provides will be cast as a significant part of the fulfilment of the Prime Minister’s pledge to make this the most family-friendly country in Europe. Certainly, it is taking the lion’s share of the family policy budget.

The Institute for Fiscal Studies has calculated that the taxpayer is subsidising childcare to the tune of more than £7 billion a year. The rationale for adding to this enormous bill is that doing so will enable parents to play a full part in the labour market. It is concerning, however, that the IFS has concluded that we still lack a proper rationale and evidence base to support the assertion that these subsidies will succeed in getting more women into work. The IFS was particularly sceptical of the cross-party support for significantly greater help with childcare costs, saying that this does not always lead to the best policies. Moreover, the Government announced an increase in support for childcare before the Office for Budget Responsibility could estimate the costs.

Although this is a money Bill, surely it is our role at this end of the corridor, when necessary, to point out the downsides to generosity that could begin to look like profligacy when seen alongside other demands on the public purse, particularly those associated with supporting families. Calls to help dual-earner families with paid, formal childcare costs should not be allowed to drown out pleas for recognition of the considerable financial hardship facing many single-earner families. There are many reasons why one parent—often the father these days—takes some time out of the labour market when children or elderly relatives need more time than even flexible work arrangements will allow.

This Government’s introduction of transferable tax allowances for married couples is a huge achievement in a very difficult financial and political climate, but it is worth only around one 10th of the available support for one childcare place—a little over £200 per family in contrast to £2,000 per child. This is scant compensation for the many people who lost their child benefit or saw it reduced, yet we were assured that this cut to discretionary household spending power was essential to tackle the deficit. Many people who supported the withdrawal of child benefit to higher rate taxpayers have been appalled that a far more generous subsidy per child is being made available to families where each individual earns up to £150,000.

Canada’s Conservative Party has recently been able to make good on its 2011 election pledge to allow married couples to use income splitting to reduce tax bills by a maximum of 2,000 Canadian dollars—a benefit approximately five times the value of our transferrable tax allowance. However, there is a big difference, and that is that the Canadian Government are running a surplus. Canada’s income tax system, which treats families the same as roommates living under the same roof with no financial attachment, was judged by Prime Minister Harper to be unrealistic and unfair.

That assessment applies equally well to this Government’s tax-free childcare plans. I urge them to reconsider thresholds for this and the amount that can be claimed per child. This would allow some rebalancing of help for single-earner families during that period in their life cycle when finances are very tight but both parents working is unrealistic or the least family friendly option they can imagine, given their circumstances.

Polling by the Centre for Social Justice found that 82% of adults and 88% of parents thought more should be done to help parents stay at home in the early years. It has recommended doubling the amount parents with children aged under three can transfer, so that the allowance is worth around £400 per year. This would cost around £500 million.

I conclude by returning to the issue of family breakdown. We are all familiar with the enormous costs incurred by the state when couple relationships, and the families they are founded on, falter. This country is now at the point where almost half of all children are no longer living with both their parents by the time they are 15. We cannot put off the essential task of addressing family breakdown through a wide range of measures, some of which must include support for marriage, which leads to the most stable family form. Recognising marriage in the tax system also takes into account and supports the sacrifices and interdependencies within single-earner families.

However, to a certain extent our hands are tied until the public finances are in better shape. That date is likely to come later rather than sooner if we make our current and future generations of parents dependent on large childcare subsidies and resentful of any reductions to that entitlement at whatever point on the income spectrum the axe may have to fall. Let us obviate the need for the axe by being restrained from the outset.

21:38

[Lord Davies of Oldham (Lab)]

My Lords, the House faces considerable difficulties in tackling this Bill. As it is defined as a money Bill, the Minister has to reply not only to the general arguments—and I congratulate all three noble Lords who have spoken thus far on identifying clear issues to which the Minister should respond—but, as far as possible, to issues of detail, because this is our only chance of dealing with this Bill. The Minister will recognise that there are a whole plethora of issues which, had we more time and the opportunity to be in Committee, we would have enjoyed discussing. As it is a money Bill, we are operating under some constraint and therefore the Minister will forgive me if I both seek to cover the general principles but now and again lapse into a degree of detail to which I shall expect him to respond.

The Opposition of course welcome the Bill. There is no way in which we would oppose a Bill that gives additional help to parents with childcare costs, particularly in the circumstances that the noble Baroness, Lady Eaton, identified: children have grown up in units that differ a great deal from the standard parental position. We are concerned about children and to whom the support is to be directed. The parents will take responsibility for it, but we are concerned about children as regards the Bill.

The great difficulty is that childcare costs have soared in recent years. There has been very little additional help for parents over these past few years, while costs have gone up so sharply. That is why we in the Labour Party are concerned to put a rather different perspective on how to identify in the Bill support for children and their parents. We very much seek to meet the point that the noble Earl, Lord Listowel, identified—he spoke about the need for extra help for the parents and carers of disabled children. We want to increase the age to which they are entitled from the Government’s position of 17 to 18. We think that disabled children involve extra costs. Therefore, the Government should have provided some recognition of such extra costs in the Bill.

We have some real concerns about the Bill. Commentators have indicated that it is regressive in its impact. The majority of support in top-up payments will go to those with above-average incomes. Support for those in very real need will form only a small fraction of the allocation in the Bill. Those who can afford to spend more will get more from this scheme. We do not think that that can be readily justified.

We are also concerned about the scheme’s complexity. We recognise that parental circumstances can change rapidly due to the very volatile state of employment in the economy. We know that a very high percentage of jobs are insecure and have limited hours—certainly no guaranteed hours with zero-hours contracts. This means that parents have real difficulties as regards making judgments on income. There is a big complicating factor in this. The Government intend to bring in broader income support. It is not at all clear whether parents will be in an intelligent position to judge whether they might get better returns from this scheme or under universal credit. The Government have indicated that some help will be given but, given the obvious complexities of the introduction of universal credit—it has been predicated and worked on for long enough, yet we still do not have it in full—the Bill has to be put against that difficult background.

We also consider the Bill to be late. The Government seek to bring in an improvement that will not come into play until 2015, but childcare costs have risen five times faster than pay since 2010. The impact on families of the failure of the Government to act in the past is quite clear. We intend to expand free childcare for three and four year-olds from the 15 hours that the Government have indicated to 25 hours per week for working parents, as well as guaranteed wraparound childcare access through their local school. The supply side measures will be in addition to the support provided for in the Bill, and we intend to increase the levy on banks to ensure that we have the resources for these.

There are quite difficult decisions about this Bill which, had we been in Committee, we would have gone into in some detail. The Government intend that NS&I will provide the childcare accounts. NS&I, of course, subcontracts a great deal of its work to Atos. We are not at all clear that that gives a great deal of security to such an important resource allocation as this involves, given the past record of that company. As I said, the interaction between the two schemes—universal credit, when it is finally rolled out, and this scheme—is far from clear in government thinking. The Government have to realise that what may work for certain families, with full control of modern technology, high levels of education and an ability to respond to the system, does not apply to those very large numbers of parents and carers of children who will need very great guidance to ensure that they get the best deal out of this scheme or universal credit, when it comes in. It means added bureaucracy for parents and a difficult route to follow.

We also are concerned about costs. This, of course, is a demand-led system. It gives extra resources to those who demand the childcare. The Minister spends enough time in the Treasury on the economics to know that if one increases demand for a product, often the consequence is that the price goes up. That certainly happened in the Australian circumstance of a scheme not dissimilar to this one. So what do the Government do about a situation where already severely increased costs over the past five years get a stimulus from being increased again by what is in fact a government subsidy for a demand-led system?

Far from opposing the Bill, we are giving it our full support in its passage. That does not alter the fact that we want to identify these issues clearly on the only occasion we can debate the Bill in this House. The Minister has some very serious issues to confront and to answer, and I look forward to his response.

21:48

[Lord Newby]

My Lords, I thank all noble Lords who have stayed to contribute to this debate, which was as thoughtful as one would expect in your Lordships’ House. I will attempt to answer some of the specific points that have been raised.

I absolutely agree with the noble Earl, Lord Listowel, about the importance of early years education. It is probably not as widely understood as it should be that very early high-quality educational intervention is an investment, in that it raises the starting point from which everything else flows through a child’s education and, indeed, life. I absolutely agree with him about the need to have good-quality provision at every stage. I take his point about low pay in early years. We hope, for example, that in dealing with those two issues we will see an increase in the qualifications of staff in the early years—in particular, that more staff will be qualified to graduate level. One objective of the new early years pupil premium, which will cost £50 million next year, is to provide funds to improve the quality of early education to disadvantaged children, including improving qualifications.

The noble Earl asked specifically about disabled children. We have recognised already that disabled children are in a separate category by running on the scheme from the age of 12 to 17. I accept the point that some disabled children require higher costs throughout their childhood, including their teenage years. As he mentioned, the Exchequer Secretary has made a commitment to look at increasing the maximum amount that the families of disabled children can pay into a childcare account and thus increase the amount of government top-up that they can receive. I know that that does not go as far as he would like because he would like the proportion of tax benefit to increase. The challenge here, as with many other potential changes to the scheme, is one of cost. My colleague in another place, the Exchequer Secretary, is looking at that and, hopefully, in respect of raising the potential amount of government support through matched payments as per the current scheme, we might see some progress.

As regards disabled children, the noble Earl asked whether we can learn from the local government scheme. In terms of what is already happening, he will be aware of recent reforms to special educational needs provision. I agree that it will be important to learn from the experience of those on the ground. Without looking at my diary, I am not sure what I will be doing on 9 January. Last Friday, I visited a nursery in Haggesdon but I am sure that the noble Lord will think that that does not really count. I am very happy to look at whether the suggestion would be possible.

The noble Earl and other noble Lords asked about the problem of this scheme working alongside tax credits and universal credit, and how parents will know whether they are eligible for working tax credit and whether they are best to opt for this scheme or for that scheme. That is why we are doing a number of things to help them. The online tool to which we referred, which will be a ready reckoner, is expected to be the main easy way for parents to access very good information.

Sometimes a bit of an assumption is made—far be it from me to suggest this to the noble Lord, Lord Davies—that parents from poorer backgrounds are incapable of managing relatively simple technology. I do not believe that that is the case. It is so common now for everybody of all income levels to use the internet, whether it is for shopping or whatever, that it is not unreasonable to think that a very clear online tool is an appropriate mechanism as the centrepiece of what we are trying to do. Certainly, my children are happier almost to deal with the consumption of words online than they are with the consumption of words on paper. They look to online sources of information in the first place.

The right reverend Prelate asked a number of detailed questions about the way in which the scheme works, how it will interact with universal credit and whether the Government will consider a number of changes to the way we are planning to administer it. In particular, he asked whether the Government might consider allowing help with childcare costs through universal credit to be paid via a childcare account. We have a number of issues with that suggestion. The new scheme is fundamentally different from schemes such as universal credit, with support paid for different purposes in different ways to meet different circumstances. Universal credit is paid as a monthly lump sum to cover a range of costs, including childcare costs. It is not ring-fenced and is intended to support households to focus on budgeting on a monthly income. The objective is to ease the transition into starting or going back to paid work, which is why it is paid in a similar way to a monthly salary. If the Government move to the suggestion made by the right reverend Prelate, we would end up with a much more complicated scheme than we have at the moment. I think universal credit and the benefits system is complicated enough without running any risk of making it more complicated.

The right reverend Prelate asked about the fact that support for childcare in universal credit would be on the basis of payment of childcare made rather than childcare costs incurred, and that this will mean that people will have to find money up front to meet these costs. I can see that this is considered potentially to be an issue, but for parents moving into work we have the flexible support fund that can be used to pay for childcare to enable a claimant to start work. Budgeting advances that will be available to families under universal credit are also designed to help claimants pay for intermittent household expenses, of which this will be one. The money will then be reclaimed over a period. The principle under universal credit that you pay for the childcare costs that you have actually incurred is a very sensible way of approaching matters but having this fund will ease that transition, which is very important.

My noble friend Lady Eaton raised a number of wide issues which we could spend all night debating. For example, she and other noble Lords raised some of the real conundrums in this area about how you spend a limited amount of money to the best effect. I am not sure that any Government are always 100% successful in that, but we are taking funding for a scheme that benefits relatively few people—certainly not the people we necessarily want to benefit, as it is largely by chance the way your employer decides to operate the scheme—and moving it to a scheme that treats everybody in work with children fairly. I think that is a very big gain from this scheme over what we had before. It obviously does not deal with many of the other wider issues she raised, including the extremely interesting debate about the importance of marriage in society and the extent to which that might be reflected in the tax system. I suspect that the political parties will be thinking what more they want to say on that issue as they draw up their manifestos over the next few weeks and months.

One of the key purposes of what the Government have been doing in respect of childcare policy and other policies is to encourage more people, particularly women who wish to do so, to get back into work. Department for Education survey data suggest that more than half of mothers not in paid work would prefer to be in paid employment if they could arrange reliable, convenient, affordable and high-quality childcare. That is one of the attractions of what we are doing with universal credit and, to a certain extent, what we are doing in this scheme.

The relevance of at least one family member—but very often mothers—being in work is the example that that sets to children in terms of how they see their lives developing. One of the statistics in terms of the labour market of which I am most proud is that there are now 390,000 fewer children living in workless households than in 2010. That is 390,000 children who see at least one of their parents going out to work and earning a wage. They see the benefit of that as opposed to many children in the past who saw their parents not going out to work and, sadly, often saw that as being the way that they might spend their own lives. Some of the broader issues that my noble friend Lady Eaton raised may be for another night, or, even better, another day, but I am sure that we will return to them.

The noble Lord, Lord Davies, raised a number of detailed questions, some of which I think I have covered in answers to other noble Lords. He suggested that the qualifying age for disabled children should be raised from 17 to 18. Having an age limit of 17 for disabled children is in line with the employer-supported childcare scheme and the childcare element of both tax credits and universal credits. It would not be right to increase the age limit in the new scheme while leaving it at 17 in other schemes. It would be inconsistent and confusing for parents. To increase the age up to which the child would be entitled to support across all these schemes would carry a material Exchequer cost, which is something that we have to be concerned about.

The noble Lord raised concern about Atos acting as a contractor to NS&I in respect of this scheme and whether that might be problematical. I believe that Atos acts as a contractor to NS&I in respect of premium bonds and I do not think that anyone is suggesting that there are any problems in the way that they are currently administered.

The noble Lord, Lord Davies, made a number of points on issues which would involve greater expenditure on childcare. Again, this Government feel that they have an extremely strong record in this area and the constituent parts of the Government will put forward proposals for childcare in the next Parliament, as will the noble Lord’s party. I am sure that the noble Earl, Lord Listowel, will be pleased that the parties are competing to see which can be the more generous in this area.

This is a sensible measure which will benefit many families and will use the resource much more fairly than is currently the case. I am extremely pleased that noble Lords who have spoken agree with the Government that this is a sensible and positive move forward to support families and their children.

Bill read a second time. Committee negatived. Standing Order 46 having been dispensed with, the Bill was read a third time and passed.

House adjourned at 10.05 pm.