Grand Committee

Thursday 22nd January 2015 Grand Committee

Thursday, 22 January 2015.

Crime and Courts Act 2013 (Consequential Amendments) Order 2015

Thursday 22nd January 2015 Grand Committee

Motion to Consider

14:00

Moved by

[Baroness Williams of Trafford]

That the Grand Committee do consider the Crime and Courts Act 2013 (Consequential Amendments) Order 2015.

Relevant document: 15th Report from the Joint Committee on Statutory Instruments

[Baroness Williams of Trafford (Con)]

My Lords, I hope I can be relatively brief on this order, which makes minor and technical amendments to Section 195S of the Proceeds of Crime Act 2002, which extends to Northern Ireland only.

Amendments have been made to Part 4 of the Proceeds of Crime Act by the Policing and Crime Act 2009 and by legislation devolving policing and justice functions to Northern Ireland. New Sections 190A, 193A and 195A to 195S have been inserted. These new sections provide new and extended powers for use in Northern Ireland for the search, seizure and detention of property to prevent its dissipation or wanton devaluation, so that it is able to satisfy a confiscation order. The powers mirror those introduced into Part 2 of the Proceeds of Crime Act, which relate to England and Wales, and to Part 3 of the Proceeds of Crime Act, which relate to Scotland.

Amendments should have been made to Section 195S to add immigration officers as appropriate officers whose exercise of the functions is covered by the code of practice under Section 195S, and to define who is a senior officer in relation to an immigration officer. However, these amendments were unfortunately not made to Section 195S, resulting in technical defects.

If the changes to Section 195S we are now seeking to make are not made, the result would be that if a code of practice were made under Section 195S, that code would not cover the exercise of the new powers by immigration officers in Northern Ireland. This is obviously not acceptable. The guidance on the use of these powers is an important safeguard to ensure that law enforcement officers, including immigration officers, use the powers in a proportionate and consistent manner.

The order, if approved by the Committee, will allow the Secretary of State to make a code of practice that covers the use by immigration officers of the new and extended search, seizure and detention powers in Northern Ireland. This order does not affect England and Wales or Scotland. It has recently been debated in the House of Commons, with all in favour of this amendment. On that note, I beg to move.

[Lord Rosser (Lab)]

I thank the Minister for her explanation of the reasons for and purpose of the order. The order amends the Proceeds of Crime Act 2002 to add immigration officers to the officers to whom the code of practice governing the exercise of the powers concerned will apply. The order also defines “senior officer” in relation to an immigration officer.

As the Minister has said, the order addresses an oversight at the time of the passing of the Crime and Courts Act 2013. We accept the need to rectify situation.

[Baroness Williams of Trafford]

My Lords, I thank the noble Lord, Lord Rosser, for his brief comments. With that, I commend the order to the Committee.

Motion agreed.

Police and Criminal Evidence Act 1984 (Codes of Practice) (Revision of Code A) Order 2015

Thursday 22nd January 2015 Grand Committee

Motion to Consider

14:04

Moved by

[Baroness Williams of Trafford]

That the Grand Committee do consider the Police and Criminal Evidence Act 1984 (Codes of Practice) (Revision of Code A) Order 2015.

Relevant document: 17th Report from the Joint Committee on Statutory Instruments

[Baroness Williams of Trafford (Con)]

My Lords, the statutory instrument before us will bring into effect a revised Code of Practice A issued under the Police and Criminal Evidence Act 1984, also known as PACE. This code, laid before this House under Section 67(7) of PACE, governs the police’s use of stop-and-search powers. It sets out what the powers are, the preconditions for their use and how they should be exercised.

I shall briefly explain how we have arrived at the revised Code A before us. On 30 April last year, the Home Secretary announced to Parliament a comprehensive package of measures to reform the use of stop and search. The principal aim of these reforms is to ensure that the police use their powers effectively, fairly and in a way that promotes community confidence. There was overwhelming evidence that reform was right and necessary. The Home Office carried out an extensive public consultation on the powers, which attracted more than 5,000 responses and presented a clear case for reform.

Additionally, HMIC published a report in which inspectors reviewed the use of stop-and-search powers in all 43 forces of England and Wales. The findings of the HMIC inspection were very concerning. It reported, for example, that 27% of stop-and-search records they examined did not contain reasonable grounds to search people; many of these records had been endorsed by supervising officers. If the HMIC sample was representative, it means that a quarter of the 1 million or so stops carried out under the Police and Criminal Evidence Act last year could have been illegal. This is why the Government have committed to revising the Police and Criminal Evidence Act Code of Practice A: to make clear to all officers what constitutes reasonable grounds for suspicion. This is the legal basis on which police officers carry out the vast majority of stops. It is also why the Government have made it clear that, where officers are not using their powers properly, they could be subject to formal performance or disciplinary action.

The proposed changes to the code do not alter the nature of the stop-and-search power. Rather, the intention of the revised Code A is to provide a clear direction to those leaders, trainers, supervisors and officers exercising the powers themselves that the use of this power is conditional on there being a genuine and reasonable suspicion that the officer will find the article in question. Therefore, the police cannot choose to stop and search on the basis of a hunch, a social or racial stereotype or otherwise. The revised PACE Code A before your Lordships is central to the use of stop and search; for this reason, it is essential that we get it right. The revisions have been subject to an eight-week consultation and enjoy a broad spectrum of support. If we are to improve professionalism in the police, increase public confidence and enhance accountability, I urge noble Lords to support this revision of Code A. I beg to move.

[Lord Paddick (LD)]

My Lords, as a former police officer with more than 30 years’ experience, and as someone who has been concerned for some time about the use of stop and search by the police, I welcome these regulations. The important aspect of the new guidance is the fact that stop and search has to be conducted on the basis that the prohibited item will actually be found on the individual. That is the crucial point. I still have concerns that it is not merely changes in legislation or guidance to police officers that is required, but a change in the culture of the police. The evidence that my noble friend the Minister presented showed that not only did a number of the stop-and-search forms examined by HMIC not contain the necessary evidence from the officer who conducted the stop and search, but these stop-and-search forms were actually supervised and no action was taken. While welcoming particularly this aspect about the prohibited item, I think more needs to be done. Hopefully, the Minister will be able to reassure us that the College of Policing is following up the changes in the guidance with a commitment to improving the training given, both to front-line officers and to their supervisors.

[Lord Rosser (Lab)]

Once again, I thank the Minister for her explanation of the background to, and purpose of this order, which we support. The order, as the noble Lady has said, brings into force a revised code of practice that is intended to make clear what constitutes reasonable grounds for suspicion when police officers decide to exercise their statutory powers of stop and search. It also indicates that, if these powers are not exercised lawfully, performance or disciplinary procedures could be instituted.

As the Minister said, and as the Explanatory Memorandum also states, Her Majesty’s Inspectorate of Constabulary found that 27% of the stop-and- search records that they examined did not contain reasonable grounds to search people. The inspectorate attributed this to poor levels of understanding among officers about what constitutes reasonable grounds and poor supervision.

On the point that has just been raised by the noble Lord, Lord Paddick, in relation to culture as much as anything, the Explanatory Memorandum indicates that a review is taking place of the national training on stop and search through the College of Policing. Perhaps the noble Baroness could indicate when it is expected that the review will be completed. The Explanatory Memorandum also states that,

“the College of Policing will consider introducing a requirement that stop and search training should be subject to assessment and refreshed on a rolling basis”,

with failure to pass meaning that,

“officers could not use the powers in the course of their duties”.

Can the Minister indicate when a decision is likely on whether to introduce this requirement referred to in the Explanatory Memorandum?

Perhaps I may also raise a few points on the consultation that took place on the revisions to the code of practice. Were any significant issues raised by the campaigning and community support groups and organisations referred to that responded not adopted and, if so, what were they? If I read it correctly, the Explanatory Memorandum indicates that responses were received from six police forces and one police and crime commissioner. In view of the importance of appropriate use of the stop-and-search powers for good police and community relations, that would seem, on the face of it, to be a low level of response from the police. Perhaps the Minister could comment on that in her reply and say whether the Metropolitan Police was one of the forces that responded.

The Explanatory Memorandum sets out in paragraph 12 the success criteria for the changes. One of the criteria is:

“Reduction in the use of stop and search and improvements in police and community relations”.

Is there a target for the reduction in the use of stop and search? The Explanatory Memorandum states that the implementation and impact of the changes in the code of practice will be monitored “on an ongoing basis”. When is it likely that information on the progress being made will first appear in the public domain?

Having asked all those questions, I repeat that we support the order.

[Baroness Williams of Trafford]

I thank my noble friend and the noble Lord, Lord Rosser, for their very constructive comments on this order. My noble friend Lord Paddick makes an excellent point about not just amending the legislation but changing the culture in which the police operate and the importance of training in embedding the new attitudes and approach to stop and search. I assure both him and the noble Lord, Lord Rosser, that the College of Policing is making very good progress in its review of national training. The Government expect the college to publish a first draft of stop-and-search standards in February. I hope that that is helpful.

There were a number of other questions on which I hope that it will be okay to write to the noble Lord, Lord Rosser, in due course. I thank both noble Lords and commend the statutory instrument to the Committee.

Motion agreed.

Motor Vehicles (Variation of Speed Limits) (England and Wales) Regulations 2014

Thursday 22nd January 2015 Grand Committee

Motion to Consider

14:14

Moved by

[Lord Popat]

That the Grand Committee do consider the Motor Vehicles (Variation of Speed Limits) (England and Wales) Regulations 2014.

Relevant document: 17th Report from the Joint Committee on Statutory Instruments

[Lord Rosser (Lab)]

I apologise to the Minister. I would not normally seek to intervene before he even started but I failed to find both impact assessments on these issues. As I understand it, we are dealing with an increase in two speed limits: from 40 miles per hour to 50 miles per hour on the single carriageway and from 50 miles per hour to 60 miles per hour on the dual carriageway. I inquired in the Printed Paper Office but it appeared to have only an impact assessment for raising the speed limit on dual carriageway roads. Before we start, has there been an impact assessment on increasing the speed limits on single carriageway roads or is there only one impact assessment?

[Lord Popat (Con)]

My Lords, there are two impact assessments and I would be happy to give the noble Lord the one on the roads going from 40 miles per hour to 50 miles per hour sometime later today.

[Lord Rosser]

Then there is an impact assessment on that?

[Lord Popat]

Correct.

[Lord Rosser]

I can say only that I just inquired about it and was not given one in the Printed Paper Office, where they had a good look for it.

[Lord Popat]

My Lords, I have a copy of it here. I am quite happy to pass it to the noble Lord.

[Lord Rosser]

Maybe I am getting horribly confused—that is quite likely—but the one I have just been given by the clerk is the one I already have. It says:

“Raising the speed limit for HGVs … on dual carriageway roads”.

[Baroness Sherlock (Lab)]

I have this other one, too.

[Lord Rosser]

I see—I now also have the single carriageway one here. Maybe the clerk has only the one of them. I am sorry.

[Lord Popat]

My Lords, thank you. These draft regulations are being made to increase the national speed limit for heavy goods vehicles of more than 7.5 tonnes on single carriageways from 40 mph to 50 mph and on dual carriageways from 50 mph to 60 mph, in England and Wales. The freight and logistics sector is an essential part of the UK economy. Improving conditions for growth in the logistics sector is critical to the Government’s growth agenda. Raising heavy goods vehicle speed limits, particularly on single carriageway roads, will lead to quicker journeys and lower costs for the sector, aiding economic growth and generating economic benefits of £11.8 million per year. It will also reduce frustration for the many drivers who find themselves stuck behind slower-moving lorries on busy roads and are unable to overtake.

These speed limit changes are part of a wider package of associated measures that the Government are bringing forward to continue to increase economic efficiency and remove outdated restrictions. The new limits will better reflect the capabilities of modern heavy goods vehicles. They will also ensure that heavy goods vehicle speed limits are proportionate to those of other large vehicles, such as coaches and cars towing caravans, and to the speed limits on motorways.

Vehicle-specific speed limits are set out in the Road Traffic Regulation Act 1984, but the current speed limits have been in place since the 1960s. Since then, huge improvements have been made in vehicle design and highways engineering, and these limits are now outdated. What is more, our expectations of faster journey times and lower-cost goods are relying on heavy goods vehicle drivers systematically breaking the law. On single carriageways, the current 40 miles per hour speed limit causes unnecessary cost to vehicle operators and congestion. Because of the 20 miles per hour differential between heavy goods vehicle and car speed limits, lengthy queues of traffic often develop behind heavy good vehicles that adhere to the 40 miles per hour speed limit. This leads to avoidable accidents where following drivers become frustrated and make unsafe overtaking manoeuvres.

It is for these reasons that in July last year, the Government announced plans to increase the national speed limit for heavy goods vehicles to 50 miles per hour on single carriageways. The Government commissioned research into the potential impacts of the change and conducted an impact assessment and full public consultation. We also looked at what we could learn from other countries who are also leaders in road safety, such as the Netherlands and Norway, which already have 50 miles per hour speed limits for heavy goods vehicles on rural single carriageway roads.

Our impact assessment suggested that the change in speed limits could, in isolation and based on current road safety figures, result in an increase in fatal accidents of two to three per year as a result of higher average speeds. It also suggested that reducing the speed limit differential between heavy goods vehicles and other traffic could reduce accidents.

The public consultation highlighted that some respondents had reservations about increasing the speed limit due to concerns about road safety, road maintenance and the environment. To address these concerns, we are taking forward a package of measures to improve heavy goods vehicles’ safety, including encouraging local authorities to consider whether lower speed limits are appropriate on some roads because of high numbers of pedestrians or cyclists, the road condition or where there is a possible risk of air quality limits being exceeded. We will also conduct an evaluation study of the impacts of the change within five years of it coming into force.

In November last year, the Government also announced plans to increase the national speed limit on dual carriageways for heavy goods vehicles from 50 to 60 miles per hour to complement the decision about the single carriageway speed limit. This change will modernise the speed limit and bring it into line with the behaviour of professional heavy goods vehicle drivers, but the Government’s analysis suggests that it will not result in significant changes to average heavy goods vehicles’ speeds. This is because heavy goods vehicles already travel at the same speed limit on dual carriageways as on motorways, which have a 60 miles per hour speed limit. It is implausible that lorries will travel faster on dual carriageways than on motorways because motorways have fewer obstacles and are built to higher standards. So we think that the practical effects of this change on dual carriageways alone are limited.

The proposed new speed limits received significant support in the public consultations and I believe that they represent a pragmatic change that reflects the needs and capabilities of a modern transport network. I beg to move.

[Lord Rosser]

I thank the Minister for explaining the purpose and reasoning behind these regulations. I have one or two points that I wish to raise and if the answer to those points is in the impact assessment I have just been given, I hope he will accept that I have not really had a chance to digest its contents in the few minutes that I have had it.

The Minister has not indicated that there has been lobbying for this increase from the road haulage industry. Perhaps he can say whether that is the case, bearing in mind that many are of the view that increasing HGV speed limits is a priority for the haulage industry.

We do not intend to oppose the increases in the speed limits but we wish to express some reservations about the way the Government appear to have handled this matter and to make some comments on the supporting documentation. It seems from the work undertaken that the safety impacts of the single carriageway increase from 40 to 50 miles per hour are somewhat inconclusive. It would be helpful, although I have no doubt that the information is in the document that I have just been given, if the Minister could say what the Government’s impact assessment shows that the increase to 50 miles per hour will result in, in terms of any additional fatalities or serious accidents each year. Once again, I accept that that information may be in the document that I have been given. Could he also indicate how many fatal accidents involving heavy goods vehicles in excess of 7.5 tonnes there are currently each year on single carriageway roads, so that we can see whether it is accepted that there will be an increase and, if so, at what kind of percentage level that increase is projected to be?

The evidence of a link between increased speed and crashes is well documented. It is estimated that one-third of deaths on the road are caused partly by excessive speed. There has been nothing but anecdotal evidence to suggest that road safety will improve due to less of what is described as “risky overtaking” in the Explanatory Memorandum, as a justification for these measures, if the speed limit for HGVs is raised.

As I look at the Explanatory Memorandum, the single carriageway speed increase appears to have been objected to by nearly three-quarters of respondents to the Government’s consultation, so one could suggest that not very much weight has been given to the results of the consultation. Is it not also the case that the increase in the speed limit is being pushed ahead before the Department for Transport has concluded its promised review of rural road safety?

The consultation on increasing the speed limit for HGVs on single carriageway roads, according to the Explanatory Memorandum, was launched in November 2012 and went on for three months, until the beginning of February 2013. A decision to proceed was not made, presumably, until very recently—that is, 2014. One could construe that the delay was, at least in part, because the Government knew from the responses that the change was likely to be controversial, but perhaps the Minister could comment on that point.

There does not appear to have been too much of an attempt to assess the impact of higher speed limits on dual carriageways. The Government have, presumably, not properly assessed costs and benefits for the dual carriageway increase because they are of the view that, in reality, the speed at which vehicles go will remain the same. However, the majority of respondents to the consultation did not agree with that assertion, which, if it is incorrect, could lead to significant impacts for road safety, the environment and road maintenance. Higher average speeds for larger vehicles will increase fuel consumption, emissions of CO₂ and particulates and noise levels. However, it is not clear why the Government want to increase the speed limit for heavy goods vehicles over 7.5 tonnes from 50 to 60 miles per hour on dual carriageway roads.

The impact assessment says that the average speed at which HGVs travel in “free flow conditions” is about 53 miles per hour and asserts that the limit of 50 miles per hour is, “out of date”, apparently because it is,

“systematically ignored by professional HGV drivers”,

averaging 53 miles per hours—that is, three miles per hour more, in what are described as “free flow conditions”. If the Government regard a speed limit as being out of date because people are proceeding on average three miles per hour in excess of it, surely on that basis they must be pretty close to regarding the 30 miles per hour speed limit as being out of date, unless the Minister is going to tell us that in free-flow conditions motorists, including lorry drivers, do not go at average speeds in excess of 32 or 33 miles per hour when there is a speed limit of 30 miles an hour. Perhaps the Minister could comment on the view that a speed limit is out of date if it is being exceeded, on average, by three miles per hour, and where that leaves us in relation to the government view on a 30 mile per hour speed limit.

14:30

If heavy goods vehicle drivers are averaging 53 miles per hour on dual carriageway roads, why is that an argument for increasing the limit to 60 miles per hour when, in their own impact assessment, the Government state that they “do not expect” a change in the average speed of heavy goods vehicle drivers? If the Government’s argument is that they are doing an average of 53 miles per hour in free-flow conditions at the moment, when the speed limit is 50 miles per hour, what is the argument for increasing it to 60, when the Government’s view is that they will continue to do 53 miles per hour? Perhaps the Minister could comment on that point when he comes to respond.

The Government, as I said, refer to average speeds being 53 miles per hour in free-flow conditions on dual carriageways. Free-flow conditions, as I understand it from that impact assessment, mean when heavy goods vehicles are not held up by other traffic or by obstructions such as junctions, hills or bends. The change for dual carriageways means that these vehicles will presumably be able to travel up to 10 miles per hour faster when at, on or approaching junctions, hills or bends. But is it not the case that more accidents happen at junctions or on hills or bends than in what the impact assessment describes as free-flow conditions? Where was that issue addressed in the impact assessment? Was it even addressed? No doubt the Minister will want to comment on that in his reply.

The consultation period on raising the speed limit for heavy goods vehicles over 7.5 tonnes on dual carriageway roads was considerably shorter than the consultation period in respect of single carriageway roads. Why was that? Why was the consultation of just some six weeks on the speed limit on dual carriageway roads deliberately held over the summer holiday period from 24 July to 5 September, when many people are away? Perhaps the Minister could comment on that in his reply.

The Explanatory Memorandum sets out from what sources the responses had come to the consultation on the single carriageway speed limit increase, saying more than half came from private individuals. How many replies came from private individuals to the consultation on dual carriageway roads? That figure does not appear to be given in the Explanatory Memorandum. The number of local authorities responding to the dual carriageway consultation is—or was—well down on that for the single carriageway consultation. Does the Minister think that has anything to do with the fact that the consultation period was not only shorter but held over the summer holiday period?

The Explanatory Memorandum also refers in paragraph 8.8 to encouraging local authorities to consider lowering local speed limits. Can the Minister confirm in respect of which roads within its area the local authority could make the decision itself to lower speed limits, and in respect of which roads within its area the local authority could not make that decision? In relation to lowering speed limits, can a lower speed limit be placed on a road by a local authority for a heavy goods vehicle of more than 7.5 tonnes than applies to other vehicles, or is it the case that if the speed limit is lowered by a local authority, it has to apply to all vehicles?

The quick look that I have had at the impact assessment on single carriageway roads says, I think, that these vehicles are currently travelling at an average of 45 miles per hour. Could the Minister confirm whether that is the same as applies in the dual carriageway impact assessment, where the figure was 53 miles per hour on what were described as free-flow conditions? On a single carriageway, is that 45 miles per hour in free-flow conditions? Presumably it therefore does not apply when there is an obstruction—an obstruction being described as a junction, a hill or a bend. Once again, if the average speeds are 45 miles per hour, why are the Government pushing for an increase in the speed limit to 50 miles per hour?

I would be grateful if the Minister could answer some of those questions but I appreciate that he may wish to reply in writing. I can confirm that, despite all the questions that I have asked—which may not have seemed to the Minister entirely helpful—we are not opposing the regulations.

[Lord Popat]

I thank the noble Lord for a number of interesting points. I shall endeavour to answer as many as I can. Failing that, I shall be happy to write to the noble Lord.

The first question he raised concerned whether there was any lobbying by the haulage industry. It has been known for many years that the logistics industry has been pressing the Department for Transport to raise the speed limit and modernise the law. It feels that the law as it stands unnecessarily criminalises professional drivers and encourages risky overtaking by other road users. For the motorist who is trying to overtake, a lorry that is going at a much slower speed can be quite frustrating. Quite often, it can create long queues and congestion in certain areas.

The noble Lord asked what impact the speed limit change will have on road safety. The change will remove outdated restrictions set up in 1960 and 1980 and allow our roads to be better used and to better reflect the capabilities of modern heavy goods vehicles. This is one of the many changes being made to ensure that road transport regulations are fit for purpose. We have an excellent record on road safety—one of the best in the world—and I am confident that both our rural roads and lorry freight will continue to become safer. Better vehicle design, highways, engineering and changes in behaviour have all contributed to these improvements.

As to dual carriageways, in practice, because the Government do not believe that raising the speed limit to 60 miles per hour will result in changes in average heavy goods vehicles’ speeds, the change is not expected to have any impact on road safety. On single carriageways, analysis indicates that the direct effect of the speed limit changes on road safety on their own will be relatively small. The impact assessment identified a small additional risk to road safety resulting from the increase in speed—an additional two or three fatalities a year, assuming no other changes. However, it also identifies a potential benefit from a reduction of speed variants and dangerous overtaking. It is difficult to assess the size of the benefit so the impact assessment does not include a figure for that. The Government will be carefully monitoring the impacts of the changes.

[Lord Rosser]

My Lords, it may be that the Minister intended to deal with this in writing, but does he have the current figure for the number of fatalities on single carriageway roads involving HGV vehicles in excess 7.5 tonnes? I think he said the projection is an increase in fatalities by three or four, or two or three—I am not sure—and presumably there will be a likely increase in serious injury. The answer will perhaps come in the written response—I am happy to wait for it—but does the Minister know whether it represents a significant or minimal increase in fatalities involving HGV vehicles in excess of 7.5 tonnes on single carriageway roads?

[Lord Popat]

The impact assessment states an additional two to three fatalities a year, assuming no other changes. However, it also identifies a potential benefit from a reduction of speed variants and dangerous overtaking. We do not have figures for the number of lives that can be saved and accidents that can be prevented by the increase in the speed limit. We have problems with dangerous overtaking when a lorry is being driven at a slower speed than the one suggested in the SI, so overtaking becomes easier.

The noble Lord asked about road casualties. The most recently published Reported Road Casualties Great Britain annual report highlights the lowest figure in road deaths since national records began in 1926. Deaths decreased by 2% in 2013, compared to 2012, and were down to 1,713.

[Lord Rosser]

Is the Minister referring to the overall reduction in road deaths?

[Lord Popat]

The figure is in the recently published report of road casualties in the United Kingdom overall. It is the lowest figure since national records began in 1926.

[Lord Rosser]

I suggest, as does the Explanatory Memorandum, that that is not attributed to increasing speed limits. The Government’s Explanatory Memorandum gives reasons for the improving road safety record. It states:

“Better vehicle design, highways engineering and behavioural change have all contributed to these improvements”.

There is no claim in the Explanatory Memorandum that increasing speed limits will reduce deaths.

[Lord Popat]

An increase in speed limits is just coming into force. It is not the reason for fewer deaths. The reasons for a low numbers are more professional drivers, better vehicles, better signage and all that. This is why the department wants to review this after five years. We believe that, on the balance of probabilities, the number of accidents and deaths will not go up if we increase the speed limit as suggested. Bearing in mind that heavy goods vehicles break the law by driving at over 50 miles per hour on dual carriageways, we are suggesting 60 miles per hour. Remember that lorries have a meter so that they cannot exceed 56 miles per hour anyway.

[Lord Rosser]

So why do the Government want to increase the speed limit to 60 miles per hour if the Minister is telling us they cannot do that speed?

[Lord Popat]

I am saying that by increasing the limit to 60 miles per hour, the chances of their breaking the law, which they are doing now, will be less than at the moment.

[Lord Rosser]

I thought the Minister just said that there is a device on lorries that stops them going in excess of 56 miles per hour, so why do the Government want to increase the speed limit to 60 miles per hour?

[Lord Popat]

All lorries have speed limiters set at 56 miles per hour. There is no harm in increasing to 60 miles per hour. There is no point in moving the limit to 56 miles per hour. The Government are increasing the limit to 60 miles per hour in case some then can do up to 60 miles per hour. The point is that the speed limit is currently 50 miles per hour. We know that lorries break that law. By increasing the limit to 60 miles per hour, the number of people breaking the law will be minimal.

[Lord Rosser]

The Minister will accept that if that is his argument, that is an argument for increasing the 30 mile per hour limit because people exceed 30 miles per hour. I hope he not advocating that.

[Lord Popat]

I had better write to the noble Lord on our reasons for increasing the speed limit. The noble Lord asked why the Government are proceeding with the change on single carriageways when most of the consultation responses supported no change. We carefully considered the evidence provided during the consultation. We took into account the high number of hauliers represented by responding trade associations, whose membership ranges from 300 to 14,000 members. Arguably the majority of respondents were in favour of an increase in the limit.

We consider the benefits of change, including time savings and a reduction in congestion and frustration, to be worth while and are confident that rural roads and lorry fleets will continue to become safer and that any road safety concerns can be addressed.

The noble Lord asked about the delayed announcement. We were unsure whether we had fully addressed all possible impacts, so we took the time to do a thorough impact assessment and a review of the impact assessment. The noble Lord asked whether the Government have not assessed the costs and benefits of the change on dual carriageways because we do not predict a change. We carried out a sensitivity test of the impact of a very small change in speed. It is set out in the impact assessment. It resulted in a benefit to business of £8.9 million per year. The safely impact was an additional 0.18 fatal accidents per year.

On local authorities’ ability to change limits, yes, the advantage of this measure is that if, in certain areas, a local authority feels that the speed limit is too high, it is empowered to change the speed limit to as low as 20 miles per hour.

[Lord Rosser]

The noble Lord was entitled to say that I ought to know the answer already, but obviously the fact that I am asking the question indicates that I do not. Is it in relation to any road within the local authority’s area that the local authority can decide, if it so wishes, to reduce the speed limit?

[Lord Popat]

Yes, if the local authority feels that, in certain parts of the area, having higher speed limits is not safe, it has the right to reduce the speed limit to 30 miles per hour.

[Lord Rosser]

I am simply asking the question because I do not know the answer. Is it correct that that would apply on a main trunk road going through the local authority area—that the local authority, if it so wished, could decide to reduce the speed limit?

[Lord Popat]

The answer is yes. We talked about the speed limit being out of date. Let me write to the noble Lord on the subject. My briefing says that if the local authority, within its contested areas, is worried about the safety of people living around there, it has the power to reduce the speed limit. But let me write to the noble Lord on the subject.

[Lord Rosser]

I am happy to accept a written response from the Minister on that point.

[Lord Popat]

My Lords, we talked about the speed limit being out of date. I said earlier that, while heavy goods drivers already exceed existing speed limits, they cannot be caught by speed cameras, so enforcement is often very difficult. They currently break the law anyway. Heavy goods vehicles have to be fitted with speed limiters that limit them to a maximum speed of 56 miles per hour, and the average speed for heavy goods vehicles on motorways is already 53 miles per hour. Therefore, these changes are unlikely to have a big impact on speed.

I hope I have given a sufficient explanation of all the issues raised by the noble Lord; failing that, I would be very happy to write to him, as he raised a number of issues. It is a contentious issue, and I am certainly happy to look at it again and drop him a line where there is doubt.

Motion agreed.

State Pension Regulations 2015

Thursday 22nd January 2015 Grand Committee

Motion to Consider

14:48

Moved by

[Lord Bourne of Aberystwyth]

That the Grand Committee do consider the State Pension Regulations 2015.

Relevant document: 16th Report from the Joint Committee on Statutory Instruments

[Lord Bourne of Aberystwyth (Con)]

My Lords, this is the first set of new state pension regulations to be made under the Pensions Act 2014; further secondary legislation will follow over the next 12 months in the run-up to the introduction of the new state pension in April of next year. These draft regulations are largely technical and in many respects replicate the regulations governing the current scheme, although the legal language has been updated where appropriate. However, I should flag up at the outset two provisions governing the new scheme that differ from the current scheme and will be important for people in their planning for retirement.

First, Regulation 10 sets the accrual rate for increments—also known as extra state pension, paid where a person defers claiming their state pension—at the equivalent of around 5.8% per annum. The Government announced their proposal for the deferral rate on 22 July last year. The rate, which is based on advice from the Government Actuary’s Department published at the same time, is slightly higher than the rate of 5.2% assumed in the original estimates.

The rationale for moving from the current accrual rate of 10.4% per annum—set around 20 years ago but not introduced until a decade later—is to ensure that people get an actuarially fair return but not a bonus if they delay claiming their state pension. This is necessary to ensure that the costs of the new scheme do not exceed those of the current scheme. However, there may be other advantages in deferring claiming, such as in relation to tax. Typically this will be where a person continues in work beyond pension age and is a higher rate taxpayer, which means that if they draw their state pension it would also be taxed at the higher rate or alternatively that the higher rate of pension might send them into the higher rate tax band. If, on retirement, they are no longer a higher rate taxpayer, their state pension—including the increments on it for having deferred claiming—would be taxed only at the standard rate. That may be one reason why people would wish to defer.

The second factor to draw noble Lords’ attention to is Regulation 13. This sets the minimum qualifying period for entitlement to the new state pension. As announced on 13 December 2013, the minimum number of qualifying years of paid or credited contributions required will be 10. This is the maximum permissible under the enabling powers in Sections 2 and 4 of the 2014 Act. Setting this minimum qualifying period at 10 years is intended to ensure that entitlement to the new state pension is restricted to those who have a strong connection with and have made a significant contribution to the United Kingdom.

This approach is consistent with that adopted in many other European and OECD countries. Indeed, we in the United Kingdom adopted such an approach to the current basic state pension until 2010. A person needed then to have qualified for at least a quarter of the full basic state pension for any state pension to be payable. This 25% de minimis condition was perceived as having a disproportionately adverse effect on women in the United Kingdom—particularly ethnic minority women—who faced barriers in working outside the home. While this was undoubtedly the case historically, by the time the condition was lifted in 2010, under the changes brought about in the Pensions Act 2007, relaxation of the contribution conditions and improvements in the crediting arrangements, particularly for time spent raising children, meant that very few women in the United Kingdom would have failed the condition even in 2010, had it been retained. In effect, the change addressed a historical problem which, in reality, did not largely apply to the cohorts affected by the change.

Although not explicit in the draft regulation, I should point out that under the European legislation governing the co-ordination of social security systems, insurance or in some instances residence in another EEA member state will count towards the 10-year minimum qualification period but not the entitlement. In other words, it would affect a person qualifying but not count towards the amount they were paid by the UK authorities. I will try to give an example later on that might make that clearer. The same would also apply where people have been insured in a country with which the UK has a bilateral agreement—such as the USA or Israel—that allows for co-ordination of the two countries’ schemes in this way. It is not in my speaking notes but I will try to explain that. If a person has five years’ qualification in the United Kingdom and five or more years’ qualification in Europe, that would enable them to qualify but the pension they would be paid would be based on only the five years they were in the United Kingdom. I hope that that is helpful.

Turning to the remainder of the provisions, Regulation 1 is technical but importantly specifies that the regulations come into force on 6 April 2016—of course, we know that that is the operative date—alongside the state pension provisions in Part 1 of the Pensions Act 2014. It also ensures that the regulations reflect the Act by restricting the new state pension to people who reach pensionable age on or after that date.

Regulations 2 and 3 deal with prisoners under the power at Section 19 of the 2014 Act. These provisions will, thankfully, have only limited application but it is worth noting that the number of older people serving prison sentences has been on the rise over the past decade. Since 2002, the number of prisoners aged 60 and over in England and Wales has increased from around 1,500 to close to 4,000.

In essence, Regulation 2 provides that a person is disqualified from receiving the state pension if they are in prison as a result of a criminal offence or are serving part or all of a prison sentence in hospital—typically a secure psychiatric hospital. The basic principle that a person should be barred from drawing their pension while in prison dates back over a century and is based on the premise that to pay the pension would constitute double provision by the state as the person’s “bed and board” is being provided and could therefore be construed as rewarding criminal activity.

The disqualification under the regulations also applies where a person is serving a prison sentence overseas but with the caveat that it does not apply if, in similar circumstances, the person would not have been imprisoned here in the United Kingdom.

The new regulation is more explicit than the current provisions in one respect in that it clarifies that a person continues to be barred from receipt of their pension if they are “unlawfully at large”—a splendidly Dickensian phrase. This is common sense. It would simply be absurd to put a pension into payment—in effect as a reward—if a person managed to escape from his prison or psychiatric unit where they were effectively a prisoner.

Regulation 3 covers the position of persons being held on remand in connection with a criminal charge. The principle here is relatively straightforward and has been applied for many years. Payment of the pension will be suspended while the person is being held on remand. If at the conclusion of court proceedings a prison sentence, including a suspended sentence, is imposed, payment of the pension is barred for the period during which the person was held on remand.

If a sentence of imprisonment is not imposed—typically where the person is found not guilty, but also if the court were to impose a fine—the suspension is lifted and arrears of pension paid for the period the person was held on remand. As I said, this is a common-sense approach because periods spent on remand prior to sentencing will normally count as time served when it comes to a person’s release from prison.

Regulations 4 to 11 deal with deferral of the state pension. In addition to Regulation 10, which I mentioned at the outset, these set out the detailed terms and conditions that underpin, first, inheritance of deferral benefits built up by a person who deferred their old state pension—that is, the state pension that is currently payable until 6 April next year—and, secondly, deferral of the new state pension.

Regulations 4 to 6 deal with the former—inheritance of old scheme deferral benefits—under the powers at Section 8 of the Pensions Act 2014. In the same way as the new state pension will not be inheritable, any increase from deferring the new state pension will not be inheritable either. However, deferral inheritance will continue to be available where the late spouse or civil partner had deferred an old state pension. The rationale for retaining inheritance rights here is that in these circumstances the availability of such rights may have been a key factor in a person’s original decision to defer their pension, particularly where their spouse or partner is, or was, significantly younger than them.

These provisions basically replicate the current provisions governing when and how a survivor can choose a lump sum payment instead of increments, and how and when such a choice can be changed. That is in respect of the old state pension. This will ensure parity of treatment of survivors of people who deferred under the old arrangements, regardless of whether the survivor is covered by the old or new schemes.

Regulations 7 to 9 are made under the power at Section 16 of the Act and cover arrangements for people who, having initially claimed their pension, subsequently decide to “suspend” their entitlement—and thus, in effect, revoke their claim—in order to build up an increase under the deferral arrangements. Although the language has been modernised—the current regulations predate the removal of the retirement condition in 1989 and so are still couched in terms of an “election to be treated as not having retired”—the requirements and restrictions imposed by these regulations mirror those applied under the current scheme. Basically they are that entitlement can be suspended only prospectively, but not more than 28 days in advance, and must be done in writing or by phone; and that the suspension is lifted from the point when a person makes a further claim to state pension, which may be backdated for up to 12 months.

15:00

Regulations 11 and 12 are made under the powers in Section 18 of the Act and deal with periods during which increments or extra pension do not accrue and the treatment of part-weeks in the calculation. The provisions in Regulation 11 largely mirror those that apply under the current arrangements by preventing a person from being able to accrue a pension increase while they are drawing another payment out of public funds, such as pension credit—clearly, that would be unfair. Regulation 11 prevents duplication of provision by precluding increments from accruing for any period during which a person who, although not claiming their state pension, is receiving another benefit out of public funds that would be abated or not available to them if they were drawing their state pension. The provision also applies where another person is receiving an increase of a publicly funded benefit in respect of the person who is deferring their state pension. Regulation 12 simply provides that, when the total number of weeks for which a person’s state pension has been deferred is totted up to calculate the value of the increments, any odd days are counted as a full week.

Regulation 14 and the schedule deal with the sharing of state pension rights on divorce. Currently, additional state pension can be included in the assets that are considered for sharing in divorce proceedings. From April 2016, only the protected payment—that is, an amount above the full rate—will be shareable.

The department is in effect the servant of the court and supplies information about the value of the individual’s state pension. It also implements orders from the court. The regulation and schedules introduce the concept of old and new pension-sharing arrangements to assist the courts and the department in administering pension sharing. I commend the regulations to the Grand Committee.

[Lord German (LD)]

My Lords, I will address my remarks, if I may, to Part 4 of the regulations—that is, Regulation 13. As I understand it, the regulations effectively replace what is called the home responsibility protection with a 10-year minimum qualifying period for a UK state pension. Prior to 2010, we had in the UK both the HRP and a 10-year minimum qualifying period. From 2010 until now, we had the HRP only. That is now being replaced by the 10-year minimum qualifying period, which was the position before 2010.

I refer to the Explanatory Memorandum and, in particular, paragraph 7.21, which, without the benefit of an impact assessment, is one of the major ways of discovering how many people will be affected by the shift that is announced in the regulations. This is what worries me more than anything else. In the Explanatory Memorandum, the Government look at the difference between a seven-year and a 10-year minimum qualifying period. The number of affected individuals in the United Kingdom who reach retirement age between 2016 and 2020 is approximately 3,000—the figure for the seven-year qualifying period is 6,000 to 10,000, while that for the 10-year period is 9,000 to 12,000, so the average difference between the two is 2,500 to 3,000 people. However, the following sentence says:

“In comparison, we estimate that 18 to 23 per cent (6,000 to 10,000 people) of the total number of individuals living overseas reaching state pension age in the same period will not qualify for a state pension because of the 10 year MQP”.

Then there is an estimate of that saving the Exchequer £650 million by 2040. This figure, I presume, relates mainly to those people living in other countries who have made a contribution to a UK state pension through their national insurance contributions, but who have not reached 10 years of qualifying and do not live either in the EEA or in a country that has a bilateral arrangement with the UK—for example, contributors to a UK pension who live in Australia, Canada, New Zealand, South Africa and other places. That is presumably why this figure is so high.

In that four-year period from 2016 to 2020, somewhere between 18% and 23% of all those pensioners who are expecting to receive a UK state pension are now not going to receive one. I would be grateful if my noble friend could provide—in writing if he does not, as I suspect, have the information to hand—a breakdown of who will be affected, where those people are affected and what the average rate of payment into a UK state pension has been in terms of minimum qualifying periods. If in fact there is a greater number between seven and 10 years, would that figure of 18% to 23% of people affected fall dramatically, if there were a seven-year qualifying period? It would be interesting to know what the rates of contribution had been for those people.

There is of course a second issue, relating to those who live within one of the countries that have a bilateral arrangement with the United Kingdom. I presume that those who live in an EEA country would in fact be entitled, because of contributions made through that European Economic Area member state, to a pension of some sort from the country where those contributions had been made. I want to ask my noble friend whether that is correct. Has an assessment been made of what that pension would be in each of the European Economic Area countries? More specifically, for those countries where there is a bilateral arrangement—my noble friend mentioned Israel and the United States of America—would the contributions which would enable people to get their pensions if they did not reach the 10-year minimum qualifying period, providing they had made sufficient contributions in those countries, for example, entitle them also to some form of pension ability in those countries, given that we have a mixed and bilateral system? I wonder whether my noble friend would agree with me that now is perhaps the time to reconsider the arrangements that we have with other member states in the European Economic Area and with other countries, particularly those of the Commonwealth, where we perhaps need to revisit whether we have a consistent, safe and sane system.

My noble friend also referred to the assistance that will be given to people to understand the new changes. It is not in the regulations, obviously, but paragraph 9 of the Explanatory Memorandum refers to guidance. Could my noble friend tell me whether any guidance is given to those people in the country who are now seeking, part-way through their working life, to emigrate to Canada or Australia, for example, that their state pension rights will be affected by these regulations, and perhaps much more dramatically than they would have been in previous years? I understand that this is a very narrow area to consider, so I would be happy, if necessary, to have a detailed reply in writing, but I would like to see the breakdown of how this affects people who have been contributing to a UK pension in countries such as Canada, New Zealand, Australia and South Africa.

[Baroness Sherlock (Lab)]

My Lords, I thank the Minister for his very helpful explanation of the regulations and the noble Lord, Lord German, for his contribution, too. Generally speaking, the regulations seem to broadly reflect the intention of the legislation, so I shall concentrate on only two or three points on which I would like some clarification, which mostly have already been raised by the Minister—although I confess that I was not planning on talking about prisoners, or his idea of people being “at large”. I completely agree that people should not be rewarded for this, but the Government’s argument for not giving them a pension is that the state is taking care of their bed and board—which, presumably, the state is not doing if they have absconded. However, I shall let him off on that point for now.

Regulation 10 sets the accrual rate for increments when someone defers claiming their state pension. The rate has now been set at 5.8% per year, which is slightly above what we were told in Committee. Have the Government had time to reflect further since the Bill became an Act about the reasons behind the decision to stop people being able to take a lump sum when they defer, instead of an enhanced ongoing pension? During the passage of the Bill through this House, my noble friend Lady Hollis of Heigham challenged the Government and said that doing this was removing the only opportunity for some future pensioners, particularly those of lesser means, to acquire a lump sum to use in retirement, which might be the last opportunity to fix some particular problem with the house or buy a car. She pushed the Government on that.

I understand—the Minister can correct me if I am wrong—that of the 1.2 million who defer their pensions, only 63,000 take the lump sum, which on average is worth about £14,000. Could the Minister remind us of the reasoning for this? I seem to recall at the time the Minister for Pensions Steve Webb said it was to “simplify the system”, but I do not think it is very hard to understand that you can have a lump sum or a higher weekly amount. So I do not find that reason hugely compelling. Furthermore, government policy on pensions has evolved a bit in recent times, and the idea that people who have been saving for their retirement should be allowed to take a lump sum rather than a weekly pension has become rather flavour of the month. For example, it is there in the Taxation of Pensions Act, whereby people who would have had to spend their retirement savings on an annuity in future may take it out and spend it on a Lamborghini—I believe that is the phrase—should they be so moved. Has the Minister had any second thoughts on that, in the light of changing government pension policy?

Secondly, Regulation 13 was raised by the noble Lord, Lord German. I shall not repeat all the questions that he asked, some of which I would have asked myself, but I will be very interested to hear the Minister’s answer. I am interested in the rationale—that the reason for doing this now is because of the profile of the people who would be affected not being the people one would have expected when the legislation was going through. The Explanatory Memorandum suggests that only 2% to 3% of the people affected would be living in Great Britain, versus 18% to 23% overseas, but the absolute numbers are broadly comparable. We are talking 9,000 to 12,000 in Great Britain and 6,000 to 10,000 overseas. The memorandum says:

“Current projections by the Department indicate that in the medium and long term, abolition of the de minimis condition would have disproportionately benefitted people living outside the UK”.

What is expected to be the short-term impact?

As the noble Lord, Lord German, said, the changes made by the last Labour Government in the Pensions Act 2007 are the context for this. It meant that people who reached state pension age on or after 6 April 2010 needed only 30 qualifying years to qualify for a full basic state pension—and, of course, the HRP, as the noble Lord, Lord German, said. With fewer than 30 years, they qualify for a BSP of one-30th of the full rate for each complete qualifying year that they have built up. That means that somebody reaching state pension age from 6 April 2010 who would not be entitled to any BSP would only be somebody who had built up not even one qualifying year. So it is quite a significant difference. The Labour Government estimated that to mean that, by 2025, over 90% of people reaching state pension age would be entitled to a full BSP. It is quite a big difference from that to someone with, say, nine qualifying years, who as I understand it would not receive anything at all. Labour tried in various ways during the passage of the Bill to soften the transitioning, which would have dealt with some of the issues, but the Government rejected it. Have the Government had any further thoughts on that?

On another point, that is only one of many reasons why someone might not find themselves entitled to a full new state pension, which has become a bit of an issue of late. I understand the desire for simplicity, but in trying to advocate for the single-tier pension, there is a danger that the Government have led many people to believe that they will all qualify for the new state pension, when, in fact, we now know—from freedom of information papers released after Christmas—that 55% of people will not be on the new flat-rate state pension. Obviously, this is partly down to the way the Government have presented this. In an unusual bout of politicians declaring their responsibility, I gather that the Pensions Minister Steve Webb told the Daily Telegraph:

“I think I may have been guilty of oversimplifying the new flat rate state pension”.

Could the Minister tell the Committee, given that that misapprehension is out there, for whatever reason, what steps the Government are taking to correct it? What kind of information campaign is going on to make sure that people who are approaching retirement within the next 10 years will have a better understanding of what they can reasonably expect to get?

15:15

I am just very conscious that we discussed all this in both Houses of Parliament during the passage of the Bill, and it attracted some, but only minority, interest in the media. Now that we are running up to the introduction of the new state pension, there is a huge amount of media interest, but that is very close, and too late for anyone to take any action. What are the Government doing to notify people?

Finally, I should like to ask the Minister for an update on the issue of mini-jobs, raised during the passage of the Bill. I hope he will give me enough licence to raise this. This is the issue of people who have more than one job, but with none of them individually taking them over the lower earnings limit for national insurance. Thus, no matter how many hours they work, they are not gaining any qualifying years towards the new state pension. What is the Government’s latest thinking on this?

[Lord Bourne of Aberystwyth]

I thank noble Lords who have participated in the debate on these regulations. I will try to cover the points raised; where I fail to do so, I certainly undertake to write to noble Lords. I turn first to the points made by the noble Lord, Lord German, on an issue that is, perhaps, somewhat tangential to the regulations themselves, but certainly an issue that I know the noble Lord feels strongly about, and is impacted by these regulations. Let me return to the basic point here, and answer some of the points raised by the noble Baroness, Lady Sherlock, as well.

The 10-year period signifies a close connection with the United Kingdom. I suppose there is nothing magic in a period: that is the period chosen, and, of course, we have to do this within the broad envelope of public spending. That is the basic rationale here. The question raised by the noble Lord, Lord German, concerned what happened to pensioners, or prospective pensioners in some cases, who were in countries such as South Africa, Canada, Australia and New Zealand, which did not have a bilateral arrangement with the United Kingdom and were clearly not in the EEA. It is fair to say that they are not able to build up the qualifying period in the same way as people within the United Kingdom and people in the EEA or countries with bilateral agreements with the United Kingdom, such as the USA and Israel, which I mentioned. That has been the position through successive Governments. This is nothing new in these regulations and nothing new with this Government: this has been built up over a period of time. This is not seen as a key priority at the moment, in relation to pensions reform. I do not know the number of people who will be affected or the breakdown of how many are in each country. I will write to both noble Lords with whatever statistics we have on this to elucidate that point. The fundamental point is, however, that 10 years has been picked as signifying a close connection with the UK. The EEA is in a particular position with regard to the co-ordination of pensions policy, so that is why that is affected.

In relation to the point raised by the noble Lord, Lord German, on guidance and communications, I will, again, seek to provide more information in writing. We have a communications campaign going on that will set out the broad principles: they are operational and will influence how the scheme operates. This was launched in November and aimed at broadening awareness and understanding of how the state pension is changing. This has been trialled: there are regional trials in the north-west and the north-east as a control to see how that is being perceived. There is also an online campaign with an offshoot of YouTube—PensionTube—for people to find out more information. We are seeking to communicate the changes being made to the system as things move forward.

Turning to the point made by the noble Baroness, Lady Sherlock, I can confirm that those unlawfully at large are not, so far as I am aware, getting food and lodging at the expense of the public purse. A different point applies there. That is the point in prison. If they escaped from prison, it would be a bit perverse to reward them for escaping from prison or a psychiatric unit by saying that they could have their pension. Presumably if we were in that position, we would know where they were and would recapture them, but that is the point.

The noble Baroness made a particular point about the lump sum or annuity where somebody has deferred and then seeks to crystallise the amount in a lump sum or annuity. The reason for dispensing with the lump sum payment arrangements was that the new deferral arrangements would help to flatten the expenditure profile and offset some of the costs of the early years over a period which, if there was an ability to take a lump sum, would expose us on the public spending front, as I understand it. The new state pension scheme—this may be hard to believe—is simpler, and the deferral arrangements reflect the change. Offering a choice of deferral payments has made the current system rather complex, and people are unsure what is best for them. That is basically the reason. The lump sum is seen as a somewhat inflexible savings vehicle. That is the reason that we have gone for the annuity option.

I will have to write to the noble Baroness on this point. I think I have seen this somewhere, but I had better be careful what I say. I think it is possible after 2016 to buy additional qualifying periods pre-2016. I am not sure whether that affects qualification or only the amount of the pension that could be drawn down. I think that is probably a point on which we need to get back to the noble Baroness. I will write on that point. I think at the very least I have seen something about it affecting the amount of the pension that you can draw down. You can certainly contribute post-2016. Whether you can use that for a qualifying year, I am not sure, but I will write to the noble Baroness on that point. There is a communications campaign.

The noble Baroness raised a number of points. The mini-jobs point was raised by the noble Baroness, Lady Hollis, in the Chamber. I am afraid I do not have the current state of play on that because it is somewhat wide of these regulations, but I will ensure that the noble Baroness gets a response on that point.

With regard to the fact that not everybody will be getting the full amount, the reason is that if those who have contracted out—and many have currently contracted out, although that ends in 2016—were to get the full amount, it would be double-counting. You would have the benefit of contracting out in the other pension and then you would get the full amount with the state pension. That would be unfair, so that is why. Nobody is worse off. There are provisions now to prevent that opting out counting. That is purely what this is. That number will decline over time because opting out is ending, but the figures that the noble Baroness cited are correct. Not all those getting the new pension will get the full amount because they are getting the benefit of the opt-out.

[Baroness Sherlock]

Did the Minister say that nobody would be worse off? Did he mean that?

[Lord Bourne of Aberystwyth]

I hope I did not, because I am not sure that is the case. If I did, I certainly correct that point. I am not sure that nobody will be worse off. I could not say that.

When that story broke, as it were, this was not new news; it was old news and the BBC and perhaps others—I should not single the BBC out—were being lazy in reporting. We are clearly correcting that via the media. I think it has been corrected. The reason for this is to ensure that there is no double-counting. As I cannot be certain, I would not go so far as to say that nobody is worse off, but I think it would be perceived as fair by most fair-minded people that if you have opted out of the state system and the state has, as it were, contributed to a different pension, you should not be able to count that again for the benefit of the state pension. I think it is fair to say that most people are better off, but I would not like to put a particular figure on the amount.

If I have missed anything, I will certainly pick it up in writing to noble Lords who have contributed to this debate. I thank them once again for their helpful contributions and commend these regulations to the Grand Committee.

Motion agreed.

Universal Credit (Work-Related Requirements) In Work Pilot Scheme and Amendment Regulations 2015

Thursday 22nd January 2015 Grand Committee

Motion to Consider

15:25

Moved by

[Lord Freud]

That the Grand Committee do consider the Universal Credit (Work-Related Requirements) In Work Pilot Scheme and Amendment Regulations 2015.

Relevant documents: 16th Report from the Joint Committee on Statutory Instruments, 21st Report from the Secondary Legislation Scrutiny Committee

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud) (Con)]

The regulations before the Committee today introduce powers to test a range of approaches to establish how we can best support working universal credit claimants who are on low earnings to progress in work and earn more. This is a core principle of universal credit.

I take this opportunity to update noble Lords on where we are with universal credit. Universal credit is now in almost 100 jobcentres. Some 55,000 people have claimed and almost 27,000 people—including couples and families—currently benefit from the much enhanced support that it provides. For example, we are seeing that universal credit claimants spend twice as long looking for work than claimants on current benefits. Two-thirds of claimants surveyed believe that universal credit provides better financial incentives to work and earn. Early evidence shows that universal credit claimants are taking up more work when compared to those people on jobseeker’s allowance.

Universal credit is working for not just claimants but for employers, too. It removes the inflexibilities that exist in current systems and means that employers will now have access to a more engaged and flexible workforce—people willing to take up more hours as they are available without the fear of having to stop and restart their benefit claims. This is excellent progress and from next month we will roll out universal credit nationally. By the spring, universal credit will be in one in three of the country’s jobcentres.

A key question we are now looking to address is how we will support working claimants who are on universal credit and in some of the lowest-income households, typically earning less than £12,000 a year. Our aim is clear: we want to help encourage, influence and support low-paid claimants who can earn more to progress in work and increase their pay. The potential benefits of this support are significant and wide-ranging. There will be more people working and earning more, and living more independently of benefits. We will strengthen our ability to tackle and reduce poverty. Employers will benefit, too. They will have a more engaged and motivated workforce and will benefit from the rewards that that will bring. To realise these benefits, it is crucial that we put in place the right help and support. It is a key reform, a unique challenge and it is transformational.

I want to be open about the challenge that we face. It is no easy task. This is the first time any nation has attempted to support working claimants in such a large-scale way to increase their earnings. Because we are one of the first nations to try to do this, there is very limited evidence on what works. For this reason, we must run trials to learn what is effective. We must do things differently if we are to succeed. The approaches of the past—static trialling of rigid, fixed approaches—will simply not work here. We therefore must look to do things differently. Our approach to trials needs to be more flexible. We need the ability to tweak and change things as we learn about what works and what does not. This is about trialling to refine and perfect our approach. Having broadly defined trialling regulations, as we are discussing today, with clearly defined parameters and safeguards will allow this tailoring and tweaking. On the other hand, a traditional approach of defining every element of a trial would have left us locked into one approach, even if it proved to be ineffective. To test changes and variations, we would then have to stop and come back to Parliament to secure brand new powers to test something slightly different.

15:30

The approach we are looking to take is endorsed by some of the world leaders in trial design and theories. Jim Manzi, a predominant expert in trial principles, is clear that many trials fail because we cannot accurately predict how people will respond. He recommends that, in order to understand what works, you must be able to be responsive in your approach so that trials can be flexed and adapted to learning. There is clearly a strong case to have the flexibility that we are seeking with the powers today.

I now turn to transparency. I am fully committed to being transparent about what we plan to test. I have given a clear commitment to share with the Social Security Advisory Committee details of any future trials under this regulation. We are also committed to publishing regular updates on universal credit, including details of our future plans, such as our publication in October 2014, Universal Credit at Work. We will also publish formal evaluations of these large-scale trials to ensure that our findings are available publicly. Noble Lords have my commitment on this.

I should like to spend a few moments outlining what we will do first with the proposed powers. From April 2015, we plan to launch the first large-scale trial in universal credit. This first trial aims to set the baseline for effective interventions of a core in-work service. In doing so, it will explore the impacts of providing tailored support based on the individual’s circumstances, setting and embedding clear expectations for our claimants, and reinforcing the consequences of non-compliance so that claimants fully understand the implications of their actions.

This first trial will be delivered by Jobcentre Plus and will focus clearly on providing tailored, personalised support to low-earning claimants. These conversations will be led by our work coaches. They will be responsible for setting the relevant and appropriate goals and building the right aspirations. They will help the individual to consider what they could do to increase their earnings and they will also define what activities they should undertake.

Some of the activities that we will set will be mandatory, particularly where they offer a claimant a strong opportunity to increase their salaries. This is to encourage claimants to engage with the support on offer. We will also be testing the impact of the regularity of very challenging conversations with claimants on the progress they are making, comparing fortnightly discussions and conversations every few months. This overall approach will be tested against much lighter support that consists of two telephone calls with a work coach. This is our control for the trial, against which we will measure whether intensive treatment delivers better results.

We aim to trial this first approach with more than 15,000 low-earning in-work universal credit claimants across the country, subject to us seeing positive early results. Testing on this scale is necessary for us to gather robust statistical evidence to demonstrate whether our interventions are effective at helping people to progress in work. Importantly, the larger numbers give us more granularity in the data, helping us to understand not only whether something like this works but how it works and for whom.

It is also important to trial across a different range of geographical areas, hence the requirement to be able to test in many different locations. Local labour markets vary immensely from area to area, so restricting trials to just one or two areas would give us a less clear indication of whether something would work well across the country. The first trial will be run as a randomised controlled trial, perhaps one of the most effective ways to test new approaches. It is certainly endorsed as the gold standard approach by many external experts.

It is important that we do not lose sight of why we are doing these trials. It is to learn about the best ways to support and drive greater independence from benefits by getting individuals to earn and work more.

Given the challenge that we face and the clear need to test a range of measures, we are seeking regulations that enable us to test this and optimise the approach over time. The regulations are broadly worded but they do not provide unlimited powers. They set out clearly defined areas and parameters for us to test in, and provide a number of protections and safeguards to ensure we only require more from those who can do more.

I recognise that this is a marked departure from the more static DWP trialling approaches of the past. However, we believe that this more dynamic approach provides the best opportunity to build the evidence we need while retaining the right balance in safeguards and flexibilities. I commend the regulations to the Committee.

[Lord Farmer (Con)]

My Lords, rolling out universal credit and optimising such a colossal and innovative system without an iterative process of trial and error should be inconceivable. I am grateful for the opportunity to discuss these regulations because I see them as a sign of a fresh wind blowing through large-scale publicly funded social policy projects, which is an unapologetically experimental approach, as the Minister said, in the most robust sense of the word.

I also understand a randomised control trial methodology is to be implemented, as the Minister said, and it is the gold standard when it comes to experimental design. I am not a social scientist: I am a businessman and conscious that writers such as Jim Manzi, as has been mentioned, have been taking my world by storm by insisting that leaders there can and should use what he refers to as RCT experiments to test decisions in a controlled, low-risk environment before committing their firms and shareholders to large-scale and expensive changes.

We owe it to the people who are the subjects of similarly large-scale social programmes and the taxpayers who fund them to test what we think will work best and learn from that process whether they are in fact being aided effectively and cost-effectively. Both are important.

The Washington State Institute of Public Policy has led the world by raising the bar for policy development in this regard. All sorts of approaches might make a little difference but let us sink our resource into the ones that will help people make the most progress. Honing the many facets of the most effective approach requires the iterative and flexible piloting legislated for in Section 41 of the Welfare Reform Act on which these regulations are based.

As one who is used to having a free hand when it comes to undertaking the necessary fact-finding and research prior to investing my own and my clients’ money, I want to emphasise how innovative and important this flexibility is. As we have heard, static trials have been the standard fare of DWP research contracts but the Minister has already made clear how innovative the proposed assistance is. We have to roll out in-work support that ultimately could help hundreds of thousands to escape a low-income existence while, at the same time, testing and adjusting the assumptions different forms of support are resting on for a wide range of diverse people.

Moreover, it is my understanding that the DWP expects about 1 million universal credit claimants to fall within the “working but could do more” category. If the department wants to help such an enormous and diverse cohort effectively, it seems entirely appropriate that a flexible research model is adopted.

However, I have some questions. First, what does the 1 million figure represent as a percentage of all universal credit claimants and what benefits in terms of cost savings might there be to the country if people can be consistently helped to overcome barriers to raise their wages? In other words, what is the great prize that these trials can place within our reach?

Secondly, I am pleased to learn from the September 2014 minutes of the Social Security Advisory Committee that detailed guidance will be given to work coaches on the pilot, so that anyone randomly chosen to take part in this test-and-learn approach who is deliberately working fewer than full-time hours in order to get a business off the ground will not be forced to take part. A research agenda must not become the tail that wags the dog. Forcing someone to accept help to build up their hours when they are already taking steps to improve their circumstances and possibly even to employ others would be a perverse use of public time and money. It would also undermine the purpose of the trial.

Obviously, there need to be two-way safeguards. Selected claimants may be particularly concerned about complying with all the requirements placed on them under universal credit, not least to avoid sanctions, as they may be in a financially precarious position. They may not realise that there are exempted categories in the guidance. Will the Minister give an assurance that all people who are chosen for trials will be made fully aware of the characteristics, including permanent disability, that mean that their involvement is not mandatory? Given the lack of public and media awareness of exemption for many disabled people from the withdrawal of the spare-room subsidy through the use of discretionary housing payments, I suggest that all effort is made to make this clear from the outset, to avoid much worry and the proliferation of misinformation.

Thirdly, although my head believes that flexibility is indispensable, in my heart I worry a little about the power over claimants’ lives that these regulations are giving to researchers. The Minister mentioned tailoring and tweaking. The 21st report from the Secondary Legislation Scrutiny Committee referred to the very broad nature of the powers permitted by this instrument and raised similar concerns to mine over the transparency of research design and process. Will the Minister say how we will know when researchers have made modifications to these? As the Secondary Legislation Scrutiny Committee also asked, what controls will exist on the extent of these trials?

Finally, my wholehearted support is behind this Government’s ambition to help a million universal credit claimants to increase their earnings, but is the money to embark on this vast exercise in the departmental business plan for universal credit?

[Lord German (LD)]

My Lords, I start by thanking the Minister for giving us an update on where we are with universal credit—27,000 people and 100 jobcentres. I wonder whether I can tempt him to tell us where we might be by the end of April, for example, with the number of people who are receiving universal credit and the number of jobcentres that are supplying it. It is important to note what progress we are seeing.

In-work progression, which is the target that this pilot and these regulations are trying to attach themselves to, is one of the challenges of the next five years. I believe that we will find that this area requires a great deal of attention. It is an issue that relates to a drop in unemployment, so we have to make sure that those who are in employment are given the best possible hand-up and help. I could not help having a wry smile when my noble friend referred to the way in which DWP does this sort of trialling, saying that it was unique and distinctive. I congratulate him on that because we need to find out how universal credit has been doing. As you find out, you adjust, you change and you move on, rather than having a simple blanket approach, which is a recipe for difficulties in the future.

However, there are issues, and I welcome the comments of the noble Lord, Lord Farmer. I particularly welcome what he said about the wind of change. I wonder whether this is a sign of Harold Macmillan coming back to see us again and a revitalised way of looking at social policy. I raise that as an interesting point.

15:43

In the challenge of finding a way of developing and helping in-work progression, given the flexibility that has been given by these regulations, there are issues which need to be pinned down. As far as I can judge—my noble friend will tell me whether this is right—paragraph 7.1.2 of the Explanatory Memorandum sets out the four areas or themes which will underpin these pilot studies. Is that a suitable balance between sticks and carrots? The detail we are given is quite limited on the support we can offer, the role of employers, the impact of conditionality and using financial levers. In any striving to help people to progress and to develop their income, it is important that there is a range of levers, some of which are going to be sticks and some of which will be carrots. Will my noble friend indicate whether in his view that balance is adequately described?

It is true, as my noble friend said, that there is very limited evidence on what works to help people get improvement in their earnings. Starting early with this challenge as universal credit rolls out is an important way of helping those who are trying to strive and find their way out of in-work poverty.

My question is about who will be selected in the random sampling. Perhaps I have not got this right—my noble friend will correct me—but I understand, for example, that a single claimant who is not responsible for a child or qualifying young person would have to be earning less than £111 a week to receive universal credit, without any housing element. That is the kind of level at which we are trying to assist people so that their earnings rise beyond the figure where they no longer qualify for universal credit. These figures are found in Annexe 1 of the impact assessment on universal credit produced by the Department for Work and Pensions. It has also been uprated. However, I do not know whether it is completely uprated in terms of the current position in relation to universal credit work allowances.

My second point has been alluded to by the noble Lord, Lord Farmer, and is about what sort of people might be included or excluded. Will people with disabilities be included or excluded? One of the challenges this country faces is ensuring that people who have the ability to work but who have disabilities are able to find and get work. It would be useful to know how that category will be determined and whether there will be other exclusions from the random sampling.

Finally, I have a statistical question. I may have heard my noble friend incorrectly, but I thought he said that there could be up to 15,000 people involved in this piloting, testing and trialling work. At the moment there are 27,000 people on universal credit. A pilot of 15,000 out of 27,000 seems an extensive test. It would be more than half the people on universal credit, which is why I return to my first remark, which encouraged my noble friend to tell us where we might be on numbers on universal credit by the end of March.

[Baroness Sherlock (Lab)]

My Lords, in thanking the Minister for that explanation, I am expressing more than just the usual courtesy. As has been alluded to, the Secondary Legislation Scrutiny Committee commented on the very wide nature of the powers that the Government are seeking through these regulations and the remarkable paucity of information in any of the material available to us about the way in which they intend to use them. Therefore, although I am very grateful, and without sounding too churlish, I would rather have had some of that information so that I could have considered it more carefully before getting to the stage where we are asked to consider the regulations. I will do my best, but I may end up intervening in the Minister’s reply. I hope that he will bear with me if I have misunderstood some of the information that he gave us today. However, I thank him for it.

The Minister mentioned that these powers are very wide, and that is certainly true. This is quite an interesting point for us to be at. We discussed the question of in-work conditionality extensively when the Bill was going through this place, particularly in Committee. One reason that it is so worthy of attention is that it is very new. The Minister mentioned that it is new internationally, but certainly people currently in work are going to get a bit of a shock. At the moment, if you have been on benefits and you get a job, you do not expect the department to ring you up at work saying, “Come and talk to me because you’re not working enough”. I think that people who feel that they have escaped the tender ministrations of the jobcentre are going to be a little taken aback when they find that it starts following them to work.

I wonder what thought the Government have given to this cultural shift and how they are going to engage with people who, when they think they have done the brilliant thing of getting a job, will find that it might be a job but it is not good enough, not big enough or not well paid enough. Under the current system, if someone is working at least 16 hours a week, they can claim tax credits. However, under universal credit there will be no minimum hours requirement, which is the Government’s reason for introducing conditionality for people in work.

I should like some clarification on how this is going to work. Some points have been touched on by the noble Lords, Lord German and Lord Farmer; others have not. First, in the various pilots, will there be the same level of income which triggers entry to or exit from the scheme? I am also interested in hearing the answer to the question from the noble Lord, Lord German, on what that level of income is. Will the income threshold be the same for a household or a benefit unit—the rather ugly phrase favoured by the DWP? In other words, is it a threshold for each individual in a household of, say, two or more adults, or is it for the whole household? For example, if one person in a couple were earning more than the threshold for two individuals, would the second person then not be under any pressure to increase their hours, change their working pattern or increase their income?

Next, the Explanatory Memorandum states that the DWP will impose,

“different sets of requirements on different groups of claimants selected for the pilot”.

The Minister began to outline how that might happen, but the committee’s report flagged up the ethics of an approach which deliberately seeks to test different approaches to claimants simply to work out the behavioural impacts. The noble Lord, Lord Farmer, commended the benefits of randomised control trials to test the evidence if done in a low-risk, controlled environment. However, the problem here is that the risks are not merely to the resources invested by the state but the impact on the individuals. Can the Minister tell us what discussions the department had about the ethics of that? I will come on to the question of sanctions in a moment. In a randomised control trial of, say, pharmaceutical drugs, there can come a point where a trial is stopped because it becomes clear that the evidence is very strong one way or the other and, as the drug is so effective or so ineffective, allowing a control group to carry on without it or continuing to give it to the group being tested would simply be unethical. Has any consideration been given to how the ethics would be weighted as the requirements are imposed and the evidence starts to come in?

Next, I turn to the numbers, which the noble Lord, Lord German, began to prod. I am very interested in them. I think that we all want to know what the denominator is. Are the numbers going to change? If we start off with, say, 15,000 out of 55,000, is that going to change proportionately? Will we see a different proportion of the universal credit claimant base involved all the way through? What proportion of that 55,000 will be eligible for the scheme? It presumably includes some people who would not, for a variety of reasons, be eligible, so that is not necessarily the denominator. What is the denominator? This was something that the Secondary Legislation Scrutiny Committee specifically asked the Minister to tell us, and I shall be very interested to hear what he can tell us about this.

I am also interested in having more information about the control groups. The Minister mentioned one control group, which I think he said would get just the occasional phone call. How big will that control group be, and can he tell us more about it? Will it be spread right across the country? Will it cover the full range of categories of claimants who will be covered by the other pilots? Will that change as different categories of claimant come on-stream with universal credit? That question applies also to the pilots. Will the pilots cover all the different categories of claimant as different kinds of people are brought on?

Secondly, on the flexibility of trends, I understand why the Government want a flexible power to tweak things as they go. However, coming back to the points made by the noble Lord, Lord Farmer, I want to understand how that impacts on the Government’s ability properly to evaluate the evidence. If you try to compare the effectiveness of a strategy with the control group but you are constantly tweaking things, how good will the data gathering be? How well will the department be able to understand the causality to enable it properly to understand what happens? The state generally does not always have a great track record on this. If we are to spend all this time and money on a trial, as well as put people through it, we want to be really sure that the findings are robust. I am very glad that the Minister committed to publishing the findings, but we want to have confidence and know the study is replicable. If it is tweaked too often or becomes too different, it will be quite hard to evaluate that. Could the Minister explain that?

Next, could the Minister say a little more about what kind of support will be offered to people in work? He indicated what kind of pressure or interventions there are in terms of encouraging them to come in, but what help will they then be given? I seem to recall that this was advocated at one point by saying, “People get lots of help to develop their careers if they are high-flying executives, but get nothing if they are lower than that”. What actual help will be offered to them? Will it be mentoring or work coaching?

Then there is the voluntary or otherwise nature of this, which was flagged up before. Again, will any of the pilots make this a voluntary option or will it always be compulsory? This point was raised in the other place by the Conservative MP Nigel Mills, who in fact suggested that the Government trial both. He also asked how soon after taking a job in-work conditionality would kick in. For example, if I got myself a job for 16 hours a week, it goes really well and I have been out of work for a long time, presumably the department would not ring me up on week two and say, “No, tough: you now need a better job on 30 hours a week or one that is better paid”. How long will a claimant get in a job before in-work conditionality kicks in?

Next, and this is a really important point, can the Minister tell us more about how caring responsibilities will be taken into account? This is something that exercised the Grand Committee considerably when the Bill went through the House. I have met many people in this circumstance. The noble Lord is aware that in the past I ran a charity that worked with single parents. We ran programmes helping people into work. We often found that lone parents took a job, say on 16 hours a week. One of the reasons employers liked these people was that they stayed in the job a long time so the employers had much lower turnover than with some other employees. One of the reasons that the lone parents stayed a long time was that they had found an employer who enabled them to combine their job with their families. For example, the employer would be flexible if occasionally a child was sick or if the employee had to leave early because a problem arose at school. The employee would be very loyal to that employer and stay for a long time because it worked for both of them. However, it meant that they might work fewer hours than they were capable of. I am just concerned—and raised this in Grand Committee at the time—about what happens to those people and what pressure they will be put under. Presumably, we would not want to see a lone parent who had been in a very successful job for maybe 10 years but at 16 hours a week being pushed into giving it up to take a better paid but less flexible job that she might have to give up anyway or that could be less secure. How will the Government deal with something like that?

Also, how will the Government consider the impact on childcare? I raised the issue in Grand Committee of a lone parent of a 13 year-old who began to have problems at school. That parent had taken a job of 25 hours a week because that enabled her to get home in time to make sure that the teenager came home from school and was not out on the streets having “difficulties”. If she were required—the implication is that she now would be—she would have to take a job of, say, 35 hours a week at minimum wage. She could also be forced to do 90 minutes’ travel either way because that is what the guidance says. Those are then very significant hours, and getting childcare for a 13 year-old is not easy. It is not often available, and it is very hard to get them to accept a child like that. So how much flexibility will be there?

I do not apologise for the large number of questions as these are very significant matters. Next is the issue of sanctions. Is it intended to use the full range of sanctions available? In other words, could somebody lose all their universal credit for three years for failing to take action that they were advised was necessary to increase their hours or earnings, such as, that lone parent? What if someone is concerned about jeopardising their existing job for other reasons? It has been confirmed that universal credit claimants will have to take a zero-hours contract, although not an exclusive one. If they were, for example, required to take additional hours at short notice but were also expected to take a job interview elsewhere or meet their adviser to think about getting a different job, they could be at risk of jeopardising things.

15:59

We have had problems in the past where a Work Programme adviser, for example, asked someone to come to an interview, and they were not able to do so for a very good reason—they might have had a job interview or they might have been asked to work extra hours—but they were still sanctioned and had to appeal. They would be successful, but the Work Programme adviser had to say, “Even though you had a perfectly sensible reason—you had a job interview or you were in hospital—I still have to sanction you. You go through an appeal and I am sure that when you get to it, the DWP people will make it okay”. That is hugely stressful and, frankly, a waste of everybody’s time and money. Could the Minister tell us how that will work?

I have some other questions about the scheme. What will be the success measures of the pilots? Is the aim to see people earning more, working more or just stop getting universal credit? Will the DWP be tracking all of those things? For that to work, it would have to track people on what happened to their earnings and working hours, even if they left universal credit altogether. Can the Minister confirm that it will be doing that?

Who will deliver the support? Will it be the jobcentre staff or will it be outside contractors? Can the Minister confirm, for the record, what the resource implications will be? The Explanatory Memorandum states that there is no impact on the public sector. That seems improbable, at least I hope it is improbable. The Secondary Legislation Scrutiny Committee said:

“It is, in our view, misleading to say there is no impact on the public sector: provision may already have already been set aside for piloting and no additional costs are envisaged, but the testing will cost up to £15 million”.

Could the Minister confirm that?

There have been some issues about the effectiveness and value for money of the various previous labour market trials, and I will not dwell on the private misery pointed out by the National Audit Office, which reckoned that only two of the 14 trials had been seen to be effective. When these regulations were considered in another place, my old friend Stephen Timms asked whether in-work conditionality and the work around it had been included in the strategic business case signed off by the Treasury last autumn or would be included in the outline business case, which we believe is going to be coming in the summer this year. The Minister was unable to answer then, but said that she would look into it. Since there has been a reasonable gap between that committee and this, is the Minister now in a position to provide that information?

There are a large number of questions, and it is quite possible that more might emerge from the Minister’s answers. I will be very grateful if the Minister will do his best to share the answers with the Committee.

[Lord Freud]

I thank noble Lords for what has been a series of good contributions to this debate. These regulations are driving at a very simple question: how best can we support lower-earning, universal credit claimants to progress in work and increase their earnings? Let me try to deal with all the questions.

My noble friend Lord Farmer asked how many people would be affected in relative terms. As he said, there are about 1 million universal credit claimants in low-paid work and that is as a proportion of a total of 7.7 million people. We cannot at this stage quantify the monetary benefits of that in-work support. One of the reasons for these trials is to find out whether it is cost effective to provide support above the bare minimum and whether we get a return. However, universal credit has, bluntly, astonishing returns on its investment, saving the Government and the taxpayer £38 billion from now until 2022-23. When it is fully in, it will have an economic benefit of £7 billion a year.

I was urged by my noble friend Lord German and the noble Baroness, Lady Sherlock, to give extraordinarily precise figures on this. We are ramping up very rapidly now, and by spring, as we said, we will be in one in three jobcentres; we are currently in about one in eight. Clearly that implies that the 15,000 people will be a much smaller proportion of the current 27,000 that we see. However, I am not in a position to give more numbers.

As to the balance between sticks and carrots, an issue raised by my noble friend, most of the areas we are looking at will focus on how we support and help people. We need to learn how to do that. At the same time, we are working closely with employers. We have implemented a couple of programmes to find out what kind of support and incentives work. There is a great deal of emphasis on the support element. Basically, the intensive work coach discussions are a kind of mentoring process in which one goes through the options.

All noble Lords who have contributed are interested in the safeguards that we have in place. There are a number of regulatory safeguards to ensure that conditionality is applied to claimants only when it would be appropriate. The trials are limited to those in the all-work requirement conditionality group. In other words, they explicitly exclude those who are disabled, an issue which was of some concern. Claimants in the other conditionality groups will not be part of these trials and those in specific circumstances, such as recent victims of domestic violence, will be excluded from the outset.

Beyond that, as a more formal protection, we realise that claimants will have individual circumstances and it will be for the work coach, after discussions, to work out what the tailoring requirements should be. That will give the work coach the scope to set reasonable, achievable requirements and earnings goals, taking into account the kind of commitments mentioned by the noble Baroness, Lady Sherlock, in regard to caring responsibilities and so on. The result will be a personalised claimant commitment that places reasonable expectations on clients.

My noble friend made a point about transparency to Parliament. Given that we are trying to ensure that we have an accountable and flexible process—that is the delicate balance that we are trying to achieve—for transparency we will share information as we change the trials with the Social Security Advisory Committee. We will do that by letter and I shall ensure that the information is placed in the Library so that Parliament can see what is happening.

In response to a question from my noble friend, we are discussing with SSAC the issue of self-employed people trying to start businesses. We will take account of that circumstance, among others, and people building businesses will be able to do so and guidance will be provided.

In response to the noble Baroness, Lady Sherlock, the regulations expire after three years of being in force. Where we need to gather more evidence, we can extend these regulations by a further period of up to 12 months without returning to Parliament. Such an extension does not expand the powers within the regulations, which strictly define limits to testing work-related requirements and will have been subject to full scrutiny. All it does is extend the period.

My noble friend and the noble Baroness, Lady Sherlock, asked about the business case, the question asked by Steve Timms. A letter has been sent to Steve Timms, which I can give chapter and verse on. The strategic outline business case approved contained a light-touch regime and £15,000. The objective of that £15,000 was to find out, against the control of that light touch, whether we can do better.

The core of the question asked by the noble Baroness, Lady Sherlock, was about how we treat people. The real protection, which is not explicit in the regulations but is nevertheless there, is that under these regulations our expectations of in-work claimants cannot exceed what we expect from out-of-work claimants. The level and extent of sanctions will therefore be within those existing constraints. That is the constraint we have for this trial.

Getting into some of the detail of the trial, the reason there is a figure of 15,000 is that 5,000 are the control. We are looking at two main types, which I described in my opening remarks. Then we will segment that 5,000, looking at four or five different categories and geographically. That is how the numbers add up as we run this trial to 2016.

As we see people, we will start supportive conversations with them almost immediately. We will start to have tougher conversations after a person has been in work for two months. That is the initial testing. I think I have dealt with carers.

Ethics are a very interesting issue as we move into other, more elaborating trialling. This first trial is rather straightforward and is within the context of the kind of conditionality we do anyway, and we have a requirement to be reasonable to the individual with the safeguards I have described. However, I appreciate the point the noble Baroness made that for future trials and as the system develops we may have to think about ethical controls more on a medical model. For this trial, we have SSAC overseeing it, which means there is a group of experts having a look as we run along.

The noble Baroness asked about couples versus individuals. Members of a couple are treated as joint claimants so their earning threshold is set on a joint basis and conditionality is imposed on the basis of their combined income. If that exceeds the household threshold, neither partner will be part of the trial. That reflects the underlying philosophy of universal credit.

16:15

I was asked what kind of help was on offer. I will quickly run through some of the elements that we are expecting to test. There will be an underlying expectation that claimants will take all reasonable steps to increase their earnings in return for the support that we provide, which includes a clear understanding of what is specifically required; a motivation process, to encourage them to progress in work and take action, which could be around skills acquisition; help to identify what is realistic; giving responsibility to the claimant to identify opportunities—that is the new philosophy, whereby we are coaching and not telling people; help in having the right conversations with their current employer about what the opportunities are; looking at what the barriers to progression might be—in confidence or motivation, or in skills or childcare; looking to what support is available to address those barriers; and providing supportive and challenging conversations on action and progress.

Clearly, sanctions are there to deter non-compliance. We are testing what a mandatory system would be; there would be no point in having a voluntary system in the testing when you are trying to test for a national system. All that builds very much on what we have learnt and—again, through our test and learn approach—developed about the role of the work coach to give responsibility for individuals. We are moving that approach, which has been very successful, into this new sphere.

We will tweak trials once we have learning and evaluation to show whether it is the right thing to do. Sometimes one can learn pretty fast, but sometimes it takes a bit of time. The noble Baroness will be delighted about how we are going to track information. We now have an astonishingly valuable tool of real-time information; we know what people are earning, so we can now measure the effectiveness of trials. We can start to do a lot of trials, because we can relatively cheaply see what is happening by earnings.

I must pick up the noble Baroness’s throwaway line about the value for money of previous trials, about how only two of 14 were effective. The expert on this, Jim Manzi, to whom I have the privilege of talking on a couple of occasions on other issues, said that one in 10 trials finds you something. That is the whole reason why we need to do so many, because the fall-down rate is high, and that takes us back to why we need the flexibility and dynamic approach, which is something that Governments have not done because of the restrictions.

The noble Baroness asked about pressure and when we would talk to someone about looking for a new job. We will have to take individual circumstances into account. Sometimes, it may be reasonable to expect people to take up new employment, but we will never impose a sanction if claimants have a good reason not to do so. I think that the noble Baroness picked up on some of the reasons that would be accepted.

Not only does the system have to work but it has to be cost effective. The cost of making these interventions could be very substantial if they were intensive. We need to know that they are value for money, and that is one of the key tests when we establish what a national system will look like. Then there is the question of how the controls look. We will keep that control group of 5,000 constant. The control element is that light-tough regime, which is already in the universal credit business case.

What are we looking for? We are looking to help people to earn more, which is not just about looking for more hours; it could involve more skills. We will find that out. That is a good outcome. I think that I have dealt with all the issues.

[Baroness Sherlock]

The Minister has done very well. I do not like all the answers, but he has done very well at trying to address many of the points. I will just pick up a couple of them.

First, can he tell us who will deliver the support? Will it be Jobcentre Plus staff or others, and what are the resource implications for the public sector? On the business case, if the £15 million and the light-touch control group are in the original business case, what about the rest of it? I may have misunderstood his comments on that, but where is that to be found?

As for tracking outcomes, obviously RTI works for those who are paying tax and national insurance, but for this to work properly the Government would also need to track people who were not to be found on the system and to find out why not. I am sure the Minister would rebut this, but there is a growing concern—he will have seen both recent media reports and the work of the Work and Pensions Committee—that the ways in which sanctions are being imposed at the moment are completely arbitrary. The only success measure for Jobcentre Plus staff is how many people are driven off the benefit rolls rather than into work. No one bothers to find out the numbers, but the suggestion is that only about one-fifth of people leaving benefits go into work—nobody knows what happens to the rest.

This was a real issue, as I am sure the Minister is aware, in one well known phase of welfare reform in the United States. Researchers tracked people longitudinally and found that a lot of them had simply ended up dropping out of the system completely. At this stage I am not making a value judgment about that, but for this to be properly effective the Government would need to follow those people through and find out what had happened to them to understand what the consequences of that were.

The Minister mentioned skills and the kind of support that is available. If one of the barriers to someone’s progression that is identified is a lack of skills, will the pilots be able to provide skills, or resources to enable people to get skills, which might enable them to earn more and break free of the threshold that would be constrained by this? I also asked whether the same income threshold would be applied for entry to or exit from all the pilots. Is that one of the things that is going to be flexed in any way? Is it the same for all of them?

On the question of ethics, the Minister said at the start that these regulations comprise strictly defined limits. In a manner of speaking they do, but only in the sense that I am strictly defined by the law of gravity, which still gives me quite a lot of latitude in how I go about behaving. The Minister also said that he will give us no information on numbers. Presumably, that could theoretically mean that the entire universal credit population could be put into this without any need for further recourse to Parliament. Is that right? In other words, when does this stop being a pilot? I am trying to establish whether the regulations were really designed to be able to pilot something. The scale of this is such that I am beginning to wonder whether Parliament would really see this as being a pilot. Although I am very glad that the Minister is going back to the SSAC, there is no obvious way to scrutinise this here. Will he give some more thought to that?

Finally, I want to clarify something relating to the sanctions. If the Minister is saying that the requirements will be no worse for people in work than for those out of work, my response would be that I would hope not, otherwise the incentive for getting a job would seem to be rather small. However, that presumably means that somebody could lose all their universal credit for three years for a failure to comply with a brand new requirement exercised by his staff—something that has never been done before. Is the Minister confident about that? I realise he has said that nobody will be sanctioned without good cause, but we both know that there are plenty of examples of people who have been simply because there is a significant amount of error in the way that the guidance has been applied. Cases are constantly being brought forward, and he will be aware of that. How will he check up on that? How will he quality-test the nature of that?

I am aware that I have asked a lot of quite specific questions. I would be grateful if the Minister, with his normal customary kindness, would allow his officials to go through the record and write to me on anything that has not been picked up.

[Lord Freud]

I will certainly go through the record but I am doing my best to answer everything. There is a technical question about income in and out. At the top end, a single person stops being in this trial when he or she hits 35 times the minimum wage—I think, from memory, that it is £116-something. I may be corrected, but that is the top end. The bottom end for a single person is, effectively, £76, and for a couple it is £116, we think.

Essentially, we are trialling this group because people would have come off the out-of-work benefits system at 16 hours times the minimum wage up to where they would get out of conditionality entirely because they would have satisfied 35 hours times the minimum wage. We do that for singles and couples. My figures are being hastily checked but that is the principle behind the answer.

[Baroness Sherlock]

Is that for all pilots? It is not a variable?

[Lord Freud]

Yes. Let me make absolutely sure that I have got the figures right. It is £76 for the individual. However, it is not £116 but £126 for the couple. The figure for an individual at the top end which gets you out of conditionality is £230. So it is within that range of earnings. Clearly quite a lot of people may be doing fewer hours if they are earning rather more.

[Baroness Sherlock]

I am grateful to the Minister and I thank him for establishing those ranges. However, what I am trying to get at is whether exactly the same ranges will be applied in all the different pilots, or are the Government testing whether the ceilings should be set at different levels?

[Lord Freud]

We are going to stay in that range because that is the group for which in-work conditionality would apply. There is no point in testing other ranges. However, we will have information, which I think is the underlying point of the noble Baroness’s question, on how different segments of earnings within that range respond to the different types of regime.

[Baroness Sherlock]

The Minister is being incredibly helpful. I apologise for my having to work this out on the hoof, but I think the Minister is saying that only people whose earnings are within that range will be subject to a pilot. I am trying to establish whether people who are at different points in that range may be subject to different trials. I will say that again. Will people on the same income within that range be subject to different pressures or levels of support requirements?

[Lord Freud]

The answer to that is no. We will put people in within that range. We will then have a process of personalising and tailoring the claimant commitment, which may contain an element of what their earnings are or could be. So I can answer no and yes. It will not be done at a mechanical level but may be done at an individual level.

16:30

[Baroness Sherlock]

I am very grateful to the Minister—I had not understood that at all. In that case, we are saying that each of these 15,000 people might have a different target of earnings that would allow them to exit from the conditionality and the programme. That raises some very significant ethical questions and I would strongly ask the Minister to consider giving more thought to this. I am very slowly doing a PhD. Before I am allowed to do anything involving other people—human subjects—I have to go to an ethics committee which puts me through my paces quite carefully. The consequences here are not just differential levels of support but that, potentially, two people in almost identical circumstances might do the same things, but one would lose three years’ worth of universal credit while the other loses nothing. That is a radical step for the Government to take. Has the Minister really thought through the ethics of that?

[Lord Freud]

This is how one delivers personalised support. The claimant commitment is in the system. Elements of the claimant commitment have a mandatory aspect but with others it is just an agreement. In reality, in the trials we will set the claimant commitment rather carefully. It is an agreed document between the work coach and claimant. Elements of that claimant commitment may be mandatory but quite a lot of it will not be. The likelihood is that as we run the trials we will look extraordinarily closely at making sure that we do not have any unsatisfactory sanctioning behaviour. We will test for that. This is a trial.

Although 15,000 people sounds a lot, when universal credit is fully rolled out, we will be dealing with 20 million people—8 million-odd households, comprising 12 million-odd adults and then a number of children. We are talking about a very small number so that we can micromanage it in terms of that kind of concern. The noble Baroness, rightly, is focused on us getting that right, and we are utterly conscious of that particular issue. The numbers will allow us to make sure that there are not those kind of arbitrary differences, as she described them, particularly when the sanctioning regime can move quite rapidly.

Skills is clearly one area where we could do a lot more development as we find the programme beginning to work. In this first trial, we plan to signpost the National Careers Service and colleges. There will be money available to support that through the adviser discretionary fund.

On RTI, the figures are that around 94% of people in formal employment are captured in the PAYE process. Some self-reporting may be required but we will get the bulk of them. Clearly, we will look at other things than just the RTI, but the RTI should give us a good feel for this. We will look at whether there are some anomalies going on where people fall off the system. That is one of the most important things that we will find out from the trial.

The light-touch regime in the business case is funded. Clearly, we will only introduce a less light-touch regime if it offers value for money. That will be part of a negotiation, if we discover it is worth doing. We will not spend hundreds of millions of pounds on a regime that somebody made up in a darkened room when it has no effect. That is why we are doing these trials. Who will deliver these trials? To start with, it will be Jobcentre Plus, as I have described. That is the first iteration; we could go on to other iterations. I described, I hope, the light-touch regime, which involves two work coach conversations. One happens when someone enters work and the other occurs eight weeks later. That is what the control is based on.

I think that I have dealt with the question of sanctions. The noble Baroness will be quick to correct me if I am wrong, but I think that I have covered everything. However, on her point about the numbers, by March, we will have moved to one in three jobcentres. I am sure that she will be the first to acknowledge that, and she will have seen the escalation: 54,000 have already applied for universal credit and the figure is moving up rapidly. That is when we will start pulling out the people on universal credit who are in work to test them.

This is about the commitment by this Government to deliver a universal credit that genuinely supports working-age people when they are out of work and then in work. It gets rid of the distinction which, in my view, has been invidious in our support system. If we are going to do that, we have to understand how best we can support the in-work claimants and get them to get their earnings up. The regulations before us today combine oversight and flexibility in the optimum way.

During the passage of the Bill I was very clear that, in driving through this approach, we would do it through a regulatory structure, so that we could have these debates, keep an eye on it and get that balance. It is a very delicate balance but we will build an evidence base on how we can improve people’s careers and improve earnings among the low-earning. If we get this right and learn how to do it properly, this piece of research will be a key element in improving the economic performance and productivity of the country. That and the fact that people’s lives will be better when they earn more are the two fundamental reasons that I commend these regulations to the Committee.

Motion agreed.

Regulatory Reform (Scotland) Act 2014 (Consequential Modifications) Order 2015

Thursday 22nd January 2015 Grand Committee

Motion to Consider

16:39

Moved by

[Lord Wallace of Tankerness]

That the Grand Committee do consider the Regulatory Reform (Scotland) Act 2014 (Consequential Modifications) Order 2015.

Relevant document: 17th Report from the Joint Committee on Statutory Instruments

[The Advocate-General for Scotland (Lord Wallace of Tankerness) (LD)]

My Lords, the main purpose of this order is to provide for two new statutory appeals regimes. The first is in connection with decisions regarding electricity generating stations to be situated in the Scottish offshore region and the second is in connection with Section 36 consent decisions made under the Electricity Act 1989. These new regimes aim to establish a uniform statutory appeal regime to challenge certain marine licensing decisions made by Scottish Ministers across inshore and offshore regions.

The order is made under Section 104 of the Scotland Act 1998, which allows for necessary or expedient legislative changes to be made in consequence of an Act of the Scottish Parliament. This particular order is made in consequence of the Regulatory Reform (Scotland) Act 2014, which I shall refer to as the 2014 Act.

The 2014 Act is primarily intended to improve the way regulation is developed and applied in Scotland. It is the intention of the Scottish Government to strike a balance between the need to licence offshore renewable energy projects and a right to challenge those decisions. Therefore, the 2014 Act aims to amend the procedure for challenging decisions to enable any challenges to proceed quickly to the Inner House of the Court of Session. Currently, applicants for marine licences seeking authority under the Marine (Scotland) Act 2010 to carry out all types of licensable activity in the Scottish inshore region who wish to appeal Scottish Ministers’ decisions may appeal to the sheriff court. Third parties with title and interest may raise judicial review proceedings in the Outer House of the Court of Session.

Section 54 of the 2014 Act amends the Marine (Scotland) Act 2010 to provide for statutory appeals in connection with certain decisions made by Scottish Ministers. Those decisions relate to applications for marine licences in the Scottish inshore region in connection with electricity generating stations as well as to whether to hold a public inquiry in relation to the determination of such applications. The 2014 Act allows such appeals to be made by aggrieved persons to the Inner House of the Court of Session, provided that the court has granted permission for the appeal to proceed. To ensure consistency across inshore and offshore regions, this order amends the Marine and Coastal Access Act 2009 to provide for the same fast-tracked appeal regime in relation to such decisions for electricity generating stations to be situated in the Scottish offshore region.

Similarly, this order amends the Electricity Act 1989 to provide for that same appeal regime in respect of decisions made concerning applications for consent to construct, extend or operate generating stations, which is also referred to as Section 36 consent, as well as decisions on whether to hold a public inquiry in respect of such applications under that Act. This provision is required as there is currently no statutory right of appeal against Section 36 consent decisions.

Although the main purpose of the order is to provide for the two new statutory appeals regimes which I have just outlined, the order also makes minor or consequential changes to give the 2014 Act full effect. These include the following: first, the repeal of Sections 1(1)(d) and 5 of the Health and Safety at Work etc. Act 1974—the 1974 Act, which were repealed previously in England and Wales, but not Scotland, due to a number of extant regulations made in part under Section 1(1)(d) of the 1974 Act, but which now appear to be spent and suitable for repeal. Secondly, they include minor amendments to the Income Tax (Trading and Other Income) Act 2005 and the Corporation Taxes Act 2009 to ensure that the definition of a “waste disposal licence” in those Acts includes an authorisation under the integrated authorisation framework established by Sections 16 to 19 of the 2014 Act.

Finally, they include the extension of Sections 47 and 50 of the Copyright, Designs and Patents Act 1988—the 1988 Act—to Part 3 of the 2014 Act. The sections of the 1988 Act provide, inter alia, that copyright is not breached by copying material that is open to public inspection in pursuance of a statutory requirement, or which is on a statutory register, or by acts done that are specifically authorised by Acts of Parliament. This amendment is necessary as the move from environmental regulation under various UK enactments to the new powers in Part 3 of the 2014 Act has the unintended consequence that the provisions of Sections 47 and 50 of the 1988 Act would no longer apply. The order applies those sections of the 1988 Act to the relevant sections of the 2014 Act to ensure copyright is not breached. Similar provision is also made in respect of the Copyright and Rights in Databases Regulations 1997.

I consider this order to be a sensible use of the powers under the Scotland Act 1998. It again demonstrates that this Government continue in their commitment to working with the Scottish Government to ensure that the devolution settlement works. I commend the order to the Committee. I beg to move.

16:44

[Baroness Smith of Basildon (Lab)]

My Lords, I thank the Minister for his detailed explanation, which I found extremely helpful. I was struggling with the copyright changes and it is helpful to understand why they were brought forward.

I have a few comments and only a couple of questions. My understanding is that the order is purely consequential; there does not appear to be any new policy development coming through. However, what impact will it have, if any, on the development of offshore wind facilities in Scotland? Will it have a substantial impact on it?

In article 4 of the order, subsection (4) of proposed new Section 36D of the Electricity Act 1989 states:

“An application under this section must be made within the period of 6 weeks beginning with the date on which the decision to which the application relates is taken”.

Is six weeks the normal period of time, or was it chosen as the most reasonable period of time to allow for an application made under that section?

Again in article 4 of the order, subsection (2)(b) of proposed new Section 36D states, as one of the conditions that has to be met for a court to grant permission for an application to succeed, the court would have to be satisfied that,

“the application has a real prospect of success”.

That also appears as one of the conditions in proposed new paragraph 5C(2)(b) of Schedule 8 to that Act on page 4. Is it normal legislative language that the court should grant permission only if there is a real prospect of success? I am not sure whether I have seen that language; I have seen “reasonable” but I am not sure that I have seen “real”.

Could the Minister also clarify what the language in proposed new paragraph 5C(2)(a) means. It states that the court must be satisfied that,

“the applicant can demonstrate a sufficient interest in the subject matter of the application” .

I am unclear exactly what that means.

From what I have seen I think we can support the order. However, those points of clarification would be helpful.

[Lord Wallace of Tankerness (LD)]

My Lords, I thank the noble Baroness for her general support of this order. It is consequential, and it is neutral in terms of whether it will give rise to more applications for offshore wind turbines. However, in the regimes that are in currently in place, the Scottish Parliament can competently legislate for the inshore marine area but not the offshore marine area. This order is to ensure that there is consistency between the two regimes. It simplifies matters by giving direct access to the Inner House of the Court of Session—the equivalent to the English Court of Appeal—rather than having to work up through the sheriff court and subsequent appeals, as was the case previously.

The noble Baroness also asked whether the period of six weeks was normal. I rather suspect that it replicates the arrangements already in place. As to having a sufficient interest in the subject matter, it is normal, especially in more recent times, that there should be some interest or title to sue. I have to be careful about the use of that term of art. However, not just anyone can come off the street and raise an issue. There has to be some nexus between the aggrieved person and the proposal under challenge.

[Baroness Smith of Basildon]

I thought my asking a question might allow for further enlightenment when I saw the Minister seeking advice.

If someone does not have sufficient interest, why would they make an application? It seems to be a given. I do not understand why a person would make such an application to the court if they did not have any interest in it.

[Lord Wallace of Tankerness]

They might just have a remote interest and generally be interested. For the sake of argument, let us say that the development was somewhere off the east coast of Scotland and this was a person who was just generally interested in wind farm developments and was living in a stately pile in Argyll. You would not actually say that there was a sufficient interest for them to merit a title to raise an action. I am told that the six weeks replicates what was under the 2014 Act. That is certainly my understanding; if that is not the case, I will certainly write to the noble Baroness.

I will also have to check up—as we are introducing this measure, as it were, at the behest of the Scottish Government—as to whether the term, the “real prospect of success”, is normal. I know that there have been substantial reforms of the Scottish civil jurisdiction in very recent times and much of it is still to be implemented, but I will write to her and confirm whether that is a new term of art or something that goes back into the mists of time. The general point is that we are giving effect to something the Scottish Parliament could not legislate for under the 2014 Act, to ensure that there is consistency between what it can legislate for and what it can not.

Motion agreed.

Microchipping of Dogs (England) Regulations 2015

Thursday 22nd January 2015 Grand Committee

Motion to Consider

16:51

Moved by

[Lord De Mauley]

That the Grand Committee do consider the Microchipping of Dogs (England) Regulations 2015.

Relevant documents: 17th Report from the Joint Committee on Statutory Instruments, 13th Report from the Secondary Legislation Scrutiny Committee

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

My Lords, these regulations deliver one of the main measures contained in the package of policies set out in my Written Ministerial Statement of 6 February 2013 to tackle issues relating to dog welfare and irresponsible dog ownership. We have amended the Dangerous Dogs Act 1991 so that its criminal provisions on dangerously out-of-control dogs are extended to private property. We have also increased the penalties available for the worst dog attacks and provided authorities with new preventative powers in the form of community protection notices. In addition, these regulations will make it compulsory for all dogs in England to be microchipped.

Over the past three years, an average of just over 100,000 stray dogs a year were passed to English local authorities and welfare organisations. Of those dogs not able to be reunited with their owners, some 38,000 dogs were re-homed and a further 8,000 were put down. The annual cost incurred by local authorities and welfare organisations in dealing with stray dogs is more than £30 million. That is not to mention the distress caused to dogs and owners.

Since we first announced our intention to introduce this requirement in February 2012, the number of dogs microchipped is estimated to have risen from 58% to 70%; but we consider that we are close to the ceiling of the number of dogs that would be microchipped if we were to maintain the voluntary approach. Microchipping a dog is a welfare measure. Increased traceability allows lost dogs to be reunited with their keepers more quickly and therefore avoids dogs having to spend unnecessary time in kennels with possible resultant welfare problems or the need to be re-homed. I expect compulsory microchipping to have the additional benefits of reducing kennelling costs to local authorities and welfare organisations and allowing abandoned and nuisance dogs to be traced back to their keepers, who may then, if appropriate, be held to account.

The regulations require that, from April 2016—unless a vet has certified that a dog should not be microchipped for reasons of its health—all keepers of dogs in England must have their dogs microchipped. The regulations define “microchipped” as both having a compliant microchip implanted in the dog and, crucially, having the keeper’s up-to-date details on a reunification database. The details of the dog and its breeder, where known, also need to be recorded. This should help to encourage more responsible breeding as breeders will be more traceable.

Only trained people, including vets, veterinary nurses and others who have passed an approved dog microchipping course, will be able to implant microchips. Microchips and database operators must meet certain standards, including the ability to supply information to authorised persons to enable dogs to be reunited with their owners on a 24-hours-a-day, seven-days-a-week basis.

In keeping with the Government’s wish to have light-touch enforcement of the regulations, the microchipping requirement is enforceable primarily by the issue of a notice. Any keeper of a dog found without a microchip can be handed a notice by a local authority authorised person or a police constable requiring them to get their dog microchipped within 21 days. There is then a fine on conviction, currently up to £500, for non-compliance with such a notice. Finally, all dogs must be microchipped before they can be transferred to a new keeper, unless a vet has certified otherwise.

Microchipping is a relatively simple process which a number of animal welfare groups and local authorities have been offering free for many years. Blue Cross and Battersea Dogs & Cats Home offer free microchipping at their respective centres, and the Dogs Trust has offered to meet the cost of microchips and has set aside £6 million to help ensure all unchipped dogs are microchipped ahead of April 2016. Animal welfare groups are already campaigning to raise awareness of this new obligation as well as of the benefits of microchipping. We also plan to undertake significant communications activity ahead of April 2016 to ensure breeders and keepers are aware of this new duty.

These regulations will help tackle the problem of stray dogs and help to reunite keepers with lost pets more quickly. They will also lessen the burden on animal charities and local authorities and protect the welfare of dogs by encouraging responsible ownership. I commend these regulations to the Committee. I beg to move.

[Baroness Miller of Chilthorne Domer (LD)]

My Lords, I congratulate the Government on bringing these regulations forward. The Minister was right when he said that the voluntary scheme is probably reaching its upper limit and that to catch the last pool of dogs that are not chipped, compulsion is needed. At the same time as congratulating the Government, I congratulate the many animal charities he mentioned—Dogs Trust, Battersea Dogs & Cats Home and the Kennel Club—on how proactive they have been in working on this issue. I congratulate Dogs Trust on coming forward with its offer of free chipping because that makes a tremendous difference. The Minister mentioned that the saving to the public purse would be over £30 million every year, which is a significant sum.

I have three questions. First, Regulation 6 relates to the conditions to be met by a database operator. The Minister mentioned that Defra will advertise the reunification databases but, if you are dog owner, how do you know which databases are approved? The regulations state that the database must be approved and lays out all the things that have to be done for it to be approved, but how will the dog owner know which databases advertising on, say, the internet have that approval from Defra and which are just rogue databases which will not meet the conditions?

My second question relates to another detail of the conditions that have to be met by a database operator. I can see why the Minister mentioned that telephone and online requests will need to be answered at all times. Having no knowledge of who is going to be operating these databases, I am slightly concerned about whether a 24-hour-a-day, seven-days-a-week service is practical. I am sure that the Minister’s department may have done some research into this.

My last question relates to Regulation 8, which concerns a change of keeper. It is rather worryingly ambiguous that,

“where a dog is transferred to a new keeper, the new keeper must, unless the previous keeper has already done so, record their full name, address”,

and so on. The point is that the person who is giving up a dog that they do not want might say, “Well, it’s okay Fred. I’ve done all that. There’s no need to worry about it”. How would the new keeper know that the previous keeper had recorded all that information? When you transfer a car, there is a very definite document. Therefore, I wonder whether this regulation depends simply on trust or whether there will be something to back it up.

I congratulate the Government and I warmly congratulate the dog charities and all the other charities involved on all their efforts in this area. I think that this will hugely benefit not only dog owners but lost dogs too.

17:00

[Lord Trees (CB)]

My Lords, I have some general points to make and also some rather specific ones. I make it clear from the beginning as a veterinary surgeon that I very much welcome this legislation. It is a very progressive step and one that we have needed for a long time. I think I can say unreservedly that the entire veterinary world supports the proposals. As the Minister said, it will benefit animal welfare and assuage public concern by aiding the identification of strays and reuniting them with their owners. It will contribute to addressing the problem of dangerous dogs, provided that their owners have had the dogs microchipped. In addition, reducing the problem of strays will save a lot of money for local authorities and charities.

Having made those positive comments, it is important to stress that this measure of itself will not at a stroke solve all the issues that occasionally surround dogs. Alone, it will not prevent dangerous dogs attacking people or the exploitation of breeding bitches, because the breeding history of bitches, for example, is not required to be recorded on the database of the microchip. I referred to that in an earlier debate in Grand Committee on the Deregulation Bill in November. Nor will it solve all the problems associated with the illegal importation of dogs. It is an extremely valuable tool in addressing these problems but it is not the definitive solution. Key to making it part of that solution is enforcement of these regulations. I urge the Government to consider very carefully and thoroughly all means to facilitate and enable their enforcement.

I have a number of technical and specific points, which I will go through quickly in the interests of time. I would appreciate a response to some of the more important ones but I am happy to receive a response in writing if that is appropriate.

First, the term “authorised person” is used in two different contexts in the regulations and I think that they should perhaps be differentiated. In Regulation 11 it is used in the context of those enforcing the regulations, whereas in Regulation 6 it is used in reference to persons reading the microchips and interrogating the database, which could include vets and others. Do these latter groups need to be authorised by a local authority or the Secretary of State? This seems unnecessary. Moreover—this is a very important point that concerns the veterinary profession—veterinary surgeons do not want to be put in the position of being enforcers of these regulations. Not only would this make client relations very difficult but it would have a negative consequence for animal welfare if people were reluctant to take their animals to veterinary surgeons.

Secondly, in Regulations 4, 16 and 17—this is a small technical point—the term “transponder” is used in a way which clearly refers to the microchip reader. I understand that the reader is technically a transceiver, whereas the transponder is part of the microchip. Perhaps those regulations need to be reworded to be clear.

Thirdly, and this is of some significance, the site of implantation is not referred to in the regulations. However, microchip readers have a relatively small sensitivity range of a few centimetres. There are ISO-defined standard sites of implantation that are internationally recognised, and in the UK we all use as convention a single site of implantation on the dog in the midline of the back between the scapulae—the shoulder blades—so perhaps the site of implantation should be defined in regulations.

Fourthly, with respect to Regulation 5, “Details to be recorded”, should there be provision to add the details of the dam which would ultimately help enforce the Breeding of Dogs Act 1973 and the Breeding and Sale of Dogs (Welfare) Act 1999?

Fifthly, regarding Regulation 8, “Change of keeper”, which was referred to by the noble Baroness, I was a bit puzzled. While Regulation 8(1) refers to the fact that,

“the new keeper must, unless the previous keeper has already done so”,

change the record and so on. Not to do so is not an offence. The offence is committed by the former keeper if they have not had a microchip inserted. Perhaps there needs to be more clarity here as there will be confusion in the minds of the public in dog areas about who is responsible and what penalties might follow if they do or do not do certain things.

Sixthly, regarding Regulation 9, “Implanting of microchips”, the term “veterinary nurse” is used alongside “veterinary surgeon”. “Veterinary surgeon” is a legally and professionally protected term while “veterinary nurse” is not. It is used here in a context suggesting that these are both specifically professionally protected terms. However, given that a new charter is to be granted to the Royal College of Veterinary Surgeons, probably in February, which will place all professionally accredited veterinary nurses on the register of veterinary nurses and the term “registered veterinary nurse” is a protected title, perhaps the word “registered” should be prefixed to “veterinary nurse” in this context.

Seventhly, Regulation 9(1)(c) and (d) deal with qualified persons other than veterinary surgeons or veterinary nurses implanting microchips. There is no objection in principle to such other suitably qualified people implanting microchips. Problems with incorrect implantation appear to be rare, although to be honest we have not had formal reporting systems in place for a few years. However, cases are recorded of serious effects from incorrect implantation leading to, for example, paraplegia. The requirement in Regulation 9(1)(c) for training on a course approved by the Secretary of State appears to be a very prudent and sensible measure which I welcome.

Regulation 10, “Adverse reactions”, includes a requirement in paragraph (2)(b) to notify the Secretary of State of migration of a microchip from the site of implantation. We are constantly in this House quite rightly concerned not to overburden people with regulation. I wonder if this regulation is necessary. Migration of microchips happens on occasion. It does not reflect incorrect implantation, nor is it likely to be of any health consequence to the animal. It is implied in the regulations that the chip has been found and read, so why should it be a requirement? It is an offence punishable by a fine not to report that to the Secretary of State?

Finally, there are a number of questions around databases, which have been in part referred to by the noble Baroness opposite and were brought to the attention of the Minister by the Microchipping Alliance and others. One important point that might bear repetition is that, given the number of databases that exist, the tracing of an animal would be facilitated if there were a single portal of entry for inquiries that could then be distributed to the relevant databases. In conclusion, I warmly welcome these regulations and strongly support them, but ask that the Minister and the department consider some of the points I have raised.

[Lord Grantchester (Lab)]

I thank the Minister for his introduction to the order. Although operating a farm, I do not have an interest to declare regarding dogs. From this side of the Committee, the Labour Party supports microchipping of dogs. I start by paying tribute to the many organisations that have tirelessly campaigned and worked for the introduction of compulsory microchipping of dogs. Blue Cross and Battersea Dogs & Cats Home have been offering free microchipping, and the Dogs Trust has offered to meet the cost of all microchips, setting aside £6 million for the provision of microchips to vets, local authorities and housing authorities. The Kennel Club has gifted microchip scanners to every local authority in England and Wales. This is remarkable co-operation and determination from the sector to make this work. I note that several housing associations, as part of Wandsworth Borough Council, have introduced this as a tenancy condition for people on their estates.

In the 2012 consultation, the measures before us today were supported by 96% of respondents, so the regulations have been long anticipated. It was Labour’s Animal Welfare Act 2006 that provided powers to the Secretary of State to introduce secondary legislation to promote the welfare of vertebrate animals in England. However, it is somewhat disappointing that there appear to be questions around some of the provisions—that the Minister’s department may not have met all the various concerns of sector organisations or provided enough clarity.

The immediate concern involves the measures implicated in the Deregulation Bill. The Minister was not present in Committee on 18 November when his colleague, the noble and learned Lord, Lord Wallace of Tankerness, replied to our amendments. The measure relevant to this was contained in the clauses whereby certain requirements of the Breeding of Dogs Act 1973 and the Breeding and Sales of Dogs (Welfare) Act 1999 were to be repealed because of the imminent introduction of microchipping. Section 1(4)(f)(g) and (h) of the 1973 Act specifically requires that bitches are not mated before one year-old; that they do not give birth to more than six litters each; and that they do not give birth to more than one litter in any 12-month period. These provisions are designed to provide essential protections for the welfare of the breeding bitch.

In contrast, under the microchipping provisions, the information required on the database serves to notify of the details of dog and owner only, providing no information about breeding welfare, the number of litters, and so on. Does the Minister agree that, as the information objectives differ, the repeal of the requirements in that section of the 1973 Act on the grounds that they were redundant after the introduction of these microchipping regulations is entirely false? The Minister may reply that the Deregulation Bill is another matter, and we look forward to Report, when the Government’s position may be clarified. However, the first date in December for deliberation of this order was postponed due to some defect. What was that about? It does not seem to have been in relation to the data requirements of the microchip. It is entirely possible that the Minister does not want the microchip to record any details in addition to those provided for, which would then anticipate difficulties for the Government’s one-in, one-out regulation-reducing requirement, which would be a shame.

During the Committee’s proceedings on the Deregulation Bill on 18 November, the noble and learned Lord, Lord Wallace of Tankerness, stated that the Government had,

“decided to consult the key stakeholders”,

on the repeal, to consider whether there was,

“enough evidence to support retaining”,—[Official Report, 18/11/14; col. GC 154.]

certain provisions. It appears that interested organisations are unaware of this, and I ask the Minister to provide details. I have yet to receive any information. Could the Minister clarify this before the return of the Deregulation Bill for further consideration?

17:15

Is the Minister satisfied that the data requirements under Article 5 are sufficient? There does not appear to be an obligation for the breeder always to be recorded as the dog’s first keeper. Is the Minister confident that, in time, that would be the effect of the order, as it appears that it would be simple for the breeder to take a lifetime update service costing £16 further to extend the welfare benefits of microchipping to all future owners?

The success of this measure will very much depend on the public’s full compliance with updating new information. Has the Minister set up any mechanisms whereby that could be monitored? How long would a dog owner have to comply with the microchipping provisions before a notice would be issued? As the noble Baroness, Lady Miller, asked, will the Minister clarify who is responsible for updating the database with the details when a dog’s keeper changes, as required by Regulation 8?

It appears from the Explanatory Memorandum that there are currently four microchipping databases. Indeed, the Kennel Club runs one of them, Petlog. The Minister may say that it is not up to him to prescribe the number, but I wonder whether some consolidation could take place. It could be a simple task for one organisation, such as the British Cattle Movement Service. My reason for raising this is contained in Regulation 6(1)(i) and (j). Sub-paragraph (j) states that each database must be set to,

“automatically redirect on-line requests relating to dogs whose details are recorded on other databases”.

Can the Minister satisfy me that the links will be working satisfactorily every time? There is some anxiety that there should be one central inquiry point that could direct the inquiry to the right database. What provision is there for the transfer of data should an operator go out of business?

There is a provision in the regulations that all dogs imported into the country should be microchipped within 30 days. What is the situation regarding dogs microchipped overseas? Presumably they would comply under Regulation 3(3). What links will there be to databases overseas? Would a UK citizen taking a dog overseas, that then strayed, be confident that he might be reunited with the dog through an overseas database?

In Committee on the Deregulation Bill, the Minister, the noble and learned Lord, Lord Wallace of Tankerness, made clear that the Control of Dogs Order 1992 remains, whereby any dog on any highway or in a public place must wear a collar or badge attached to a collar with the name and address of its owner on it. He said:

“It is considered appropriate to retain that, even after compulsory microchipping is introduced”.—[Official Report, 18/11/14; col. GC 156.]

It would be a fair assumption that the public may not realise that both belt and braces will be required after the introduction of compulsory microchipping. The department must be careful not to give mixed messages. The Explanatory Memorandum states that the cost to the public purse of publicising these measures will be £400,000. Is the Minister satisfied that it is prudent, bearing in mind the connotations of that word, that these costs are contained in the maximum? The Microchipping Alliance understands that the Government intend to produce guidance to accompany the legislation. Can the Minister confirm that? It would be extremely helpful in providing clarity on many of the questions I have asked today. There is every possibility that the data on the microchip may not correspond to what is on the badge. Will the Minister consult relevant organisations on the wording of the guidance so that the precise workings of the regulations are those intended? Will the Minister consult local authorities, police and organisations on the publicity for the measures so that their messaging can complement that of the Government?

I hope I have not punctured the euphoria that these regulations may induce from their passage today. I merely hope that I pointed out several areas where clarity is needed to get the operation of these regulations correct. In this regard, I am grateful to the noble Lord, Lord Trees, for casting his professional eye for detail over these regulations. If I am right, if there is an identity badge and a microchip attached to a dog, there should be less concern to local authorities that they will be inundated with lost dogs at a considerable cost because ordinary members of the public coming across a stray do not possess scanners. We must be far from complacent. In agreeing this order today, can the Minister satisfy me that local authorities are confident that they have the resources necessary? The prize of saving some £32 million annually in dealing with some 102,000 stray dogs per year is certainly worth while, especially when considering the welfare benefits to dogs and the anxieties of their owners.

[Lord De Mauley]

My Lords, I am most grateful to all noble Lords for their comments and questions. Let me do my best to address them. My noble friend Lady Miller of Chilthorne Domer raised a number of questions. She started off asking which databases are approved. We will be publishing a list of the databases that inform us that they are compliant by 6 April this year, which is the date by which the microchipping database operators must comply with the requirements set down in the regulations. In answer to her second question, they will not be approved unless they can perform 24 hours a day, seven days a week. She asked a question about change of keeper. I suspect I might return to that but basically the buck stops with the new keeper. The new keepers are the people in whose interest it is to make sure that the dog is microchipped, because they are the ones who will suffer if the dog does not come back to them. I will return to that in a moment.

The noble Lord, Lord Grantchester, raised a number of points. He referred to the issue of dog breeding and he should be aware—I know he is—that this is not the primary purpose of these regulations, which is to allow more easy reunification of a dog and its owner when the dog has strayed. I will return to the breeders issue in a moment. The noble Lord raised issues related to the Deregulation Bill. We are looking at those issues and the record-keeping requirements on dog breeding. My colleagues dealing with the Bill are well aware of the issues, and they are considering whether any action or clarification is necessary.

[Lord Grantchester]

My anxiety is raised because the Minister at the time mentioned a consultation and yet the various sector bodies in the industry seem to be unaware of that consultation.

[Lord De Mauley]

I understand that. I will return to him in writing on that particular point.

[Lord Stevenson of Balmacara]

I am sorry to add to the cacophony of voices on this. It is not my topic but I am in charge of the Deregulation Bill on this side. I just point out to the noble Lord, and I am sure he is aware of this, that we will be on Report within a few days, so it is important for us to know whether we should be pursuing this issue. We would therefore be happy if the letter could come expeditiously.

[Lord De Mauley]

I take that point on board: expedition is the name of the game. The noble Lord, Lord Grantchester, asked whether full discussion on guidance would be taking place with a number of interest groups that he referred to. I can assure him that there is very active two-way communication with those groups. He asked about the adequacy of local authority resources. It is very clear from our discussions with both dog welfare organisations and local authorities that this is about saving them money. It is not going to involve them in more expense but will reduce the amount of time it will take to identify who the owner is, so I am pretty confident about that particular point.

The noble Lord, Lord Trees, raised a number of important questions. First, I thank him for his support for the regulations and acknowledge his point that these measures, on their own, are not a silver bullet. Indeed, we never expected them to be that, but they will, over time, enable us to tackle some of the other issues that he and I are concerned about. He and the noble Lord, Lord Grantchester, asked whether there would be a single point of contact for the six databases. Regulation 6 requires that database operators must be able to redirect online inquiries to other databases if someone comes through to a database that does not hold the details linked to the microchip. All databases will have a system whereby, if an inquirer enters the microchip number on the wrong database, a pop-up—that may be the wrong technical expression, but I think he and I understand what I mean by that, although perhaps “window” might be a more appropriate word—will be automatically generated on the screen which, when clicked on, will redirect the person to the correct database.

The noble Lord, Lord Grantchester, raised the important point of whether the first keeper will always be the breeder. There is also the issue of whether that is dealt with in guidance. Yes, the breeder, as defined by the regulations, is always considered the first keeper of a puppy. This is covered in the Explanatory Memorandum to the SI and will be included in the guidance.

The noble Lord, Lord Trees, asked for clarity about who is responsible for change of ownership. I have touched on that already. Regulation 8 is clear that it is the responsibility of the new keeper to update the database where there is a change of keeper. He also suggested that there is some question over the use of the word “transponder”. This is essentially a technical issue but there is not a problem. The chip must conform with the FDX-B protocol set out in ISO standards, which is referred to in the regulations. The important point is that the chip must respond to a scanner at a given frequency.

The noble Lord also asked about the term “authorised person”. To clarify, the reference to authorised person is in respect of someone enforcing the regulations. Vets are not defined as authorised persons in the regulations; there is no provision limiting the provision of information to others to aid reunification of dogs and their keepers or to deal with other matters such as faulty microchips. These relationships will not be affected by the regulations and we would expect relevant consents from keepers to be in place already in relation to disclosing personal data. We would expect vets, re-homing centres and microchip manufacturers that already have a working relationship with database operators to have some secure identifier, if they do not have one already, from the database operators to ensure that they are bona fide inquirers for data protection purposes.

The noble Lord asked about a recommended site for implantation. This will be covered by the implantation training, so we do not consider it necessary or appropriate to legislate on this point. The training also advises implanters to check that the dog does not have a chip in a different implantation site and to check for any microchip migration.

The noble Lord, Lord Grantchester, asked whether there were any conditions that database operators must meet and whether they applied to the UK only. Regulation 6 sets out the conditions to be met by the database operator. Databases do not have to be located in any particular country but the conditions apply to any database that holds itself out as being compliant with these regulations. He also asked what happens if a dog strays while it is overseas. I am afraid that that will depend on whether an analogous set of rules applies in that country.

I have done my best, although I suspect that when I go through Hansard, I may find questions that have been left unanswered. If I may, I will write on those. I think noble Lords all share with me the strong view that irresponsible dog ownership is a complex problem to which there is no single, simple solution. We have introduced a series of measures, of which these regulations are the latest. We believe they will help promote animal welfare and encourage responsible dog ownership. The draft regulations will help lost dogs to be reunited with their keepers more quickly, so reducing any suffering of the dogs and distress to their keepers. The increased traceability of dogs to keepers will ensure that keepers can be held to account better if their dogs are allowed to roam and cause a nuisance. They will also save local authorities and re-homing centres money, which can be better spent elsewhere to promote dog welfare and encourage responsible ownership.

Motion agreed.

Films (Definition of “British Film”) Order 2015

Thursday 22nd January 2015 Grand Committee

Motion to Consider

17:30

Moved by

[Lord Gardiner of Kimble]

That the Grand Committee do consider the Films (Definition of “British Film”) Order 2015.

Relevant document: 17th Report from the Joint Committee on Statutory Instruments

[Lord Gardiner of Kimble (Con)]

My Lords, as may have been seen from this month’s BAFTA nominations, the British film industry is thriving. Alongside such critical success, the UK film industry has a turnover of £7.3 billion and is worth more than £1.4 billion to the economy, employing more than 66,000 people. Production spend on films made in the UK exceeded £1 billion in 2013.

This is very much as a result of film tax relief. Since its inception in 2007—I know the noble Lord, Lord Stevenson, has a long interest and connection with this concept—film tax relief has supported 1,680 films, with total production expenditure of £7.8 billion, of which 72% was incurred in the United Kingdom. The Government are committed to building on this and safeguarding it for the future.

The order updates the statutory test that is used to assess whether a film is a British production and eligible to apply for film tax relief. Certification as such is a requirement for film production companies to claim tax relief on production costs. The revised test aims to benefit particular areas of film production, such as visual effects and post-production, in which the United Kingdom excels.

In the Budget of 2013, the Chancellor announced that the Government would consult on tax options to support visual effects industries, and that was launched in May 2013. The United Kingdom has historically been a leader in visual effects production and is currently home to a number of world-renowned and award-winning visual effects houses making a significant contribution to British culture and creativity. Recent successes include the Oscar-winning film “Gravity” and “Paddington”, and work is currently under way on the latest “Star Wars” film.

Nevertheless, the sector has been adversely affected by rapid changes in the global industry, and there have been reports that activity may be moving overseas. Evidence suggests that the UK’s visual effects industry saw a 23% decrease in employment during the three years to 2013. There has also been a proliferation of incentives available in non-European jurisdictions. This has been a significant contributing factor in more films undertaking their visual effects outside the UK and Europe. Without further support, British visual effects houses may be forced to reduce headcount and investment in infrastructure, resulting in a decrease in the sector’s economic contribution and ultimately fewer British films being made.

The Government have responded in two interrelated ways. First, the Government have made the UK’s film corporation tax relief regime more attractive. The rate of tax relief for films with a qualifying budget of £20 million or more has been increased from 20% to 25% on the first £20 million of UK expenditure, with any excess UK expenditure still receiving the existing 20% tax credit. The minimum spend threshold in the UK has been reduced from 25% to 10% of a film’s overall budget. It is anticipated that this will encourage more films to carry out their visual effects and post-production work in the UK. These measures are now in force, having been introduced via the Finance Act 2014.

The second action is to modernise the statutory test used to assess whether a film is a British production. This is the purpose of the draft order before the Committee. This points-based test, often referred to by the industry as the cultural test for film, ensures that relief is targeted towards qualifying British productions. These changes are straightforward and mirror elements from the existing cultural tests for high-end television, video games and animation programmes. The amendments increase the points available if certain percentages of a film’s production work, including visual effects, take place in the UK. They also increase the points awarded for the language spoken in the film. For example, if more than 75% of a film is in the English language, it will now score six points rather than four. Finally, points that are awarded for a film’s British setting, subject matter, characters and language will now equally be awarded for other European Economic Area states. These measures are designed to encourage co-operation with European film industries while still ensuring that activity takes place in the United Kingdom. The effect of these changes is that the number of points available increases from 31 to 35. The pass mark is accordingly raised from 16 to 18 points.

These measures have the strong support of the film industry, including the British Film Institute, which is the Government’s lead agency for film, the British Film Commission, which works to attract inward investment to the UK, the major film studios and the leading visual effects houses. The Government believe that this order is essential to encourage further film production work in the UK while ensuring that tax relief benefits only productions that carry out work in the UK and enrich our cultural perspective. In combination with the changes to the corporation tax relief regime, these measures will further growth and ensure that the UK remains at the forefront of a very competitive global film production industry. That will in turn increase the opportunities for British artists and help ensure that the British film industry remains a world leader and continues to provide so much pleasure to us all. I beg to move.

[Baroness Bonham-Carter of Yarnbury (LD)]

My Lords, I echo what the Minister said in congratulating the previous Government on introducing tax breaks for British films. Of course, since then the coalition Government have extended that to animation, high-end TV, video games and, most recently, regional theatre and live-action children’s TV, all of which have contributed enormously to the creative industries and their success. Tax breaks for the British film industry have paved the way and brought huge inward investment into the industry: millions of pounds of private funds to the independent sector and, from the private sector, millions more pounds spent on infrastructure. I am told that next week’s British film industry figures will be very positive, so the industry is happy.

We obviously support this order, particularly the extra points for production activity undertaken in the UK as that gives even greater incentive to bring work into the country. I have what is not really a question but more an observation. It is something I have picked up from talking to people in the industry: things are working well. The Minister has probably answered this already, but too many tweaks and changes should on the whole be avoided. I think I am right in saying that there is another order in the pipeline. The observation is to leave things that are working so well as they are.

[Lord Grantchester (Lab)]

My Lords, I enjoyed the Minister’s explanation of the order before us today. If a film that has been supported by the Government and the taxpayer in this way should be very successful—he mentioned “Paddington”—and especially profitable, is some element of the profits returned to the pot, if that is the right expression, for further use by British films to encourage the British film industry or does it escape from the system? Is it in some way self-fulfilling that the profits of a publicly supported film go back into making more British films?

[Lord Stevenson of Balmacara (Lab)]

My Lords, I am very pleased to respond in this debate. First, I declare my interest as a former director of the British Film Institute. I thank the Minister for his kind words about my contribution in that time.

I have spent many happy hours over the last few years debating issues that come up on the DCMS brief with the Minister. I have usually been able to, I think, in his own words, “trip him up” on something and cause him difficulty. I am normally rewarded, because is it often a delight to have a two or three-page letter—indeed, the last one almost ran to four pages—in which he finally gives me the answers that I have asked for, usually to my complete satisfaction and sometimes even far beyond that.

Today is different. I have consulted widely with my remaining friends and colleagues in the industry and have sought comments from FACT and the British Film Institute. Nobody has a word of doubt about this order. They are delighted with it, and it seems otiose for me to stand here and even question the Minister about it, so I shall give the Committee one anecdote and ask three very small questions. I do not expect a letter.

When I was director of the British Film Institute, which I was for nearly nine years, I spent most of my time trying to argue with officials and Ministers in what was then a Conservative Government that we needed a better definition of a British film. It is therefore somewhat ironic to be considering an order which not only deals with that but improves the current definition and brings it forward. There is a little irony within that irony, which is that the order does not define a British film at all; it defines a film as British if it is made in the EEA, which must have come as a bit of a shock to those who perhaps take a view different from mine about the benefits that flow from the European Community, but let us pass over that.

The reason for the anecdote is that part of the work I was doing at the British Film Institute developing a public policy issue around this stemmed from work that was initiated by the late Prime Minister Mrs Thatcher, who held a very high-profile summit in Downing Street in 1990, from which most of the policy that we are now concerned with started. Indeed, other Members of your Lordships’ House were at that meeting and could talk about it as well. It was the beginning of government interest in film, but it constantly worried us because of something within the idea that more people should be going to see films, which was Mrs Thatcher’s view. She recalled her time in Grantham when the whole village used to go to the village cinema twice a week to catch the latest films, which were, of course, largely British. In the early 1990s, it was feast or famine. There were occasional rushes of successful British films that were invested in by American studios, but that tended to fade away and we were back to the usual diet. The main diet in British cinemas at the time we went to see her was films that were often made by British people, or had British expertise in them, but were financed, often produced and almost certainly made outside Britain, and we wanted to resolve that. It has taken a very long time, but the situation is now transformed. As the Minister said, between 150 and 200 British films a year benefit. It is an extraordinary transformation of the arrangements.

17:44

This is a good-news story. There was a sense that we had a natural talent here and that there was something in the water that made our people very good at film-making. The expertise and skills which were originally developed in the great studios on a ring around London, of which there are only two or three left, have now transferred into fantastic computer-based skills. The people with those skills are operating largely out of Soho. This was originally the place where all the costumes were made for the films made in Britain but it is now where, 24 hours a day, people are working on creating characters and animations, and making things happen that drive the world’s film industry. Long may that continue.

In my experience—I think it is still true—just about every Government in the world support the film industry in a way. I repeat: every Government, including that of the United States of America. The US system of support for film exports has been the envy of the world and it is something that we may want to come back to at some future date. It provides a guarantee against loss for those who export their films from America and, as a result, that puts the American distributor who takes films abroad in a very strong competitive position. We do not have as much support here, although that is changing. I use that as a means to simply say that there is nothing unusual about using the tax system to try to help films.

Film-making first got a tax break in the 1994 Budget. It was then changed in 1999 and again in 2005 or 2006. Since then, the situation has been transformed, and I think that these changes will help. The irony, as I mentioned, is the fact that it is now a pleasure to read about the way in which films can qualify as being British—not just in terms of whether they are made here, which was the original definition, but now in terms of set-dressing, the talent, the writing, the audio-visual work and the post-production work, which are all part of this extraordinary industry. It is a collaborative industry beyond all collaborative industries, yet it relies on individual skills of the high order that we have in Britain today. That is my anecdote in terms of what I have experienced, and I have pleasure in seeing this measure before us.

I have three questions. In the Minister’s introduction—and I see it in some of the background notes—there was a suggestion that the reason for this order, as is said in the paper Modernising Film Tax Relief, which was originally from the Treasury, was in some senses to improve the way in which a film receives its tranche of money and, to avoid a step-change between low-budget and high-budget material. I think that that is right but I am anxious to check that I am reading it correctly. A paper that accompanies the order says that the reason for doing this is to try to make sure that the film is more culturally British—or, as truth is, that it comes from the EEA states—in order to better qualify for the state aid regulations that operate in relation to this issue. I would be interested to hear the Minister’s response to that. What is driving this? Is this about better and more efficient use of the tax break or is it something that has come from outside and is there a need to make sure that we do not fall foul of the European regulatory concerns?

My second point is not unrelated to that. The cultural test for film, which is the subject of the order, is said to be aligned to the other three cultural tests relating to animation, programming, high-end television and video games; of course there is also drama as well. That is not mentioned in the order but presumably it is in the background. When the Minister comes to respond, perhaps he could sketch out how close the alignment is. Are they exactly the same or are there differences in what they do? Many of the considerations applying to film will certainly also apply to high-end drama in terms of post-production, talent, location and shooting. Indeed, that was the subject of a number of debates on the recent success of “Wolf Hall”, the television production which has just started.

My third point is about the money, given that 150 to 200 films a year benefit from film tax relief, and given that the Explanatory Memorandum says that one of the things that it is hoped will happen as a result of this is that there will be,

“greater investment within the UK from overseas and in international co-productions, resulting in higher levels of economic contributions from the sector, more stability for a highly skilled workforce, and the creation of culturally important products”.

I have to confess that when we tried to persuade Mrs Thatcher that it would be quite a good thing to finance the film industry with tax support in order to get more co-productions, she gave one of her handbag expressions and we soon dropped that. It did not go down very well: she did not seem to like the idea of British taxpayers’ money going on some foreign films. The truth is that European sensibility will be useful to the British film industry and that most films have to be made in English if they are going to be successful at all in the export market, so I think it is a self-solving problem.

However, my real point is that the Exchequer impact study for this—I do not think there is a separate one for the measure before us—suggests that the impact on the Exchequer will be a loss of £10 million in 2014-15; £20 million in 2015-16; and then nothing, nothing and nothing from 2016 to 19. That does not quite square: if more external productions are going to come to Britain to be made here and if there are going to be more co-productions—I hope there will be—then surely there will be a continuing drain, or is something else going on here? I would be grateful if the Minister could respond to that point.

Other than that, I want to stress again that this is a terrific move. It is going in the right direction by giving more credit to some of the things that need to be recognised. The skills we have in post-production are terrific, and the overall scheme requiring just over 50% of the points, I think, for the film to be allowed to qualify as British or, as we say, European in content is the right way to go forward. It will be a boost and a further step in fuelling the success that we have seen in the recent awards ceremonies, with hopefully more to come in the Oscars.

[Lord Gardiner of Kimble]

My Lords, with this cast list we have had a very agreeable debate. I am very pleased, and acknowledge the support that has come from your Lordships on this matter because it is something that is clearly in the interests of the British film industry. I would like to place on record the Government’s thanks to the British Film Institute and the industry for their assistance in developing this policy. That is the reason we are here today. It is a prime example of an industry and government working together to secure the best that we could possibly achieve.

My noble friend Lady Bonham-Carter referred to support, but also raised an element of concern for some that there are too many changes. My understanding is that no further changes are envisaged. Perhaps I should say that the cultural test has been amended on three occasions, in 1999 and twice in 2006. On each occasion, this was to update the test to reflect changes in policy as to what should qualify a film as a British production. Like today, those changes were all designed to ensure that we were ahead of the game and in no way disadvantaged.

The noble Lord, Lord Grantchester, asked about use of profits and the profit-returning element. Of course, although there are profit reliefs, a hugely successful film will make a contribution to the Exchequer. We obviously want to ensure that the more films we have with tax relief, the more will come into the Exchequer. Interestingly, the Government are investing £47 million of lottery funding and more than £23 million of Treasury funding to support film and audiences in the UK. The total public funding for film in 2011-12, for instance, was £366 million. From all angles, on the point that the noble Lord was making, the Exchequer gets a good return on very successful films.

The noble Lord, Lord Stevenson, continues to look very well on the handbagging he may have received from the late Lady Thatcher. There is no doubt about it: she was interested in concepts of this sort. Perhaps with someone with the reputation that she has, when one gets down to how she was in practice, she was rather different from the persona that has some currency.

The noble Lord, Lord Stevenson, asked a number of questions, which I shall endeavour to answer. If the answers are not fully sufficient—it is a Thursday—he might like a letter from me. The noble Lord alluded to a point about the changes and approval by the European Commission. Yes, these changes, along with the changes to the rates and qualifying expenditure for film tax relief made in the Finance Act 2014, were approved by the European Commission in a state aid notification on 17 March last year. I hope that that is also satisfactory.

As to what was driving the change, and whether it was because of the requirement of approval or to remove a tax cliff et cetera, this was very much designed to encourage more production in the UK by taking a broader definition of what qualifies as a British production. We obviously wanted to ensure that we retained the talent and skills in certain areas of production, particularly, as I emphasised in my earlier remarks, in the visual effects and post-production houses, where we excel but where we were concerned that quite a lot was going abroad. Again, that was important.

On the alignment of all the tests, the ambition is to align the cultural tests for the creative sector tax reliefs as far as possible. Given the slightly different nature of the activities, there may be an element of that, but we would certainly wish to align all of them wherever we can. The Government will be consulting on the alignment of the high-end TV cultural test with the film test shortly, so that will be work in progress.

As to the expected cost to the Exchequer, and the possibility of a decrease from 2015 onwards, this exercise is about the cultural test, but I should write to the noble Lord on this one. This may be a more intricate issue, but I promise that I will not write four pages and I hope that there will be clarity. On that basis, and following this good Thursday debate, I commend the order to the Committee.

Motion agreed.

Committee adjourned at 5.57 pm.

House of Lords

Thursday 22nd January 2015 Lords Chamber

Thursday, 22 January 2015.

11:00

Prayers—read by the Lord Bishop of Coventry.

Introduction: Lord Lisvane

Thursday 22nd January 2015 Lords Chamber

11:07

Sir Robert James Rogers, KCB, having been created Baron Lisvane, of Blakemere in the County of Herefordshire and of Lisvane in the City and County of Cardiff, was introduced and took the oath, supported by Baroness Boothroyd and Lord Judge, and signed an undertaking to abide by the Code of Conduct.

Libraries: Funding

Thursday 22nd January 2015 Lords Chamber

Question

11:12

Asked by

[Lord Palmer of Childs Hill]

To ask Her Majesty’s Government what assessment they have made of the impact of changes to local government finances on libraries in the United Kingdom.

[Lord Gardiner of Kimble (Con)]

My Lords, the Department for Culture, Media and Sport monitors closely all developments relating to proposed changes to library services throughout England. It is for each local authority to determine how best to provide a comprehensive and efficient public library service that meets local needs within available resources. Responsibility for libraries in the remainder of the United Kingdom rests with the respective devolved Administrations and relevant local authorities.

[Lord Palmer of Childs Hill (LD)]

My Lords, I thank my noble friend for his Answer—but the problem lies within it. Government spending cuts have impacted heavily on local authorities. The local authorities to which my noble friend refers are reducing expenditure on the library service by closing or reducing the number of buildings, under the guise of modernising. What will the Government do to dissuade local authorities from reducing the number of library buildings, such as ring-fencing funding? Libraries form the social hub in many areas and are a basic component in promoting literacy and reading. Finally, there is a group seeking to modernise libraries. When will we have its report, and will it be too late?

[Lord Gardiner of Kimble]

My Lords, my noble friend refers to the library service. There is still a strong library service in England, with over 3,142 public libraries, and local authorities invested £757.3 million in them in the last financial year. William Sieghart’s report was published on 18 December and presents recommendations for the Government and local authorities working in partnership. Many local authorities of all political persuasions are making some very interesting innovations in their library services.

[Lord Howarth of Newport (Lab)]

My Lords, if the Government reduce resources for local authorities by 30% to 40%, with inevitably larger reductions in available funding for discretionary services, how can local authorities comply with their statutory duty to provide the comprehensive and efficient public library service which he mentioned?

[Lord Gardiner of Kimble]

My Lords, I could take your Lordships through many local authorities where important changes are taking place, such as Devon, which is expanding into community hubs; Newcastle upon Tyne; Northamptonshire, where there are enterprise hubs, partnerships between Northamptonshire libraries and Northamptonshire Enterprise Partnership; and Suffolk, where there is an independent organisation with charitable status. All those local authorities of different political persuasions are doing great things with fewer resources. No one is saying that there will be more resources; we all have to deal with the cuts, which all parties now recognise are necessary for the national economy. In the main, however, local authorities are doing a very good job.

[Lord Suri (Con)]

My Lords, it is not good thinking to make any reduction in libraries, which play a very good role in increasing the knowledge of the nation. The economy of the country is doing well, and now, with the reduction of oil prices throughout the world, the British economy will benefit. We should support the libraries financially.

[Lord Gardiner of Kimble]

My Lords, my noble friend rightly highlights the very important role in our national life that libraries perform. As I say, libraries are changing and innovating. For instance, there is an enormous increase in lending on the e-lending side—from a smallish base, yes; but there has been a 125% increase over the past year.

[Lord Collins of Highbury (Lab)]

My Lords, the one thing that the Minister did not mention is that the Government have a statutory duty under the libraries Act to ensure that services are maintained—that there are library services. What is the Minister doing to ensure that that obligation is met?

[Lord Gardiner of Kimble]

My Lords, the noble Lord is absolutely right: under the Public Libraries and Museums Act 1964 there is a duty on the Secretary of State—and, indeed, there are a number of situations where the Secretary of State is taking an interest in what is happening in those local authorities.

[Baroness Walmsley (LD)]

My Lords, will my noble friend join me in acknowledging the contribution of many local groups all over the country which are managing to keep their libraries open through volunteer work? As an example, Gresford and Marford local library, of which I am honoured to be a patron, is working with Wrexham local authority, which provides the books and the computer system, while the community group provides the manpower and raises the money for the utility bills. That works extremely well. That may be second best to having a full local authority-run library, but it does work.

[Lord Gardiner of Kimble]

My Lords, the first thing to say is that the community libraries and, indeed, the volunteers who are part of it deserve our congratulations. They are doing precisely what is happening in many communities, with communities joining together. They do not replace the extensive network of council-run libraries, but they are very important in providing that additional element of provision, and I congratulate them.

[Lord Harrison (Lab)]

As a former chair of the Cheshire library service, I, too, welcome the examples of innovation that the Minister described. However, given that, will he please answer my noble friend Lord Howarth’s question about applying a statutory service when the funds made available to local councils are diminishing?

[Lord Gardiner of Kimble]

I think that local authorities have done extremely well; last year, there was a reduction, I think, of 39 out of the 3,142 libraries. That shows that there is a very strong system. In many cities and small towns, new libraries are opening because there is a refurbishment and the local needs are being identified in that way.

[Lord Cormack (Con)]

My Lords, does my noble friend accept that fundamental to any civilised society is a full network of public libraries, with books in them? E-learning is one thing, but the book is the fundamental foundation stone of the library, and may it long remain so.

[Lord Gardiner of Kimble]

My Lords, I am a keen fan of books myself, but it is important—for young people in particular, and given the fact that so many more people are looking after their lives digitally—that libraries provide that facility as well. That is one of the ways we shall ensure that there are more people visiting libraries.

[Baroness Howells of St Davids (Lab)]

My Lords, I have a special interest in libraries. I was the very first black person to be employed by a public library; I met my husband there, and I made many friends. The most important thing about the library that struck me when I came into the job was the facility provided for people who never spoke to anyone for the whole day, but who would come into the library, sit and read the papers, and have something to discuss. We need the libraries. I am sure the Government think that they are doing their best, but in the borough where I live and have worked, we are noticing the shortage of libraries. Will the Government look again at how they perform their statutory duty? It may not seem like a big thing, and libraries have improved in lots of ways, but all this is being lost now. Both my husband and I worked in a library, and that was the first move towards racial equality; I suffered in the beginning, but I was determined. So may I ask the Government to consider that the library has a greater purpose than people just going in there to get the odd book?

[Lord Gardiner of Kimble]

My Lords, that is precisely why the Government were so keen on William Sieghart’s report on independent libraries, because it provides recommendations for the Government and for local authorities. The Government greatly support that role. The libraries have a huge community role to play, and I am very pleased to hear of the noble Baroness’s experiences.

United Nations Secretary-General: Selection

Thursday 22nd January 2015 Lords Chamber

Question

11:22

Asked by

[Baroness Falkner of Margravine]

To ask Her Majesty’s Government what is their assessment of the selection procedure for the next United Nations Secretary-General.

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

My Lords, the United Nations Secretary-General must command the greatest possible support from the international community, and the authority to carry out the role effectively. The current system of selection, whereby the Security Council nominates a single candidate to the General Assembly, ensures that the candidate receives maximum support. This process has produced good consensus candidates in the past, and we would not want to see it significantly changed.

[Baroness Falkner of Margravine (LD)]

My Lords, my noble friend will know that last time the decision was effectively made by Bush, Putin and Hu Jintao—not great men of peace. And with eastern Europe in the frame now, it is likely to be just the US and Russia. What discussions are the Government having with all l5 members of the Security Council to ensure that at least two names go forward to the General Assembly—from my perspective, preferably those of two women—and, if there is a veto, to ensure that the appointment is then for a single term only, so that proper reform can be put in place by 2020?

[Baroness Anelay of St Johns]

My Lords, there are quite a few questions there, but important ones, which I shall answer as briefly as I can. The veto is within the format of the constitution—the rules of the game—so there would have to be a change in the rules for the veto to be abandoned. My noble friend refers to the method of selection last time. Last time, of course, Ban Ki-moon was unopposed for a second term, and it is clear that when he was selected at that stage, China had made it known that it would not accept anybody other than an Asian candidate. The method of selection was across the membership, but clearly the P5 have a crucial role to play. My noble friend is right to point out that it is important for women to be considered, too—and with a woman Leader of this House, a woman Leader of the Opposition and a woman on the Woolsack, who would dare think anything else?

[Lord Anderson of Swansea (Lab)]

My Lords, is it not the case that there are two admirable women in the frame—Helen Clark and Gro Harlem Brundtland? They would not be secretaries; they would be generals.

[Baroness Anelay of St Johns]

I always listen with great interest to the noble Lord, Lord Anderson. He enables me to answer another of the several questions that my noble friend Lady Falkner asked with regard to candidates. Names are, indeed, beginning to be floated. If I may change my analogy, it is almost like a susurration—but, as with all susurrations, the names change as well. The noble Lord may have the latest names; there is quite a little list, I think. We do, indeed, need not only secretaries but generals, too.

[Lord Hannay of Chiswick (CB)]

My Lords, does the noble Baroness agree that one change which could greatly improve the process and improve its transparency would be if all candidates were asked to set out their ideas for strengthening an organisation which desperately needs strengthening? Will the Government lend their support to that sort of approach, which is a good deal less ambitious than some of the other ideas around but could bring real benefits?

[Baroness Anelay of St Johns]

The noble Lord makes a very practical and important proposal. Although, of course, as just one member of the P5, we cannot force and insist on a change in the way that processes go forward, it is clear that from our point of view it would be a great advantage if we were given details by the candidates of how they intended to carry out their leadership skills and, as he indicates, how they would enable the United Nations in these difficult times to get beyond its 70th year, which it celebrates this year, and to go on for another 70. I find his suggestion very helpful indeed.

[Lord Dykes (LD)]

Will the British Government support and encourage whoever becomes the next Secretary-General to modernise the Security Council arrangements and deal with two disputes that have raged for far too long—50 years and more: namely, Cyprus, where too many people still hark back to the past rather than think about the future; and Israel-Palestine, where the United States has constantly allowed Israel to disobey international law via a succession of vetoes?

[Baroness Anelay of St Johns]

My Lords, with regard to United Nations Security Council reform, I was in New York just before the new year and met various actors at the United Nations. I made it clear that we support administrative and efficiency reforms but also reforms of the Security Council itself and its membership, and that in a changing world since the United Nations was founded 70 years ago, it is right that we should now look at membership for countries such as Brazil, Germany, India, Japan and, indeed, at African representation —although it would be for the African group to decide how it approached that. It is important that the United Nations Security Council as a whole works unanimously to resolve some of the most difficult and complex disagreements around the world.

[Lord Dubs (Lab)]

My Lords, I am disappointed with the Minister’s answer. No British employer operating an equal opportunities policy would be allowed to get away with the shambolic approach that the United Nations takes to these leading posts. Surely, what we need is something that is not a travesty of an appointments system but that actually ensures that the person who gets the job is the best and most suitable person to do it.

[Baroness Anelay of St Johns]

The noble Lord is right to say that the procedure must enable the best person to be appointed. At the FCO, we approach appointments on the basis that women should always on a shortlist. That is the principle at the FCO. I hope that others hear that.

Welsh Government: Fracking

Thursday 22nd January 2015 Lords Chamber

Question

11:28

Asked by

[Lord Wigley]

To ask Her Majesty’s Government what discussions they have had with the Welsh Government regarding the devolution of powers over fracking for gas on land.

[The Parliamentary Under-Secretary of State, Wales Office (Baroness Randerson) (LD)]

My Lords, in November 2014 my right honourable friend the Secretary of State for Wales announced a programme of work to seek a political consensus on the way forward for devolution and to provide a stable settlement for Wales. This work is underpinned by discussions with Welsh party leaders, including the First Minister of Wales, the right honourable Carwyn Jones AM.

[Lord Wigley (PC)]

My Lords, may I interpret that Answer as an indication that we can look forward to a Statement being made by the Secretary of State on St David’s Day to indeed confirm a transfer of responsibility for fracking to Wales? Since the Government have their own amendment to the Infrastructure Bill, Amendment 86, on Report in the House of Commons on Monday, removing Scotland from the provisions of that Bill concerning the right to use deep-level land for fracking, why is there not a similar amendment for Wales, if that is indeed the direction in which the Government are going? Will the Minister link up with the department today to see whether it is possible, even at this late stage, to table such an amendment?

[Baroness Randerson]

The noble Lord should take into account the process that is under way. The Secretary of State has set great store by the fact that he wants to achieve political consensus across the four parties in Wales. The Welsh Government are involved, of course, and they have made it clear what their views are on the need to offer powers to the Welsh Government if they have been offered to Scotland. However, what is right for Scotland is not necessarily always right for Wales, and discussions are still ongoing.

[Lord Thomas of Gresford (LD)]

My Lords, within 10 miles of my home in Gresford in north Wales—its second mention this morning—there were in 1866 some 21 shale oil extraction plants, selling petrol at three shillings and four pence per gallon. Two years later it had fallen to 10 pence a gallon and the industry was completely wrecked. Is Welsh shale oil as sound a basis for Welsh independence—which 3% of the people of Wales want, including the noble Lord—as, for example, North Sea oil is for Scotland?

[Baroness Randerson]

My noble friend illustrates the volatility of energy prices, then as now. From current reports, the potential for significant amounts of shale gas in Wales is unclear. However, I agree with my noble friend: the recent big falls in the oil price have illustrated the shaky financial foundations on which the Scottish independence campaign was based.

[Lord Hunt of Kings Heath (Lab)]

My Lords, forgive me, but I did not quite follow the first Answer of the noble Baroness. Have there been discussions on the devolution of powers over fracking for gas on land—yes or no?

[Baroness Randerson]

My Lords, there are four parts to the ongoing discussions. One of them relates to the Smith proposals, and which of those proposals would refer to Wales appropriately. Those discussions include the issue of fracking. In relation to Wales, the conversations are ongoing.

Channel Tunnel

Thursday 22nd January 2015 Lords Chamber

Question

11:32

Asked by

[Lord Berkeley]

To ask Her Majesty’s Government what action they are taking to minimise rail passenger disruption caused by the recent closure of the Channel Tunnel.

[Lord Popat (Con)]

My Lords, we are closely monitoring the situation, and we expect Eurostar to help passengers to get to their destinations as quickly as possible. Eurostar filled trains up to the maximum to help to resolve the backlog, and provided beverages on board services and in the queues. Eurostar also paid for hotels, taxis and food for some passengers. The repair works are anticipated to take two days. Eurostar is running a full service with delays of around two hours.

[Lord Berkeley (Lab)]

I am grateful to the Minister for that answer. I declare an interest as chairman of the Rail Freight Group, having spent many years building the tunnel. Eurostar may be running a full service. I came in this morning only two hours late. The tunnel is still partially closed and it has been closed for five days now. Coincidentally, at the same time, our latest political party, led by the Pub Landlord, has suggested that we should brick up the Channel Tunnel. Whether or not that is a good idea, the tunnel should be open; it is a major piece of infrastructure. Will the Minister ask the intergovernmental commission on an urgent basis to produce a report on the passenger disruption, just like at King’s Cross, the infrastructure failure and, most important, the cause of the fire—it is the fourth fire caused by a lorry fire—and recommend changes to the safety regime?

[Lord Popat]

My Lords, I shall address the situation of the passengers on the train and the assistance given to them. All passengers and staff were evacuated from the train to a place of safety in good time, with no injuries or stress. As I said, most passengers were offered tea, coffee, beverages and, in some cases, hotel and train costs. In a situation like this, the first priority is always to ensure that Eurostar is running a safe service. Of course, there are inevitable delays because of the fire damage in the tunnel. It is clear that only one of the tunnels, the southbound tunnel, was affected in this incident.

[Lord Bradshaw (LD)]

My Lords, there have been four fires—actually, I think it is five—affecting lorries being taken through the tunnel on shuttle carriages going from France to England. Those carriages have lattice sides. That means that when they are going forward, any fire or possibility of fire swiftly generates a dangerous fire that causes immense damage and destruction. This would be obviated if the wagons carrying the lorries were enclosed, like those for cars, with built-in fire-extinguishing apparatus. Will he take this to the safety authority responsible for the Channel Tunnel to get something done before we have an even more serious fire and fatalities?

[Lord Popat]

My Lords, the noble Lord is correct in saying that there have been previous fires. The relevant authorities are constantly reviewing how to limit this risk; in this instance, the situation was helped by the new sprinklers that were installed as a result of the previous situation. This has considerably reduced the amount of time for which the tunnel has been closed. The use of enclosed lorries is an area that has been looked into in the past but, frankly, it would be commercial suicide for the freight companies to have enclosed lorries. The whole purpose of this is to make sure that goods are transported from one end to the other as quickly and economically as possible.

[Lord Hunt of Chesterton (Lab)]

My Lords, surely we should be measuring the temperature as these trucks go into the tunnel. One should easily be able to do that because of the open structure. It is likely that the temperature was rising in this case, but that information was not available on a screen to the people operating the tunnel. That would be quite economical and should certainly be instituted.

[Lord Popat]

I take the noble Lord’s point but there is an ongoing investigation into this incident and I am sure that we will learn our lessons about what actually went wrong. It should be borne in mind that this incident happened on the French side of the tunnel, not ours.

[Noble Lords]

Oh!

[Lord Popat]

Because it happened on the other side, the onus is on the French authorities to work with us. It is easier for them to investigate the cause of the fire than for us. However, our own fire authority will of course be working with those authorities to discover the cause of the fire. We will learn some lessons from this and see what further improvements we can make to ensure that we limit fires in future.

[Lord Mawhinney (Con)]

My Lords, while I regret the inconvenience and disruption to the passengers caused by the fire, will my noble friend say a word of thanks and appreciation to the staff who so efficiently got everyone out without any damage or distress?

[Lord Popat]

Yes, my Lords. In fact, I commend all the Eurotunnel staff, who worked very hard. A number of volunteers also came forward at King’s Cross to help passengers, who were served with teas, coffees and beverages and given whatever assistance they could be given. It was regrettable and unfortunate for a large number of passengers that their journeys were delayed. Having said that, this incident was unexpected and they were very understanding about the delay to their journeys.

[Lord Dykes (LD)]

Does my noble friend accept that the prospect of new rolling stock might be one way in which to deal with some of these problems? I declare an interest as a frequent user of the shuttle service, which normally works extremely well and efficiently, not just in the summer but throughout the year.

[Lord Popat]

My Lords, I take the point about new rolling stock. I am quite aware of the new rolling stock that our train operating companies in the UK will be introducing. This is a private company and, frankly, I am not briefed on whether new rolling stock has been ordered for Eurotunnel and Eurostar.

[Lord Rosser (Lab)]

My Lords, safety regulation is a key responsibility of the binational, British and French, Channel Tunnel Intergovernmental Commission, which has as its statutory independent safety advisory body the Channel Tunnel Safety Authority. The Secretary of State appoints the heads of the British delegations to the intergovernmental commission and the Channel Tunnel Safety Authority, so this issue is not just related to the incident happening on the French side of the tunnel. Bearing in mind that fire is a tunnel’s biggest enemy, and that there have previously been fires in 1996, 2006 and 2008 in the Channel Tunnel, are the Government still satisfied with the safety arrangements and procedures for the carrying of lorries and their loads by rail through the tunnel—yes or no?

[Lord Popat]

My Lords, I will take the safety aspect. The Channel Tunnel Safety Authority will be looking into the problems last weekend and at whether Eurotunnel needs to make further improvements. The Rail Accident Investigation Branch is also making preliminary inquiries in conjunction with its French counterpart, BEA-TT. We will wait for the report to come out to see what further things we can do. It is important that it is safe to travel, and it is of equal gain to both countries that our lorries travel from one end to the other.

[Lord Teverson (LD)]

My Lords, for many people the major disruption of the Channel Tunnel is that, despite having been able to use it for 10 years now, no one can take a direct service to either Brussels or Amsterdam or anywhere outside France. I do not know whether this is because of competition restrictions on the other side of the channel or difficulties with passport control, but can we please get this fixed ?

[Lord Popat]

That is for the French Government to comment on. However, I will certainly take it to the department and will write to the noble Lord about what more the French could do to make travelling from Paris easier.

[Lord West of Spithead (Lab)]

My Lords, does the noble Lord agree that the British people tend to be sailors rather than troglodytes and that we should encourage a strong cross-channel ferry sector?

[Lord Popat]

I agree with the noble Lord. We should support a strong ferry service across the channel.

[Lord Tomlinson (Lab)]

On at least two occasions, the Minister has pointed in the direction of France. In the absence of the noble Lord, Lord Pearson of Rannoch, may I ask him to confirm that there was no culpability on behalf of the European Union?

[Lord Popat]

This is a matter for the French and the British.

[Lord Harris of Haringey (Lab)]

My Lords, since the questions are ranging fairly widely on this topic, what progress are Her Majesty’s Government making on turning Stratford International station into a genuinely international station where services through the Channel Tunnel actually stop?

[Lord Popat]

My Lords, the noble Lord’s question is not that on the Order Paper, but I will certainly investigate and come back to him.

Child Abuse Inquiry

Thursday 22nd January 2015 Lords Chamber

Statement

11:42

[The Parliamentary Under-Secretary of State, Home Office (Lord Bates) (Con)]

My Lords, with permission, I will repeat an Answer to an Urgent Question which was made by my right honourable friend the Home Secretary in the House of Commons earlier today:

“Mr Speaker, in July last year I announced the establishment of the Independent Panel Inquiry into Child Sexual Abuse. The inquiry will consider whether public bodies and other non-state institutions have taken seriously their duty of care to protect children from sexual abuse. As I said when I established the inquiry, it must expose the failures of the past and must make recommendations to prevent them from ever happening again in the future.

The House is aware that the first two nominees for chairman of the inquiry resigned after it became apparent to them that they did not command the full confidence of survivors. I am clear that the new chairman must be someone who commands that confidence and who has the necessary skills and experience to carry out this vital work. In my work to find that person, as I told the House I would do, I have undertaken a number of meetings with survivors of child abuse and their representative bodies. I have been deeply moved by the candour and the courage they have shown in telling me their harrowing stories and the experiences they have been through. I am absolutely committed to finding them the right chairman to ensure they get the answers they deserve. Not only does this inquiry need the right chairman, it also needs the right powers. That means the ability to compel witnesses and full access to all the necessary evidence.

In December I wrote to panel members to set out the three options which could give the inquiry these powers. I confirmed those options in my evidence that month to the Home Affairs Select Committee. I also confirmed that I would make a decision on the right model for the inquiry and the chairman by the end of January. It remains my intention to make a Statement to the House shortly after I have made that decision, and after the necessary interviews and careful due diligence work have taken place.

It is important that this inquiry can get on with its work but it is also vital that we have the right chairman, the right structures and the full confidence of the people for whom it has been established. We face a once-in-a-generation opportunity to expose the truth, to deliver justice to those who have suffered, and to prevent such appalling abuse from ever happening again. That is what the survivors of child abuse deserve and what I remain determined to deliver”.

11:45

[Baroness Royall of Blaisdon (Lab)]

My Lords, I am grateful to the Minister for repeating the response from the Home Secretary. The Minister will know how serious this inquiry is and how much it means to those who endured awful abuse in childhood, who were not listened to then and who deserve to be listened to and to have the chance for justice now. For the inquiry to stall once is unfortunate but twice is careless and the situation now frankly looks incompetent.

I wonder what is going on. Given the seriousness of this matter, I fear that there is now no choice but to start this inquiry again—properly, with a new chair, full powers and proper consideration of the scope and purpose involving survivors themselves. Other people have set up effective inquiries—for example, Hillsborough, the Northern Ireland inquiry into chid abuse and the Soham inquiry. When will the Home Secretary act decisively?

[Lord Bates]

We share the general consent to get at the truth of what has been happening and to get on with the work. I have explained some of the reasons for the delays. The suggestion made by the noble Baroness was very much one of the options set out by the Home Secretary in her letter of 17 December 2014 to panel members. The three options were a royal commission, giving statutory powers to the existing independent panel or starting all over again with a new chairman. Those remain the three options being actively considered.

We also very much share the view about the success of the Hillsborough inquiry in gaining truth. In fact, the model of that inquiry was the original model used to set up the independent panel. However, it proved not to be possible to command the confidence of the survivors’ groups in the structure as it was then. That is why we sought to open it up to a much wider range of people—150 people have applied or have been nominated to be considered—to go through the matter very carefully and, crucially, to keep survivors’ groups informed all the way through. We will continue to do that.

11:47

[Baroness Howarth of Breckland (CB)]

My Lords, the Minister talked about this never happening again but in the work I do it is happening every day, now. We know that this is a problem. Unless we have the right staff on the ground and the right programmes, we do not have a hope of preventing this. Meanwhile, the funding for many groups is being reduced. The funding for the Stop it Now! programme, which had a full preventive programme, has been stopped for two years in England but not in Scotland, Ireland and Wales, where it is doing well. Are the Government really serious in thinking about what is happening now when we have a whole range of inquiries with recommendations that have already taken place? We may need to look at this historical situation, but I ask: how much will that cost and how much will the Government put into present-day schemes which will stop the child being abused today?

[Lord Bates]

First, I pay tribute to the work that the noble Baroness has done in this important area, not least on the all-party group and its report, which was extremely helpful and informed a lot of our thinking in this area. She made a specific point about funding and pressure that groups are experiencing at present. There is no doubt that with the increased publicity more and more people are coming forward. On one level, that is to be welcomed as an opportunity for justice and to learn lessons, but on another level it puts increasing pressure on those organisations which do tremendous work in caring for and working with victims and survivors. That was one reason why my right honourable friend the Home Secretary announced an additional £7 million of funding. Some £2.85 million of this funding will be available to the organisations representing child and adult victims of sexual abuse, and there will also be a child abuse inquiry support fund of £2 million. That fund will open very shortly, and bids will be invited.

[Baroness Walmsley (LD)]

My Lords, I wholeheartedly endorse the noble Baroness’s call for more prevention work. In my view, we need a statutory inquiry. I hope that the Secretary of State will choose the correct one of the three models, and will come up with that and the right chair as soon as possible. I have two questions. My noble friend mentioned additional funding. Could he please reassure us that this funding will both be swiftly available and not be ringed round with a lot of bureaucracy? More people will undoubtedly come forward as these issues are highlighted, and the money needs to get to the groups which support them quickly and without a lot of bureaucracy. Secondly, as more allegations are made, can the Minister assure us that these will be referred swiftly to the police, and preferably to a different police force from the one within which the allegations were made?

[Lord Bates]

On the last point, of course there is nothing in the delays which we are experiencing with the inquiry which should for one moment stop the prosecution or investigation of these heinous crimes. That should not occur. We now recognise that all three options must have a statutory element, and without doubt the inquiry will have that. Regarding the funding which is available, I have mentioned some special funding. We are also working with the Department of Health and the Department for Communities and Local Government to see what additional support can be provided, particularly for those who will be invited to come forward to give evidence to the inquiry.

[Lord Pannick (CB)]

My Lords, have the Government considered that the difficulty in getting this inquiry off the ground is due to its size? Surely nobody could sensibly conduct an inquiry with terms of reference requiring consideration of the extent to which state and non-state institutions have failed in their duty of care since 1970. That is an impossible task, and it is surely not surprising that no competent person is able to perform it. I must say to the Minister that if an inquiry of that sort ever did start, the inevitable delays in conducting it would make Sir John Chilcot look like a chairman in a hurry.

[Lord Bates]

I very much hope that that is not the case. I have to say that in most cases the pressure that we have been under was to extend the terms of reference still wider. I totally understand the noble Lord’s point that the inquiry needs to be sharp and focused, and to get to the heart of the matter. The chair who is appointed to the panel therefore has an incredible responsibility to provide that clarity of focus and speed of deliberation so that we get the answers quickly.

[Lord Rogan (UUP)]

My Lords, the Minister is suggesting that a new panel may be set up. Could its remit be extended into inquiring into the Kincora Boys’ Home in Belfast?

[Lord Bates]

This is a devolved matter in Northern Ireland. An inquiry is ongoing at present, chaired by Sir Anthony Hart. We are of course open to the devolved Administration making approaches, but at the moment this is for England and Wales.

[Lord Richard (Lab)]

My Lords, the Minister said that so far there have been 150 nominations for the post of chair of this inquiry. Could he tell us a little more about this? Is it really going to be decided by nomination? Is the chair to be picked from the people who have been nominated? Have they nominated themselves? What organisations nominated them? It seems to me that in an affair of this sort the discretion of the Home Secretary in choosing the chair is extraordinarily important and should not be eaten into.

[Lord Bates]

We opened this up after the initial appointments of the two chairmen because they did not command confidence. Some people have responded and come forward directly, while a number of representations have been made on behalf of others by Members of your Lordships’ House. We wanted to broaden the net as widely as possible so as to allow people to come forward, and then of course to go through the due diligence aspect of their backgrounds to ensure an appropriate shortlist. Then, most crucially, before the shortlist is made public, the first people to see it will be the survivors’ groups themselves to ensure that we have their confidence in the individuals concerned.

[Lord Cormack (Con)]

My Lords, does my noble friend accept that many of us feel that it was little short of a tragedy that the Home Secretary’s first nomination was not able to continue as chairman? Further, would he bear in mind the importance of the points made by the noble Lord, Lord Pannick? Will he also reflect on the Saville inquiry, which went on and on? It is crucial that the remit is clearly defined, not unending in its scope, and that a report is published within a reasonable time.

[Lord Bates]

I am happy to endorse the views of my noble friend about the previous nominees, who were both genuinely outstanding candidates. That is still our belief. On the approach going forward, we want a system of regular reporting retained in the methodology. Rather than an ongoing inquiry delivering at some point in the future, there will be interim reports. The initial inquiry suggested that there would be a report after six months, but I hope that there will be regular opportunities to produce reports, and that those reports will provide opportunities for noble Lords to discuss and debate the evidence received to date.

Business of the House

Thursday 22nd January 2015 Lords Chamber

Timing of Debates

11:56

Moved by

[Lord Taylor of Holbeach]

That the debates on the Motions in the names of Lord Adonis and Lord Beecham set down for today shall each be limited to two and a half hours.

[Lord Taylor of Holbeach (Con)]

My Lords, with the leave of the House, I beg to move the Motion standing in the name of my noble friend Lady Stowell of Beeston.

[Lord Forsyth of Drumlean (Con)]

My Lords, why is it that we have to wait until late afternoon/early evening to consider the Statement on the document, Scotland in the United Kingdom: An enduring settlement, when it has been all over the newspapers, it has been publicly explained through press conferences, and the rest of it? It directly affects the future of the United Kingdom and the interests of many Members who come from Scotland and the north of England and who will be travelling back to their homes on a Thursday night.

[Lord Taylor of Holbeach]

I do not doubt the importance of today for the people of Scotland and indeed for the United Kingdom as a whole and I understand the importance of the Statement. It is a busy day in the House today. We have Opposition day debates that will take up five hours of the business. It is one of the courtesies of the House that when a Statement is issued in another place the Opposition and the Government talk about it. The Opposition are given the choice whether to take the Statement and they are also asked whether the timing is convenient for the business of their spokesmen. Accordingly, the time that has been chosen to debate the Statement has been fixed. It is not impossible for the Government to override the wishes of the Opposition, but it is one of the long-standing courtesies of the House that the primary choice rests with the Opposition, and quite rightly so.

[Lord Maxton (Lab)]

My Lords, I agree with the noble Lord, Lord Forsyth. Can the Minister tell us whether the delay in producing today’s speakers list was down to the debate that was taking place between the two Front Benches? To be told only at five to 11 when you are to speak in a debate is quite ridiculous.

[Lord Taylor of Holbeach]

I understand that, but unfortunately the decisions on this matter were not available to my office in order to print the list at an earlier time. The noble Lord is correct, but he will know that my office works very efficiently in this regard. When a decision had been made, the lists were then made available. I am sorry for any inconvenience that Members of the House may have suffered. I know that many noble Lords expect to be able to go home at a reasonable hour on a Thursday, having considered the business that is of interest to them. However, the interests of one Member may not be the same as those of another. I think that the tradition of the House of working with the Opposition on these matters is an important one to maintain and I hope that it will be understood and continued by noble Lords.

[Lord Forsyth of Drumlean]

My Lords, I do not wish to detain the House, but if the Opposition decided to delay the Statement and prevent us from having an early opportunity to discuss it, that may explain why they are so far behind in the opinion polls—behind the SNP—in Scotland. This is a vital matter. These proposals were put forward by the leaders of the parties without any consultation. Indeed, the leader of the Labour Party in Scotland resigned, saying that she had not been consulted. It seems grossly unfair that Parliament has not been given an opportunity at an early stage to debate matters that are vital to the future of the United Kingdom.

[Baroness Royall of Blaisdon (Lab)]

My Lords, I do not wish to prolong this. I merely point out that tomorrow is a sitting Friday. If it were not, I would entirely accept that noble Lords would wish to go home to Scotland today. However, as it is a sitting Friday, they may wish to be here tomorrow. I would also point out that, had the Prime Minister gone to Scotland yesterday, the draft clauses would perhaps have been published yesterday. As it is, he has gone today, so I suggest that perhaps it has something to do with the Prime Minister’s diary.

Motion agreed.

National Infrastructure

Thursday 22nd January 2015 Lords Chamber

Motion to Take Note

12:01

Moved by

[Lord Adonis]

To move that this House takes note of the case for improving investment in and planning for the United Kingdom’s national infrastructure.

[Lord Adonis (Lab)]

My Lords, the case for improving investment in and planning for the country’s infrastructure is compelling and I hope that today’s debate will promote consensus in working towards this goal from all sides of the House. Although the value of investing in infrastructure is increasingly understood and supported by politicians and the public alike, we have got to make it happen, and my argument is that it will not happen on the scale required unless it is better planned, better led and better financed. I want to look to the future, but an understanding of past failures is essential to preparing for a better future, so I will highlight three areas of failure.

First, as a country, we have significantly underinvested in infrastructure, and there has been far too much stop-go in public investment, which is just as bad. This has been a problem during the entire post-war period, but the present coalition Government have provided a master class. Public sector net investment more than halved between 2010 and 2014, from £53 billion to £25 billion in constant prices—a decline from 3.3% of GDP to 1.5%. The OBR projects that public sector net investment, as a share of GDP, will fall further to just 1.2% by 2017 under the present Government’s forward spending plans, and it will stay at just 1.2% for the rest of the next Parliament. To put this in context, across the EU as a whole, public sector net investment has declined much less—from 3.6% to 2.9% since 2009. Yet even within this fast-shrinking total there has been damaging and expensive stop-go investment, particularly in the roads programme, which was slashed in 2010, only for a large number of schemes—including the A14, the A21 and the A27—to be reinstated last year.

On top of public investment in public infrastructure there is, of course, privately financed investment. In some of the privatised utilities—notably telecommunications and water—and in port and airports, there have been significant investment programmes, but here, too, there are serious deficiencies. Where is the superfast broadband in rural areas that has been promised for years? What has happened to the super-connected cities programme, only a fraction of which has been implemented? The electricity generation sector, although privately financed, is in a precarious position because of serious underinvestment in new generating capacity and long-standing political uncertainty about the most appropriate and cost-effective mix of new energy sources.

This brings me straight to the second long-standing problem. It has proved notoriously hard to forge long-term consensus on key infrastructure priorities and projects. This is not universally true, even of big, initially controversial projects. Crossrail, HS2, the Thames tideway tunnel, the Silvertown tunnel and the nuclear power programme are now progressing with broad consensus. But in all these cases they are progressing years—if not decades—later than they should have done. I hope it will be possible to reach consensus much more rapidly on HS3, linking the major cities of the north with much faster and higher-capacity trains, and we look forward to the Government’s plan, to be published in March.

However, in many vital areas, controversial projects have been stalled, for years if not decades. Airport expansion in the south-east of England, vitally needed bridges across the east Thames, many major new housing developments and new electricity-generating capacity have been stymied not just by understandable differences of opinion but by a protracted inability to resolve these differences at the political level. Heathrow, the Thames Gateway bridge, new nuclear power stations and onshore wind farms, eco-towns and swathes of undeveloped brownfield land in areas of high housing need are all bywords for years, if not decades, of indecision and inability to build consensus.

The third key failure of recent decades is the failure to regard homebuilding as an overriding national and local infrastructure priority, in the face of an escalating housing crisis. There is consensus that we need to be completing between 200,000 and 250,000 new homes a year to meet England’s population and household growth. When housing was a major national priority in the 1950s, 1960s and 1970s, this level of housebuilding was achieved in most years, reaching a peak of 437,000 new homes in 1968, which also happens to be the year after the state last designated a major new town—Milton Keynes. But it is now 25 years since 250,000 new home completions were achieved in any year. Under this Government the provision of new homes has barely exceeded 100,000 a year, which is not only a policy failure but a cause of acute anxiety and stress to families nationwide, particularly in London and the south-east, where population is booming.

How should we tackle these weaknesses? Partly it is a question of priorities and leadership. To govern is to choose; we need political leaders and government—national and local—choosing to give a higher priority to housing and infrastructure, prioritising funding, and being prepared to take controversial decisions where they cannot or should not be ducked. These will be key issues in the next Parliament. I am particularly glad to see my noble friend Lord Rogers of Riverside in his place. He has long been making the case for systematic planning for brownfield sites to tackle housing need, particularly in London. This requires planning not just of housing but the transport and other infrastructure required to unlock major sites. The result could be a new generation of city villages. But it simply will not happen without a strong lead and systematic support from central government developing its own landholdings, notably in defence and the NHS, mobilising local government too in a new national drive to transform housebuilding.

Institutions have a key role to play in promoting better decision-making in respect of infrastructure, and I want to set out two worthwhile institutional changes which, between them, could transform our national and regional infrastructure planning and delivery: first, devolution to city and county regions; and, secondly, an independent national infrastructure commission.

As a policymaker, I have long believed that R&D often stands for “rob and duplicate”. On devolution, hardly anyone would now dispute that the establishment of the Mayor of London and the Greater London Authority, with a particular brief to manage London transport and promote better transport infrastructure, has been a notable success. We now need similar institutions in England’s other city regions. As a former Transport Secretary, I can say with near certainty that without the Mayor of London there would be no Crossrail, no Overground, nowhere near as much upgrading of the Tube and bus infrastructure, and, although this is not the direct responsibility of the mayor, there would also have been less commercial development and even less new housing development in the capital. Indeed, a good part of the reason why we are stuck on airports is because the mayor and central government have been at loggerheads on the way forward.

It is also notable that the next most effectively led and cohesive of the city regions after Greater London, Greater Manchester, has been the next most effective in terms of transport infrastructure planning and investment. Witness the growth of the Manchester Metro and Manchester Airport, thanks to significant investment and effective regional planning. We need bold devolution for other city and county regions to enable them to promote infrastructure improvements in a similar fashion. The noble Lord, Lord Heseltine, said this in his excellent report, published two years ago. I urged it too in a report for my party last year. The challenge is to create fit-for-purpose institutions, which means more, and more powerful, combined authorities on the Greater Manchester model and devolving to them serious budgets, tax income and infrastructure planning powers. For London, there needs to be more devolution to the mayor and the boroughs, particularly in respect of housing.

I turn to national institutions. It is essential that we have better institutional machinery for assessing medium-term and long-term requirements for national infrastructure in a non-party fashion, not—I stress this—to replace government and Parliament as decision-takers but to support and strengthen them and to help build consensus. This is the purpose behind my party’s proposal for a national infrastructure commission, as recommended by an independent review led by Sir John Armitt, who, along with the noble Lord, Lord Deighton, played a key role in the planning and delivery of the Olympics. The commission would span a 25 to 30 year planning horizon, updating its assessments at least once a decade.

At the Report stage of the Infrastructure Bill in November last year, I moved an amendment to establish a national infrastructure commission. I hoped the Government would rob and duplicate the idea, particularly given the consensual way that the noble Lord, Lord Deighton, has gone about his job as infrastructure Minister. Unfortunately, this did not happen, perhaps because the noble Lord himself was not responding for the Government. I am more hopeful today because he is. In responding for the Government last November, the noble Lord, Lord Ahmad, did not address the key argument for a commission—to promote independent analysis of medium-term and long-term infrastructure requirements in energy, transport, telecoms, water, waste, flood defences and possibly also social infrastructure and major urban extensions, taking account of sustainability, both environmental and financial. In responding, the noble Lord, Lord Ahmad, simply retreated into an argument about the cost of a commission, although, of course, the Government already employ armies of civil servants and officials within Whitehall and their agencies to work on infrastructure planning. They are just not sufficiently co-ordinated, expert, long-term or independently led. The noble Lord, Lord Ahmad, also said that a commission,

“would distract from the business of providing the infrastructure that the country needs now and in the future”.—[Official Report, 05/11/14; col. 1644.]

It could hardly distract from the future, since it is all about the future. It is stark, staring obvious that governments and the state need the capacity both to deliver in the present and to plan for the future. They are not either/or. Indeed, the Government accept this in principle, which is why they now publish an annual national infrastructure plan. The problem is that the plan is not really a plan. It is a catalogue of some projects already under way and many hundreds more in the ether with little overarching needs analysis, rationale or prioritisation. I know this from bitter experience. When I became Transport Minister in 2009, the nation’s forward plan for rail modernisation stopped in 2014, which is why we had no national plan for main-line rail electrification or high-speed rail, both of which take somewhat longer than five years to plan and deliver, and which relate to national needs over the next generation, not the next decade.

It is no surprise, then, that the World Economic Forum Global Competitiveness Report 2014-2015 ranks Britain 27th for overall quality of infrastructure—27th for a country with the fifth largest GDP in the world. It is no surprise either that the view of business leaders is that future growth and prosperity prospects are being undermined by weaknesses in planning and delivering major infrastructure. A CBI survey of 443 senior business leaders in November last year showed that 96% felt political uncertainty to be discouraging investment and 89% were supportive of an independent infrastructure commission.

Let me stress that an independent infrastructure commission is not a dangerous innovation. Australia has a successful one, Infrastructure Australia. It applies to infrastructure the principle of systematic, impartial advice and analysis which is taken for granted in other spheres. It is precisely the principle behind the present Government’s decision to establish the Office for Budget Responsibility in 2010, to bring independent analysis and advice to bear on fiscal policy, although of course decisions on taxes and spending are a matter for government and Parliament. My party has endorsed the OBR, and it is here to stay. The last Labour Government also set up the National Institute for Health and Care Excellence—NICE—to make recommendations on the funding of NHS medicines and treatments based on evidence of clinical and cost effectiveness. NICE, too, has been sustained and it is clearly here to stay. A national infrastructure commission would play an analogous role. Indeed, the Davies commission, set up by the present Government to recommend a strategy for extra airport runway capacity in south-east England, is precisely such a commission but with a single-issue remit. So I hope that we hear a more positive response from the Minister today.

Let me end on an optimistic note. London 2012, the greatest infrastructure project in Britain since the Victorians, was a model of national purpose, successful planning and effective delivery. If we can make an outstanding success of the Olympics, there is no good reason why we cannot do the same in modernising our transport systems, our utilities and our housing. 2012 was Britain at its best; let’s make it the model for the future. I beg to move.

12:16

[Lord Sassoon (Con)]

My Lords, as the former Commercial Secretary to the Treasury, I am very pleased that the noble Lord, Lord Adonis, has initiated this debate on infrastructure today. I should note that I am currently the chairman of the China-Britain Business Council.

This is the first infrastructure debate in which I have spoken from the Back Benches and I will start by congratulating my successor, my noble friend the Minister, on the expertise, the energy and the success with which he has driven forward the UK infrastructure agenda in the past two years.

No Government in recent UK history have better understood the case for improving investment in and planning for the United Kingdom’s national infrastructure. This Government have spent more and they have spent better than the last Government ever did.

Let us remember that note which was left by the last Government in the Treasury drawer in May 2012, saying:

“I’m afraid there is no money”.

That was the appalling background against which the easy thing to do would have been to cut infrastructure expenditure—but this Government did the difficult but correct thing of increasing capital spending, initially by up to £2.3 billion a year and then by switching a further £5 billion a year from revenue to capital spend.

Not only was it more expenditure, it was against a plan which the last Government never had: the first ever national infrastructure plan, to set out the challenge and to give transparency to infrastructure investors and contractors. That plan was and is at the heart of this Government’s pro-growth policies, and it is a plan against which the Government have regularly reported progress.

We also inherited a PFI programme which had been poorly executed by the last Government, with endless cases of inflated costs borne by taxpayers and excessive profits made by investors. This Government have attacked those excessive costs and, by the end of 2012, had exceeded their initial target of saving £1.5 billion.

This Government have not dodged the most difficult infrastructure challenges. As far back as 2003, the last Government published a White Paper on UK runway capacity, but for seven years they did not act on it. But this Government have set up the Davies commission to make a detailed study and recommendations on runways in the south-east. The last Government were frit. This Government have risen to the difficult challenges.

On the international front, the Government have put infrastructure at the heart of our commercial relationship with China—a relationship which had no such dimension under the previous Government. It has led to Chinese investment in our water and in our airport infrastructure, and that is to be welcomed. I would be interested to hear from my noble friend about the even more important prospects for Chinese investment in nuclear power and in high-speed rail.

Finally, the noble Lord, Lord Adonis, referred at some length to the proposal for a new infrastructure commission. The last thing we need is another quango, more paperwork and more layers of bureaucracy. I hope that my noble friend will assure the House that this is neither necessary nor something that the Government will entertain.

I have noted the recent work of the new UK Regulators Network. It seems an excellent example of how well this Government are taking forward the huge and difficult infrastructure challenge, and I commend my noble friend for that initiative.

12:20

[Lord Bhattacharyya (Lab)]

My Lords, I thank my noble friend for securing this vital debate. I meet global business leaders regularly and they all agree that Britain must improve its infrastructure in order to attract inward investment. From China to Holland, they see what good infrastructure achieves.

British business also says that we need to improve. Some 60% believe our roads are poor. Five years ago, the cost of road congestion was £2 billion a year. Yet, after the last election, many road projects were mothballed in the spending review. Capital spending on roads fell by around a half. Now the Government boast of major new investment. I welcome these projects, but all it means is that projects such as the A21 are back on again. It demonstrates that we do not think long term. In fact, our basic weakness in this country—whether it is investment in industry or in infrastructure—is all associated with short-termism. This has consequences. As KPMG has said, foreign investors are frustrated because,

“there aren’t projects to invest in immediately”.

We know there is a better way because we put huge effort into creating long-term consensus on projects such as the Olympics or Crossrail. That needs to be systematised in our approach to all infrastructure planning and is why I strongly support my friend Sir John Armitt’s proposed national infrastructure commission. It is, to quote the Spectator, an idea,

“good enough for George Osborne to steal”.

My noble friend has set out how the commission would work. I will make one additional point. Giving an independent body authority to assess infrastructure needs would not reduce the power of elected Governments. Rather, it would give Ministers a power that they do not have already—the power to choose. One of the big problems of the other infrastructure bodies that noble Lords have mentioned is that they become quangos. That does not have to be the case. They become quangos only through the authority given to them by the Government.

Infrastructure assessments would create a better understanding of future needs and lead to stronger medium-term plans under departmental leadership. Ministers would have greater certainty about resources as their party would have been consulted on priorities from the beginning. Now Ministers only have a choice between the plans of their predecessors and further delay. With improved advance planning, Ministers could better set priorities and choose which projects should go ahead. They would get the power to deliver what they need and Parliament would be able to hold them accountable.

Some ideas make us regret that the other lot got there first. Once the National Audit Office, Bank of England independence and the Office for Budget Responsibility were established, they seemed common sense. A national infrastructure commission is the next such proposal. The Government still have time to steal it. I urge the Minister to take this opportunity.

12:29

[Baroness Maddock (LD)]

My Lords, I declare my interests as recorded formally. I particularly draw attention to my vice-presidency of the Local Government Association, because in my remarks this morning I will be drawing on the interim findings of a report commissioned by the LGA into economic growth and the future of public services in non-metropolitan areas, under the chairmanship of Sir John Peace.

There will be no disagreement around the House that good infrastructure forms the backbone of a modern economy and is vital to our economic growth. In coalition, the Liberal Democrats have agreed to prioritise infrastructure as part of our economic strategy. Indeed, by making tough choices, the Government have been able both to reduce the deficit and to increase capital spending on infrastructure—I disagree with the noble Lord’s opening remarks. It is now higher as a percentage of gross domestic product than in the final term of the previous Government.

However, this morning, I want to concentrate my remarks on the challenges that face us now and in future to make sure that the whole of England can benefit from important infrastructure development. One of the main challenges that we face is a highly centralised system of government and financial decision-making. The coalition has taken steps to decentralise, but central government still controls 60% of local government spending in England. What is more, it prescribes how much of that can be spent and sets limits on how local government can spend much of the money that it raises locally.

Local authorities are often best placed to understand the needs of their local economies and the challenges and opportunities that they face, which cut across traditional administrative boundaries. Having control over the whole budget would enable local authorities to prioritise according to local needs. Outside London, the non-metropolitan areas—the shires, smaller towns and cities and rural and suburban areas—produce the majority of England’s growth. Although it is vital that cities should be empowered to grow their skills and productivity, it is important not to hold back areas other than the major cities. We need to ensure that transport investment provides infrastructure that better joins those non-metropolitan areas to their urban neighbours and to global trade routes.

No one wants a wholesale reorganisation of local government—I have seen at first hand how difficult and destructive that can be—but that does not mean that we cannot use our existing structures to better effect. At the end of the day, unless we can make cities and non-metropolitan areas more fiscally self-financing, we will continue to be a centralised economy.

As a resident of Berwick-upon-Tweed, I am only too aware of the effects of our centralised system of government and financial control in areas such as rural north Northumberland. The main artery, the A1 from London and Newcastle to Edinburgh, peters out to a single carriageway most of the way north of Morpeth. Morpeth is 50 miles south of Berwick and at present is the home of county hall. I am pleased to say that, after years of lobbying, my right honourable friend Danny Alexander has announced hundreds of millions of pounds to dual the road at least halfway to Berwick. Promises have been made in the past but then forgotten by both Labour and Conservative Ministers. I sincerely hope that, whatever the result of the next election, that will not happen again. We need that strategic road to be upgraded all the way to Berwick if we are to attract businesses and jobs there; it is dualled most of the way the other side to Edinburgh.

We also need good local transport that is affordable to our young people and students. We have one of the lowest take-ups of further and higher education in the country. We have one high school in Berwick; the next nearest is 30 miles away. I am very pleased that we pledge in our manifesto to give two-thirds off public transport fares to young people.

Broadband is very important in our area. The county council has worked with the Government to ensure its rollout. It is vital to every farm and small business in a rural or remote area. Again, the council had to bid for that money.

We want good infrastructure. We need more devolution, to balance the budget and to have a long-term plan for capital expenditure on infrastructure, including housing, so that we can continue to raise the amount of money available in both absolute terms and as a share of our gross domestic product.

12:29

[Lord Freeman (Con)]

My Lords, in a spirit of consensus, I agree with a great deal of what the noble Lord, Lord Adonis, said and congratulate him on securing this very important debate. I also associate myself with a number of recommendations that my personal friend, John Armitt, made in his excellent report to the Opposition.

I welcome the policy statement on national networks but I have one problem with it, which is the timescale. Governments of all hues over the years have made the same mistake of not thinking long-term. It seems important that one should be looking at least 30 years ahead, whereas at present the policy statement tends to be looking at a much shorter period. It is over that length of time that policy involving all modes of transport can be properly taken into account.

I will make four simple points. The first is that all modes of transport should have been involved in the policy statement, although I very much welcome it and it is definitely a step forward. Air transport is not included, for example, and it is important that we avoid some of the mistakes made in the past in rail and road planning, forgetting the implications for proposals for national airports. Secondly, and here I agree with my noble friend Lord Heseltine, local authorities up and down the country should play an important role in the planning of infrastructure. The delegation of responsibility to local authorities in this matter, in terms of both policy and finance, is extremely important. Thirdly, the private sector has a role to play in the planning of national infrastructure. I give noble Lords one example: on the west coast main line the franchisee has much responsibility, financially and in planning, in contributing to the improvement of that line running from London to Scotland. I welcome the initiatives already being taken by the Department for Transport to think long-term about improving that line.

Lastly, I will take what some of your Lordships might think a step too far. I think that this House should emulate the other place, the House of Commons, which has an excellent Select Committee on Transport. I see no reason why your Lordships—or the Government, in discussion with the Opposition—should not consider setting up a Select Committee in this House specifically to deal with transport. A lot of your Lordships have a great deal of experience in this field. Bipartisanship and looking long-term, which are both important principles, would be encouraged and developed if we could have a Select Committee, built to be bipartisan between opposition and government on planning infrastructure, devoted to considering this matter over the long term.

12:33

[Lord Rogers of Riverside (Lab)]

My Lords, we live in an urban age. Ten per cent of the world’s population lived in cities 100 years ago; today it is 50%, and in the next 30 years we shall see it at 80%. People are drawn by jobs and the possibility of meeting other people. They are the hearts of our culture and the engines of our wealth.

As part of this we need to invest in the infrastructure of cities, particularly in housing—the infrastructure of the everyday. Some 15 years ago, I chaired the Urban Task Force set up by my noble friend Lord Prescott. We said then that we needed 300,000 homes a year. That is more or less what we are saying again, but today we are for the first time building only one-third of this. We were building up to 400,000 after the war. In addition, we have some of the smallest—and in my view, the shoddiest—housing in the world. We need to rediscover our skills in creating cities that everyone wants to live in.

The only form of sustainable city is compact, mixed-use and well designed, using brownfield land, retrofitting and densification, supported by public transport, and has well designed public space—and a lot of it—for walking, cycling and leisure. For example, in the centre of Manhattan 60% of people walk to work—in a city that is known for cars. Such cities must have a mix of uses of living, working and leisure, for poor and rich, and we need to build affordable houses to make cities have a real social mix. We will meet our housing targets only if we make the most of our brownfield land, and England has among the most brownfield land of any country, first, because of a vast Industrial Revolution, which changed it completely; and secondly, because there are still remnants of the war.

That industrial change and its impact give us a tremendous opportunity to strengthen our existing cities. We have enough brownfield land for 1.5 million houses, at a medium density. That is according to government figures, and after the selection of certain areas of brownfield that are easily developable and which would link in with the cities we already have, so it is a low figure that misses out on a lot of things. That supply is constantly being replenished as industrial change continues, so 15 years ago we used lots of it but we still have the same amount. Left derelict, brownfield land is a tear in the urban fabric and a focus for crime and disorder. Intensification and retrofit add much more potential. Somewhere like Croydon, for example, has potential for new development within the urban fabric on the scale of a new town, and already has wonderful infrastructure systems. The centre of Croydon is nearly empty.

Therefore I believe—and I have studied this for many years—that building new towns is not sustainable, either regarding climate change or using already half-empty buildings which are left near those areas. The situation is made worse when the planning and building of new houses is led by volume house builders, whose primary concern is the bottom line—and I am sure they would agree. That would seem crazy anywhere else in western Europe.

I have good examples of urban regeneration, where the people and the local authority take responsibility.

[Baroness Garden of Frognal (LD)]

My Lords, I remind noble Lords that this is a time-limited debate.

[Lord Rogers of Riverside]

We need to give elected local authorities the powers and resources to plan for new brownfield development, intensification and retrofit so that they can repair the tears in the urban fabric and build the houses that we need, building on brownfield land before green. With the right infrastructure investment, and the power taken back by local authorities, we will be able to build new towns in our cities, not outside them.

12:39

[Earl Attlee (Con)]

My Lords, my first point concerns the cost arguments against HS2—and, for that matter, any other large infrastructure project. My recollection is that we are spending around £3 billion a year on Crossrail. About the time we stop spending large amounts on that, we will move on to the construction phases of HS2. Clearly we can afford these projects, as we are doing so now. Affordability is a red herring used by the opponents of HS2. To put this expenditure into perspective, we spend in the order of £100 billion each year on welfare. I say “spend”, because that is not investment: next year we will have to spend another £100 billion on welfare, if we want to remain a humane and compassionate society—which I suggest we do. The beauty of a railway infrastructure project is that we can enjoy a return for 100 years or more.

My second point concerns the scheduling and sequencing of these large infrastructure projects. The advantage of having an Infrastructure Minister within the Treasury is that there is a much better chance of ensuring that projects are properly sequenced, to avoid feast and famine, and perhaps of providing some predictability for the construction industry. For example, drilling down into the HS2 phase 1 project, I would imagine that in the construction phase all the bridges will be commenced at more or less the same time. Each construction site will require at least one large crane. If we were to build HS2 phases 1 and 2 concurrently rather than sequentially, we would massively increase the demand, and therefore the cost, of the construction equipment—but everyone would know that famine would follow. The same argument would apply to every other capability, including professionals, that we need for HS2 and other projects. It would be much better for my noble friend the Treasury Minister to do his best to ensure a steady flow of work and avoid the stop-go that the noble Lord, Lord Adonis, mentioned in his excellent introduction. We should therefore do phase 1 of HS2 followed by phase 2, and then I hope by HS3 in due course.

My last point is that we cannot undertake large infrastructure projects without very adversely affecting some of the population. Sadly, an infrastructure commission would not change that. Unhelpfully, those who are adversely affected often do not benefit directly once the project is in operation. There are many inside and outside your Lordships’ House who query the economics of HS2. I sympathise with those adversely affected, and respect the opposing views, but I firmly believe that such projects should be authorised at national level, in Parliament, at the earliest possible point. The paving Bill for HS2 has been approved by Parliament, and it would be very difficult to stop it now, because that would involve writing off hundreds of millions of pounds of public money in sunk costs.

My concern is about the use of judicial review to delay, derail or stop a project. Some of the recent cases involved the HS2 consultation procedure, and claims that the consultation was not done in precisely the right way. It was a case not of no consultation, but of exactly how consultation was done. I am pleased to say that most of those claims have been thrown out by the courts, although some minor technical points were upheld.

12:43

[Lord McFall of Alcluith (Lab)]

My Lords, I congratulate the noble Lord, Lord Adonis, on generating this debate. I shall focus on three areas: the mindset of the Government, the present strategy, and the consistency or inconsistency of approach. The Government’s mantra has been fiscal consolidation, which is nothing more than a euphemism for cuts in public spending. That view was shared by the IMF, but it changed its tune dramatically in October, in its World Economic Outlook, where it said that there was a need for a substantial increase in public infrastructure investment globally. It asserted that properly designed infrastructure investment would reduce, rather than increase, government debt burdens. In other words, it would pay for itself. There is therefore an overwhelming case for investment now, and on a substantial scale.

The second issue is strategy. The Government’s strategy needs to embrace the entire country. That is mentioned in their document on transport, Rebalancing Britain, but it has to mean what it says.

I note that the Prime Minister is in Scotland today. He has to emphasise that the tools to deliver such projects need to come from the decentralisation proposals which will be implemented in England and the devolution proposals which will be implemented in Scotland, Northern Ireland and Wales.

The Economic Affairs Committee is looking at HS2 at the moment. I had a revealing exchange recently with Sir David Higgins, who is in charge of that. Sir David is a man of great integrity and impeccable professional credentials. However, I questioned him about his statement that we need an east-west train line in the north of England. He had called for that to be built alongside HS2, at a cost of £15 billion. It was revealing that Sir David replied:

“I do not think we were even talking about east-west six months ago, and as I started spending time with northern politicians, a number of them said, ‘Why do you not at least consider the issues?’ … the more I thought about it the more I thought that this debate needs to be had”.

Under questioning from me on whether the six-month timescale added up to a national strategy, he replied:

“You are right, so it is not a national transport strategy”,

so we are building HS2 without a national strategy. His advice to the committee was that,

“you need to say, ‘There needs to be a national transport strategy’”.

Two conclusions can be drawn from that: first, that we have a London-centric approach; and, secondly, that we have a lack of clear strategic planning. The Public Accounts Committee report published last week was very clear that the Department for Transport is making decisions about which programmes to prioritise for investment on unclear criteria. Indeed, it has still to publish proposals for how Scotland will benefit from HS2, including whether or not the route is extended into Scotland. What goes for transport goes for other areas such as energy, airports and housing, which have been mentioned.

The third issue is inconsistent government policies. To deliver projects there needs to be public-private collaboration. There was a great initiative a few years ago whereby pension funds were going to invest £25 billion in infrastructure projects. However, for them to do so, they needed to match their investment with long-term liabilities. The Chancellor radically redesigned the pensions landscape in the 2014 Budget. The result will be a net gain to the Treasury in the next four years of £3 billion, and £17 billion a year by 2030 at 2013-14 prices, but uncertainty for pension funds and long-term investment.

There is a case for greater certainty in long-term strategic policy. That can be delivered only by an independent national infrastructure commission, as has been said. Sadly, that task will be left to the next Government, who need to make it a primary responsibility.

12:47

[Lord Marland (Con)]

My Lords, I welcome the debate initiated by the much respected noble Lord, Lord Adonis. I completely concur with other noble Lords that it should be conducted in a bipartisan spirit because, as we all know, infrastructure is for the long term and crosses Governments and Parliaments.

From my experience in government, which ended a year ago, I know that government has a poor history of developing infrastructure. It is not a naturally commercial animal and should avoid carrying out projects at all times, as they often end in overspend and incompetent management. However, government is an enabler. I congratulate the current Government and my noble friends Lord Sassoon and Lord Deighton, who have set about the task of enabling in an extraordinarily energetic and vigorous fashion.

We have had a very poor landscape of infrastructure development. We have had economic failure and the failure of banks to lend, which is fundamental to development. That has led to lack of confidence. Through my noble friends’ initiatives, despite having their hands tied behind their back, we have been able to develop confidence. I have enjoyed working closely with them on projects such as Battersea, Sellafield, when I was a Minister for energy and climate change, the early stages of Hinkley Point and now the Tottenham redevelopment.

What they have established is joined-up government. It is fundamental that across departments we must all share and work for a common aim. They should be further congratulated on setting up a showcase of the infrastructure projects that are available. This is the first time a Government have ever done this.

The noble Lord, Lord Adonis, quite rightly refers to the regions. He has taken London as a shining example of infrastructure showing the fundamental prosperity of a region. I totally concur with him that if we are to get real infrastructure projects going in this country, we have to empower the regions; we have to let them make the decisions and therefore generate the opportunities.

If one wants to see how that works, as the noble Lord said, one needs look no further than at Boris Johnson’s mayoralty, which has shown London as having travelled so widely. It is now the centre of the world in terms of how people look to see a city prosper and develop. We now have an opportunity, surely, because the economic landscape is changing. We have cheap money. We have the availability and the thirst of many investment organisations to invest in long-term projects. We must grasp this opportunity, as noble Lords have said, to develop infrastructure projects for generations to come. Now is the moment when government should act and take those opportunities.

12:51

[Lord Hollick (Lab)]

I would like to thank my noble friend Lord Adonis for securing this debate. All major parties have enthusiastically committed to infrastructure investment, but there are some key differences that have emerged over the level of funding, the process for evaluating projects and whether responsibility should reside in Westminster or increasingly in the nations and regions of the UK.

The Conservatives are clear that they will seek to achieve an overall budget surplus by 2018-19, with investment spending maintained at the current 1.2% share of GDP. Labour has sensibly proposed to unbundle current and capital expenditure and committed to secure a current budget surplus as soon as possible, to reduce the national debt as a share of GDP, but—critically—to increase infrastructure spend as a percentage of GDP back to 1.5%. The difference between the Labour and Conservative plans for infrastructure spend has been independently assessed as being up to £20 billion by the end of the next Parliament. The case for increasing the level of infrastructure spend at a time of record low long-term borrowing rates and when it can sustain and improve the current momentum in the economy is indeed powerful.

Another key difference between the main parties is the process of evaluating and deciding which of the many competing projects to pursue. The coalition published a National Infrastructure Plan, which has been referenced, and has subsequently published updates. This approach is most important. It has focused on delivery, cost control and implementation—all of which are of absolute and vital importance. But we are invariably proceeding without a clearly articulated strategic plan. As my noble friend Lord McFall mentioned, the Economics Affairs Committee is currently reviewing the economic case for HS2. Many of our witnesses have criticised the absence of a comprehensive strategy for HS2. This, they say, has undermined public confidence and stands in the way of a thorough and transparent review of alternative solutions. Professor Overman said that the case for HS2 and the alternatives presented to Parliament was so poorly analysed that it left MPs in a quite hopeless position to make a decision.

This is the crux of the problem: without a clear strategy, how are the Government, let alone the public, to decide what are the most appropriate and cost-effective options, and to prioritise investment? The Treasury carries out rigorous, zero-based capital reviews to determine priorities. But it is HS2 and the Department of Transport which are responsible for providing all of the data and analysis to support this evaluation. There is no independent review and the detailed analysis is not made public. This stifles informed debate and independent analysis.

The establishment of the national infrastructure commission—described by my noble friend—by the next Labour Government, will allow future Governments the luxury of making their decisions on which infrastructure options to pursue in the light of an overall strategy, and only after rigorous independent, impartial assessment.

The huge regional disparity in infrastructure spend was a very hot topic when our HS2 enquiry took evidence in Manchester from five Midlands and northern city authorities. The cities want to combine into large metro groups and take responsibility for infrastructure planning and implementation. Spending per head on infrastructure in 2013 was £2,595 in London but a meagre £5 in the north-east and only £99 in the north-west. The cities were justified in claiming that they are being short-changed and resented their subservience to Westminster. My noble friend Lord Adonis has made a powerful case to give large metro regions the responsibility for regional infrastructure and devolved budgets to support their projects. The noble Lord, Lord Heseltine, holds similar views, as does the City Growth Commission—chaired by Jim O’Neill, who appeared before our committee—which has called for the power to approve projects and secure finance to be devolved to the regions.

It is interesting to speculate whether, if HS2’s £50 billion budget was available to promote growth and connectivity in the regions, the regional metro authorities would pursue what one economist described as the lowest common denominator solution, or a more focused series of transport initiatives. Only when the regions are freed from the grip of Westminster will we know the answer to that question.

12:55

[Baroness O'Cathain (Con)]

My Lords, this is a brilliant debate, given that we are looking at investment in and planning for the United Kingdom’s national infrastructure. As noble Lords can probably see, I have torn up my speech completely and have scribbled only a few things because almost everything that I had wanted to talk about has been mentioned.

The letter of May 2010 was a fact, although even then we were more infrastructure-minded when looking at plans for 2012. We are now looking at many greater plans for the next five years. It was slightly unfair of the noble Lord, Lord Adonis, to castigate the Government, because investment in infrastructure in the five years of this coalition Government was at a higher proportion of GDP than under the last five years of the Labour Government.

Investment is something that we do not have too many worries about. Sovereign wealth funds and individual corporate investors want to invest in this country. Why? They trust us, appreciate our rule of law and the relatively stable political climate, and approve of the established regime of independent regulators. They are all part of a climate that is attractive to investors. Investment is certainly part of our normal business proposition.

However, I am concerned about the future of infrastructure programmes in this country because of the skills shortage. The skills deficit is definitely a fact. We have funds, brains, designers, brilliant architects and award-winning engineers. We have a history of excellent research and innovation. What we must do is make skills the most important short and medium-term focus of our education system. I wish that I was convinced that there would be more rapid upskilling than seems to be happening. We need more of the technical academies such as those set up by my noble friend Lord Baker, who I am glad to see is sitting in his place.

I ask my noble friend the Minister if he could use his undoubted influence to resolve the current visa problems of overseas students who graduate from UK research institutes and have to leave the country after graduating. This is crazy; it flies in the face of common sense and sends all the wrong messages to would-be investors. This country is home to four of the top 10 graduate colleges in the world league table for research and innovation—Cambridge, Imperial College, Oxford and UCL. I have deliberately listed them alphabetically. Why do we educate these people to such a high standard in the best colleges in the world and then say, as soon as they have completed their PhD, DPhil or whatever, “You cannot stay. You’ve got to go”?

In conclusion, I firmly believe that we are in a very good place, both to attract investment and to produce great new developments in infrastructure. However, there is a caveat. We cannot put this at risk by allowing political posturing to damage the course we should be taking. We definitely need a national consensus. The leader of the Opposition in the other place certainly did this when he announced that he would insist on a freeze in energy prices if he were leading the Government. The overseas reaction was immediately bad. Investors are not risk-averse but when political whims enter the equation trust is damaged and we all know how hard it is to roll back from that situation.

12:59

[Lord Berkeley (Lab)]

I very much support and congratulate my noble friend Lord Adonis on this debate. I would definitely support the national infrastructure commission proposed in the excellent report produced by Sir John Armitt. I follow HS2 with a certain amount of interest. When my noble friend was Minister of Transport, and subsequently Secretary of State, he put a vision into the railways and quite a lot of discipline as well. He started the idea of HS2. The noble Lord, Lord Marland, and my noble friend Lord McFall suggested that everything was too London-centric. I remember suggesting to my noble friend Lord Adonis at the time that it might have been better to start in the Manchester and Leeds areas and work south. It would be easier to get across the Chilterns when there was nothing else to do but join them together. Nevertheless, it went well while he was in charge. I am sad that, in the period from then until the present Secretary of State, Patrick McLoughlin, took office—he is taking a great interest in it and doing very well—I detected a slight rudderlessness in the way HS2 was taken forward at the political level.

Last night I was pleased to be in Brussels with my noble friend Lord Adonis to see him being awarded a very important prize by the European rail supply industry for the vision that he showed in this country when he was Secretary of State. He went round many high-speed lines that were being developed across Europe in Germany, Spain, France and Italy to see how they did it. It was quite clear that in all those places they manage to build these lines much more quickly than we do. When it comes to operating their trains they are nothing like as good as we are, but they do the building very well. I suspect that this is something to do with us being a mature democracy—I am not saying that they are not—and listening to people’s complaints a bit more. I remember when I was starting off the Channel Tunnel, my French colleagues used to say to me: “Why is it taking so long to get permission to build this thing? We got permission in six weeks”. In the UK, we took three years. I asked them how they did it and they said: “If you want to drain the swamp, you do not consult the frogs.” That is an interesting way of putting it but it is quite true. One thing they did was related to arguments about compensation for people who owned property or whose businesses might be affected. There is a system in France where it is normal to pay a good 10% over the assessed market value of the business or the house. I hope we take up some of these big projects and wonder whether we should look at that when we do so. I am sure that if people felt they had been given a little bit extra, in addition to their moving and relocation costs, it would help a lot.

We also need to discuss how to get these permissions. The Bill for HS2 is grinding through the Commons. I do not know whether it is going to take three, four or five years. In many ways, it is no more contentious than the Bill for High Speed 1 was, but is that the right process? If it is, what about having a Joint Committee of both Houses to do it? Do we really need to offer people the opportunity to petition on the same subject—and it can be in exactly the same format—to both Houses? I suggested this a few years ago for HS2 but it has not been taken up. Or should we abandon the hybrid Bill process completely and go for the new regime within the Planning Inspectorate? This, of course, is the way the Thames tideway tunnel is being done. I happen to object to that project, but the process is probably going quite well. We need to have this debate; we need to reflect that, being a mature democracy, we have to take a bit longer. We have a long way to go but I welcome my noble friend’s debate today and hope we can take it forward.

13:04

[Viscount Ridley (Con)]

My Lords, I congratulate the noble Lord, Lord Adonis, on securing this debate and on the prize we have just heard about from the noble Lord, Lord Berkeley. I have had huge respect for him ever since his recent very fine report about the north-east of England. I am very sympathetic to much of what he has to say about the future of infrastructure but I will focus my remarks on roads.

Since 1990, France has built 2,700 miles of new motorway. Between 2001 and 2009, under the previous Government, this country built just 46 miles. To use the words of the noble Lord, Lord Adonis, himself, this was a “master class” in underinvestment, although admittedly it was before he was Transport Secretary. The UK has half as much motorway per vehicle mile as other major EU countries. It is not as if the Labour Government did not know that they were underinvesting in this, because in 2006 they commissioned Sir Rod Eddington to look into the road network and make suggestions. He wanted to tackle a number of bottlenecks, build bypasses, widen roads, improve junctions and so on, and he made a number of recommendations which largely were not acted on.

The Institute for Economic Affairs calculates that, over the last decade or so, we have been cancelling road projects that would have an average benefit to cost ratio of 3.2 to 1 and deferring ones with a benefit to cost ratio of 6.8 to 1. Yet at the same time we have been funding public transport projects with much lower benefit to cost ratios averaging about 1.8 to 1. I ask the noble Lord, Lord Adonis, why so little was done to fix the roads when the fiscal sun was shining. Was it just because we were all frit of Swampy in those days? I welcome the fact that, as my noble friend Lord Sassoon said, this Government are planning, under much tougher fiscal conditions, to spend £24 billion on roads between 2010 and 2021 to resurface 80% of national roads, to add 221 lane-miles of motorways and start 52 major road projects. I echo what my noble friend Lady Maddock said about welcoming the dualling of the A1 through Northumberland.

The crucial point is that we need to rethink how we pay for roads. In 2011, the RAC Foundation said that we had fallen behind other nations in the way we fund road building because in both the United States and across Europe contracts to build roads are nearly always, or very frequently, privately financed, often regionally commissioned and invested in by pension funds because there is a capital return through tolls. For example, in the United States, 4,500 miles of new highway infrastructure have been built in this way, using tolls, since the early 1990s. In France, which is hardly a hotbed of free-market economics, they have privatised most of the strategic road network and drivers are now very used to using tolls, particularly because of electronic tolling. That is, of course, why the roads in France are so good and they have been able to build so much more. The RAC Foundation concluded:

“Across continental Europe, toll roads now account for a significant portion of the strategic road network in all of the countries we have reviewed.”

We need to be more radical, open and imaginative if we are to cut congestion, which is a huge drain on business in this country, and boost economic growth.

13:08

[Lord Graham of Edmonton (Lab)]

My Lords, I join many other noble Lords in congratulating the noble Lord, Lord Adonis, on securing this debate. It is impossible to do in four minutes what one wants to do in a debate of this kind but I congratulate the staff of the House of Lords Library who have produced an excellent note, full of facts and figures. I do not intend to knock previous programmes but to remind the House of what has happened to some of them, such as the sale of council housing.

In 1979, there were 6,568,000 council homes. By 2012, this figure had shrunk to 2,096,000, and there one may find some of the seeds of the present problems. Of course it was a good policy to sell council houses—we backed it in this Chamber. But the problem was that the Government of the day, because of their political stance, did not allow councils to replace the houses that they had sold. As a consequence, we have the problems that we have today, and that is not very good.

On the disposal of national assets to allow private landlords to amass a portfolio, I should like to put on the record a recent piece from a national newspaper. When houses were allowed to be sold, one assumed that people would own them for the rest of their lives or that they would be inherited by their children. But what has happened? A number of private individuals have made it a business to buy council houses and to rent them. I know of a situation where a man is saying, “If you have more than two children; if you are on a zero hours contract; if granny moves in; or if you are on housing benefit, you will be evicted”. That is what that man is doing. The terrible problem is that nothing can be done about it. He is operating within the law. I should like to ask the Minister, if it is possible to do this in this very busy period, whether there is any move towards examining the manner in which previous assets have been distributed and are now working against us.

Housing is not the only issue. I look at the extent to which water, electricity and other public assets have been distributed. Noble Lords will know the slogan: “Tell Sid”. Everyone jumped on the bandwagon but the shares did not remain in the hands of the individuals. They were bought up by, among others, the Canadian Pension Plan, a consortium in Hong Kong, Australian and Canadian pension funds, Cheung asset management, the Norway central bank, and organisations in China, Malaysia and Singapore.

I am conscious of the time and I do not want the Whip, who is doing her job, to remind me. This has been said in the country and I have said sufficient to indicate that I am in favour of the plans ahead. However, we need to be very careful that the defence of this realm is not put in jeopardy by selling or allowing to be bought the assets that we have inherited from our predecessors. We should be very careful not to allow too much imbalance.

13:13

[Lord Bradshaw (LD)]

My Lords, those of us who work in systems industries are well aware of the fact that when you are using 85% of capacity—whether it is roads, water, electricity or railways—you put yourself in a position where a slight aberration in performance starts to collapse the system. We have to get our priorities right and we have to invest early enough. The noble Lord, Lord Adonis, will remember that when he was Secretary of State, we persuaded him to order 200 new diesel trains but he was unpersuaded after the OECD notice and I do not know why.

The noble Lord, Lord Deighton, would do well to address the whole issue of the appraisal of schemes and the capturing of the economic effects. Last night’s Evening Standard announced that house prices would rise 54% in Whitechapel because of Crossrail. As far as I know, none of that money accrues to the public purse or is even credited to Crossrail. We create wealth but it is not created for the public purse.

Air quality and congestion are enormous problems. As at present constructed, business cases do not give enough emphasis to that. In the infrastructure plan, there is a very imaginative scheme for Bath city centre. The local council wants to improve the appalling traffic flow and the huge damage to buildings by relieving the whole pressure of traffic on Bath. However, it is difficult to get the scheme to conform to the appraisal system. While I am on appraisal systems, I do not think there is any economic justification for adding together huge numbers of very small time savings and justifying things on that basis. They have to be credible and realisable time savings to be worth being taken into account.

I am very pleased to say that the railway franchise bidding procedure is at last taking quality into account. That has long needed to be done but the Treasury has shied away from it because it cannot be proved in financial terms. It is very heartening to see that the Stagecoach bid for the east coast and the Abellio bid for the ScotRail franchise have taken these things into account. I ask the Minister to note that the railway franchise system overspecifies the service. Lots of small stops are put into routes. Lincoln to Nottingham could be a very fast service, end to end or stopping at Newark, but it is precluded from that by the passenger service obligation.

I am interested in the idea of an independent infrastructure commission, as advanced by the noble Lord, Lord Adonis. I am a victim, I suppose, of the Strategic Rail Authority. In the years in which I was involved with it, we had constant fights with government departments as to who was in charge of what. A decision has to be made about who will be in charge—Whitehall or the independent infrastructure commission. There have to be clear lines of demarcation.

I endorse what the noble Baroness, Lady O’Cathain, said about training. Training is essential. We need huge numbers of engineers and people to support them. I am very pleased that this Government have at last delivered a great increase in the number of apprentices.

13:17

[Lord Liddle (Lab)]

My Lords, I declare an interest as a member of Cumbria County Council. My purpose in speaking in this debate is to bring a cold wind of Cumbrian reality to all this chatter about infrastructure. When it comes to infrastructure, London gets most of what it wants—as, probably, as a global city, it should—but the rest of England has to be content with crumbs. These crumbs are from Chancellor Osborne’s table, which his spin doctors try to confect into some imaginary tray of appetising cream cakes. They look tempting and delicious when they are offered but, in the modern world on public health grounds, you are not allowed to get near them.

In Cumbria, we were greatly heartened by the Chancellor’s talk of a northern powerhouse and by the idea of High Speed 3 connecting our great northern cities. But what is the reality? A couple of weeks ago, the Transport Secretary, Patrick McLoughlin, who is a good man, came to Carlisle. It was one of those visits to marginal constituencies that Ministers have to make at this time in the political cycle. Doubtless, he had asked his department to identify what suitable goodies he could announce or perhaps reannounce for Cumbria. However, the cupboard proved very bare. There would be no road improvements to link the centre of Britain’s nuclear industry on the west coast to the M6. Nor would there be improvements in rail connectivity or an improvement in the east-west line from Carlisle to Newcastle. That is a journey of 60 miles, which in the modern world takes 100 minutes but should take 45 minutes. Instead the Transport Secretary came up with the announcement of a single additional early morning train service to take workers from Carlisle to the nuclear site at Sellafield. In my youth, the railway would have described that as a workmen’s special.

This beneficial improvement came out of the recent refranchising of the Northern and TransPennine rail services. What Mr McLoughlin failed to highlight in this announcement was that, as a result of this refranchising, Barrow-in-Furness has lost its direct rail service to Manchester Airport, which used to run every two hours. That service was a crucial lifeline for this isolated town. Why is Barrow losing this service? It is because the TransPeninne units have to be transferred south to tackle overcrowding on the Chiltern line. In other words, there is not so much a northern powerhouse as a southern smash and grab. As a consequence of this shortage of modern rolling stock, in order to provide services in Cumbria, diesels from the freight operator DRS will have to be used to haul old-fashioned coaches that have been retained for steam train excursions.

That is an extraordinary failure and it shows a deeper failure. We in Cumbria were supposed to get the third nuclear power station to be built, but there is no planning for that power station. It is in the national infrastructure plan, but there is no planning whatever. Planning is lacking. That is why I fervently hope that a new Government will implement the proposals made by Sir John Armitt in his excellent paper.

13:22

[Lord Flight (Con)]

My Lords, I add my congratulations to the noble Lord, Lord Adonis, both on his speech and on his prize. He is clearly speaking very much to the converted. However, I have some reservations—and need to be convinced—about his argument for a commission. Over the past four years we have not done so badly given the difficult economic climate. Crossrail has gone well and projects have advanced, and the 2014 NIP plan is a big improvement on the 2001 plan.

I will point to some specific issues that other noble Lords have raised. A key problem for major infrastructure projects remains the excessive regulatory, environmental and consultation requirements. These cause delays and costs and eventually lead to indecision, as was pointed out by the noble Lord, Lord Adonis. There is too much centralisation, and the regions need to be empowered.

I agree with my noble friend Lord Ridley that the biggest inadequacy is in our road network. While I am aware of inadequacies to the north, this applies particularly to southern England. For a long time we have desperately needed a motorway from Dover to Bournemouth, going through the middle of my former parliamentary constituency. There are still ridiculous traffic queues every day at Worthing and Arundel.

It is slightly wrong to think of infrastructure investment as part of the public sector. The major investor and manager of projects is the private sector, which accounts for something like 70%. Like my noble friend Lord Marland, I have rather greater confidence in the private sector’s ability to manage projects than in that of the public sector, which is not a natural for the purpose. I will add that there is no problem with financing proper projects, and I trust that my noble friend Lord Deighton would support this. If anything, we do not have enough projects lined up for the pension funds, the sovereign wealth funds and economies such as China to finance.

In 2010 I went to hear the shadow Chief Secretary present the infrastructure plan of the time. It consisted of roughly £200 billion of energy investment and £200 billion of communication, transport and digital investment, but with no particular timeframe. Indeed, I asked him when these projects were likely to take effect, and he could not answer. What has actually happened over the last four difficult years has been surprisingly good, in a way. We have averaged £47 billion per annum of investment, making a total approaching £250 billion over the last five years. This is also some 15% more than infrastructure investment in the previous Parliament.

The 2014 NIP is extremely good. There is an organised pipeline of £554 billion of investment, of which £303 billion is in energy and £176 billion in transport. Again, the financing of this is 64% private, 23% public and 13% mixed.

Before I sit down, I refer to the specific point of co-operation with China on infrastructure, which was raised by my noble friend Lord Sassoon. I understand that China has some concerns that the Hinkley joint venture project, which is 49% Chinese and 51% French, is in a state of stalemate. This is partly because the French do not have the funds, and partly because of political problems here about whether the National Security Council views China as a security risk for investment in nuclear energy. I hope that my noble friend Lord Deighton can sort this out, because I believe that it is causing some evaporation of Chinese support.

13:26

[Lord Maxton (Lab)]

My Lords, I join in thanking my noble friend both for obtaining this debate and for the very eloquent way in which he introduced it. Rather like my noble friend Lord Liddle, I will take a slightly different course by saying that we live in a world that is changing very fast indeed. That must be taken into account when we look at the investment and planning of our infrastructure.

A friend from America told me recently, in an e-mail in which he gathered together a lot of information, that the computing power contained on my mobile phone at the present time would have cost me £3.5 million in 1991, only 24 years ago. That is the computing power that I now have on my mobile phone. That is only an example of the way in which the world has changed and is continuing to change. That is the important point. The world is not only changing, but is continuing to do so and is changing faster and faster.

After all, most of the infrastructure we are talking about deals with transport problems that would not have existed 250 years ago. Yet 250 years is a very short time in the history of mankind, let alone the history of the world. Railways and motor transport did not exist then, so there was no infrastructure as we talk about it at the present time. Having said that, I make the plea that the infrastructure for the internet be considered as part of the essential needs of the people of this country. At the moment, the internet is provided by a variety of individual capitalist companies which, quite rightly, desire to make a profit. However, there are three distinct groups of people who lose out in the present structure.

The first group is the elderly, which I have to say includes some of my noble friends around the House.

[A noble Lord]

What about yourself?

[Lord Maxton]

I am elderly, but not in that category. Some people think that I am quite an expert on computers in this place, but I consider myself to be a one-eyed man in the kingdom of the blind. There is some element of truth in that.

The fact is that the elderly often lose out because they do not have computers, and if they do, they do not know how to use them. Even mobile phones can be a bit baffling. The second group is the poor: those who cannot afford to pay for a monthly internet service.

I was tempted to say that the third group is made up of those who live in rural areas, but it is not just them, it is those who do not have a fast internet connection in their home. I want this Government—or any Government, because two out of these three groups would benefit from having a Labour Government—to ensure that the telephone network is part of the infrastructure that we are looking at in terms of planning because it is the main way of providing access to the internet. If we do not do that, we will leave these groups behind. We have already seen in education that children who have access to computers and the internet are benefiting over those who do not. I therefore ask the Government to consider this.

13:31

[Baroness Mobarik (Con)]

My Lords, I rise to make a few points in this debate on what is clearly an extensive subject and one which has a significant impact on our own and our children’s long-term future. I would like to say first that in this debate, whatever our political allegiance, we all essentially want the same outcome, which is an infrastructure that will strengthen our economy and ensure that we remain one of the leading economies of the world. To do that, though, we cannot rely on our Victorian heritage. We must have a long-term vision and the will to make it happen. As the Chancellor said last year:

“We must learn from the past, not be the past. Decide or decline. That is the choice”.

That means not only putting aside our political differences but doing things differently, for clearly, as it stands, the system of decision-making still leaves considerable room for improvement. I welcome Sir John Armitt’s proposals for an independent infrastructure commission because it has sparked a debate and, it is hoped, will lead to the outcome that we all want.

From a business perspective, there is clearly support for doing things differently. The noble Lord, Lord Adonis, quoted the views of the CBI on this. That is not to say that the direction of travel in recent years has not been positive. The publication late last year of the road investment strategy and the forthcoming publication of a digital strategy this year indicate that we are starting to think beyond the immediate future. The innovations in the Infrastructure Bill currently going through the Commons are helping to put in place the building blocks for this. These are less controversial, though, than some of the tough decisions that are still outstanding, and none is more pressing than the key question of the airport capacity that is required if the UK is to remain competitive, and if we are to rebalance our economy and secure longer-term sustainable growth.

The experience of the Airports Commission, currently led by Sir Howard Davies, offers interesting insights upon which we can draw, demonstrating the importance of taking an evidence-based approach. When analysed in the cold hard light of day, the case for new runway capacity in the south-east is clear. With this clarity, it is essential that we as politicians play our part and commit to implementing the proposals when they are published in June, so that we can finally increase our capacity and grow the links to emerging markets that our businesses so desperately need. In the past five years, while we have been reviewing one runway, China has gone from 175 to 230 airports.

Getting value for money is important, although I cannot help but ask the question: did the Victorians rigidly cost-benefit analyse every project they undertook or did they start with a vision of what they wanted to achieve as a country? Where do we want to be: among the top industrial nations of the world or lagging behind because we have made an industry of analysing the detail of the tools we require in order to get there? Indecision on new runway capacity is already impacting on business investment, so we must take action as soon as possible. Business needs clarity, and not just on aviation but on the long-term future of infrastructure across the board, from our energy supplies to our funding for upkeep of the road network. These are key aspects that will promote growth. In all these areas we need to have an adult conversation both with each other and with the public about what we need and when we need it.

For too long, major infrastructure projects have become a painful process which has been hijacked by bureaucracy, electoral cycles and interest groups, despite the fact that we have democratically elected representatives to take these important decisions. It is important that we have a national debate which involves both politicians and the public, but we must also keep the end goal in mind—job growth, prosperity and security for our citizens. Perhaps an independent body made up of experts is the best way to help politicians to achieve this.

13:35

[Lord Hunt of Chesterton (Lab)]

My Lords, I welcome this debate, which was introduced by my noble friend Lord Adonis, and I am pleased to follow the noble Baroness, Lady Mobarik, who commented on the broader considerations of our infrastructure. Of course, when levels of pollution got too bad during the great stink, this Parliament had to abandon the area. Similarly, China has to stop activities when the pollution levels get too high. Sometimes they turn off all the factories in order to have clean days, which are called “APEC blue”.

This debate concerns what we do for everyone’s benefit in both the immediate and the long term by using the space below the ground, the shrinking space we have available at ground level, and the increasing value of the space above the ground—right up to the ionosphere, which is one of the most valuable parts of our infrastructure. The debate has embraced all aspects of our built environment, our engineering structures and our natural resources, which include the vital and invaluable element of radio communications. I found out the other day that “infrastructure” was not in my 1960 edition of the OED, although the French introduced it in 1875. The noble Viscount, Lord Ridley, pointed out that the French understand systems. Perhaps that explains the lack of UK investment in the broader infrastructure. In that area, the UK is now ranked 28th in the world, having fallen from 24th place. I declare my interest as an engineer and scientist and as a former head of the Met Office, a very successful government agency that is a world leader. Vis-à-vis the remarks of the noble Lord, Lord Sassoon, and others, it was criticised for generating excess profits.

The UK’s engineers, scientists, architects and landscape architects, of which my wife is a distinguished exemplar, have gained a worldwide reputation and have contributed to some of the world’s greatest infrastructure projects. Although there is some great infrastructure in this country, as my noble friend Lord Adonis said, there are many areas where we have failed. One of the points which other speakers have perhaps not emphasised is the need for an integrated approach. The suspicion of integrated systems mooted in this House by Lord Shackleton in 1976, when the idea of systems thinking in government began to be discussed, was exemplified by the noble Lord, Lord Sassoon. He suggested that any kind of integrated visionary commission would essentially hold things up. I believe that a proper UK system would not necessarily mean adopting a top-down bureaucratic approach, but rather a visionary commission that considers many factors: the environment, climate change, training and many other areas which have been mentioned in the debate. Of course, a visionary commission should also look to its rather unvisionary colleagues in the Treasury, whose job it is to find the money and make sure that it is properly spent. I believe that a commission as envisaged in the Armitt review would be very different from what happens in the Treasury.

The other important point about such a visionary commission is that it must devolve powers to the regions and the cities, to government agencies, and most importantly to industry. That will ensure interconnected planning, particularly for new forms of power, technology and transportation. The remarks of my noble friend Lord Liddle exemplify this point. Such a commission will also link the UK infrastructure system to the network systems in other countries. In Europe, we have an interconnected system for electricity and other interconnected systems for other aspects of our power and business, and that is an important role of the visionary commission.

I end by referring noble Lords to the remarkable concepts of Buckminster Fuller, the great visionary engineer, who talked about an electrified interconnection grid developing around the globe. We are now seeing this, for example, in Asia. That is the kind of visionary idea that the commission would be able to have, and I believe that that kind of openness is what we need.

13:40

[Lord Cavendish of Furness (Con)]

My Lords, I am pleased to join other noble Lords in thanking the noble Lord, Lord Adonis, for introducing this important debate. His considerable experience, knowledge and enduring interest in Britain's economic performance were all evident in his eloquent opening remarks. In contributing today I declare my interests, which are quite numerous and varied, so I refer noble Lords to the register.

I wish to make two points. Given that the funding for 64% of our infrastructure projects is met by the private sector, it is worth asking why our national performance has slipped relative to other developed countries. Part of the answer must lie with the fact that our planning system moves at a glacial pace and needs urgently to be more responsive. More importantly—and I am sorry to say it—there seems to be no doubt that confidence is still lacking among the business community. It is not as though the Government have done nothing; on the contrary, as noble Lords have heard, they have done a great deal and in difficult circumstances, and I congratulate them warmly. I have listened to the arguments put forward by the Government against the establishment of an independent infrastructure commission and so doggedly advocated by the noble Lord, Lord Adonis, over a long time. I do not feel qualified to challenge those arguments. The rather convincing worry is that 89% of business wants such a body so that well developed infrastructure strategies are less exposed to political cycles, and, in a raft of other areas, business still has misgivings about the future.

One problem is that neither this Government nor any other understand business properly. It is not that we lack clever and committed politicians and officials—there is no shortage of those—but, crucially, not a single Minister, civil servant or public sector officer woke up this morning or any other morning to the reality of risk-taking and being held accountable, and the subtle workings of capital are not understood at all. It is an interesting reflection that barely a handful of noble Lords participating this morning have current experience of constructing a capital budget, or worrying about how they will pay the wages tomorrow morning or how they will cope with the daily tsunami of regulations. Business wants to see the politics of infrastructure change fundamentally in order to improve the perception of the UK as a place to do business. It would help if the noble Lord, Lord Adonis, would perhaps persuade his colleagues to talk less about such things as nationalising the railways.

I will finish by speaking about my own area of south Cumbria. I am more optimistic than the noble Lord, Lord Liddle. As he would agree, in common with many other rural areas we have had a varied economic history, but today in the Furness peninsula we are preparing ourselves for the biggest investment in our history. It is estimated that over the next decade some £40 billion will be spent in industries that include civil nuclear, biopharmaceuticals and nuclear submarine building, To put that in perspective, in money terms it is equivalent to one and a half times the Olympics. While it is hard to exaggerate this good fortune, the infrastructure implications are huge. Quite simply, we lack that infrastructure by magnitudes, as the noble Lord, Lord Liddle, said. My major concern is to see that small and medium-sized businesses benefit from this investment and have access to the supply chain. I am out of time, but I simply ask my noble friend to visit and see for himself the scale of the opportunities and the challenges that face us.

13:44

[Lord Morris of Handsworth (Lab)]

My Lords, whatever view we take in this debate, one word concentrates all our minds: capacity. The House will no doubt remember the fire at Didcot power station last October, which resulted in its partial closure. This, added to the planned closure of two more power stations and the decommissioning of others, was a wake-up call.

Last November, the Royal Academy of Engineering published the findings of an investigation into the capacity margin of GB’s electricity system. The investigation was commissioned by the Prime Minister’s Council for Science and Technology. The report warned that, in the absence of intervention, the capacity margin,

“would present an increasing risk to security of supply”.

The nation’s transport capacity—road, rail and air—is rehearsed daily in our media. Indeed, we consider it regularly in this Chamber. It cannot be ignored much longer. Investment is not something you do tomorrow; its implementation has to be decided on today. The lack of investment throughout our infrastructure leads to misery for many, destitution for some, and a massive cost to both the local and the national economy.

Throughout my industrial and political career, save for the National Economic Development Council, I can recall no overarching body charged with the responsibility for planning or co-ordinating the national infrastructure needs of the nation. It is now, I believe, an idea whose time has come. Last autumn, an article by Dan Lewis, senior adviser on infrastructure policy at the Institute of Directors, summed up the malaise of the nation, saying that until now the UK had somehow “muddled through”. He predicted that this was about to change and that over the next 15 years Britain would face a rolling series of major infrastructure shocks. Coming from the IoD, it was indeed a wake-up call.

I am pleased to say that the wake-up call is being heard loud and clear in this Chamber and in this debate. The Armitt report, which has been discussed, was published last September. It called on the Government to hand over responsibility for identifying the UK’s long-term infrastructure needs to an independent panel, which would monitor, plan and report. We need that debate because we have to reach a consensus. At least we have to convince those from whom we seek investment.

The call that I hear today is no different from what the Armitt report said. It called for a cross-party political consensus to encourage investment in long-term transport, energy, telecommunications and flood defences. I have heard the call, and I hope that the Government are also listening.

13:48

[Lord Horam (Con)]

My Lords, as others have done, I congratulate the noble Lord, Lord Adonis, on introducing this debate. We all respect his great record in transport and education. Equally, I am glad that my noble friend Lord Deighton is answering for the Government because he is the great implementer, as the noble Lord, Lord Adonis, admitted in his remarks. Indeed, with the two of them together, the House of Lords leads once again over our colleagues in the House of Commons; I do not believe that it could field two such Ministers as we have today leading our debate.

Undoubtedly, infrastructure planning has been a problem for this country for many years, stretching over many different Governments. The noble Lord, Lord Adonis, said that we were now 27th in the league of international comparisons. I thought it was 24th but, whether it is 24th or 27th, it is far too far down for a country that is fifth overall in the economic league tables. Now we have the annual infrastructure plan, which is an excellent idea and has cleared up some of the chaos that we were left in by the previous Government due to their bad planning over PFI and their penury on the macroeconomic front. That has helped to bring an element of stability to the whole situation but it is not enough.

Urgent attention needs to be paid to two things that I want to stress to the Minister, which I hope he will pay attention to. The first is that we need to get going on fracking. There is an important decision being taken shortly—in the right direction, I hope—by Lancashire County Council. I speak as a Lancastrian who knows the area of Bowland extremely well; it is where I was born. That decision needs to go the right way. If it does not go the right way, I hope that the Government will intervene and overrule the council. We need to make progress on this matter, otherwise we will be left behind in this very important area of energy development.

Secondly, affordable housing was mentioned by the noble Lord, Lord Adonis, and in a very important speech by the noble Lord, Lord Rogers of Riverside. I agree with both of them: our housing record is appalling. We need between 200,000 and 250,000 houses a year. Even Harold Macmillan in the 1950s was able, from an almost standing start, to get up to 312,000 houses in two years. He was able to do that only by a careful and dynamic plan from the centre, organised by the Government. It will not be enough to rely on private housing providers. They will not build the houses in the right places for the country or for the people who need affordable housing. What is happening in London now is a disgrace in terms of the number of houses and flats that are being built and immediately sold off-plan to foreign buyers and are not available to people who live in London. That must not happen any longer if we can possibly avoid it.

I therefore say to my noble friend: I want to see in the next Conservative manifesto something very concrete on fracking and something very concrete on affordable housing.

13:52

[Lord Rooker (Lab)]

My Lords, I have agreed with almost every speech that I have heard today. I resented the petty, demeaning, partisan comments made by the noble Lord, Lord Sassoon, but they were the exception.

I tore up my notes and will use as an aid the Chamber of Commerce note that we all had because I agree with all the points it raises. When I visited an infrastructure project recently—the oldest railway tunnel in the world in daily use, a couple of miles down the road—I thought: what would Brunel think about us today, with our lethargy on infrastructure?

The message I took from the speech of the noble Earl, Lord Attlee, was crucial: the need for sequential planning to ensure that you can smooth things out and do not have all the cranes at once and then nothing for months afterwards. I think that is really important.

Let’s face it: until this Government came along, the last person to order a nuclear power station in this country was the late Tony Benn. The previous Government missed the post—we know that—with the disastrous 2003 energy White Paper. Between the start of HS2 under the previous Government and it being fully supported by this one, there was a hiatus for about a year when there was a bit of backsliding within my own party, which we had to correct in this House by making it clear that we were fully in support and wanted to buy into it.

That brings me to the point. I do not know too much about the plan for the commission and building it all together, but what is clearly needed is a grand coalition on infrastructure that goes across Parliaments. We cannot go on saying that no Parliament can bind itself; by definition, it has to bind itself on infrastructure planning, otherwise we waste a fortune in money, crash hopes, destroy industry and end up not doing anything. So it requires more than what probably is planned. We need to tie ourselves down. The consensus we have here today shows that that can be done.

On motorways, years ago I was amazed when the noble Lord, Lord Mawhinney, as Transport Secretary, published a paper showing how small a proportion of the population actually regularly used a motorway—in other words, those who use them should pay for them or pay a contribution. I agree with the noble Viscount, Lord Ridley, that it is not too late to do that. Energy storage was on the list as well. Our gas storage is woefully inadequate and I do not think we have done much about it in the past decade. We are heading for trouble.

The Government own enough land to build 1.5 million houses. Most of it is brownfield, as my noble friend Lord Rogers said. Why are we not using it as a master plan within the Government? I do not worship the green belt like everybody else—most of it is rubbish land. It is not areas of outstanding natural beauty and it is not the national parks—they are quite separate. It is the urban collar around the big cities where the infrastructure is already there to have houses added to. That is the key point: we do not have to go for big greenfield new towns any more. It is not necessary. We can use the land we have. As I say, the Government own enough land to build 1.5 million houses on, and basically they ought to get on with it.

I agree that infrastructure should stick with the Treasury. Whatever I might have said about the Treasury in the past, the long-term nature of the Treasury is crucial. The DWP is subcontracted to the Treasury. Every decision that it makes on pensions and benefits has a 30-year to 40-year consequential change, and it is crucial that the Treasury is four-square with that. With infrastructure, it is exactly the same. The Treasury does not have to take the detailed decisions, but rest assured that it has a bigger bite on it than it used to have.

13:56

[Lord Teverson (LD)]

My Lords, when I left university in the 1970s, I did not take a gap year; I got in a Morris 1100 with two of my friends and we did something slightly unusual for those days: we drove around eastern Europe. Of course, those were the days of the Soviet empire and central economies, and one thing that particularly struck me was that there was no lack of infrastructure; in fact, plenty of infrastructure got built. The problem was that, first, it was not maintained, and, secondly, when they had failed to maintain it, they failed to repair it. That is one of the issues that I would like to pursue in my few minutes today. There are similar problems in the developing world.

Fast-forward to the United Kingdom in 2015: we have a major area of infrastructure that, when we go home and walk around, we see most often—our homes, our housing stock. One area that we have a problem with is upgrading our housing stock. There are 22 million homes in the United Kingdom, of which 82% do not meet even an energy performance certificate standard of C. That standard is not fantastic, it is merely okay, but the other 82% fall well below that. The previous Government and this one have had a number of schemes—Warm Front, CERT, ECO and the Green Deal—that have tried to tackle this issue. They have been successful to a degree and have been better than a drop in the ocean, but they have far from solved the problem of energy efficiency, fuel poverty and the cost of fuel to the economy and to families trying to keep themselves warm.

I will refer to a report produced by Cambridge Econometrics, among others, called Building the Future: The Economic and Fiscal Impacts of Making Homes Energy Efficient. It has set what would be a very reasonable target for any Government—the next Government, I hope—to bring all poor households up to energy performance certificate standard C level and to provide free loans of 0%, as is done in fiscally conservative Germany, for other households that can afford to pay for those changes in order to bring them up to those standards as well. The report estimates the cost of that over the lifetime of a Parliament as something in the order of £13 billion, which is a lot of money. Compare that with what the overall infrastructure spend might be for those five years in the next Parliament, which is estimated to be hundreds of billions. So it is something like 10% of the total infrastructure cost over a five-year term Parliament.

What are the benefits that come out of that? The estimate, which I see as being reasonable and reasonably conservative, is some £8 billion of energy savings, and that is taking into account what is called, shall we say, “comfort take”—people who are already too cold increasing their energy consumption or bringing up their temperatures after that. It reduces carbon emissions, of course, and increases energy security. The other area, which people like myself who deal with energy and climate change do not always take into account, is the huge benefit that there would also be to the National Health Service. In this country we have some 30,000 excess winter deaths, of which 30% to 50% occur because of cold homes. That is something that we can solve, something that is really important to us.

The cost of all that would be something like £13 billion, but every year we pay £2 billion worth of winter fuel payments to everyone universally. Over the same parliamentary period, that would be £10 billion. I suggest to my noble friend the Minister that this is an area where we could move on from Soviet and developing-world models, invest in our housing infrastructure and be of real benefit and cost benefit for our country in the future.

14:01

[Lord Whitty (Lab)]

My Lords, I think my noble friend Lord Adonis was right to put the proposal for a national infrastructure plan at the centre of his speech, and I think this debate has rather brought that out. We need a mechanism whereby we have an overall prioritisation; an overall allocation of resources; an effective form of scheduling, as the noble Earl, Lord Attlee, said; a consistency of project assessment, as my noble friend Lord Hollick implied; and something therefore that investors of all sorts can have confidence in, so that they can avoid the tendency to short-termism and to knee-jerk political or financial reaction.

The investors include the Treasury, but they also include the corporate headquarters of multinational companies, the banking system, the finance markets and institutions such as the pension funds. At the moment they can have virtually no confidence. For those who say that a national infrastructure commission would simply be a bureaucracy and produce all sorts of favours, I refer to all the papers emanating from several different government departments and agencies that we should have read if we were to be properly informed on this debate, as recommended by the Library. We need an overall plan. The glossy that the Government produced on the national infrastructure plan in the past month is very helpful but incomplete; it does not give its basis or, in most regards, its timescale.

I shall concentrate my remarks on areas that are not in there: energy efficiency, which is hardly there apart from a brief reference to smart meters, and housing, which is hardly there at all. Had I had longer, I would have liked to have talked about transport and flood defence, but not in four minutes. However, I say to the noble Lord, Lord Sassoon, if I may depart briefly from my bipartisan approach to this, that the areas that the Government cut when they came in were exactly those: housing, energy efficiency, roads and flood defence. That was a ridiculous short-term decision, but luckily the Government have recovered from it. I hope that therefore we have a basis for bipartisanship in future.

On energy efficiency, the noble Lord, Lord Teverson, has spelt out the need for investment in energy efficiency at the point of use, and I echo virtually all his remarks. There is also energy efficiency in the system itself. We lose the bulk of our energy before it gets to the point of use. We need to look at improving the transmission and distribution of energy, at decentralised energy, at CHP and at carbon capture and storage, which is mentioned there but only briefly. That should all be part of an investment and infrastructure plan, and should be assessed on the same basis as, if you like, the sexier parts of the agenda, which relate to big roads and big airports. At the moment the process of assessment of such projects is very differential and, if you like, politically and subjectively charged, depending on which area you are looking at.

The same applies to housing. In a sense, the noble Lord, Lord Horam, must be right that this is the biggest lack of infrastructure failure of successive Governments in the past 30 years. Housing for our people must be a central part of the infrastructure agenda. At the moment it is not in the December document, and it ought to be. I hope that we can rectify this as we go forward. I hope that we can do so on a consensual basis, but I think we also have to recognise that we need new structures in order to be able to do so. Sir John Armitt’s report is a very good basis for starting.

14:05

[The Commerical Secretary to the Treasury (Lord Deighton) (Con)]

My Lords, I thank noble Lords for an excellent, instructive debate; it has been thought provoking for me, absolutely. I congratulate the noble Lord, Lord Adonis, and endorse the point that the noble Lord, Lord Berkeley, made about his contribution and his receiving the European Railway Award. I was delighted that HS1 and Eurostar could get the noble Lord back here safely and on time to kick off the debate in a most interesting way.

This debate has also been useful in reinforcing the fact that infrastructure really does need to be centre stage: it is at the heart of our economic strategy—I think there is absolutely bipartisan endorsement of that. We have talked about the great opportunity that infrastructure brings, and we all agree that it is a key driver of economic growth. Transport, communications and energy systems help people and businesses improve their productivity, and as a result improve the rate of growth of the country. The construction projects, where we build them, are great short-term spurs to growth and skilled jobs. Infrastructure is also the key to unlocking growth in our regions. It is also a critical way of unlocking the housing growth that has been a big part of many of the contributions made by noble Lords.

The challenge, of course, is that historically we have underinvested, for a variety of reasons. What do we need to fix to cure that historical underinvestment? It has something to do with the shorter-term horizons of the political environment, which do not quite match the longer-term needs and gestation periods of investment in infrastructure. How do we tackle that more effectively? The noble Lord, Lord Adonis, referred to our ranking as 27th in the World Economic Forum. My noble friend Lord Horam was appropriately horrified by that. I should just point out that those rankings are a result of the home audience’s subjectively evaluating what it thinks of its own infrastructure, so it probably says more about the British psychology than about the objective state of our infrastructure. Noble Lords might listen more carefully to the IMF review.

[Lord Hunt of Chesterton]

According to the Institution of Civil Engineers, this ranking was developed for the World Economic Forum. It is rather topical.

[Lord Deighton]

It is topical, but it was still a subjective review of our own psychology. The IMF review in 2009 says that the UK has the fastest-improving infrastructure in the G7, which is clearly a good thing. We managed to get cross-party support for the Olympic Games. We started off with a Labour Government and a Labour mayor, and ended up with a coalition Government and a Conservative mayor, and there really was not a single slip when the baton was handed over because there was very effective cross-party support. I suspect that the nature of our immovable deadline—with Her Majesty the Queen’s parachuting into the Olympic Stadium on 27 July 2012—and our British fear of being embarrassed in public were probably helpful disciplines in getting us to that successful outcome.

There are three simple components to the Government’s plan to deliver our infrastructure more effectively: first, to have a plan; secondly, to have the money; and, thirdly, to focus on delivery so that we get it done very effectively in terms of the Government’s performance as a client and industry’s performance as the deliverer of that infrastructure. Everything that we have done as a Government has been about refining how we do those three things and making them better. I will therefore structure my comments and my responses to noble Lords’ questions around those three components of the plan.

We have a comprehensive, cross-sector plan; it is the national infrastructure plan—a number of noble Lords referred to it. It is a lot better now in 2015 than it was in 2010, simply because we have iterated it and built upon it, and we should do that every year. It was unfair of the noble Lord, Lord Adonis, to say that it is not really a plan. It is a plan and it does have timescales. At the beginning, it was a little more like a list of projects, but now it is a plan and is underpinned by a clear strategy. We have a road investment strategy: it is the road investment strategy which drove the list of projects which then enabled us to put a five-year funding plan in place.

I take on board the comments by my noble friend Lord Bradshaw that we need to invest early enough to get capacity right—the lead times on this are absolutely critical. My noble friend Lord Flight pointed out that the plan was improving. It is rather boring government: each year, each section gets a little bit better; each year, the strategy which we pull out of the departments responsible for those areas gets better. That refinement is going on. It is a plan that is backed and supported by industry; we work with industry to develop it; and it is a plan that has given industry and investors the certainty to plan against the pipeline which, because we have now been doing it for five years, they are just about beginning to believe in. We need to keep doing it over and again. Government’s work is done at the front end of that pipeline; that is, turning the concepts or solving the problems, and creating investable projects. As a noble Lord said, it is not the finance that is the constraint; it is shaping such projects into investable projects so that they can be carried out.

The claim I would make for this Government’s achievement is that we have got to grips with the short-term delivery challenges. We have put in place a plan to 2020-21. Many of the projects last through the 2020s. The next step is to develop a plan that addresses the UK’s infrastructure needs in the much longer term—which is where we should spend a moment addressing the case made by the noble Lord, Lord Adonis, for a national infrastructure commission, which was supported by many noble Lords here. I agree that the next stage of work is to look at our longer-term needs and to ensure that we develop strategies for them. Out of those strategies will come the work to develop the projects that will give us the outcomes that we are all looking for. I absolutely agree that that is the next stage of work.

I agree also that there is a significant role for independent expert advice. That was what we did in wrestling runway capacity in the south-east to the ground with the Davies commission. If one looks at the amount of work that has gone into solving one particular problem within one sector of the broader transport area, one sees that the kind of effort that we are talking about here is very broadly based. Defining the precise scope is an interesting question. The noble Lord, Lord Maxton, referred to the infrastructure of the internet. In the National Infrastructure Plan, there is a chapter on communications. The Government are producing a digital strategy just as they have produced a road investment strategy. So these things are all under way. I also accept the point made by the noble Lord, Lord Hunt, about integrated systems. We have very good plans for each sector, but we need to be much smarter in the longer term about understanding integration opportunities and interdependence. We have, too, to understand climate change; we have to understand the impact of technology. Those are all the things that we need to figure out.

The discussion that needs to take place on how we do this—my noble friend Lord Sassoon referred to it— is about how heavy we make the machinery to accomplish it. My experience in business and especially in government is that we need people who can get to outcomes, not people who can create layers of process. I am very nervous about signing up to quite heavily constructed process when my experience has been that what we need in government is the ability to get these things moving.

If that is where the plan fits in, let me spend a little time talking about the money. Our infrastructure is financed either publicly, from taxpayer money, or privately. Quite a lot of it is financed with a mix. Two-thirds of it is financed in the private sector. On the publicly financed component, we can effectively retain a good bipartisan approach, but I think that this Government have been very successful in stabilising our public finances, which is what has created the room for us to be able to spend more ambitiously on infrastructure. That is a big difference between the parties. The success in stabilising those public finances has been what through successive fiscal events has enabled us to invest more effectively in public infrastructure. On the public side, we are talking about the road network, the flood protection environment and Network Rail as the three key sectors. We have also made settlements that last right through the Parliament, which is the first time that we have ever done that. If I look at all the things that we have done in the past four years, turning a one-year financial settlement into one that lasts to 2021 has been the single most transformational thing, because those sectors can now plan, build and construct, and have much more effective delivery, by having that medium to long-term planning environment. It is absolutely transformational.

We need to work through the system to make sure that the agencies responsible, such as the Highways Agency, the Environment Agency and Broadband Delivery UK, have the skills to be able to work with industry to realise the full benefits of that longer commitment of public money. I am delighted that we have been able to finance some of the pet or favourite schemes of noble Lords; for example, the interest of my noble friend Lady Maddock in the A1 north of Newcastle and connectivity with Berwick. As my noble friend Lord Attlee pointed out, such a longer commitment is the key to avoiding the feast and famine of past years and getting the sequencing right. If you have a five to six-year settlement, you can sequence it intelligently through that period, rather than having to make sure that you have spent all the money in year 1 because you are never quite sure whether it is going to be there tomorrow.

I have talked about the fact that we in the UK are pioneers in private finance. We do private finance of infrastructure better than anybody in the world. We introduced privatisation; we introduced public/private partnerships—as my noble friend Lord Sassoon pointed out, unfortunately the PFIs were not always as well executed as they should be, but getting the balance right is hugely important. A number of things make the environment that we have got here right. We are a very attractive location for overseas investment. Of course, we cannot be complacent; we need to keep making it better. The noble Baroness, Lady O’Cathain, was very articulate about the stability of this marketplace, the clear property rights and our world-class regulation—which a number of noble Lords referred to, including my noble friend Lord Sassoon. Preserving the independence of that regulatory framework is critical. I am particularly pleased with the combined work that the regulators are doing through the new body that we set up, the UK Regulators Network, to focus on the key issues such as affordability, cross-sector infrastructure investment and how we engage with consumers to facilitate switching. The Government have also intervened in a variety of sectors to support financing, including the new electricity market reforms. The noble Lord, Lord Rooker, referred to nuclear and the way in which we are driving that forward. The noble Lord, Lord Liddle, talked about Cumbria. We are doing an enormous amount of work to get all three big nuclear projects off the ground—not only Hinkley Point, but also NuGen and Horizon. That will ultimately be for the benefit of the economy in Cumbria too. I agree with the noble Lord, Lord Whitty, that work is needed on the demand side of energy just as much as on the supply side. All these sectors are critical.

I support my noble friend Lord Horam in his call to accelerate fracking. We have put the planning environment and the tax incentives in place. It is now down to the developers to determine if the economics are there for them. My noble friend Lord Ridley said that there are alternative models—which other countries have embraced—for funding our roads. The noble Lord, Lord Rooker, backed this up.

The noble Lord, Lord McFall, talked about potential investment in infrastructure by the big insurance companies and the challenges they sometimes face. Of the £25 billion they said they would put up, £5 billion is already committed, so that is moving ahead pro rata. We have helped with making the Solvency II rules as benign as possible to support that development.

The third component of what we are trying to do is to get smarter on delivery, what we do in government and how we can help industry get better at it. We are much more focused on government intervention to unblock things in our top 40 projects. My noble friend Lord Marland referred to it as “energetic” and “enabling”—making sure that we have joined-up government. I ran an exercise in upgrading the commercial capability across the key departments. My noble friend Lord Cavendish correctly pointed out that it does not come that naturally to government. We have to ship in a lot of the commercial expertise; otherwise we are outgunned in big commercial negotiations. There is a lot of work going on there. We have put our top people in key leadership positions. Of all the things we have done in HS2, persuading David Higgins to be its chairman has probably been the single factor which will make most difference in the effectiveness of its delivery.

Many noble Lords made observations about the need to improve the planning system. That is part of the responsibility of government in enhancing delivery. We have done a series of things. My noble friend Lord Freeman referred to the national networks policy. The noble Lord, Lord Berkeley, referred to draining the swamps and trying not to listen too much to the frogs. At the next Budget, we will consult on CPOs, and ideas about how to financially motivate getting to the right point more quickly will be our underlying objective.

With industry, we have worked at ways to improve project initiation—how projects are set up and delivered. In the first three years we took £3 billion out of a big set of projects through working with industry and we are continuing that engagement to look at change in their own delivery. An important component is getting skills right. When I started this job, the construction companies came to see me to say, “We want work”. Now they say, “Slow down, because we do not have the capacity to deliver it all”. Skills are at the heart of this. My noble friend Lady O’Cathain was spot on when she said that the important short-term and medium-term challenges were to get that right. Apprenticeships are absolutely at the heart of that. I am delighted that we have the HS2 colleges set up in Birmingham and Doncaster. My right honourable friend Patrick McLoughlin, who is clearly doing a very good job as a successor to the noble Lord, Lord Adonis, was at Crossrail on Monday, celebrating its breaking through its 400-apprentice model.

I have not said much about rebalancing the economy, a subject which many noble Lords raised. The noble Lord, Lord Adonis, talked about devolution. My noble friend Lady Maddock talked about local authorities. The noble Lord, Lord Liddle, spoke about cream cakes and Cumbria. The noble Lord, Lord Rogers, talked about cities and urban regeneration. I think we all accept that we have not invested sufficiently in infrastructure in the regions, and that needs to be corrected. We are trying to do it. Chapter 2 of the National Infrastructure Plan is all about getting that right. The underlying, driving theory of HS2 is to empower the northern cities so that they can have the same kind of economics of agglomeration that can drive growth. We have seen it similarly in London.

I agree that there is a link between infrastructure and housing. Battersea is a great example. We guarantee extending the Northern Line and suddenly Battersea creates 30,000 homes. That kind of relationship needs to be worked out right around the world.

In conclusion, we must relentlessly continue our work to deliver the pipeline that we have. It is necessary to work at everything I have talked about—the plan, the money, the delivery—to ensure that consumers and businesses reap the benefits. As I believe we have demonstrated in this Parliament, where there is a clear plan to build and finance the infrastructure that we need and a powerful programme to drive its delivery, then that infrastructure can and will meet its potential to be a real engine of our economic growth.

14:26

[Lord Adonis]

My Lords, this has been an excellent debate and I congratulate the Minister on his highly constructive speech and on the great work that he is doing. It is striking how broad has been the support across the House for the establishment of an independent national infrastructure commission, including from Conservative Members and from the Minister himself. I think he came as close as he could to endorsing the idea provided, as he said, that it is practically focused. I entirely accept that proviso.

The only dissenting note was from the noble Lord, Lord Sassoon, who said that the commission would be a bureaucracy. Any gathering of public officials is a bureaucracy. Your Lordships’ House is a bureaucracy; it just happens to be a very good one. The case for an independent commission is that it would be a good bureaucracy because its job would be to prepare a major infrastructure pipeline which has been so sorely lacking in recent decades. However, I believe that the noble Lord, Lord Sassoon, secretly agrees with me; he was just obeying orders from Tory Central Office. I say that because it was the noble Lord himself who took through the House the excellent legislation setting up the independent Office for Budget Responsibility— another bureaucracy, but a valuable one to provide independent advice on fiscal policy. It is precisely analogous to what we seek to do in respect of infrastructure. When making the case for the OBR to your Lordships, the noble Lord said:

“The independence of the OBR’s judgments will ensure that policy is made on an unbiased view of future prospects”.—[Official Report, 8/11/10; col.12.]

An independent infrastructure commission would have exactly the same purpose—to ensure, or at least to help ensure, that policy is made on an unbiased view of future prospects in respect of infrastructure. As almost every noble Lord who has spoken in this debate has recognised, we urgently need such an unbiased view so that we move from 27th to at least the top 10 in international rankings for the quality of our infrastructure. Nothing is more important to our future prosperity.

Motion agreed.

Criminal Justice System: Autism

Thursday 22nd January 2015 Lords Chamber

Question for Short Debate

14:28

Asked by

[Baroness Uddin]

To ask Her Majesty’s Government, in the light of the case of Faruk Ali, what steps they are taking to improve access to the criminal justice system and victim support for people with autism spectrum disorders.

[Baroness Uddin (Non-Afl)]

My Lords, I begin by mentioning my interests as declared in the register. I am very grateful to have the opportunity to debate improving the criminal justice system for people with autism, and thank all noble Lords who have kindly made time to take part. I welcome this opportunity to bring to the attention of your Lordships the appalling experience that some people with autism have of our criminal justice system.

I want to highlight the case of Faruk Ali, a 33 year-old autistic young man living with his family in Luton. According to press reports, one morning last February, Mr Ali, who has the mental age of a young child, was putting his family’s and his neighbours’ bins out for collection, as was his Thursday morning routine. While he was doing so, two police officers drove past. The officers are reported to have returned and chased Mr Ali, in the prosecutor’s words “for fun”, laughing as they went about their pursuit, which culminated in later charges of assault. A neighbour reported seeing one officer come out of his car and punch and kick Mr Ali near the bins that he had been collecting as Mr Ali ran into his home calling for his mother. Mr Ali was wearing a large red badge to signify to those who came in contact with him that he has a disability. Unfortunately, the prominent sign designed to protect him failed to protect him from those officers.

Last December, both officers were cleared of racially aggravated assault and misconduct in public office. An internal police investigation into the matter continues. Although the jury did not have sufficient evidence to convict the two officers, video and audio footage remains of the incident which demonstrates the callous, racist attitude of the officers to a very vulnerable and disabled man. In the recording played in court, in their interaction with him, one officer was heard describing Mr Ali as a “Paki”. Laughter followed. After the incident’s unhappy denouement, as the officers drove off, one of them was heard to have mocked family members when they asked for their police numbers. One officer was heard to say—I paraphrase to remove the expletives—“If he does not interact with people, then don’t let him out”.

The internal police investigation into misconduct will determine whether the behaviour of those officers was acceptable and worthy of a public servant against a disabled person, but will the Minister assure the House and members of the minority and disabled community that the racist language that the court is reported to have heard during its proceedings and the derision for disabled people reportedly exhibited have no place in our institutions, and that complaints will be taken seriously? What is his view of the public interest in making available the contents of the tape?

I raise that today in some detail because I am appalled by such outrageous victimisation of one disabled person, which evidence shows is not an isolated incident. Mr Faruk Ali’s case exposes a wider problem. Although we debate it as a topical debate, I regret that its relevance is enduring.

I was moved to speak on this subject having heard the disappointment and feeling of injustice expressed by Mr Ali and his friends, and from previously attending the All-Party Parliamentary Group on Autism last November, with a large number of people attending echoing similarly unhappy experiences of our criminal justice system. The Grand Committee Room was packed to the rafters with people with autism and their families, alongside policemen, psychologists, Members of Parliament and other experts who understand the problem, some of whom recounted experiences reminiscent of Mr Ali’s.

People with autism face extraordinary difficulties in obtaining justice. Autism is a lifelong developmental disability that affects more than one in 100 people in this country in many different ways. It generally affects how a person communicates with and relates to others. Some people with autism live wholly independent lives, while others rely on specialist support and may be unable to speak comprehensibly.

Autistic people are no more likely to commit crime than anyone else. Indeed, given the reliance of many with the condition on support and care, people with autism should not be disproportionately exposed to crime. However, somehow the system discriminates to pull them in. Research indicates that a third of people with autism have been a victim of crime. Those with autism are also overrepresented in our prisons, where incidence may be as high as 15%.

It is hard to avoid the conclusion that, just as stop and search has criminalised black Muslim youth, the system is criminalising our autistic population and others with learning disabilities. That we are locking people up at least in part as a result of their disability is surely of deep concern to us all. When an individual encounters the criminal justice system, they should expect fair, respectful treatment—treatment that is mindful of the needs of those who may not have the required skills to face up to or deal with all the complexities of our legal system.

The old cliché of working together, multiagency, may indeed yield better services and justice. In many instances, it requires a multiple set of responses. The first is through the training of professionals including police officers and judges. What progress have the Government made with the commitment in their autism strategy to update the College of Policing’s mental health e-training for new officers? Will an autism marker be introduced on the police national computer and made available to prison and probation staff? Those steps would be welcome, but alone they are insufficient. Mr Ali was wearing a marker. The incident occurred in a division in which the police had long before committed to implementing disability training. Beyond lip-service to badges and training, what steps are the Government taking to roll out appropriate quality autism training to all police officers and prison staff, not just new recruits, so that they make appropriate adjustments to and recognise the significance of disability markers?

Secondly, to cater for the significant minority of the prison population with a suspected learning disability or autism spectrum disorder, the prison and probation services must have procedures in place to assess a person’s needs as they enter and pass through the system. Will the Minister commit to the use of screening tools for autism across our prisons?

Finally, early diagnosis of autism makes a huge difference to the development and future well-being of people with autism. Speaking to several organisations last year, I was told in no uncertain terms that many parents feel that there is a racial dimension to their experience. The Government have already acknowledged the significant under-diagnosis of autism among people from black, Asian and minority backgrounds. Delayed diagnosis results in delayed support. The provision of basic social care and support for people with autism at every stage of life can mitigate the likelihood of a costly health crisis or encounter with the criminal justice system. Low-level services such as social skills training or anti-victimisation classes can be effective and should be mandated by local authorities.

Whether a person has autism or not, they should be treated with respect by all our statutory institutions. However, as a mother of an autistic boy about Mr Ali’s age, I can vouch for the wariness that many of us as parents have about exposing a disabled child to institutions. For all the brilliant dedicated professionals in our hospitals, education and social services, police and prison services, persistent incidents of racism, prejudice and abuse not only erode the public’s faith in those institutions but profoundly injure people’s lives.

The process of appeals and complaints can do long-term damage to the mental well-being of those who must endure it. For that reason among many, I salute the determination and tenacity of Mr Ali’s family, his solicitor and all his supporters in their struggle to secure justice for Faruk Ali—and all others who persist.

14:38

[Lord Ponsonby of Shulbrede (Lab)]

My Lords, I congratulate my noble friend on securing this important debate. I will not be talking about the case of Faruk Ali, although I have read the material available on the internet. I propose to talk in more general terms about dealing with autistic people in the criminal justice system. It is indeed a large and difficult subject, and I shall talk about the courts system in particular, of which I have some experience.

In preparing for this debate, I have seen that a lot of guiding material is available published by the House of Lords Library regarding dealing with people with autism. There was a recent article in the Magistrates’ Association magazine about dealing with autistic people in a court setting. If one googles the issue, as I did, there are a lot of comment pieces about the appropriateness of different procedures within the criminal justice system as a whole.

A very important context for today’s debate is the rollout of Liaison and Diversion by the Government to those with mental capacity issues. My understanding is that the objective is that this will be fully rolled out within England and Wales by next year. Liaison and Diversion is where a mental health practitioner is available to the court, so that a hearing may be adjourned for an initial assessment to be done on the spot as to the mental capacity of either victims or the defendant. This has been at the instigation of leadership from my noble friend Lord Bradley and I understand that it has led to a measurable drop in such cases being brought to court in the pilot schemes operating to date.

I want to talk about my own experience as a London magistrate, where I have dealt with defendants who are autistic. I will not go into the details of the case I have in mind; suffice to say that I believe that the court system coped well with the challenges of the trial, in the sense that all the individual elements of dealing with this difficult situation were met. Nevertheless, by the end of the process the autistic defendant was bemused —he did not understand what had happened—and his family felt that they had not been treated fairly.

So what were the elements in place? First, the young man was charged with a sexual assault, so special measures were in place to protect the victim from the attention of the young man or his family. Secondly, an appropriate adult sat with the young man at all times when the case was being conducted. An intermediary was not believed to be required because the young man claimed he had no memory of the incident of which he was accused. We had an expert witness who gave lengthy evidence, having interviewed the young man, and was cross-examined. That was really the burden of the defence case. As the presiding magistrate, I could see that witness support was giving very active support to the family of the young man who was accused. We took regular breaks, as asked for by the defence lawyer; that would be good practice in such cases in any event. Legal aid was available but would not be for this level of charge for most defendants. Incidentally, that was one of the sources of delay.

We convicted the defendant of the sexual assault. As I said, he looked bemused as if he did not understand what had happened. The family made it very plain that they were unhappy with the result. We had no doubt that we had properly convicted the young man. After the trial, I discussed with my colleagues and the court staff what could have been done better. All the individual requirements had been complied with, after all, so what was the problem? It was the delay in the whole process. It had taken a year from the initial incident to when the trial took place. All the people completing their individual elements as part of the process no doubt believed that they had done their job but it added up to a long delay.

It was made plain to the court by the expert witness that delay disproportionately affects people with autism, because they are very likely to have worse memories than other people. This problem was not overcome and was, I believe, the source of the discontent of the young man’s family. We were never going to make them happy with the result but we could at least have made them feel that their son had had a fair trial. I am afraid that I do not think they believed that. My point to the Minister is very simple: all these elements are good and complex but they have to be done quickly, otherwise their benefit gets dissipated and people do not feel that they have had a fair trial.

I will close on one separate, short point regarding Liaison and Diversion. It is on the need to scrutinise whether these diverted cases are properly being diverted. As the noble Lord, Lord Faulks, will know, there are various pilot schemes in the country and various methods among police forces of recording the way that police forces divert cases. From a courts perspective, it is very important to have a realistic record of those diversions when they come to sentence people who have committed subsequent offences. We have this issue in the youth court, where we do not know which diversions have been done properly. It is potentially the case that we will also have this issue in the adult court if there is not proper recordkeeping of diversions for people with mental capacity issues.

14:45

[Lord Addington (LD)]

My Lords, we have addressed things related to this subject fairly frequently. The fact of the matter is that those with autism get a rough deal out of society, for the simple reason that they have problems communicating and that we are an animal who communicates all the time. If you have a problem with communication, you are always going to find yourselves in positions that are potentially stressful and breeders of conflict. If we take that into account when looking at just how many rules and regulations we have, the fact that the criminal justice system will have problems with those who have autism at least occasionally is obvious to us. We should look at how we deal with that now.

The noble Baroness, Lady Uddin, gave information about a case on which the police were found not guilty at the trial but into which there is an ongoing internal inquiry. The fact that it was severe enough to get to court suggests that something had gone wrong at this point. Look at the selfish genes of society. Having to take an issue like this to court in the first place means that there has been a fundamental mistake. If we lose track of that, no matter what the outcome of this, we are losing track of the fundamental problem. Having looked through the information and attended some of the meetings that have already been referred to, I say that the police are always going to struggle with somebody who has these communication problems. However, they know this and there are schemes in various parts of the country that are better at making the police informed. What are the Government going to do, and encourage local police forces to do, to make sure that people understand or at least have an awareness of autism?

This is not easy, quite simply because most of the problem will be at the high-functioning end of the autistic spectrum—those with Asperger’s or those who will not obviously have a problem, and where the first few lines of communication will probably not be enough to establish it. There is a desperate need for training but initial police training is a very slow way of getting this into the structure. I cannot help but feel that if a senior sergeant or inspector within the force had had a look at this case and said that an apology or some form of mediation were required, we might not have had to go through that wasteful process of taking an action in court. We might not have needed such a lengthy internal procedure. We are wasting time and money by not taking on some basic awareness training within this part of the service.

The same criticism could almost certainly be made of most bits of government. I will undoubtedly make similar points about other disabilities at other times, and already have. But unless you do this, you are building up the stress levels. If we are not to keep all our disabled people, and particularly autistics, locked away but to have them interacting with society, it is a basic requirement that we allow those in the public sector at least to be able to interact with them. I am calling not for everybody to be an expert but for them to have enough confidence and awareness so that, when they establish that something is not right, they call in the right support and help. That is not too much to ask: that you know that you do not have to soldier on here, and you call in the person who knows something. You are not wasting time or resources, or causing that individual such enormous stress.

We had a debate on mental health a week ago today, in which I spoke about the problems of those with disabilities and mental health. Autistics were a large part of that group. Some 70% of those with autism are reckoned to have some form of mental health problem, and the noble Baroness, Lady Uddin, has already referred to the fact that those on the autistic spectrum are grossly overrepresented within our prison system. By the way, it is very widely accepted that virtually all hidden disabilities or special educational needs are grossly overrepresented within the prison system. Therefore that should not come as any surprise. To try and avoid that, we should invest a little in training and time throughout the system, so that there is a way in which you can interact, apologise, back down and correct what has gone wrong, as far as you can. All systems will go wrong, but unless we can instil enough knowledge within the system so that we can say, “Yes; something has gone wrong and we will intervene to do what we can to put it right”, you will have these problems. Would it not have been better if that had taken place?

It is equally damning in this case because this same individual had been involved in a case three years earlier, and Bedfordshire Police had agreed to undertake some of this. If it did, clearly it did not get through to the right person at the right time. We need to make sure that we get this done, and quickly. If not, we will waste the time and resources that could very usefully be spent somewhere else. The selfish gene of society means that we deal with this and move on, otherwise we waste time and resources and make people’s lives unpleasant. That is more or less an open-and-shut case.

14:51

[The Lord Bishop of St Albans]

My Lords, I, too, thank the noble Baroness for this debate. As has already been said, Faruk Ali comes from Luton, a town in my own diocese. Quite a number of people have raised that case with me and have been concerned about what happened, so I am glad to be able to involve myself in this debate. However, I will leave it to other noble Lords to comment on the specifics of the debate—I, too, have read the media on this—as clearly it raises a number of wider problems. At an early stage I pay tribute to all those people, both professional and volunteers, who work in the statutory services and in the charitable sector, who are doing a very good job at huge personal cost and with great expertise. We need to acknowledge what they are doing and affirm it before looking at some of the problems.

Between 500 and 800 people have been victims of disability hate crime in each of the last five years. Some of those will almost definitely have been people with ASD, although it is widely accepted, as has already been pointed out, that generally they are more likely to be victims than offenders. Indeed, one of the characteristics of ASD is that very often people give inordinate attention to obeying laws and rules, and find that the most comfortable context in which to operate.

Over the years I have known a number of people with ASD, and one family in particular whose son had Asperger’s syndrome. They are a deeply supportive family; I got to know the lad when he was in his 20s. On first meeting you would have no idea that he had been diagnosed with Asperger’s syndrome, but when you got to know him you realised some of the problems it was creating. He found it difficult to relate to other people; being a young man in his 20s, he was very keen to make friends with the opposite sex, but he simply did not know how to relate to girls. He would often say things that could be taken as totally inappropriate and easily misunderstood. He was very distressed by that, but simply did not have the ability to know how to relate in any other way.

In a more extreme way, on occasion he would lose his temper, which meant that, being a full grown man, he could appear frightening. I was a neighbour of his family, and sometimes he would run out of his house in a fury and knock on my front door. I learnt over the years how to simply give him a place to sit down and calm him down. In fact he was fine, but just needed some help at that point. I am telling your Lordships this account simply to illustrate that this is an immensely complex issue, particularly for people who are meeting someone, perhaps in extreme circumstances, for the first time. It is not easy for police or other health professionals always to recognise immediately who they are dealing with.

The National Autistic Society recommends that,

“the child or adult with ASD carries an identity card”,

as Faruk Ali was,

“stating their personal details, emergency contacts and an explanation of their condition”.

However, for someone with Asperger’s syndrome, who longs to integrate into society—and his family were trying to help him to do that; he had moved into a flat to live by himself—that can be quite humiliating, because it marks you out as different. That was precisely what he did not want to do.

I will raise three areas of concern. The first is on police training, which has already been referred to by the noble Lord, Lord Addington. I know, because I have talked to people involved with training the police, that they are already expected to cover a huge amount of different areas of training—they do not sit around with nothing to do. Having said that, it is important that part of that training is on how to recognise when you may be dealing with someone with particular needs, especially ASD. The Prison Reform Trust recommends that:

“Legal professionals and practitioners who undertake criminal work, members of the judiciary and liaison and diversion staff should be required to participate in awareness training in mental health problems, learning disabilities and other learning, developmental and behavioural disorders such as autism, attention deficit hyperactive disorder, communication difficulties and dyslexia”.

Does the Minister agree that that should equally apply to the police?

Secondly, we need to ensure that there are sufficient police interview advisers. Each police service has some of those, but again it is crucial that there are sufficient resources and that they are trained.

Thirdly, I will say a word about registered intermediaries. At the other end of the criminal justice system, we also need to ensure that people with ASD are given the right support. Back in 2012 the Prison Reform Trust published Fair Access to Justice?, which recommended that support should be made available for vulnerable defendants by registered intermediaries on the same basis as witnesses:

“The Advocacy Training Council … recognises that the handling and questioning of vulnerable people in court, in order to achieve best evidence, is a specialist skill; however, there is a lack of clarity concerning the provision and availability of intermediaries for defendants. While intermediaries appointed to support vulnerable witnesses are registered and subject to a stringent selection, training and accreditation process, and quality assurance, regulation and monitoring procedures, intermediaries for defendants are neither registered nor regulated. The practice of ‘registered’ and ‘non-registered’ intermediaries—potentially in the same trial and paid different fees—is anomalous. Intermediaries should be introduced into the statutory provision of special measures for vulnerable defendants”.

Finally, does the Minister agree that this recommendation is not only important but needs to be implemented?

14:58

[Lord Touhig (Lab)]

My Lords, a young Japanese boy by the name of Naoki Higashida wrote a book entitled The Reason I Jump. It should be basic reading for anybody in public service who has to deal with other members of the public. It is just 198 pages long and is set out in a question and answer format. There are just 58 questions, each question no more than 10 words long, with the answer about 100 to 150 words long. Question 21 in the book is relevant to today’s debate. The question which some people ask him as an autistic person is:

“Why don’t you do what you’re told to straight away?”.

He answers:

“There are times when I can’t do what I want to, or what I have to. It doesn’t mean I don’t want to do it. I just can’t get it all together, somehow. Even performing one straightforward task, I can’t get started as smoothly as you can. Here’s how I have to go about things.

1. I think about what I’m going to do.

2. I visualise how I’m going to do it.

3. I encourage myself to get going.

How smoothly I can do the job depends on how smoothly the process goes.

There are times when I can’t act, even though I really, badly want to. This is when my body is beyond my control”.

That one sentence jumps off the page for me:

“How smoothly I can do the job depends on how smoothly the process goes”.

Just think of that sentence, and how easy it would be for the most basic and simple encounter between a police officer and an autistic person not to go smoothly, and to get out of hand.

The plain truth is that people with autism have no more desire to commit a crime than any of us. But what may start as an innocent inquiry—an encounter with a police officer—could lead to a crime being committed. A situation could escalate simply because the police, in the main, have no idea about, and lack sufficient training in dealing with, people with autism.

People with autism communicate in a way that is not familiar to most of us. The command of spoken language in a person with high-functioning autism or Asperger’s syndrome does not necessarily indicate their true level of understanding or social awareness. The wider implications of a situation may not be apparent to a person with autism, and they may not understand the kind of information they need to give in response to questioning. People with autism are also often unaware of the consequences of their actions or the effect their behaviour will have on other people, because they do not link cause and effect.

Put yourselves in this position, my Lords, and imagine that you are autistic and for one reason or another enter into a confrontational situation with a police officer. Imagine the police officer telling you to do something. They, rightly, expect you to respond immediately. And then remember that young man’s question 21:

“Why don’t you do what you’re told to straight away?”

And his answer:

“There are times when I can’t do what I want to, or what I have to. It doesn’t mean I don’t want to do it. I just can’t get it all together, somehow”.

People with autism are often very single-minded about their interests, and can be unaware of the effect that their actions could have on others, or that those actions could lead to them putting themselves or others in danger, or committing a crime. A person with autism, when faced with a situation such as arrest, or following an incident, may have difficulties in managing their emotional reaction. The response of the criminal justice system to this is crucial. But without appropriate training in autism, the situation could escalate, leading to inappropriate sanctions being taken against a person with autism.

The refreshed autism strategy, Think Autism, which the Government published last April, commits the Home Office to working with the College of Policing to update the mental health training for new officers, and to look at the feasibility of an autism marker being used on the police national computer, so that police officers can identify whether someone has autism, and make appropriate adjustments. That point was well made by my noble friend Lady Uddin, who we congratulate on securing this debate. The strategy was signed off by both the Home Office and the Ministry of Justice. If there were a marker on the police national computer, it could also be seen by other criminal justice system professionals, including prison and probation staff. So may I ask the Minister what progress has been made in this area, and what processes exist to roll out autism training to all police officers and prison staff, not just to new recruits?

Contact with the criminal justice system will have a significant impact on a person’s life. This is no less true of a person with autism. Such contact may also be a sign that their existing care and support is no longer working. For some people with autism, the situation may have been compounded over recent years by their no longer being eligible for support as a result of changing criteria—or perhaps they never qualified for support in the first place.

I share the disappointment of the National Autistic Society—here I must declare an interest as a vice-president of that organisation—that the revised adult autism strategy failed to highlight the need to reassess a person’s needs when they enter or leave the criminal justice system. So I ask the Minister: what steps are the Government taking to ensure that people with autism in prisons are identified and given appropriate support? I must stress that they need to be properly assessed to ensure that support will be there for their journey out of prison and back into the community.

Like the noble Lord, Lord Addington, I believe that training plays a key part in trying to overcome some of these problems. The questions and answers in the small book that I have spoken about should be essential reading for everybody working in the public sector. It would make a difference in solving some of these problems.

15:04

[Lord Kennedy of Southwark (Lab)]

My Lords, I start my contribution to this debate by thanking my noble friend Lady Uddin for tabling this Question for Short Debate. In the light of the case of Faruk Ali, she raises an important issue about how people with autism are treated when accessing the criminal justice system as victims, witnesses, suspects or offenders. The role of victim support is important, and a proper understanding in this respect is also needed. I agree with what the right reverend Prelate the Bishop of St Albans said when he paid tribute to the people who work in the criminal justice system.

What is autism? As other noble Lords have said, it is a developmental disability that affects how people communicate with, and relate to, other people. It also affects how they make sense of the world around them. A person with autism may display a number of characteristics, which can include, among other things, being unable to read social cues, appearing to lack empathy, behaving in what would seem an odd or inappropriate manner, having difficulty in understanding tone of voice or facial expression, and making literal interpretations of figurative or metaphorical speech. They may also become extremely anxious because of unexpected events or changes in routine.

It may not be immediately obvious if someone has autism. Unusual behaviour may invite the attention of others, but it can also be said that autism is a hidden disability. People with autism do not always understand the implications of their actions or the motivations of others, and they may not learn from past experience. There are examples of people with autism being victims of crime because they are not able to deal with the situation and avoid becoming a victim. I read about the example of a person with autism who understood that it was important to avoid dark places with few people around in the late evening or at night. But they were unable to cope with the situation of being threatened by a gang in the High Street on a busy Saturday afternoon.

Only a small minority of people with autism come into contact with the criminal justice system as victims, witnesses, suspects or offenders. But it is important for people in authority to have a proper understanding of autism and to deploy effective strategies on an individual basis to ensure clear and effective communication. Some people with autism find it difficult to make eye contact, and that could, in certain circumstances, be misconstrued as being shifty or dishonest, for example. People with autism are individuals, but they all experience difficulty with social interaction, social communication and social imagination. They may not always be easy to recognise. Where a person, on coming into contact with the criminal justice system, displays unusual behaviour, it is important for the person in authority to consider whether the person has autism, and where they are on the autism spectrum.

People with autism often find unexpected or unusual situations very difficult. Encountering a situation that involves anyone from the criminal justice system or the emergency services is just the sort of situation that could be very difficult for a person with autism. My noble friend Lord Touhig gave us an excellent example of how difficult it could be for a person with autism to deal with the criminal justice system.

When the noble Lord, Lord Faulks, responds to the debate, it would be useful if he could explain what advice and guidance is given to professionals from the criminal justice system on adopting effective strategies for dealing with autism. Is he confident that police forces have fully understood the condition, and the steps they need to take when dealing with a person who has this disability, in whatever context?

It appears to me that more could be done to raise awareness among professionals in the criminal justice system. I read one report about a victim of crime with autism who was viewed as someone who would make an unreliable presentation in court, so the case against the suspect was dropped. It could of course be that the people who questioned the victim did it in a way that did not enable the victim to tell their story. Instead—unintentionally, I am sure—they caused that person stress and made it impossible for them to get their points across effectively, and they were denied justice as a consequence.

Organisations such as the National Autistic Society run bespoke courses for professionals in the criminal justice system. Does the Minister know what the take-up of such courses is, and what the Ministry of Justice is doing to encourage greater take-up? Has the ministry thought about talking to the Home Office and seeing whether at least one officer, if not more, in every police station has been on a course designed to equip them with the skills to communicate effectively with a person with autism?

The noble Lord, Lord Addington, made an important point about training in the criminal justice system. Perhaps the noble Lord, Lord Faulks, can tell us what he understands the Crown Prosecution Service does to communicate and deal with the needs of people with autism it comes into contact with. Is any discussion taking place with the legal professions to ensure that they have an appropriate appreciation of the condition and of how people with the condition need to be communicated with? My noble friend Lord Ponsonby of Shulbrede made an excellent contribution highlighting what happens when a person with autism appears in a magistrates’ court and the problems that delays and other issues cause them.

The autism alert card produced by the National Autistic Society is a useful initiative and can help people when dealing with someone with the condition, although I understand the point that the right reverend Prelate made in that respect. I do not intend to comment on the Faruk Ali case as IPCC proceedings are under way. In conclusion, I again thank my noble friend Lady Uddin for raising this important matter in the House today.

15:10

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

My Lords, I am grateful to the noble Baroness, Lady Uddin, for securing this debate, and raising the important issue of access to, and support from, the criminal justice system for those with autism spectrum disorders. It is, of course, a spectrum. As has been rightly said, those with higher functioning autism can be particularly difficult to identify. Generally, autism can sometimes be difficult to identify or diagnose.

A lot of information is available about Mr Faruk Ali’s case. However, as a number of noble Lords have indicated, the two police officers were cleared after a trial relating to the incident which took place on 20 February. Both officers remain suspended pending the outcome of a misconduct investigation. In those circumstances, it would be inappropriate for the Government to comment further. However, I have no difficulty at all in saying that we expect the highest standards of professionalism in all aspects of policing and across the criminal justice system and I am extremely happy to condemn any racist or discriminatory behaviour by any police officer in any circumstances. The decision as to whether to take further action against these officers is a matter for the Independent Police Crime Commission and the Crown Prosecution Service.

I am well aware of the need for all parliamentarians, and especially those who work in public services, to be more conscious of the needs and experiences of people with autism. This issue is particularly important as regards the criminal justice system. It is thought that around 2% of the general population have autism, but I recognise that the figure within the offending population could be much higher as a percentage.

The Government’s autism strategy, which was updated in April 2014, contains specific actions in relation to criminal justice. The Ministry of Justice is a signatory to that strategy. The update contains new obligations for the Ministry—obligations which I am pleased to say we are taking forward. These include the commitment to establish a cross-government group to take forward issues with autism and the criminal justice system. I am pleased to say that although the system encompasses a large number of players, as noble Lords will understand —for instance, the police and prosecutors, to which the noble Lord, Lord Kennedy, referred, as well as courts, prisons and probation—my department is leading on this work and chairing the group.

We also agreed, as part of our commitments in the strategy, to examine and share good practice in prisons towards prisoners with autism. We are also considering whether autism awareness training can be made available to probation staff. We are having conversations with the new independent Probation Institute about this. As part of our strategy, we agreed to make information available to potential bidders for contracts for the new providers of probation services under our transforming rehabilitation programme.

All the strategy objectives have one thing in common: they are helping with our aim to ensure that the criminal justice system can adapt to cope with people with autism, whether they are suspects, victims or witnesses. As a number of noble Lords have said, training is key to this. All staff in the criminal justice system cannot be expected to be subject experts in every disability they may encounter, as my noble friend Lord Addington said, but they should at least be on notice that there might be a problem, which I think was the burden of his remarks. For example, a person whose possibly different perception of social norms may get them into trouble and the chances of someone in the criminal justice system encountering someone with autism is therefore significant.

As part of the autism strategy, the Home Office has committed to ensuring that the College of Policing develops better training for the police in recognising autistic spectrum disorders. I am pleased to update noble Lords on the fact that the college now has a full-time mental health co-ordinator and, arising from that role, it has set in train important streams of work around the development of new authorised professional practice guidance on mental health, including autism. The new guidance should be available to consult in the near future and we hope will go live and be public by autumn 2015.

The guidance for police will be underpinned by the first comprehensive package of training, pitched at different levels of detail and relevance for different ranks and roles of officers across the service. These training packages will be relevant for the promotion process and professional development, right up to the Police National Assessment Centre, which selects senior officers. This training is delivered through a formal training board, including the police national curriculum manager, and has already highlighted the need to understand the extent to which police training should confirm condition-specific awareness.

It has been recognised that these disorders may need to affect a policing response. The work is at an early stage and will develop in 2015, with a view to training products being ready for piloting in 2015 and completed for consumption nationally by the end of the first quarter of 2016.

As to prison officers, NOMS has a Prison Service instruction, a set of binding rules for prisons which covers autism. It includes a specific section to help people understand autism as well as a section on communicating with people who have learning difficulties or related disorders because it is sometimes the case that there is comorbidity, as it were. There may be autism and other difficulties within one person.

Some prisons have developed their own autism strategies and sets of training materials—for example, the excellent work that is being done at Dovegate prison. As I mentioned earlier, my department is very keen to find best practice among local practitioners and to share and promote this more widely.

I am glad to say that within the Ministry itself training is available for staff on autism. I know that a number of charities offer training on interacting with people with autism, written specifically for criminal justice professionals. I hope that this will mean a real improvement in the experiences that autistic people have when they interact with the criminal justice system.

Liaison and diversion schemes, mentioned by the noble Lord, Lord Ponsonby, and others, are key to this. It is, of course, crucial that we are able to identify autism. Twenty- five million pounds has been invested across England to fund mental health professionals in police stations and courts to establish liaison and diversion services. These services identify people when they first come into contact with the youth and adult criminal justice systems and help support the most appropriate outcomes. They are available 24 hours a day and ensure that across the trial areas they will be provided with the same level of care and service.

By identifying someone with a health problem such as autism when they are brought into a police station or involved in court proceedings, liaison and diversion schemes can ensure that an individual is supported through the criminal justice system and into the right mental health or social care service. We have strong anecdotal evidence that they can reduce the overall length of court proceedings—a point raised by the noble Lord, Lord Ponsonby—through the provision of timely reports to magistrates, limiting the number of court hearings, and probably adjournments, and therefore avoiding periods on remand. They should be passed between authorities and should follow the individual through the criminal justice system to probation or prison services, so that from the first encounter, quite apart from the question of flagging this on a computer—that important point was raised and is being looked into—there is not, as it were, a gap in people’s awareness.

There is a real opportunity here for the liaison and diversion service to help courts do their job. The case mentioned by the noble Lord, Lord Ponsonby, was a considerable challenge to the court, by the sound of it. It almost sounded like an exam set for a judge in all the most difficult problems a court would have to confront. Even the question of unfitness to plead, I dare say, would have come before the court on that particular occasion. I am sorry that there were delays. Of course, delays can sometimes be encountered in finding the appropriate expert to make the diagnosis or identify the disorder. It can still take too long. I have had briefings from the Department of Health on this issue. It has commissioned the National Institute of Health and Care Excellence to produce guidance which will lead to quicker diagnosis. There is a role for NHS England in looking at people’s experience of diagnosis, and the importance of timely and effective services will be highlighted in a forthcoming statutory guidance on autism for local authorities and the NHS.

The new model—the liaison and diversion model—has already seen more than 10,000 children, young people and adults, come through the service while going through the justice process. The model will be independently evaluated to inform a business case for services to cover all of the English population by 2017-18. As to victims and witnesses—as in the case raised by the noble Lord, Lord Ponsonby, there can be times when both a victim and a defendant may need support—it is very difficult for a court and all those taking part in the criminal justice system to come to the truth and nevertheless respect the rights of all those involved in the process.

The Government are committed to providing support for all types of vulnerable and intimidated victims and have a range of special measures in place to support them in the criminal justice system. Of course, the courts have an inherent right to ensure that someone on the autistic spectrum has appropriate facilities to assist them in their defence, including the use of intermediaries. There is guidance given to judges as to this use of special measures and the access to materials on the private judicial websites. If they are confronted with difficulties they should be aware of the possibility—and indeed they are—of helping those who have difficulties, although, as I said, the information should be conveyed by the liaison and diversion services or through the probation service in any event.

The registered intermediary should help them communicate their evidence. Intermediaries are communication specialists to help vulnerable witnesses provide their best evidence. They are one of the special measures introduced in the Youth Justice and Criminal Evidence Act. In 2014, 499 requests for a registered intermediary to help witnesses with disorders such as autism were received. In addition, victims and witnesses can also expect to be able to use communication aids, devices such as books and symbol boards to help them communicate when giving evidence in court.

A new victims’ code implemented in December 2013 sets out the support and services that victims can expect to receive from agencies throughout the criminal justice process. It also sets out that victims in the following three priority categories of crime are entitled to receive enhanced support and information: victims of the most serious crime; intimidated or vulnerable victims; and persistently targeted victims, which can be a particular feature of those who are on the autistic spectrum. The code entitles them to receive this enhanced support including the referral to specialist organisations.

The police and the Crown Prosecution Service have a duty under their code to assess the victims’ needs at an early stage—this is a partial answer to the noble Lord, Lord Kennedy—and to refer any eligible victims for enhanced services for pre-trial therapy where appropriate. So every single player in the criminal justice process should be equipped—and should be better equipped—to identify and help those with autism. In addition, of course, victims with disabilities, or a close relative, can nominate a family spokesperson as a single point of contact to receive services under the code.

The conclusion that I invite the House to reach is that there is an increasing appreciation by the Government —increasing joined-up thinking—that the criminal justice system must respond to the challenge of autism. I genuinely think that the Government are taking this seriously and that the access to and experience of the criminal justice system for those who have these disorders should improve in the future.

This is a very sad case, whatever ultimately may be the determination of the facts. If it has done anything, it has perhaps helped stimulate this debate and further reinforced the importance for all those in the criminal justice system to be aware of autism, the challenges that it confronts, and responding appropriately to them.

I thank all noble Lords for their contribution to this useful debate.

Local Government Finance Settlement

Thursday 22nd January 2015 Lords Chamber

Motion to Take Note

15:25

Moved by

[Lord Beecham]

To move that this House takes note of the Local Government Finance Settlement and its implications for the future of local government.

[Lord Beecham (Lab)]

My Lords, I look forward to hearing the maiden speeches of the right reverend Prelate the Bishop of Southwark and the noble Baroness, Lady Pinnock, of Kirklees in Yorkshire. They, and perhaps others of your Lordships’ House, may recall a well known broadcaster from Yorkshire—one Wilfred Pickles, whose catchphrase was, “Give him the money, Mabel”. The local government world would be surprised if the Secretary of State proved to be related, though the Chancellor might be forgiven for seeing in him the very reincarnation of his namesake. This after all was the first Minister across the door of Number 11 in 2010, offering up to the Treasury the largest cuts of any government department.

Year after year the story has been the same: injury compounded by the insult of meaningless consultations and a last-minute announcement of the annual settlement, this year on the very last day before the Recess. I have had the privilege of serving as a member of Newcastle City Council since May 1967 and I declare my interests in that capacity and as a vice-president of the Local Government Association. I have lived through good times, difficult times, and bad times in local government, but I have never known a time when local government and local democracy were in such a desperate plight as they now are.

Even during the Thatcher era, Secretaries of State such as the noble Lords, Lord Heseltine and Lord Baker, and Lord Jenkin displayed a sympathy with local authorities and understanding of the importance in their role. Such, sadly, is not the case today. What is in some ways worse is the propensity of the Secretary of State not only to promote his obsessions—weekly bin collections or car parking charges, for example—at the same time as he presides over massive cuts, but also to suggest that the damage is not serious, that councils in general are sitting on vast reserves, or that the 50 helpful hints for savings he jotted down on the back of an envelope could avoid difficulty.

The reality, as the Secretary of State must well know, is very different. Capital reserves cannot be used for revenue purposes, revenue reserves must be available to meet contingencies as they arise or be held on a prudential basis, and of course, once spent, are no longer available. Councils of all political colours are in dire difficulties even after making significant efficiency savings. He must also know of the claims of the Under-Secretary of State, Mr Hopkins. Like Mr Pickles, he is a former leader of Bradford Council, though unfortunately both cast from a very different mould from that of the noble Baroness, Lady Eaton, from whom we will hear later, who was also a leader of that council. Mr Hopkins, after all, stated that,

“the settlement leaves councils with considerable spending power”.

That claim is grossly misleading. In the first place, the LGA point out that real-terms cuts since 2010 will reach 40% by the end of 2015-16. In fairness, the National Audit Office figure is a little lower at 37%—but there is, of course, more still to come.

Secondly, the Government's claims about spending power—an artificial construct designed to conceal the reality of what is happening—are utterly misleading. The Government claim a reduction in spending power of 1.8%. But that includes council tax income and the NHS element of the better care fund, which in fairness is a good policy, but which represents money that is not the councils’ money to spend. If those two elements are taken out, the cut becomes 8.8%, and this rises to 11.8% if ring-fenced funding and social care cost new burdens are taken into account, making a like-for-like comparison cut not of 1.8% but 11.8% in all.

This does not, of course, reflect equal misery all round. Hackney’s spending power, a deeply deprived inner London borough, drops by £199.50 per head, and Birmingham’s by £156.77, but Surrey’s goes up by £56.42—and even then, the Conservative leader of Surrey complains that it is not enough. Wokingham, which is frequently referred to by Ministers as a comparator with Newcastle, also gets an increase of just under £50 per head.

The National Audit Office is critical of the Government’s use of spending power, which it describes as,

“an indicator that combines government funding with council tax income”,

and which does not give,

“a measure of the scale of the financial challenge facing local authorities over time”.

Local auditors moreover, the NAO reports, say that 52% of single-tier and county councils,

“are not well placed to deliver their medium-term financial strategies”.

Worryingly, the NAO asserts that:

“The Department has a limited understanding of the financial sustainability of local authorities and the extent to which they may be at risk of financial failure”,

and, moreover,

“does not monitor the impact of funding reductions in a co-ordinated way”.

Of course it, and we, no longer have the benefit of the Audit Commission’s views of these matters since it was abolished in a fit of Pickles pique.

On top of this, there are instances of sleight of hand in the published figures. A £200 million cut in the grant to education authorities for central services for schools is not reflected in the declared spending power, and the £70 million New Homes Bonus going to the Greater London Authority is still included in the spending power figures for the London boroughs, while the Government’s better care fund is not all spent on social care or other services commissioned by local councils.

A number of areas of general application are worrying. In relation to business rates, councils have made a provision of £660 million for back-dated appeal losses, representing local government’s 50% share of the cost, as decreed by the Government, who received all the money in the first place but are meeting only half the subsequent bill. If anything, this provision underlines the need for a prudent level of reserves.

Council tax support sees a £1 billion cut, which is certainly going to make life even more difficult for low-income and, frequently, working households, and the councils which will have to attempt to recover unpaid council tax. Moreover, the Government are cutting local welfare assistance, which partially cushioned the blow of the council tax support cut and simply absorbed it into the funding assessment, which will therefore be at the expense of other services. The LGA has rightly sought the restoration of this funding.

What does all this look like on the ground? Twelve north-east councils stand to lose £240 million in spending power—that artificial measure—next year, on top of a 40% cut in grant thus far; and that is happening in the region with the highest unemployment in the UK, and where the council tax yield is much less than in the more prosperous areas. By 2017-18 Newcastle’s budget will have fallen from £280 million in 2011-12 to £207 million, with a reduction of 48% in government funding.

The pattern is similar in all the metropolitan areas, many of the inner London authorities, and many other places such as seaside towns. However, breaking down the figures in service terms illustrates the problems more vividly. Children’s services, for example, have seen the number of looked-after children increase by 11% in five years, but by 33% in the north-east; yet government funding for core children’s services has suffered an estimated cut of £2 billion, or about 50%, including a cut of 17% or £0.5 billion for 2015-16 alone. Local welfare assistance schemes, a lifeline to the most vulnerable, have been scrapped by the Department for Work and Pensions, and £129 million is now included in the overall settlement but is not ring-fenced and has to be seen in the context of the 11.8% cut overall.

Sure Start everywhere faces cutbacks, although in Newcastle we are managing to maintain provision in the most deprived areas by a reconfiguration of the service. Yet the pressures are palpable across a range of services, from adult social care to the state of the streets and open spaces, from threatened cuts to policing and fire services, and from the provision of library services—although we in Newcastle have managed to retain a reduced service in all but one of those threatened with closure by working with residents’ groups and other partners—to a much reduced youth service. The council faces a cut of £26.7 million in government funding next year as we struggle to meet the rising costs of demographic change, particularly in the light of an increasing number of elderly residents, and huge pressures on children’s services.

The voluntary sector is also under enormous strain—I declare my interest as president of Age UK Newcastle—and unable to meet the increasing demands on it. We are, in 2015, a city with eight food banks and seven low-cost food centres, by no means the only area with such a necessary provision. There are also 5,376 house -holds paying the bedroom tax, which is costing them and the city’s economy £3.75 million this year. Some of these cuts will lead to greater expenditure elsewhere—notably but not exclusively in the National Health Service, as well as in pressures on other services, which is reflected, for example, in a failure to equip youngsters to participate in the local economy. That also impinges on the general welfare of the area and the success or otherwise of local business—as well as, perhaps, on the criminal and family justice systems.

What we desperately need is a fair system of distributing financial support for local government based not on spending power but on spending need, accompanied by the revival of Total Place, or place-based budgeting as it appears to be known now. It is a concept developed by the Local Government Association, adopted by the previous Government with the full support of the Treasury and the Department for Communities and Local Government at that time, but disappointingly not necessarily taken on board by other departments. In any case, it has withered on the vine over the past few years. Under this approach, one would look at all relevant public spending in an area, at the appropriate local level, thereby enabling both efficiency savings and reduced overheads, but essentially allowing a more integrated and effective approach to issues and problems that necessarily cross departmental and service boundaries —whether in Whitehall or the local town hall.

The Motion refers to the settlement,

“and the implications for the future of local government”.

Thomas Hobbes famously described the life of man as “nasty, brutish and short”—epithets which some might be tempted to apply to me from time to time. Unless there is a change of course, I fear that the future of local government is destined to be depicted in those sombre Hobbesian terms.

I hope that the Government will, in their final settlement announcement in February, reflect the widespread concerns expressed across the whole of local government, and of all political colours, as well as by independent bodies, those who deliver services and those who assess their efficiency, and that a more realistic appraisal of what is happening up and down the country will result. I do not have any great confidence about that because the department is not representing, as it were, local government in Whitehall but is merely an instrument for cutting services. That is in part, apparently, in the pursuit of an ideological approach of down-sizing the state in general and local government in particular. That does no service for the people who need our help—whether they be deprived individuals in deprived communities or businesses that need a thriving local economy and investment in skills and infrastructure. The prospect is indeed gloomy. It is not too late to begin to reverse it and, in particular, to redress the grotesque inequalities perpetrated by this Government in their distribution of cuts. We are living in difficult times obviously, but the burden should not be borne by those who are least able to bear it. That has been the hallmark of the Government’s approach to funding local government in the past five years, and it is high time for a change.

15:39

[Lord Tope (LD)]

My Lords, it is courtesy in your Lordships’ House to say what a pleasure it is to follow the previous speaker. I have heard pretty well all the speeches that the noble Lord has made on the local government finance settlement for at least the last 25 years. I hope your Lordships will understand that my pleasure in following him has been just a little diminished over that time, perhaps matched by the predictability of what he says each time—which, I am bound to say, is not that different, regardless of who is in government.

I have one particular point of agreement with the noble Lord, which is in regard to his comments on whole-place, total-place or community budgeting or—as he rightly says—whatever the current title happens to be. It was introduced by the last Government as total-place and fairly enthusiastically embraced by my coalition Government, albeit with a change of name to community budgeting—but I share his disappointment at the very considerable lack of progress at a time when it is actually needed even more than it was when it was first introduced. That is down to a lack of leadership—local, perhaps, but most certainly national and at departmental level. I hope that the Minister will be able to comment on that.

It will be my pleasure to hear today’s two maiden speeches: one from the right reverend Prelate, who I could possibly describe as my local bishop, and the other from my noble friend Lady Pinnock who is also a very long-time local government friend of mine. We all look forward to that. I declare my interests as a vice-president of the Local Government Association and as a signed-up member of the local government party for a very long time. I thank the LGA, which has gone to great lengths with its excellent briefings that will, I am sure, inform the debate. However, I am one of only two London local government Peers speaking in this debate; the other is the noble Lord, Lord True. I acknowledge that the Minister has a distinguished record in London local government, but I felt that he might feel a little inhibited in replying to the debate solely on behalf of London.

In the three minutes remaining to me, I will concentrate on the six points that the London councils have raised, which are probably shared across local government to a greater or lesser extent and with different emphasis. The first is the question of local welfare assistance and the funding for it, to which the noble Lord, Lord Beecham, referred. We strongly support the wish that this should be additional funding, not included—as it is—in the settlement. The Liberal Democrat Communities and Local Government Committee, which I co-chair, has actually written in response to the consultation to that effect.

London Councils calls attention to the lack of transparency in the proposals and calls on the Government to publish a full breakdown of the local government resource departmental expenditure limits alongside the settlement. We are all used to year after year of completely different figures coming from the department and from local government. Frankly, it does not matter who is in government: there is always that difference and it is almost impossible to match the two. Is it really beyond the wit of government and local government to agree on the figures, even if they do not agree on the outcome?

My next point refers to the revenue spending power calculation. I am a little surprised that the noble Lord, Lord Beecham, made so much reference to it because it is, frankly, largely discredited within local government. It certainly means different things to different people in different places. So, again, the call from London Councils is that, if we are to continue to use that reference, local government and central government should try and get together with a shared definition of what “spending power” means.

Business rates, and the business rates retention scheme, are important issues in London and indeed everywhere. We welcome the return of some of that rate to local government. I believe that it was the intention, certainly in the Department for Communities and Local Government, that that share and proportion should increase over years, and I hope that the Minister will be able to tell us how that increase is happening and what the current Government, at least, envisage will be the future for the return of the business rate to local government in greater and greater proportions until we reach 100%. I would also add the return to local government of the power to actually determine the business rate.

Lastly, but possibly most importantly, is what London Councils calls the disproportionate impact of spending cuts on London local government. By 2020, this looks like being no less than 70%—the impact of which is considerable. We are to discuss the future of local government: I hope that much of this debate will actually be about the future of local government. Unless there is a very radical change in the relationship between local and central government, with more power, responsibility and power to raise funding devolved to local government, I do not think that local government, in any meaningful sense, has a future.

15:44

[The Lord Bishop of Portsmouth]

My Lords, I welcome this debate on the implications and challenges of the local government settlement. On these Benches, and indeed in the whole House, we look forward to the maiden speeches of the noble Baroness, Lady Pinnock, and of my colleague and friend, the right reverend Prelate the Bishop of Southwark. I look forward to that for many reasons, not least that he was a senior curate in the diocese that I now serve. He is the most recent in this House of a long line of able clergy nurtured and grown in the Diocese of Portsmouth.

I will focus on local welfare provision, which is a vital service to people in crisis, many of whom are very vulnerable. A single mother in Portsmouth, escaping domestic violence, lived for a while in overcrowded conditions with her mother. She successfully applied for her own accommodation but it was unfurnished, so she and her children shared a sofa-bed and lived on sandwiches and takeaways. The local council, through the Government’s allocation for local welfare provision, awarded her money for beds, a cooker and a fridge freezer. That sort of situation is repeated many times in my see city of Portsmouth and in other places. A modest award of a few hundred pounds provides the essentials for the decent nourishment and reasonable comfort of a mother and children.

I want to place on record my relief that the settlement announced in mid-December includes notional provision for the continuation of local welfare provision. I express both relief and gratitude but there are two caveats—two disappointments. First, the allocated amount of £129.6 million is substantially lower than in the past two settlements. Secondly, there is no obligation on councils to use the funding for that purpose; even the reduced allocation is not ring-fenced. It is possible to make a strong case for every item of local authority expenditure. However, this emergency local welfare provision surely should be an exceptional case. First, this is emergency help to very vulnerable people in crisis situations. Secondly, we are all aware that the tightening impact of welfare reform on mainstream benefits has increased the need for, and importance of, an effective safety net. Thirdly, the heavily reduced allocations for local welfare provision since 2010-11 means that in my city of Portsmouth, for instance, the amount spent since then has declined from £900,000 to £440,000, just over half. My anxiety is less about that particular decline and more about the considerable variation in local authority practice around the country.

Only ring-fenced allocations will commit the welcome, although reduced, resources to guarantee this crisis provision continuing. A relatively small amount of non-discretionary funding would not significantly restrict the local government autonomy which many of us seek to preserve. Alongside the moral case is an economic rationale. Portsmouth City Council’s review of the provision concluded that this modest expenditure saved substantial costs elsewhere. The loss of the provision increases demand for mental health services, for children’s social care, for temporary accommodation provision and debt advice. Preventing a tenancy breakdown, for instance, saves the authority nearly £7,000 per eviction.

On moral, economic and practical grounds, I make a modest request about a small but significant matter in this settlement and invite the Government, if they cannot maintain the level of local welfare allocation, at least to ring-fence it and ensure that those in crisis need are helped.

15:50

[Lord True (Con)]

My Lords, I declare an interest as leader of a London borough. I thank the noble Lord, Lord Beecham, for initiating this debate and I, too, very much look forward to the maiden speeches that we will hear.

During this short debate, Britain will borrow over £25 million more. To say that the public sector must go on making savings should be blindingly obvious and, amid the many strictures that we heard from the noble Lord opposite, I heard no promise from that Front Bench to reverse the downward squeeze on spending. Doubtless the noble Lord, Lord McKenzie of Luton, will correct me if I am wrong by laying out Labour’s plans to increase local government spending.

Gaps cannot be filled by new taxes, such as the vindictive homes tax that Mr Miliband seems to have picked up off the back of a rather tatty old lorry that has been abandoned by his penfriend, Dr Vince Cable. I agree with the noble Lord, Lord Mandelson: it is unreasonable to ask Londoners to pay ever more on the nominal value of homes, many of them heavily mortgaged. The average terraced house in Richmond costs £944,000 and the average semi costs £1.2 million. Already, people buying these homes face higher levels of stamp duty set on property over £937,000 in the Chancellor's otherwise very welcome stamp duty reform. These are not super-rich people; they are average people who have often made more than average sacrifices. I submit that they cannot bear more.

My right honourable friend Mr Osborne has done a fine job in handling the economy. He is also to be thanked for supporting the freezing of council tax, which is of enormous value to millions of families. Richmond has frozen council tax since 2010 and we intend to freeze again this year. That reflects greater efficiency, but the Government have made a sustained contribution in freeze grant and deserve recognition.

That is the background to tough but necessary decisions in this settlement. Yes, there is a hard squeeze on, but even in the Newcastle of the noble Lord, Lord Beecham, the online budget report tells me that it plans to spend another £5 million next year on buying new council vehicles and a further £5 million on upgrading IT. It is not enough to peddle on the doorsteps that, “It’s all the fault of Mr Pickles”. We all have to face hard challenges, and all local authority leaders have. We have to do even more to assess priorities—the right reverend Prelate set down important challenges—to pool costs and to share services with others. We must do that.

However, I believe in the fundamental value of local choice. Local government deserves more respect than it is sometimes given. If other parts of the public sector had been as good at cutting costs as councils, we would be far better off. Frankly, in my submission, a team of good local government finance directors, paid far less than top NHS bosses, could cut a swathe through the waste and inefficiency that is protected in the NHS while fully safeguarding services. The Secretary of State loves having a pop at local authority chief executives. I do not actually think that helps very much, but I hope that further thought will be given to the details of the new plan to cap public sector redundancies. It will not help with the major restructuring at the top that will often be needed. I hope that can be reconsidered.

I conclude with three requests. The first is about spending power. Richmond is given what is described as a 1.7% increase but, as others have said, this is nonsense because it includes pre-existing health money that is not available for councils to use, and the spending power measure ought to be quietly dropped. Our real reduction in grant and business rates is nearly 7%. Secondly, can local authorities have the power to set planning fees, albeit on a cost-recovery basis only? Currently my taxpayers subsidise developers to the tune of £1 million per year, or 1% on council tax. I wish that that could be looked at.

Thirdly, I point to an emerging problem in education that already affects us, but will affect others. Our DSG grant does not meet the needs of special needs pupils, and we will overspend by more than £1 million. We have England’s best primary school results. Given that, it was surprising for my chief executive and director of education to be summoned by a DfE Minister, Mr Laws, to be told that he was concerned about Richmond’s performance. I would like my Ministers to have better things to do. I urge my noble friends in the Department for Education and Skills to consider a more flexible and responsive method of calculating the DSG high-needs block, including an element of pupil-led funding.

These requests show that we will all have practical issues to raise within the funding formulae. However, it is an inescapable reality that savings must continue to be made. The Government are right, and we must act accordingly.

15:56

[Baroness Armstrong of Hill Top (Lab)]

My Lords, it is a great pleasure to join in this debate. I congratulate my noble and very good friend Lord Beecham, who is from a neighbouring authority. When my noble friend was leader of the old AMA, and then of the new LGA, I was Local Government Minister during the first Labour term from 1997. We did not always agree, but we always had a good relationship. His absolute passion for local government is well known and acknowledged in this House. It is significant that so many Members of this House have kept that commitment to local government, and in that light I really look forward to the maiden speeches that will follow shortly.

As I say, I was Local Government Minister for four years, so I know about formulas and how they are tweaked. I know the sort of information that Ministers get, making clear the potential for fundraising in each area, what one tweak will do to that and all the rest. My father, who was also involved in local government in the old Department of the Environment, used to say that only three people in the country understand this formula and they all disagree. There is a lot in that too.

Essentially, this is about the fact that in this country too much money is held at the centre. Some of that has historically been for quite good reasons, or for reasons that we have always defended but actually need to have the bravery to think about. The reason why so much has been controlled centrally is that the Government have priorities. They want to make sure that those priorities are reflected, and they are committed to sharing money out around the country in order to ensure that those priorities are met. That makes the main issue how the money is divided up to get fairness. Fairness has to reflect need, and I suggest that that is the problem we are discussing today. How do you achieve such fairness with what will be a reducing amount of money?

I want briefly to talk about the authority I live in and where I served on the county council for a brief period, shortly before I became one of its Members of Parliament: Durham, which is now a large unitary authority. Since 2011, Durham has seen its money from central government reduce by £137 million, which is not easy to deal with. By 2018-19, the Red Book states that the reduction will be £250 million, which is not an insignificant amount. The area is hugely rural, with the lowest rate of car ownership in the country, some of the highest unemployment rates and, of course, one of the largest ageing populations because many young people go elsewhere. The welfare assistance that the right reverend Prelate the Bishop of Portsmouth talked about is due to be reduced in Durham by £1.9 million by the end of March this year. Actually, none of us can find it in the allocation; we have been told that it is there but no one can find it, including the chief finance officer.

I simply challenge how the Government acknowledge need and how an authority like Durham can see such large reductions whereas counties like Surrey, with nothing like the level of need experienced in Durham, have seen such a large increase in the money that they are getting. We all have different views of fairness but I do not know of any external commentator who is saying that the Government have put in place a system of fair distribution. It means that inequalities will increase and, as we discussed in the House yesterday, consequences will arise from that, particularly in different parts of the country.

What about the future? I am clear that we need much more devolution, but it must recognise need. We need much more public service reform but that, too, has to be done on the basis of being fair in the end. In the town where I live at the foot of the north Pennines, which has a population of around 12,000 people, we have just lost our only supermarket and, as a result, the post office and the petrol station. I do not believe that anyone living in a town of that size in the south would be able to say that. This is what unfairness brings, and the Government have a responsibility to pay heed.

16:01

[Baroness Pinnock (LD) (Maiden Speech)]

My Lords, I am fortunate indeed to have been given the great privilege and wonderful opportunity of joining your Lordships’ House. Over the past few weeks, I have been listening and observing in this historic Chamber, and I am left wondering how my background and experience can add to the wealth of knowledge here.

Some 30 years ago, with a young family and a career in teaching, I was motivated to become involved in saving our local school from closure. The success of this campaign gave me a taste for being where the action is. After 28 years’ continuous service to my town of Cleckheaton in West Yorkshire as its elected councillor, I can still say that being able to serve the community where I live is a role I love.

My supporters, my noble friends Lord Shutt of Greetland and Lady Bakewell of Hardington Mandeville, have likewise devoted many years of distinguished service to their local communities and local democracy. I thank them for their patient help and support while I make many errors in your Lordships’ House.

When I first entered your Lordships’ House, I was overwhelmed by the grandeur of the buildings and the ease with which I got lost. I had nothing to fear as the doorkeepers, attendants and indeed all members of staff in all parts of the House have been unstinting in their time in helping me learn both my way around the House and the protocols. I thank them for that.

Kirklees Council, of which I was leader for six years, serves over 400,000 people in West Yorkshire, with the Victorian woollen towns of Huddersfield and Dewsbury at its heart, but including my own town of Cleckheaton as well as large rural areas best illustrated as the setting for the television series, “Last of the Summer Wine”. Noble Lords may remember that it was a sitcom about a group of elderly rabble-rousers, including a man called Clegg—something with which I am sure many on these Benches can empathise.

The finances of local councils have been complained about in each of those 28 years, and this year is no different. I can tell noble Lords about the impact on services for local people in Kirklees—for let us not make the mistake of presuming that reductions in funding of this severity will not have an impact on services provided.

One thing I learnt early on as a councillor is that it is virtually impossible to compare funding year on year, simply because of the changes that take place to different elements of the central government grant. The better care fund, the transfer of the public health function and the transfer of the council tax benefit scheme have added around £75 million to Kirklees’s finances—with, of course, the greater responsibilities that go with that. On a national scale, these significant transfers mask what has happened to funding via the revenue support grant.

In Kirklees, a total of £152 million of spending on services is being taken out of the budget between 2011 and 2018. Obviously, with schools’ budgets being ring-fenced, and my council rightly protecting as far as possible services to vulnerable adults and children, the cuts fall heavily on the other services on which people rely. The current Kirklees proposals to meet this budget deficit include a 15% reduction in spending on services for vulnerable adults; and, despite rising numbers, as a third of the council's controllable budget is spent on vulnerable adults, this expenditure has also inevitably had to be reduced.

Another proposal is to reduce the number of fully funded libraries from 26 to two, and to reduce spending on parks and open spaces by 30%, with the result that some recreation areas will not have their grass cut at all. Road maintenance has already been reduced by 15%, with the inevitable consequences for road users. Sponsorship of concerts and music education is being removed altogether. So local government in Kirklees is facing challenging times. This is confirmed by a report by the National Audit Office on the financial sustainability of local authorities, which states that local government’s spending power has been reduced by 25% over the life of this Parliament.

Our democratic reaction to this immense change could be hand-wringing. That may be satisfying but it will not get us very far. Those of us committed to providing essential services must think outside the box. As my noble friend Lord Tope said, one thing we need to do is seriously loosen the ties with central government, find new ways to raise local finances, and challenge central government to devolve responsibility for services such as Jobcentre Plus and community health services. If those measures are combined with greater accountability, our councils may—just—be able to survive the current financial desert and start to bring new vitality and involvement in local democracy once more.

16:09

[Lord Whitty (Lab)]

My Lords, I very much welcome the noble Baroness to this House. Everybody in the House will appreciate her speech, her passion for local government and for her local community and the problems that are faced there. In her speech she combined a lightness of touch with very serious content. The House will appreciate that and the other contributions she will make. Of course, she is from Kirklees, which used to regard itself as the greenest council in the country. I had the privilege of serving on the board of the Environment Agency with two former leaders of that council—one Labour, Sir John Harman, and one Tory, Robert Light. Now the noble Baroness is joining me, I have the full Kirklees set. I think her presence will be appreciated by the whole House.

My positioning between two maiden speeches does not in practice mean that I need to be non-controversial. Indeed, that is the end of my consensual stuff. Like my noble friend Lord Beecham, I am profoundly despondent about the prospects for local government as a result of the strategy being pursued by George Osborne and Eric Pickles. Their strategy seems to show—not just in this year’s settlement but in what they have done already and what they intend for the next five years—that they intend to ensure that the bulk of the cuts in public expenditure and a disproportionate amount of the costs of austerity will fall on local authorities and thence in practice on those who depend on their services. Within the diminishing total central support for local government, there is a deplorable—and, I would say, systematic—favouring of better-off areas over more deprived areas. If the Government, whoever they are after the next election, blindly stick to this strategy for another five years, contrary to all the talk about localism and devolution, we will have to adapt to a much diminished role of local authorities in our national life. That would be extremely unfortunate.

My noble friend Lord Beecham has spelt out what this year’s cuts actually mean. I agree with the noble Lord, Lord Tope, that the definition needs pinning down, but the Local Government Association’s view is that a 1.8% cut actually amounts to an 11.8% cut in things that the local authorities themselves can control. Whatever the precise statistics, it is clear from next year’s figures that there will be very substantial cuts in services—in schools, police, fire and, as the right reverend Prelate said, local welfare assistance. Spending on public health is being frozen and, in housing, the top-slicing of the new homes bonus effectively means that there is a cost to urban authorities to benefit the shires. If we look at the long-term effect of cuts in support over the past five years, by the end of next year there will have been a 40% cut since the Government came to power, and that is intended to continue. That contrasts with slightly over a 1% cut of total government expenditure. It is therefore clear that the pain is concentrated on English local authorities and the poorer element within them.

The distribution of the cuts can be seen as a north/south divide but that is only one part of the equation; it is also true within each category of local authority. In London, Hackney has a cut of £200 per head; in Richmond the noble Lord, Lord True, has done rather well with an increase of £37 per head. Among the urban districts, Barrow has a cut of 6.4% and Cambridge has an increase of 2.2%. Among the rural districts, West Somerset has a cut of 5.9% and Horsham an increase of 2.9%. Even among shire counties, which are by and large favoured, Northumberland has a cut of 1.7% and Surrey an increase of 3.1%. That is a shift by anybody’s definition—this embedded regression and a systematic transfer from the poorer to the richer areas.

The right reverend Prelate who is about to give the next maiden speech is the Bishop for an area I lived in for most of my life. Although I no longer live in Southwark, I am still Lord Whitty of Camberwell, so I hope he might be able to elucidate for me what was always a puzzling piece of scripture:

“For he that hath, to him shall be given: and he that hath not, from him shall be taken even that which he hath”.

That does seem to be Eric Pickles’s approach to local government finance.

If we continue to go down this road, we will be in very serious difficulty. The role of local authorities in our society will inevitably diminish. We need a constructive new Government who will engage in encouraging co-operation between local authorities, in city deals or whatever, allow local authorities to raise their own taxes in many respects, end ring fencing and predetermining expenditure, allow local authorities to borrow in housing and infrastructure and accept that there will be differences in priorities and outcomes between authorities. We need to give local authorities power, which is at present tightly restrained by Whitehall. The next Government, in contradistinction to this, need to create a properly financed and truly decentralised state.

16:15

[The Lord Bishop of Southwark (Maiden Speech)]

My Lords, I address your Lordships’ House on this first occasion with some trepidation. As I was advised not to drift into preaching mode, I will resist the temptation to expound on the interesting passage from scripture that the noble Lord has just quoted.

As a student of history, I am conscious of the dignity and importance of this House in the life of our nation, and I am acutely aware of the privilege of sharing in your Lordships’ deliberations. Throughout my life I have been inspired by the model of service found in the life of Jesus Christ, and I am humbled when I reflect on where that service has led me—not least, now, to your Lordships’ House. I will seek to serve to the best of my ability, using the gifts that God has given me.

I am most grateful for the welcome I have received from noble Lords, not least in the course of this debate, and in particular for the kindness of the members of staff who have helped me by way of induction, as well as assisting me in navigating the labyrinthine corridors of the Palace. One phrase that I have often been glad to hear is, “Head towards the river”—not, I trust, because there is any hope that the new prelate might jump in. Rather, I take great consolation that, whenever noble Lords take their libations on the terrace, they gaze across the river and into the diocese that I have the joy of serving as bishop.

The diocese of Southwark, with the notable exception of the home of the most Reverend Primate the Archbishop of Canterbury, comprises all that part of London to the south of the river, from Kingston upon Thames and Richmond in the west through central London to well beyond the Thames Barrier at Woolwich. The fast-flowing northern boundary of the diocese is rich with the history of this great city. The diocese is of course more than that, extending down through Croydon into east Surrey, well beyond the M25.

It is a diocese of some 317 square miles, with some 2.7 million people served by nearly 300 parishes and some 700 clergy and 450 lay ministers. Many thousands of young people are educated in more than 100 church schools. Our parish churches reflect the huge diversity of the capital as they are enlivened by Christian witness from every part of the world. Our communities include some of the richest in London and some of the poorest, and range from the inner city to the rural. It is a world in a diocese with all the challenges and opportunities that arise in very diverse communities. I believe that our city is greatly enriched by the diversity that immigration brings, and I look forward to playing a part in debates on such issues. The diocese is further enriched by its companion links with the church in Zimbabwe, in which I also take a strong interest, as well as in the affairs of the Holy Land and the church in Syria.

There are 16 local authorities and London boroughs in the diocese, which will see cuts of up to 15.5% in their funding as a result of the settlement that we are debating. This is in common with much of the rest of the country, and I note this with much regret. It is increasingly difficult to see how these cuts can be made effectively, given the huge savings that have already been visited upon local services.

I am acutely aware of the experience of a charity that is important to the life of my diocese and of which I have the honour of being president. Welcare, founded some 120 years ago by Edith Davidson and her husband Randall, who went on to become Archbishop of Canterbury, has always sought to work in partnership with churches, community groups and other voluntary agencies to support families and young people who are at risk. Welcare receives ongoing funding support from a variety of sources, including the diocese and many of our parishes. Since 2011, though, it has seen income from local authorities fall from £1.5 million to £500,000 and, as a consequence, much excellent work and the expertise of trained workers has disappeared, putting great pressure on a falling number of willing volunteers. This has meant that over the same period the number of families that the charity has been able to support has fallen from 5,400 to 1,050. By any reckoning this is a matter of grave concern, particularly as there is no evidence to suggest that the need is decreasing.

Indeed, the charity heard only yesterday that one local authority would continue to fund a service for a further year but without any increase in funding. So Welcare is expected to deliver the service at the same level of funding as was first awarded four years ago. This means absorbing all increases in costs, which amounts to providing a subsidy for the local authority. This is a common story in the voluntary sector, which continues to address very real need. The remarkable resources of voluntary endeavour are finite and it is morally wrong to push them to breaking point.

My concern is that, as yet, we do not pay enough attention to the very human needs that lie behind our financial decisions. In strategic terms, it would be better to continue to encourage early intervention and preventative work rather than storing up problems further down the road. That makes fiscal sense to me. However, far more importantly, it attends to another imperative that at times it is easy to lose sight of in financial discussions: namely, that of ensuring human flourishing.

16:21

[Baroness Donaghy (Lab)]

My Lords, it is a pleasure to follow the right reverend Prelate the Bishop of Southwark in this debate. If he is half as relieved as I was when I completed my maiden speech, I know something of his feelings at the moment.

The right reverend Prelate was an assistant curate at Sandhurst and, as has been said by the right reverend Prelate the Bishop of Portsmouth, a senior curate in the Diocese of Portsmouth in his early career. With his having covered the Army and the Navy, I wonder when the Air Force will benefit from his talent.

The right reverend Prelate’s interests, which he has already outlined, include urban affairs, and that was very clear from his contribution. He is very active in promoting retreats and pilgrimages, as well as in chairing the Zimbabwe round table and pursuing deaf/hearing integration. He is a man of many parts indeed. As a resident of the Borough of Southwark for the past 35 years, I thank the right reverend Prelate for his contribution. I am sure that the House looks forward to his thoughtful and moving contributions in the future.

I believe that this is the fourth occasion on which I have taken part in a local government finance debate, and I thank my noble friend Lord Beecham for making it happen. Looking around, I see that the usual suspects are in the Chamber today, plus one or two distinguished additions. It feels like being a prisoner in a gulag where we are hunched up against the cold and then, once a year, we lift our heads out of our mufflers to acknowledge each other and renew our dedication to the cause of local government. It is a chilly environment indeed.

One could summarise the present situation by saying that it is the same as in the previous four years, only worse—a redistribution of wealth from the poorest to the better off. It is disproportionate compared with other public service cuts. It is done in the name of deficit reduction, yet the deficit is not reducing. It was first announced in June 2010 that the Government’s deficit reduction programme would be for six years; now it appears that we are only half way through a nine-year programme of austerity. Does that mean that the sacrifice of local government, amounting to a 37% reduction by 2015-16, was really in vain?

Reductions in services to the vulnerable elderly and children, increased bills for the working poor and a general diminution in the quality of the environment and the arts do not make headlines. Reductions in the numbers of police, firefighters and local government officers do not make front-page news either, unless something goes wrong. The cuts in social care and the closure of residential homes have a direct impact on the National Health Service, which does make the national news. The NHS is under attack from some in the press, when much of the problem can be laid at the door of the social care crisis.

Noble Lords will be aware that the Children’s Society, among others, campaigned to retain DWP funding for local welfare provision. That has already been comprehensively covered by my noble friend Lord Beecham and the right reverend Prelate the Bishop of Portsmouth, so I will not go into detail as I had intended except to underscore that the local welfare assistance schemes cover the most vulnerable in our society: families under exceptional pressure, people with disabilities, lone parents, young people and victims of domestic violence. How is real need to be met, given the funding gap that is forecast to increase at an average rate of £2.1 billion per year until 2019-20, when it will reach £12.4 billion?

I turn to council tax. The reduction in government funding will leave councils facing unpalatable choices to increase council tax bills for some or all, and to further reduce other council budgets. The Parliamentary Under-Secretary of State for Communities and Local Government, Kris Hopkins, said in his Statement on local government,

“Councils facing the highest demand for services continue to receive substantially more funding”.—[Official Report, Commons, 18/12/14; col. 1590.]

The position on the ground is the exact opposite, and the cumulative impact of the reductions will be felt for a generation.

16:26

[Baroness Eaton (Con)]

My Lords, as a former leader of Bradford Council and a serving member of that authority, a former chairman of the LGA and a current LGA vice-president, I am particularly pleased to have had the privilege of hearing two excellent maiden speeches from the noble Baroness, Lady Pinnock, and the right reverend Prelate the Bishop of Southwark. I am also pleased to have the opportunity to speak in this debate.

As we all know, the noble Lord, Lord Beecham, is a serving councillor, a former leader of Newcastle City Council and a former chairman of the LGA so, despite our political differences, we have much in common. He is someone I respect and whose opinions I always listen to carefully. That said, I am afraid that he, along with so many of his colleagues in the Labour Party, appears to have a highly selective view of the spending reductions that the current Government have had to make. Let us be clear: if Labour had been re-elected in May 2010, there would also have been many reductions in government expenditure that would inevitably have impacted on local government. We know this because the previous Chancellor of the Exchequer, Alistair Darling, said quite clearly before the general election that that was the position. Nor should we forget the letter from Liam Byrne, the then Chief Secretary to the Treasury, who admitted that after 13 years of Labour Government there was “no money left”.

So local government was always going to be faced with significant financial challenges regardless of who was elected in May 2010. Councils have seen reductions in their grant from central government. However, in response, they have risen to the challenge positively by forming partnerships with other local authorities to reduce backroom costs and by securing efficiencies through new ways of working. A common theme of such initiatives is that they can often improve services for residents while simultaneously reducing costs. For example, South Holland District Council now works in partnership with neighbouring East Lindsey District Council to share services in relation to finance, IT, benefits and revenues and human resources. That has been delivered through a joint company that has secured savings of more than £1 million a year and is now attracting work from other councils. South Holland also shares a chief executive with Breckland council, which is creating significant annual savings for both councils.

In recent years, councils have also demonstrated their ability to work with other public sector partners to reduce the cost of services. Along with the noble Lords, Lord Tope and Lord Beecham, I am a great fan of community budgets. Research from Ernst & Young, following the successful pilots, shows that rolling out community budgets nationally could save up to £20 billion in five years. Meanwhile, the Troubled Families programme has helped to turn around the lives of more than 40,000 families, resulting in better outcomes for the individuals concerned and securing major savings for the taxpayer.

In the London borough of Wandsworth, more than two-thirds of troubled families that the borough has been focusing on have successfully turned their lives around within a year. Each of those families represents a potential saving to the taxpayer of £29,000 per year due to a reduction in crime and antisocial behaviour, the number of children taken into care, visits to accident and emergency and intervention from the police and courts, and increased employment.

It is also interesting to note that independent research indicates that the public perception of council services is very different from the doom and gloom rhetoric that we are used to hearing from the Labour Party. Ipsos MORI said last year that two-thirds of local residents consider that council budget reductions had not made a noticeable difference to services.

Of course, none of that is to deny that local government continues to face a challenging financial situation; clearly, like the rest of the public sector, it does. In particular, we need to ensure that as we are all living longer, adult social care is properly funded. For that reason, I particularly welcome the introduction of the better care fund, a £3.4 billion programme to ensure radical transformation in integrated health and social care. It is one of the most ambitious programmes ever across the National Health Service and local government, and will deliver improved services for some of our most vulnerable people.

No one would pretend that the past five years have not been difficult for local government. However, councillors and council staff have risen to the challenge and, through their hard work and willingness to embrace new ways of working, local government has adapted to changing circumstances.

16:32

[Lord Liddle (Lab)]

My Lords, I declare an interest as a member of Cumbria County Council and congratulate the right reverend Prelate the Bishop of Southwark on his moving maiden speech, and Councillor Pinnock—the noble Baroness, Lady Pinnock—on her excellent maiden speech.

I also particularly congratulate my noble friend Lord Beecham on what I thought was a fine and passionate speech. I realise that all Members will not agree with it, but we have to take into account that here we have a Member with 47 years’ experience of local government. I have only 11 and a half years on three different authorities in my time; 47 years can rarely have been matched, particularly in the House of Lords.

The essence of what my noble friend said addresses two really tough questions to the noble Lord, Lord Ahmad of Wimbledon. I fully accept the argument of the noble Baroness, Lady Eaton, that there would have been severe cuts under a Labour Government. The first question is: do the Government believe that their distribution of grants is fair, how do they justify it and how do they avoid the charge of partisanship in the way in which better-off authorities, particularly in the south of England, have been treated? Secondly, instead of scoring cheap points designed to mislead the public about the scale of the local government financial challenge, will the Minister promise to work with local authorities to find ways of protecting essential services at a very difficult time? I will make a particular suggestion in relation to Cumbria.

The situation we face in Cumbria is of forecasting that in the six years starting from 2012-13, all of what was £148 million of revenue support grant will have gone. In total, we have to find £213 million of savings—more than 30% of our budget. We have found £130 million of those already and we have £83 million to go. We think that we have found how to find £53 million of those but there is a black hole of £30 million, which represents a serious threat to essential services in the county. We have been efficient, as the noble Lord, Lord True, said. At its peak, Cumbria County Council had more than 10,000 staff. It now has only 6,800 and there will be another 1,800 redundancies in the next three years, come what may.

However, I had a case in Wigton, which is in my ward on Cumbria County Council, in the last few weeks of an elderly lady who has been looking after her Down’s syndrome son for getting on for 50 years. She can no longer cope. He has dementia and needs to go into a home. There is great difficulty in finding a suitable placement which the authorities can afford. If we cannot do that, we have no right to say that we are a civilised society. We have to find the money for that kind of social help.

In Cumbria, we on the county council think that we could save a huge amount of money if we became a unitary authority. In Cumbria at present, there is a county council, six districts and a national park. There are eight chief executives, eight finance officers and 350 or so councillors to serve a population of half a million people. On top of that, there is an absurd muddle of powers between the different levels. We estimate that £25 million of the £30 million black hole that we need to fill can be saved by creating a unitary authority, but this consensus is extremely difficult to arrive at. It needs a very strong lead from a Government who are prepared to work with authorities rather than rubbish them at every turn. I hope that the Minister will take away from this debate the need not to start a lot of partisan blaming of people for cuts but to start thinking about how the Government can make a real contribution to working with authorities to address the desperate situation in which they find themselves.

16:38

[Baroness Janke (LD)]

My Lords, I very much welcome this debate and thank the noble Lord, Lord Beecham, for initiating it. I also add my congratulations to my noble friend Lady Pinnock and the right reverend Prelate the Bishop of Southwark on their excellent and interesting maiden speeches. My own was very recent so I empathise with how they must feel at this moment, as has been said.

As we have heard, local government funding has been cut dramatically—by 40% by the end of 2015. After several years of cutbacks, the viability of some councils is now becoming a major concern. As a member of the LGA resources board and a serving councillor, I know that local government is seeking solutions to this very hard problem of financing local expenditure, both capital and revenue. With an ever-shrinking cake, we need to find other ways to fund the vital services that people rely on, or recognise that many of those services will disappear. There is great anxiety about care of the elderly, support for vulnerable people, respite care—they are fundamental to many people’s lives. Cuts to community services such as libraries, sports facilities and public health promotion programmes all hit the poorest people hard.

The UK, however, has one of the most centralised systems of government. Just 17% of local expenditure is raised locally in the UK, whereas the OECD average is 54%. Over the past 20 years, in my time in local government, I have been aware of an enormous amount of work which shows clear evidence that cities and city regions can generate economic growth and increase income in local economies. The core cities, the Centre for Cities and the City Growth Commission have produced a range of publications, research reports and recommendations which show that decisions about transport, housing, skills and employment—key economic drivers of local economies—are best taken at local level.

The most recent report from the Centre for Cities shows the potential of cities—not just the largest ones—to deliver economic growth and prosperity within their areas. I hear people asking, “What about areas outside cities?”. The Peace commission shows how non-metropolitan areas can, if given the powers, lead growth, expanding investment and employment in their own areas. The City Growth Commission report of last year describes how an evolving programme could devolve decision-making and financial powers to more strategic local government bodies, whether city regions, county regions or metro areas—all at a pace that suits them.

The evidence is clear that national economic performance could be boosted if all the areas of the UK were to achieve their potential, but that requires commitment from central government to accelerate the pace of devolution to local areas; by “devolution” I mean the devolution of powers, decision-making and financial flexibility, not decentralisation, which I see as much more of an administrative concept. Cities and counties are being prevented from regenerating the local economy by tight bureaucratic control of finances and unsuccessful remote management of key factors that affect economic performance.

It is time to recognise that local government in England needs to be set free from shrinking and conditional grants from central government and competitive bids that increase bureaucracy and are costly and time consuming to produce. When I was leader of my own city I found that my twin cities, especially Bordeaux, were astonished by the time it takes to achieve transport systems in English cities. They conceived of, built and were using their own tram in a fraction of the time it took Bristol to be told that it would not get one.

People in my city ask me why cities in this country are not free to invest in the transport system that suits their needs rather than standing in the queue at the DfT behind other cities and authorities, waiting their turn, when they could invest in the long term and raise revenue to support their investment as do other European and world cities. In the light of devolution of powers and decision-making in Scotland and Wales, there is now an opportunity for government to recognise the potential that devolution could bring and invite proposals that would attract financial freedoms as regards long-term investment and revenue-raising powers.

Local services are effectively in crisis, which is affecting other areas of public finance. There is ample evidence that devolution of financial powers and decision-making to the local level would enable councils to become increasingly self-sustaining as a result of improved economic performance. It is right that devolution of powers to Scotland and Wales is now becoming a reality. It is only fair that the strong local economies of England should not be left out.

16:44

[Lord Rooker (Lab)]

My Lords, I welcome both the maiden speeches and congratulate both Members. I shall base my account of my concerns on the work of Dr Chris Game of Birmingham University, who recently set out, in thechamberlainfiles.com, a master class in local authority funding. What follows is just a summary of that. Dr Game says that the Minister, on 18 December in the other place, claimed that the,

“settlement leaves councils with considerable … spending power. As planned, we have kept the overall reduction to 1.8%”.—[Official Report, Commons, 18/12/14; col. 1590.]

He said that the reduction could be 1.6% if additional transformation money was taken into account. But, as Dr Game points out, grant funding and spending power are not the same. Revenue spending includes council tax receipts, certain grants, and NHS social care funds. That gives a fuller picture. But income from fees, charges and investments is not included in spending power.

So in this confusing system—which is designed to confuse—total government funding to local authorities is really down 13.7%. Furthermore, if council tax income is excluded from spending power, since it is a different kind of income from government grant, the reduction is not 1.8% but 3.7%. Then, as others have said, if we remove the NHS portion of the £3.5 billion better care fund, and include in spending power only the £2 billion for social care by local government, the reduction becomes 8.8%—nearly five times the figure that Ministers have used. Chris Game has done anybody who reads that piece a great service.

The situation in Birmingham is unfair. The cut in spending power for Birmingham is 6%—very close to the government maximum of 6.4%. If one checks all the London boroughs, the metropolitan districts and the all-purpose authorities, the only ones with a cut of 6% or more are Hackney, Knowsley and Birmingham. Yet the recent Kerslake report, which I very much support, and am pleased to see is being implemented quickly, pointed out that Birmingham has,

“more poor children than anywhere else in England”.

In terms of multiple deprivation, it is the 13th on the list. Things are so bad that the Government have had to send in both a social services commissioner and an education commissioner. It appears that Ministers, on a whim, can choose to define spending power to mean what they say it is, or is not, as in Alice in Wonderland. This is not sensible. It is misleading and unfair to Birmingham.

I declare an interest. I have never been a councillor, although I was a failed candidate twice in 1967. None the less, I have had views for 30 years about the way the city should be governed, and I hope the latest attempt to modernise, as set out in the Kerslake report, will work. In the mean time I hope in a few minutes’ time to hear from the noble Lord, Lord Whitby, who, with his Lib Dem partners, was in charge for more than half a decade, until two years ago, why the city is in the parlous state that it is.

Now I shall say a few words about my adopted local authority—although nothing I say about it is meant as a comparison with Birmingham. Some call it Shropshire, but others call it “Greater Shrewsbury”, as it is a council very much centred on Shrewsbury, where all the bosses live. That is how it looks from Ludlow, a handful of miles from the Herefordshire border. I want to deal with only one Shropshire issue. The budget consultation introduction claims Shropshire as a “hub for creative business”, and says that it is,

“accelerating the move of services online”,

that,

“broadband and mobile internet is of equal value”,

and that the council knows,

“we need to do more”.

In October 2012 the head of finance said in an interview that broadband was a problem. And this the most rural county—a great county.

The Prime Minister has said he is not going to overlook rural issues, rural voters or rural concerns. The Chancellor of the Exchequer has claimed that the Government are paying for the expansion of superfast broadband into more and more rural areas. The Secretary of State for Environment, Food and Rural Affairs has tried to spin that all is well with rural broadband. But the reality is that the coalition bosses are ignoring the really rural areas, which need good broadband far more than others to survive. We are creating a two-speed rural economy by not giving priority to rural areas.

Shropshire—or Greater Shrewsbury—Council is absolutely silent on the issue, which I have raised in this House before. Would that I were joined by the county’s MPs. A recent Shropshire Council cabinet paper said that the council would,

“undertake a fresh competitive procurement; with or without match funding”,

as part of phase 2 of the rollout of broadband. No one knows if this means even partial priority for the rural areas of the county. What is more, no one from the county will say, although councillors were questioned at a public meeting in December. It is all a big secret. We have lost too much time already in Shropshire. Businesses and jobs in the “creative hub” of the county are all the losers in this settlement.

16:49

[The Lord Bishop of Derby]

My Lords, I thank the noble Lord, Lord Beecham, for securing this debate and for his introduction to it. I also thank the noble Baroness, Lady Pinnock, and the right reverend Prelate the Bishop of Southwark, who both gave us very specific examples of some of the issues involved in this area.

I want to step back and look at the bigger picture because this debate is about the future of local government. There are some major issues that we need to consider very carefully. The context is, of course, one of cuts and fairness, to which the noble Lord, Lord Beecham, and others referred. However, there is a second context of people’s disengagement from the political process and responsibility for local government. The Minister in the other place talked about the necessity of increasing local democracy. That is part of the bigger picture because one of the issues about the availability of resources is that people want to pay lower taxes. Who is going to have the courage to put their head above the parapet and say that a lot of these services will require higher taxation and more investment? There is a limited interest in the common good, as we would call it. As the welfare state mentality dissolves, the big question is how systems will be encouraged to step into a space and support politics and the funding of it that will deliver all the services that we rightly cherish.

I want to give noble Lords a picture of my work in the city of Derby and ask the Minister two questions about whether there is a new future for local government that we need to build on. I chair the inner city renewal project in Derby, which examines how we spend money in the most deprived areas of the city. All the political parties and all those involved recognise that local government and national government have for years and years put millions of pounds into these very needy areas, providing all the services we are talking about, but to very little effect. That is the challenge in renewing local government. This inner city renewal partnership involves councillors, people who head up the local authority departments, people from the health service, the head of the police operations and people involved in housing, the voluntary sector, the faith sector and community groups. It is hard work to achieve cohesion and connectivity given the different cultures involved. We in the voluntary sector are used to choosing what we are interested in and supporting it, and probably leaving other people to do everything else. Those involved in professional statutory services are used to controlling a budget and controlling the outcomes and there is probably not a lot of opportunity for the community to be genuinely consulted. It is hard work.

Business in our city is interested in contributing to this process but does not know how to do so. We struggle to bring business enterprise to the table, but we are trying. It is vital to find ways to energise people at the grass-roots level from different communities and holding different perspectives to look at the issues in a place—we note the Our Place methodology—be interested in them and want to invest in them. I am not talking just about investing through government grants or local council tax but about the social capital and business contributions that can be raised if people get really involved.

I want to ask the Minister two questions because the Government have a role in creating incentives for adopting this approach to local government and the workings of local authorities. First, will the Government give priority to investing in arrangements for local government and the delivery of services that score highly in terms of partnership working with local community enterprise and local business? Will the Government create incentives for local authorities to reinvent the way they deliver services and fund them by having a strong working partnership with community involvement and local business? My second question also relates to the incentives that can be offered to local government. Can the Government give priority to investing in arrangements that are clearly designed to find new ways of creating and deploying social capital and business involvement?

There is an urgent need for these things if local government is to have a future and be able to deliver what it should do: local people recognising and engaging with local issues and using a variety of resources to try to meet them. There is a great danger at the moment of our just going in two different directions: people shouting for services, quality and professionalism, but not feeling engaged with or responsible for their provision. I will be interested in the Minister’s response on that challenge.

16:55

[Lord Whitby (Con)]

My Lords, since the recent Scottish referendum on independence and the ensuing frenzied end game, devolution has become a major political issue and has stimulated an intense debate over how new powers and resources can be devolved to the most relevant, effective and inclusive political structure. I believe passionately—certainly in local government—that we should celebrate cultural diversity and recognise the significance of regional identity embraced within a national state. So I am very relieved and happy that we are still a United Kingdom.

Britain, however, has one of the most centralised systems of government in the world in terms of its relationship between local government and central government. Just 5% of all the taxes raised by our local people in our great cities is under the control of the city council. The remaining 95% goes to the Treasury and comes back through a multitude of funding streams controlled by Whitehall. Research has shown—and it has been alluded to in this debate—that nations that allow more freedom and independence to their cities tend to have better performing cities and a more balanced economy.

Sadly, our cities have underperformed the economic performances of most of our major European cities. It is imperative that we recognise that. I believe that the coalition Government are rectifying this dilemma and meeting the challenge. As a former city leader of the largest local authority in the United Kingdom, and as a vice-president of the LGA, I welcome the debate on the local government finance settlement, the implications of devolved power and the ramifications of direct funding to our cities. The coalition Government have listened and delegated, in an unprecedented manner, power, decision-making and direct funding—especially to the city of Birmingham—in addition to the financial settlement. While the settlement reduces Birmingham’s revenue spending power by 6%, as already mentioned, the revenue spending power per household in Birmingham is still £2,461 per dwelling—considerably larger than almost all local authorities. Its gross expenditure is still in the region of £3.2 billion.

The Government have devolved power and funding in a sophisticated and imaginative manner. Birmingham Council and the city are benefiting from a range of new freedoms and funds being made available. My friend the noble Lord, Lord Rooker, asked: what has Birmingham done and how has it benefited? A range of investments outside the financial settlement have allowed us to encourage 19,000 new start-ups in 2014. We are already attracting more FDI investment than any other region outside Birmingham. During the period of my administration, we grew tourism from £29 million to £34 million, generating formidable wealth for local industry and small businesses. We left a city that was proud, pointing outward, attracting Chinese investment, and building a whole range of entities that allowed us to be quoted, by the Mercer survey, as one of the only English cities in the top 100 in the world for quality of life. It was local government doing what it should do—making its city globally relevant but caring for its community.

As someone who has worked with Labour and Conservative-led Governments, I know the evolution of devolution has been, at times, extremely slow. Ultimately, however, the coalition Government’s attitude to local government—in particular, their generosity to the city of Birmingham—has to be measured not simply by the financial settlement but through the devolution of power and the many hundreds of millions of pounds that Birmingham has received through the direct, innovative funding streams that are now acceptable through the coalition Government.

17:00

[Viscount Hanworth (Lab)]

My Lords, the finances of local government are an opaque matter. The sources of revenue and the categories of expenditure can be represented in various ways that can give widely differing and quite contrary impressions regarding the state of the finances and the severity of the financial restraints faced by local authorities. There is ample scope for bamboozlement by a Government who are intent on conveying the most favourable impression.

On 18 December in the Commons, Kris Hopkins, who is the Under-Secretary of State for Communities and Local Government, asserted that the overall reduction in spending planned for the year 2015-16 was a mere 1.8%. This figure relates to a wide category of expenditures that include various protected budgets, such as the education, police and principal health budget. However, the so-called settlement funding assessment, which excludes ring-fenced grants for education, but which nevertheless includes the ring-fenced new homes bonus and the ring-fenced public health grant, will decrease by 13.9 %. The wholly discretionary spending of local authorities will decrease by an even greater percentage. When matters are looked at in this way, we begin to get a more realistic impression of the stringency of local government finances.

Another aspect of the finances is the restraint that has been imposed on council taxes. Local authorities proposing to raise council tax by more than 2% will have to hold a local referendum on such a proposal. The high cost of doing so and the likelihood of a negative response will effectively prevent any authority from seeking the sanction of the local electorate. A recent report from the Local Government Association has indicated that since the abolition of the council tax benefit scheme in 2013 and its replacement by a localised council tax support scheme, there has be a significant increase in the burden of taxation borne by lower-income families, many of whom were previously exempted from the tax. These are the people who are suffering most from the curtailment of the services of local authorities.

A summary of the current state of local government finances has been provided in two documents of the National Audit Office published in November 2014, entitled, Financial Sustainability of Local Authorities, and, Impact of Funding Reductions on Local Authorities. These documents point to an estimated reduction in government funding of local authorities in real terms of a 37% between 2010-11 and 2015-16.

In the most severe cases that concern urban local authorities, there will be a real-terms reduction that is in excess of 40% between those two financial years. The question that one has to ask is: how have the local authorities managed their finances throughout a prolonged period of funding reductions? The answer is that, rather than increasing their locally raised income, which they are now largely disbarred from doing, they have reduced their provision of services and cut back on their staffing costs. At the same time, they have sought to increase the levels of their reserves to guard against financial uncertainties and to prepare for future shortfalls in revenues.

A glib answer that has been offered by the Government is that local authorities have been able to manage their finances by making substantial efficiency savings. “Efficiency savings” is a euphemism that bears some examination. Efficiency savings refer primarily to the financial savings that are made by reducing pay. This is achieved when services that have hitherto been provided by local authorities are outsourced to private contractors. By outsourcing the same services to a succession of suppliers, local authorities have been able to drive down the costs.

There are provisions in law that are intended to prevent the deterioration in wages and conditions when the activities and employees of one supplier are transferred to another. However, these provisions apply for a limited time, and they are easily evaded. This is a spurious concept of efficiency and, indeed, the further immiseration and alienation of low-paid workers must lead directly to inefficiencies in the workplace. There is a limit to how far this process of so-called efficiency saving can go. It is liable, eventually, to bequeath a large proportion of our public services to the surviving private suppliers, who will become monopolists serving multiple local authorities. I will end by saying that I would favour the replacement of council taxes by a local income tax and a graduated property tax, levied on both buyers and sellers at the time of a sale.

17:05

[Lord Shipley (LD)]

My Lords, I extend my own congratulations to my noble friend Lady Pinnock and the right reverend Prelate the Bishop of Southwark on their excellent maiden speeches. I declare that I am a vice-president of the Local Government Association.

The very first paragraph in DCLG’s guide to the local government finance settlement in England says:

“Local government finance in England is complicated and can be difficult to understand”.

I think noble Lords would all agree with that, but it is an understatement. It is true, but we now know that the system is unsustainable. The rising pressures on all councils are well documented and it is a tribute to them that they have managed as well as they have. However, it is unlikely that the financial problems facing local government will get much easier, at least in the short term. I hope that they will for those where the cuts have been biggest, but it seems that there will be little extra money for local government overall until at least 2017, whoever wins the election. Labour has now confirmed that it cannot commit to reversing the public sector pay freeze or to scrapping council cuts for the first year after the election.

The reason is that the problem for any Government is stark. The Government are still overspending and are trying to get the annual deficit down. The debt, however, has continued to rise: by over £500 billion in this Parliament. If we protect the NHS, schools, pensions and overseas aid, it follows that everything else has to take a bigger hit. It does not help local government that the general public are broadly content with the performance of their local councils. I suspect that this is because schools and health are protected, many council services are actually minority services and council tax levels have been held down. Given a choice, I think most people would see the NHS as their priority for more spending, not councils.

Despite this, the National Audit Office has said that councils are showing clear signs of financial stress. It also says that DCLG does not gather sufficient evidence to know whether individual councils can or cannot cope with expected cuts in funding. So, in the absence of meaningful data, it is no surprise that opinions can masquerade as fact on all sides, with one side claiming that key services are unsustainable and another claiming that the settlement is fair. For local government, money is at the heart of all of this. There is not enough of it to meet demand and I have come to the conclusion that we would benefit from a clearer link, in the medium term, between the provision of universal local services and the council tax that householders actually pay.

In the short term we need a partnership between central and local government, working jointly with the National Audit Office, to agree a set of baseline facts and approaches. The first of these is how the LGA’s publication Rewiring Public Services can be delivered, because it offers very large annual savings through public service reform. The second is whether we should remove adult social care from the annual settlement process for local government and treat it differently, given the specific pressures on it.

Thirdly, we need to identify clearly the impact of rising demand generally on statutory services. We need to assess why councils charge different levels of council tax in broadly similar places for broadly similar outcomes. We need to explain why rural areas get less per head from central government yet pay much more in council tax, and we need to assess what the savings would be if two-tier areas moved to unitary status.

Councils are going to have to reduce overheads further and raise more of their own money. But I am puzzled by the slow speed of transformation in some councils—although not all—and a similar slowness by some in sharing services across council boundaries. Why is there such a reluctance by some areas to adopt a unitary structure when the cost savings are well established? We have heard from the noble Lord, Lord Liddle, about Cumbria, but this week a report in Oxfordshire said that there could be savings of up to £32 million a year if the six councils merged.

As part of the preparation for what will be an important period after May, it would help if councils did two things: first, talk more in terms of the levels of government support that they receive, rather than just the cuts since 2010, important though those are, since this presupposes that 2010 is the right baseline; and, secondly, understand clearly the level of total public spending in their area, not just their own direct spending, and talk about that publicly.

In conclusion, the big issue is resource equalisation and revenue support allocations based on need. Of course it is right to encourage income growth and good to see the vast majority of councils expecting growth in their share of business rates. But the crucial issue remains: central government allocations should be needs-based.

17:10

[Lord Smith of Leigh (Lab)]

My Lords, first, I declare my interests as the leader of Wigan Council and chairman of the Greater Manchester Combined Authority. I am also a vice-president of the LGA and vice-chairman of SIGOMA. I congratulate the two maiden speakers on their contributions. The right reverend Prelate showed his experience of urban affairs and I agree with him entirely about prevention work, which can save lots of money downstream. The noble Baroness, Lady Pinnock, has a lot of experience in local government. No doubt her contribution was aided by her treasurer from Kirklees, David Smith, who was pinched from Wigan. Not only did he move from Wigan to Kirklees, he changed allegiance from Wigan Warriors to Huddersfield Giants.

My noble friend Lord Beecham showed the fantastic record of knowledge, passion and care for local government that he has built up but I thought that he was a bit unfair on himself. I will give him that he may be short but I do not think that anyone would ever describe him as nasty and brutish. He outlined the scale of the loss of moneys to local government and the fact that it has not been distributed by any means fairly. Like the noble Lord, Lord Shipley, we should congratulate local authorities. Despite all the cuts that many of them have had to make, their financial stability has remained very good. Whether that can continue, as he suggests, may not be the case. We have also managed public expectations quite well. Some of us thought that if we were to make the reductions that we have been making to a number of services, there could be riots on the streets. However, that has not happened, although it may have contributed to the alienation mentioned by the right reverend Prelate the Bishop of Derby.

One of the disadvantages of speaking towards the end of the debate is that everyone has used your language, so I want to move on. Faced with loss of funding as we have, local authorities have a limited number of options. There are efficiencies in local government but we have taken all the low-hanging fruit and there is not a lot left. We can work to transform services but the DCLG unfortunately does not seem to understand. It is not an instant solution and one needs to work hard on that. There has been reluctance to increase council tax, although I see from reports in the media today that in the next year council tax might go up by more in most places. But no one will challenge the referendum. We always said that that was the case.

The real option is making cuts in services. Yesterday, Age UK showed that £1 billion had been taken out of care services. One-third of adults who were receiving home care visits no longer have them. That is the scale of the impact of the cuts to care. It cannot be said that care services must not be cut at all because, given the scale of cuts needed, care services must take a share. However, we hear daily about the crisis in the NHS, particularly in A&E. The contribution of local authorities is a return to the state of bed-blocking. Because we cannot get care packages for people who are in hospital, they are blocking beds and preventing those beds being used for people coming in at the front door in A&E. We need to recognise that.

Being in local government for this period has been a bit depressing. It has been a bit difficult to make the cuts, but we in Wigan have always believed that we would not let Eric Pickles decide our budget. There would always be something in our budget that reflected the values that we have in Wigan, not the values—whatever they are—of the Secretary of State. We have introduced new services that benefit local people. We introduced the living wage, got rid of zero-hours contracts and invested in the community. We have a programme which gives disadvantaged youngsters a chance to get a job. A cost-benefit analysis showed that that scheme saved £4 to the public sector for every £1 we invested. More than that, its impact on vulnerable young people is quite remarkable.

However, we need to think about the future. This settlement is for one year only, and the concern in local government is about what will happen in future years. I remember that in 2010 we suddenly had to face in-year cuts, which was very difficult indeed. I hope we do not have more of those. Everybody I know in local government is revising their forecasts downwards. We have to do better on transformation; this is the only way forward. We can do more in terms of devolution but, as was noted by the noble Baroness, Lady Williams of Trafford, there is more to collaboration among local authorities than sitting down in a room. It takes a lot of work. We have to do that in partnership, with local authorities and central government recognising the problem and working on it.

17:16

[Baroness Jones of Whitchurch (Lab)]

My Lords, I am extremely grateful to my noble friend Lord Beecham for tabling this Motion today. Like others, I pay tribute to his formidable record of representing local government over many years, as well as the demolition job he has done on the Government’s record today. He quite rightly points out that the scale of the cuts now being demanded of councils will inevitably have a devastating effect on core services and vulnerable residents. What is truly shocking is the unfairness of the distribution of the cuts, with the 10 most deprived areas having their spending power cut by 16 times the amount of the 10 least deprived areas. It is not difficult to see whose side the Government are really on. I also welcome the noble Baroness, Lady Pinnock, and the right reverend Prelate the Bishop of Southwark, and congratulate them on their excellent maiden speeches. I look forward to working with them in the future.

In the short time I have, I would like to focus on two examples of the consequences of the Government’s short-sighted policies for disadvantaged children and young people. A couple of weeks ago, we had a very good debate in this Chamber on the importance of early intervention for child development. There was widespread support for the notion that intervention and family support for the very youngest children, those between the ages of nought and three, could make the biggest difference to a child’s life chances and their opportunities for social mobility. This was particularly so for children from the most deprived families, with increasing evidence that this could lead to fewer demands on public services at a later date.

Of course, this was the very notion that led the previous Government to develop the network of Sure Start centres. This policy was so popular that it forced David Cameron to pledge that the centres would be safe under a Tory Government in his hands. Sadly, we now know that this was not the case. The ring-fenced funding was removed and already 600 centres have closed, with councils now forced to consider further closures to meet the new budget reductions.

The last Department for Education figures show that spending by councils on early years services was slashed by some £400 million over three years. In 2013-14 alone, spending on children’s centres and associated early years activities fell by 8.5%. This is despite all the evidence that investment in parenting and support services for very young people can reap enormous rewards later, both for individuals and, indeed, for the state. Does the Minister agree that there is an urgent need to revitalise the Sure Start network, perhaps as a basis for co-located family services, and with secure funding reinstated?

Secondly, I want to refer to the decline in youth services. Again, the Department for Education estimates that these budgets fell by more than 12% in just one year, compounding year-on-year decreases. This too represents a very short-sighted approach. For example, last week I had the pleasure of visiting the Hangleton and Knoll youth project in Hove, along with my honourable friend Tristram Hunt and our Labour candidate, Peter Kyle. We heard about the fantastic work the project is doing to turn around the lives of young people, particularly those who are alienated from the school system and would otherwise be facing poverty and unemployment. But, like many other youth centres around the country, it faces a precarious future. What these young people clearly need is a route into full-time training or quality paid apprenticeships, and it was heartening to hear the leader of the Labour group pledging, if elected, to end youth unemployment in the city by the 2019 election.

Given David Cameron’s new-found friendship with the Green Party, I wonder if the Minister could ask him to have a word with the Green-run council in Brighton and Hove about recognising the value of its youth services and to do something about the hundreds of young people in the city who have been unemployed for more than a year. While he is at it, please could he also have a word with the council about the appallingly low levels of recycling in the city, which have actually fallen by 16% since the incompetent Green Party took office? That highlights its abject failure to deliver on what should be a basic issue for any party that cares about the environment. Finally, will the Minister join me in congratulating the Labour-run Welsh Government, who are already achieving 54% recycling rates and are well on their way to their zero-waste goal? I look forward to hearing his response.

17:21

[Baroness Farrington of Ribbleton (Lab)]

My Lords, with the leave of the House, I should like to speak in the gap. Lancashire County Council found itself, with the Social Fund transfer from DWP, with less than had been spent—a cut. The Local Government Association states that the core funding budget for Lancashire County Council has fallen by 38.79% over the life of this Parliament, while the net budget for Preston City Council will have fallen by 31% over the same period.

I, too, declare a former interest of being involved in local government. There have always been discussions at what were called local government consultative finance meetings. What has changed is the ability of local authorities to initiate new projects because of the tight grip on spending levels, which are based on an assessment of grant distribution and may in no way at all recognise a genuine local assessment of need. There will never be a perfect funding formula for grant because there will always be disputes about weighting levels—how much this or that particular factor ought to be taken into account. However, once you have a vicious system that prevents a local authority from being able to move away from a target set by Whitehall, that is the beginning of the end of local government.

Whitehall does not know best what is needed in Preston and the county of Lancashire, just as it does not in other areas. There could be an argument about how much grant is deserved, whether it is in my noble friend’s Newcastle or in Preston or Surbiton. If one looks at everything that has advanced human life over the past century and a half, a whole range of issues—including public education for all, nursery education and youth services—began as local government initiatives. To me, the real tragedy is that if we have a system that prevents local authorities from experimenting and innovating, we will all suffer.

It is extremely important that we take at face value what people say about their satisfaction with local government, or indeed with the Government or politics. I remember a constituent speaking to me about a reduction in a particular service. I said that the alternative was worsening primary school staff/pupil ratios. His reply was: “I don’t want you to start confusing me with the facts”.

17:26

[Lord McKenzie of Luton (Lab)]

My Lords, I offer my congratulations to our two maiden speakers today. I have no doubt that the noble Baroness, Lady Pinnock, will have much to contribute to our deliberations in the future, and it will be a privilege to have the right reverend Prelate the Bishop of Southwark involved in our deliberations. Like others, I thank my noble friend Lord Beecham for securing this debate, for his typically robust, incisive and passionate introduction and for making a veteran of our noble friend Lady Donaghy.

The settlement under consideration heralds another year of cuts in funding and restrictions in services, another year with unfairness at its heart and doubtless another year of heroic efforts by many councils up and down the country to deliver vital services to their communities in the face of these challenges. My noble friend rightly berates the Government for the manner in which they have represented the settlement, suggesting that the damage is not serious, and the lack of transparency in how some of the numbers are presented.

Indeed, we have heard from most noble Lords this afternoon about the particular challenges for their areas and their authorities. We have had Cumbria from my noble friend Lord Liddle; Bradford from the noble Baroness, Lady Eaton; the London perspective from the noble Lord, Lord Tope; Newcastle from my noble friend Lord Beecham; Birmingham from my noble friend Lord Rooker and the noble Lord, Lord Whitby; Kirklees from the noble Baroness, Lady Pinnock; and Durham from my noble friend Lady Armstrong. We have heard from my noble friend Lord Smith of Leigh, who, in his roles for the combined authority of Wigan and Greater Manchester, is on the front line in endeavouring to cope with the consequences of earlier settlements but has also been at the forefront of trying to work with the grain of government on innovative city deals.

As we have heard, the settlement funding assessment is to reduce by 13.9% on average in 2015-16. This comprises the local share of business rates and the revenue support grant, which itself is to reduce by 27%. This means a real-terms cut of £2.6 billion next year, contributing to £20 billion of savings required of councils by the end of next year. It amounts, as we have heard, to a staggering 40% reduction in core government funding since 2010. Local government has taken a larger share of austerity adjustments than any other part of government and is scheduled to take more.

Noble Lords will know that the settlement reflects the business rate retention scheme. Under this, the central share of business rates—£11.3 billion for next year—should be returned by the Government to local government in full; that was the deal. However, some £0.9 billion is missing at present, so perhaps the Minister will specifically take this opportunity to say how and when this sum is to be channelled back to councils. As the NAO points out, there have also been real-terms cuts in council tax income because of the encouragement to freeze, and the referendum hurdle. Perhaps we are entering a time when more will test the democratic process through that referendum. I will resist the temptations of my noble friend Lord Hanworth to go down the path of a local income tax. Of course, not all councils have frozen council tax, including some Tory councils.

As many noble Lords have said, we know that the Government’s favourite measure of the settlement is to quote spending power, which includes not only estimates of council tax plus the SFA but the new homes bonus, the public health grant, some other grants and the better care fund. Such a metric produces a reduction for councils of just 1.8% next year. Of course, we understand politically why the Government would wish to promulgate this figure in the court of public opinion, but we join the LGA—and, I think, other noble Lords—in asking them to come clean on the impact of this by including it in the grant settlement. In particular, will the Minister confirm that not all BCF spending is on social care services or commissioned by local authorities? The LGA estimates £2 billion of the £3.4 billion to be of this nature. What is the Government’s assessment?

We know that whatever happens in May, resources in the next Parliament will be constrained. That makes it all the more important that what is available is distributed fairly, and on this score the Government fail lamentably. We will doubtless hear from the Minister that the 10% most deprived authorities receive 40% more than the least deprived areas. If true, that is still not an answer to why, when applying cuts and adopting the Government’s preferred measure of spending power per head, they are reducing—and have in the past reduced—the spending power of the most deprived areas and actually increasing the spending power of the least deprived areas. Noble Lords have heard the statistics: for Hackney, a loss per head of £109.50; for Wokingham, a gain of £49.47. Will the Minister confirm that this is the position and let us have the Government’s specific justification for this outcome? In the words of my noble friends Lord Liddle and Lady Jones, why is this fair?

Indeed, if we look into the Government’s approach to fairness, other aspects of the settlement give cause for concern. First, there will no longer be a separate element for council tax support schemes in the settlement, and funding for council tax support schemes is estimated to have fallen by £1 billion since they were localised. LGA research suggests that household bills are rising for some of the poorest households in the country as councils struggle to maintain their schemes—sadly, an outcome that we predicted. This will eventually feed through in higher levels of debt, lower levels of council tax collection and more costs for local authorities. Of course, the fact that council tax support funding is no longer separately identified contrasts with the treatment of council tax freeze funding, which has been specifically protected.

A number of noble Lords have commented that the Government have now determined to separately identify what is in the settlement for local welfare assistance, which is at a lower level than the current year. There is no new money attached to this, and this is a matter that we would wish to review in government. The Government’s approach is illustrative of their short-term thinking. Most of us will have heard from Crisis and the Children’s Society, and we heard from the right reverend Prelate the Bishop of Portsmouth this afternoon, about the importance of this funding stream as a safety net of last resort to protect the most vulnerable. They express fears about emerging evidence that the cuts will mean more and more councils will not be able to provide this welfare assistance, with consequential impacts on services such as homelessness and support for children leaving care, with the resultant higher costs in the longer term.

The treatment of some other significant numbers in the settlement also raises issues of fairness. The top-slicing of most of the new homes bonus means less being distributed by the RSG and more through the NHB mechanisms. This is disadvantageous to those authorities that face inherently more difficulties in stimulating growth or which may lack development land.

Where is all this leading the local authorities? The NAO’s findings are that councils’ focus has changed over the period of the 2010 spending review, with statutory services such as adult social care services contributing a higher percentage of savings in the latter period than in the former. The reverse is true for discretionary services such as planning and development, although the Federation of Master Builders has pointed out the folly of further reduction in planning departments where there is a housing crisis that needs addressing. CIPFA’s annual survey of chief finance officers showed nearly half of them less confident of being able to deliver services next year. The NAO’s report on the sustainability of local authority finances predicted that 55% of metropolitan district councils are in danger of missing savings targets. CIPFA refers to a “perfect storm” of demographic pressures bringing increasing demand for adult and children’s services at a time of continuing cuts and an erosion of the local tax base.

The evidence from adult social care is that savings have been made through both efficiencies and cuts in service levels, but the scope of the efficiency savings is diminishing. The LGA reports that adult social care is facing a funding gap of £1.6 billion next year, which could rise to £4.5 billion by 2019-20. It highlights that savings of £3.5 billion have been delivered over the past four years, but its research showed that 60% of councils were considering stopping at least some services in 2015.

What reassurance will the Minister give today to councils that remain very concerned about the affordability of the Care Act and, indeed, the timetable for implementation? This settlement follows the pattern of others under this Government. It cuts the budgets of local authorities in the most deprived areas significantly more than those in the better-off areas, leaving councils facing a huge funding gap that will only increase by 2020 unless we take another course.

With regard to the question from the noble Lord, Lord True: given a chance at government, we would implement a fairer system to ensure that those communities that need the most support did not have to bear the brunt of the cuts. We would also devolve power and resources currently held by central government to city and council regions to enable local authorities to reshape and integrate services to more effectively support local people. We would put a stop to making the poorest bear the biggest burdens.

17:37

[The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Lord Ahmad of Wimbledon) (Con)]

My Lords, I join other noble Lords in acknowledging the excellent contributions and two maiden speeches. I congratulate my noble friend Lady Pinnock on her maiden speech and reassure her somewhat. Her sense of getting lost in the House is something that perhaps those who have been here slightly longer and much longer still experience. That is not an individual experience. From her maiden speech, we have seen that she is going to be an incredible asset, to the party, to the Government and, indeed, to your Lordships’ House.

I turn to the excellent and reflective speech of the right reverend Prelate the Bishop of Southwark. Everyone has laid claim to the diocese of Southwark. I suppose that, being Lord Ahmad of Wimbledon, I can also lay claim to being part of the diocese of Southwark. I look forward to working with the right reverend Prelate as another representative voice of the town of Wimbledon. I welcome his contribution today. We look forward to the contributions of both noble Lords in future debates.

It would be remiss of me not to pay tribute to the noble Lord, Lord Beecham. I was listening very attentively to all the contributions and I want to single out the description that the noble Baroness, Lady Armstrong, gave. She said that she described her relationship with him, when she was Local Government Minister, as one of deep respect, at times friendship as well—I would add to that—and she did not always agree with the noble Lord. I think that sums up my relationship with the noble Lord as well, although I was a bit concerned when the noble Lord, Lord Liddle, said that he would pose a challenge. He then talked about the 47 years of experience of the noble Lord, Lord Beecham, in public life. I must admit I have not been around for 47 years, so I thought he was going to pose the challenge that I would have to account for every year. I am sure that when he writes his autobiography we will all reflect on those worthwhile years. In thanking him, he will not be surprised to hear that I cannot agree with most of what he said about the challenges of the settlement.

The Government have inherited the largest deficit in post-war history. Thanks to the actions that we have taken as part of our long term economic plan, the deficit is falling, the economy is growing and employment is at a record high. The Government are putting our public finances back on track. Of course, we could not have done this alone, and I fully acknowledge the incredible effort and significant contribution that local government, like every part of the public sector, has made. Councils all over England have responded strongly to the challenge of delivering public services in this new context. I thank my noble friends Lord True and Lady Eaton for their words of support and for highlighting some of the challenges that remain.

Of course, there is much still to do. English local government accounts for about a quarter of all public expenditure, more than £114 billion this year. So the Government still need to take difficult decisions on local government funding to ensure that the public finances are on a sustainable path. Local councils will continue to play their part in this.

Much has been made of the delivery of a fair settlement. The noble Lords, Lord McKenzie, Lord Liddle and Lord Rooker, and the noble Baroness, Lady Jones, all mentioned it. We announced the provisional local government finance settlement on 18 December, as many noble Lords acknowledged. With this settlement, we have kept the overall reduction in local authorities’ spending power to 1.8%, one of the lowest levels of reduction under this Government. If we include the funds that the Government have provided to support local transformation, the overall reduction is even lower, at 1.6%.

I acknowledge that councils are facing the highest demand for services. They continue to receive substantially more funding and we are continuing to ensure that no council will face a loss of more than 6.4% in their spending power in 2015-16, which is the lowest level in this Parliament. The noble Baronesses, Lady Armstrong and Lady Farrington, talked of relative needs. These were reflected in the funding baselines at the outset of the new system of business rates retention in 2013-14.

Growth is also a key part of this Government’s agenda. Throughout this Parliament, we have deliberately shifted the emphasis from keeping authorities dependent on grant to providing councils with the tools they need to grow and shape their local economies.

The noble Lord, Lord Beecham, asked about the LGA and the NAO figures. The NAO estimates a 37% reduction in spending power, but the Government’s spending power figures are transparent and allow others to calculate their own figures. The NAO does not include the better care fund or public health, which are two important policy initiatives worth more than £6 billion. Various figures for settlements and spending power were cited—we could have this debate all evening and further into the night. There is no doubt that some authorities have had reductions, but, when we look, for example, at the new homes bonus, we see that Leeds has seen an increase of £1.92 million, Salford £27.94 million, Warrington £22.67 million, Ryedale £40.59 million, East Riding of Yorkshire £5.02 million and Kirklees £3.86 million. Those are positive figures.

We have also given councils a real stake in stimulating local growth. Authorities up and down the country are benefiting from the greater powers and incentives that we have provided to invest in growth. These include Newcastle. I am delighted that the noble Lord’s council has also benefited and has frozen its council tax for the past four years in response to the challenge laid down by the Government. The noble Lord shakes his head. Is it not true?

[Lord Beecham]

Not next year.

[Lord Ahmad of Wimbledon]

Of course I said for the four years up to where we are now. I am sure that, under his direction, the council will respond to future challenges.

My noble friend Lady Janke asked about devolution, which is a subject high on the Government’s agenda. I would assure her that Newcastle, Sunderland and Northampton have seen the greatest growth in the amount of business rates retained in 2013 as a result of enterprise zones and new development deals. We have done city deals with Manchester and Sheffield. Additionally, we have provided £730 million in Growing Places funds. We have also emphasised a close working association with local enterprise partnerships—that is part of my ministerial responsibility when it comes to European funding. Local priorities have been reflected in ERDF funding up to 95%, and also in European social funding. For 2014-15, authorities’ own estimates show that 91% are expecting a growth in their business rates—a total of £414 million.

The noble Lord, Lord Rooker, talked about issues to do with cities. He mentioned Birmingham. I trust that my noble friend Lord Whitby addressed some of his concerns. Looking at some of the figures, for example, during the period 2010 to 2014, the reserves in Birmingham increased by £221 million, or 396%—and that was from a relatively low base—notwithstanding some of the serious challenges the city has had.

Councils benefit directly from the new homes bonus as well, bringing long-term empty homes back into use. We have provisionally allocated £1.2 billion of new homes bonus funding to local authorities in England for 2015-16, and this brings the total to almost £3.4 billion since the scheme began.

The noble Lord, Lord McKenzie, raised issues of business rate retention and excesses. The excess of central business rates over revenue support grant will be returned to local government through specific grants, of which there are many across government, thus complying with the statute. I shall write to him with specific examples if he so desires.

The noble Lord, Lord Tope, talked about the direction of travel when it came to the retention of business rates. I can assure him that my right honourable friend the Secretary of State, whom he, too, knows well, has indicated his personal commitment to see business rates retained locally—perhaps to a level of 90% from the current 50% by 2020, if financial circumstances allow.

The noble Lord, Lord Rooker, also talked about the rural economy. We continue to recognise the challenges faced by rural communities. The Government have a clear commitment to rural areas, and consecutive settlements have helped to address the gap in urban/rural spending power. The gap is closing and has already benefited rural authorities to the tune of £208 million over the last four years. I assure the noble Lord that we expect this gap to continue to close. In the mean time, the settlement confirms another year of additional resources for most rural authorities, to recognise the challenges they may face in delivering their services. In 2015-16, this grant has been increased to £15.5 million.

The noble Lord also rightly raised the issue of broadband. I will share with him a personal experience. I went to Cornwall and the Isles of Scilly to launch a broadband service with senior management and the chief executive. The only hitch was that we were unable to land on the Isles of Scilly because it was clouded over. I have never been, but I saw an aerial view and hope that I shall return one day. We are investing a great deal more—£780 million has been allocated to roll out broadband—with priority given, exactly as the noble Lord suggested, to the hard-to-reach areas.

My noble friend Lord Shipley talked with great aplomb about the need for transformation and for local authorities to lead. I was heartened by the contribution of the noble Lord, Lord Smith of Leigh, most of which I can relate to and agree with. As well as growing their economies, the best authorities are transforming the way they do business. This includes places such as Devon, where libraries are being expanded into community hubs, providing a greater range of services, including those designed to tackle digital exclusion and improve employability skills.

The Government are also supporting councils to demonstrate innovation, achieve real savings and, most importantly, improve outcomes for the people who use local services. In November we announced 73 projects that had successfully bid for the Transformation Challenge Award. These projects will receive about £90 million to improve services, and will ultimately save the public sector more than £900 million.

I turn to the better care fund and refer briefly to the Troubled Families programme. That programme has illustrated how together, government departments working closely with local authorities can achieve the best results for our residents—indeed, the citizens of our country. We have therefore created the better care fund. It has a £3.8 billion pooled budget for health and social care in 2015-16. My noble friend Lady Eaton spoke with great eloquence about that initiative, which will help drive further and faster integration between those services.

Local partnerships have chosen to pool an extra £1.5 billion, and this will help to achieve significant change in services that will benefit some of the most vulnerable in society. That was a specific concern expressed by the right reverend Prelate the Bishop of Derby. We are looking to prioritise those areas where there is greater partnership working. As the right reverend Prelate will know, on a wider scale we have looked to the community directly, and the Near Neighbour scheme, so ably chaired by my noble friend, has shown dividends from communities working on the ground together to provide the best services and the best initiatives to create the more cohesive communities that we all desire.

As noble Lords have said, and I fully acknowledge, the challenge for local government over the next few years is substantial, as it is for everyone managing public services. I fully acknowledge that there is huge energy and commitment in the sector to deliver the best possible public services for our local communities. I know that members and officers up and down the country are already thinking radically and creatively about the years ahead, and we will continue to support them. I assure the noble Lord, Lord Liddle, among others, that we will work with them directly to ensure that we get the best service provision at a local level.

Local welfare provision was raised by several noble Lords, including the noble Baroness, Lady Donaghy. We will work closely with colleagues in the Treasury and the Department for Work and Pensions. We have been analysing the responses to our consultation. I have met two or three councils directly, along with my honourable friend Kris Hopkins. This concern has come up consistently among local authorities’ priorities. We have been looking at how local welfare assistance should be funded in 2015-16 and, as I said, working with the Department for Work and Pensions on it. The Government believe that local authorities will continue to be able to offer local welfare assistance for 2015 from within existing budgets, alongside a range of other services if they judge it to be a priority in their area.

The right reverend Prelate the Bishop of Portsmouth talked about earmarking certain funding. There are demands for greater devolution and for local authorities to judge their priorities. It is our view that this is what should prevail in this area. We have consulted on having a separately identified amount relating to local welfare provision in each upper tier authority’s general grant, totalling £129.6 million nationally. This will not be ring-fenced and we will not be placing any new duties, expectations or monitoring requirements on its use. The Government have also been very clear that councils should choose how best to support local welfare needs, because what is right for Croydon will not be right for Cumbria. In relating that, I hope that I address some of the concerns expressed by, among others, the noble Lord, Lord Whitty.

The right reverend Prelate the Bishop of Portsmouth raised the issue of vulnerable women, particularly those who suffer domestic violence. Recently I announced from this Dispatch Box an additional £10 million of funding for women’s refuges up and down the country, which will benefit more than 100 local areas.

I assure your Lordships that the Government will consider all responses to the consultation on the settlement, including those which relate to the provision for local welfare over existing budgets, and will take these into consideration when announcing the final settlement.

All councils should be freezing their council tax in 2015-16 to help people with the cost of funding. The noble Viscount, Lord Hanworth, and the noble Lords, Lord Smith and Lord McKenzie, raised the issue of referendums. A referendum in 2015-16 can be held at reduced cost when combined with the general election. If a council has a good case for an increase above the 2% threshold, we believe that it should trust its electorate.

There were other points covering some of the areas that I look after, such as tackling fraud, but time does not permit me to go into them. If specific questions have been raised, I shall of course review Hansard to ensure that we answer them.

Finally, I wish to put on record the thanks of the Secretary of State, as well as other ministerial and governmental thanks, and mine, to all councils that are working tremendously hard in ensuring the best local services. I believe that anyone who goes into public life does so with the right intent. As we have heard from several noble Lords today who have represented electorates at a local level, it is for the right reasons: to serve their electorate to the best of their abilities.

Finally, it falls upon me to thank once again all noble Lords for their contributions, which have again provided a very informed and deep insight into the debate over local government finance. I am sure that I am accurate in saying that it is not the last time we shall discuss it. Nevertheless, the quality of the debate that we have had has again demonstrably shown the best of this House.

17:55

[Lord Beecham]

My Lords, I will say three things very briefly, given the time. First, I think the Minister for his usual courteous response—actually there are four things, because that was the first. Secondly, I congratulate again the maiden speakers, from whom we will hear a great deal to our benefit in future. Thirdly, the noble Baroness, Lady Eaton, referred to surveys showing that people have not noticed a particular difference in services. I remind her that a year or so ago, Conservative councils and the Conservative-led Local Government Association warned that with these present policies, councils would be curtailing services except those which are statutory duties by the end of this decade, with nothing else being provided.

Finally, I note the call of the right reverend Prelate the Bishop of Derby for an increase in local democracy. I would certainly endorse that, but it is not really consistent with what has been happening. The Minister has just called upon councils to freeze council tax or have a referendum. This is a bit odd, coming from a Government who came into office with, Mr Cameron said, no plans to increase VAT. They increased VAT by 2.5% within six months of taking office. That raises £13 billion a year—and, oddly enough, they did not hold a referendum.

Motion agreed.

Scotland: Draft Legislation

Thursday 22nd January 2015 Lords Chamber

Statement

17:57

[The Advocate-General for Scotland (Lord Wallace of Tankerness) (LD)]

My Lords, with the permission of the House I will repeat a Statement made by my right honourable friend the Parliamentary Under-Secretary of State for Scotland in the House of Commons. The Statement is as follows.

“With permission, Mr Speaker, I wish to make a statement to the House about the further devolution process in Scotland and the publication of draft clauses to implement the Smith commission agreement. The draft clauses published today deliver a substantial package of new powers to the Scottish Parliament. We are publishing ahead of the Burns Night deadline, demonstrating this Government’s commitment to honouring the vow made to the people of Scotland during the referendum, and meeting the timetable we set out during the referendum to deliver further powers to Scotland.

The referendum on independence held on 18 September 2014 saw Scotland vote decisively to remain within our United Kingdom family of nations, retaining the strength, security and stability of being part of the UK. But the Scottish people did not vote for no change. During the referendum campaign the Prime Minister, the Deputy Prime Minister and the leader of the Opposition made a joint commitment to deliver more powers to the Scottish Parliament. The Smith commission, chaired by Lord Smith of Kelvin, was the result of that commitment. All five main parties in Scotland came to the table and reached agreement on the proposals for further devolution to Scotland within the United Kingdom. The Government welcomed the fact that this was the first time that all of Scotland’s main parties have taken part in a process to decide the future of devolution, and this landmark agreement was signed by all five parties. I am grateful to Lord Smith and the members of the commission for their work.

The commission’s heads of agreement were published on 27 November and the Government committed to bringing forward draft clauses to implement the agreement by Burns Night, 25 January. This was a challenging timetable, but by publishing a Command Paper and draft clauses today I am pleased to say that the Government have delivered on their commitment in advance of that deadline.

The clauses published today will make it possible to quickly translate the Smith commission agreement into law at the beginning of the next Parliament. The draft clauses provide for an already powerful Scottish Parliament to become further empowered and more accountable to those who elect it. As a result, the Scottish Parliament will become one of the most powerful devolved Parliaments in the world.

I will begin with the constitutional measures. The biggest transfer of powers to the Scottish Parliament and Scottish Minsters since the start of devolution comes with greater flexibility for the Scottish Parliament and the Scottish Government to manage their own arrangements, with statutory recognition of the enduring place of a Scottish Parliament in the UK’s constitutional arrangements. Our commitment to the process has already been evidenced by the steps the Government have taken to enable the Scottish Parliament to extend the franchise to 16 and 17 year-olds in time for the 2016 Scottish Parliament elections, with an order now laid before both Parliaments.

Turning to the fiscal framework, the package gives greater financial responsibility to the Scottish Parliament with an updated fiscal framework for Scotland that is consistent with the overall UK fiscal framework. As the Smith commission agreement set out, the new fiscal framework will be agreed and implemented jointly by the UK Government and the Scottish Government through the Joint Exchequer Committee, with suitable engagement with both the UK and Scottish Parliaments.

For the first time, more than 50% of the money spent by the Scottish Parliament will be funded by the Scottish Parliament. This is an important step, which builds on the measures brought forward by this Government in the Scotland Act 2012 and further increases the financial accountability of the Scottish Parliament to the people of Scotland.

Under the tax clauses Scotland will receive extensive new tax powers without losing the essential elements of our unified tax system that support the single market and make the United Kingdom such an attractive place to do business. The Scottish Parliament will be given the power to set the rates of income tax and the thresholds at which these are paid for the non-savings and non-dividend income of Scottish taxpayers. This is the most significant tax in Scotland and a powerful redistributive tool.

The first 10 percentage points of the standard rate and the first 2.5 percentage points of the reduced rate of value added tax will be assigned to the Scottish Government—which means the Scottish Government will retain half the VAT revenue generated in Scotland. The clauses also give the Scottish Parliament the power to charge a tax on air passengers departing from Scottish airports and on commercial exploitation of aggregates in Scotland.

Turning to the welfare clauses, these provide for key welfare measures to be designed by and delivered in Scotland. The Scottish Government will be responsible for a number of benefits, including those for disabled people and carers. Issues relating to long-term unemployment will be tackled with specific consideration of local circumstances. As set out by the Smith commission, universal credit will remain reserved but the Scottish Government will have certain flexibilities, including the power to vary the housing cost element. Scotland will also continue to share the benefits and strengths of the UK-wide system for pensions, labour market benefits and Jobcentre Plus.

Additional clauses build on the already significant powers of the Scottish Parliament and Government in a range of other policy areas. To give a few examples, there are new powers for the licensing of onshore oil and gas extraction, powers to introduce gender quotas in respect of public bodies in Scotland, and powers to police the railways. Together, these clauses give greater responsibility for more decisions affecting Scotland to be made in the Scottish Parliament and paid for by revenue raised by the Scottish Parliament.

Later today, ministerial colleagues will host an event in Edinburgh to present the Command Paper and clauses to representatives of civic Scotland. This will signal the next phase in the work. The clauses are presented today in draft. They will require further preparation to make them ready for introduction in a Scotland Bill in the next Queen’s Speech, and it has been made clear that this will be taken forward by whoever leads the Government after the next general election.

To get the clauses fully ready the Government wish to engage with experts from civic Scotland, and we are committed to engaging with the Scottish Government and Her Majesty’s Opposition ahead of finalising the clauses for introduction. Questions of commencement and implementation will need to be answered, and in order to do this we will need to understand what the Scottish Government intend to do with the new powers.

It will be necessary for the fiscal framework to be agreed alongside the introduction of the Scotland Bill, and of course Lord Smith made further observations to which we need to pay heed. In some areas he recommends further devolution from the Scottish Parliament to local authorities in Scotland. He also recommended better working between the two Governments and the two Parliaments.

The Command Paper and draft clauses provide for a more responsible and accountable Scottish Parliament inside a strong United Kingdom. By publishing ahead of time, the Government are demonstrating that they are meeting their guarantee to the people of Scotland. The clauses ensure a set of proposals that do not cause detriment to the UK as a whole or any of its constituent parts. The Government remain committed to ensuring that Scotland and the whole of the United Kingdom continue to prosper from our single domestic market, our social union and the strength that comes from the pooling and sharing of risks.

People in Scotland made it clear that they want to keep the advantages of a UK pound, UK pensions, UK Armed Forces and a strong UK voice in the world. The clauses allow that to happen. This is what Scotland voted for. It is what all parties in the Smith commission process signed up to. And it is what we are delivering today. I commend this Statement to the House.”

18:05

[Lord McAvoy (Lab)]

My Lords, I thank the Minister for advance sight of his Statement. Today we again mark another milestone in the delivery of the vow made to the people of Scotland before the independence referendum. The timetable set out by my right honourable friend the Member for Kirkcaldy and Cowdenbeath during the referendum campaign has now been exceeded at every stage. A Command Paper on the process towards further powers appeared just 25 days after the referendum. The conclusion of the Smith commission and agreement by all five of Scotland’s political parties happened before St Andrew’s Day, just 10 weeks after the referendum. And today, ahead of schedule, as the Minister said, we see the draft clauses which will form the basis of the next Scotland Bill.

Before I turn to our response to the draft clauses and the Command Paper laid before the House today, I want to provide an absolute guarantee from these Benches. As my right honourable friend the leader of the Opposition has now made clear on a number of occasions, the powers agreed by the Smith commission will be delivered, and the next Labour Government will include a new Scotland Bill in our first Queen’s Speech. Labour created the Scottish Parliament in 1999, we supported more powers for the Parliament in 2012, and we will create a powerhouse Parliament with these new powers when we are in government.

Labour made it clear at the outset of the Smith commission process that we wanted a settlement that: first, respected the decisive outcome of the referendum, with a strong Scotland inside a UK where we pooled and shared risk; secondly, moved the maximum possible power from Westminster to the Scottish Parliament; and finally, did not make Scotland worse off. We are satisfied that the Smith commission delivered this outcome, and we can say with confidence that with these clauses we will be delivering home rule—the full powers Scotland needs.

As the Command Paper notes, the powers that these clauses will confer on the Scottish Parliament mean that it will control around 60% of spending in Scotland and retain around 40% of Scottish tax. This will make it the third most powerful devolved assembly in the OECD.

Before I turn to the detail of the clauses I wish to press the Minister—in a friendly way—on two areas that I hope he can address in his reply. The Command Paper makes explicit reference to the Barnett formula, and the agreement of all five parties during the Smith commission to the continuation of the formula. Can he provide just a bit more clarity about how the adjustment to the block grant will take place, and how discussions with the Scottish Government to agree this are progressing?

I also wish to press the Minister on an item on page 40 of the Command Paper, which reproduces the commitment in Smith that:

“MPs representing constituencies across the whole of the UK will continue to decide the UK’s Budget, including Income Tax”.

Given the Chancellor’s comments at the Treasury Select Committee on Tuesday, can the Minister provide an absolute reassurance that this part of the Smith agreement will be respected, as it is not addressed in the Command Paper?

I now wish to turn to the detail and the precise powers that the clauses will confer, specifically over job creation, tax and social security. The clauses confer full power over income tax and a number of other taxes. We welcome the clarity provided by the Command Paper on the areas to be devolved.

We welcome the extension of powers over VAT going further than the Smith commission, but will the Minister explain why this change was made? On welfare, the clauses have the effect of transferring extensive new powers to the Scottish Parliament, in the region of £2.5 billion of welfare spending, in addition to the powers to create new benefits. Will the Minister confirm that the clauses as drafted respect the spirit and letter of the Smith agreement and allow the Scottish Government to create new benefits? Will he also explain the process that will now be taken forward to examine in more detail the consequential arrangements to adjust the Scottish block grant to reflect what will now be devolved to the Scottish Parliament?

My honourable friend the Member for Glasgow East has already raised with the Secretary of State, and at Scottish Questions, our desire to see the job-creating powers of the Work Programme passed to Scotland at the earliest opportunity. It continues to be our view that this could be achieved using a Section 106 order to transfer responsibility to the Scottish Government immediately. This would reduce any uncertainty about the effect of continuing contracts in Scotland and would allow others to start to remedy what we regard as a failure of this Government’s Work Programme in Scotland, which sees only one in five people into a job. Will the Minister again consider bringing forward these powers now?

Finally, I would welcome more clarity from the Minister on the devolution of the Crown Estate. Will he clarify the process that will be followed to determine the transfer scheme, and how long this process might take? Will he also explain to the House how the Government will ensure that the Smith commission’s recommendation that the powers are further devolved to our island communities will be seen through? Many in our rural and island communities will want guarantees about the devolution of the Crown Estate and that powers will be passed to the islands, as both the UK and Scottish Governments promised during the referendum.

This is another milestone in Scotland’s home rule journey. Today, we on this side of the House welcome the Command Paper and the draft clauses. I am pleased that the Government have stated their commitment to further consultation with us and with Civic Scotland. There is still work to be done, and we commit to carry this work through if it is not concluded by the election and we form the next Government. On 18 September 2014, the clear will of the people of Scotland was expressed. The Smith agreement was the response to that call for change that we heard. Today, one thing is clear—Scotland will have a powerhouse Parliament.

[Lord Wallace of Tankerness]

My Lords, I thank the noble Lord very much for his comments and for his welcome of these clauses, which, as I think he acknowledged, implement ahead of time the spirit and letter of the Smith commission agreement. It is also particularly welcome that he indicated that any future Labour Government would take these clauses forward in the Queen’s Speech. It is important to note that that has been said today by all three parties which signed the pledge prior to the referendum, so those who might try to cast doubt on the commitment are just mischief-making. There is a very clear commitment on the part of all the parties that that should be done.

The noble Lord asked about the Barnett formula and the adjustment to the block grant. There is within the Command Paper, in the section dealing with the fiscal framework, an indication as to how the block grant will develop. As tax will be the responsibility of the Scottish Parliament, the amount of tax generated will be deducted from the block grant. The Smith commission said that there had to be some means of indexation; it was quite good at saying that, but did not actually set it out. However, this will be discussed. The Command Paper sets out how it is intended to be done with regard to the devolution of income tax agreed in the Scotland Act 2012. There clearly will have to be discussions and I am pleased that the Deputy First Minister, Mr John Swinney, has already indicated to my right honourable friend the Secretary of State a willingness on the part of the Scottish Government to engage in these discussions on the fiscal framework. Whereas at the moment roughly 90% of the Scottish Parliament’s funding comes from the Barnett formula, once the 2012 Act arrangements and the Smith proposals are implemented it will reduce to 35%.

The noble Lord also asked about MPs’ voting and accurately quoted the passage from the Smith commission. There clearly is an issue, which has been raised, not only in regard to tax but on a number of issues. He is aware that the Government published a Command Paper on 16 December that looks at those issues. It is very difficult sometimes to disentangle what is devolved and what is not devolved. I certainly remember when—I was the Minister responsible for higher education in Scotland—this Parliament passed laws in relation to tuition fees in England and Wales, which had very direct consequences for Scotland. Sometimes it is too simplistic to say that just because it is not devolved it does not have implications for Scotland. But there is a legitimate debate to be had.

The White Paper sets up a number of options that the Conservative Party put forward and ones that my own party put forward. I am sure that the noble Lord’s party has its own view on this. The important point to make on this, however, is that the proposals that we are discussing today stand alone. They are not contingent—as we have made abundantly clear on a number of occasions—on any arrangement or Motions that might come forward with regard to “English votes for English laws”, as it is sometimes referred to.

With regard to VAT, the noble Lord asked why we went beyond the Smith commission—as well as the first 10% of the standard rate we will also assign 2.5% of the reduced rate of VAT. The answer is that, obviously, if the reduced rate is 5% one cannot assign 10%. We did, however, think it was in keeping with the spirit that we would assign half the revenue that comes from the reduced rate of VAT.

The noble Lord asked about welfare and it is certainly our belief that we have honoured the spirit of the Smith commission. In this, he is quite right to say that some £2.5 billion of welfare spending will be devolved to the Scottish Parliament. He asked about the detail of that, which is clearly considerable; none of us shies away from that. A ministerial working group on welfare has been established, which will be jointly chaired by my right honourable friend Mr David Mundell, Parliamentary Under-Secretary of State, and Mr Alex Neil, who is the Scottish Government’s Cabinet Secretary with responsibilities in this area.

The noble Lord asked about the Work Programme. There have been discussions between his honourable friend the shadow Secretary of State for Scotland and my right honourable friend the Secretary of State on this. We take the view that this is a package. The only measure we have accelerated is the Section 30 order in relation to votes for 16 and 17 year-olds because of the necessity of getting that on the statute book in good time for the 2016 election. The Government support the devolution of the Work Programme but it must be done in a way that reflects the fact that Smith will mean that we have a shared welfare and unemployment support system between Scotland and the rest of the United Kingdom. That is why we believe it has to be taken forward as a package. We do not know what the Scottish Government would do, and therefore do not think it would be right to take the risk that there would be no alternative programme or adequate transitional arrangements if we were to do it in very quick order. That is why we believe it should go forward as a package.

Finally, we have tried to devise a way in which we can devolve the Crown Estate, as the Smith commission recommended. I certainly share the noble Lord’s view that devolution does not stop in Edinburgh. He might expect me to say that, as I am a former parliamentary representative for the Northern Isles, which had very strong views on the Crown Estate. But, of course, further devolution is a matter for the Scottish Parliament. It is important, however, to put on record and remind the House that in his report the noble Lord, Lord Smith of Kelvin, as well as talking about further powers to the Scottish Parliament, made the point that it was important that the Scottish Parliament looked at ways in which it could devolve further powers to Scotland’s many communities.

18:19

[Lord Forsyth of Drumlean (Con)]

My Lords, I thank my noble and learned friend for repeating the Statement. He said that this is what the people of Scotland voted for, but it is certainly not what I voted for. I regard it less as a milestone; it is probably more likely to be a tombstone for the United Kingdom if we continue in this way by making piecemeal constitutional reform.

I wish to ask my and learned noble friend about the draft clauses in a constructive manner. Clause 4 introduces the extraordinary new concept of a “super-majority”, whereby matters can be passed by the Scottish Parliament only by a two-thirds majority. That includes, according to the draft clause,

“the persons entitled to vote as electors at an election for membership of the Parliament”.

As I understand it, we have just given the Scottish Parliament the power to alter the election franchise for 16 year-olds. Before the ink is even dry on this, we are already changing it. Why are we introducing this concept of a two-thirds majority being required to alter,

“the number of constituencies … the number of regions …the number of regional members”,

and,

“the systems by which members of the Parliament”,

are to be introduced? Is that going to apply to Westminster and the Welsh Assembly? This is a huge constitutional innovation. What is the justification for it?

To reflect the points made by the noble Lord, Lord McAvoy, why is there nothing in these draft clauses that sets out how the Barnett formula funding will be affected by the implementation of these powers? Surely that has to be there in primary legislation so that there is no question about how that will operate. As to the narrative on the paper, all that it says about funding is that,

“the Scottish Government’s Barnett-based block grant will be reduced to reflect the tax revenues that the UK Government will forgo as a result of devolution”.

What on earth does that mean?

[Lord Wallace of Tankerness]

My Lords, picking up on that final point, it means what it says: if there is devolution of income tax, which we are proposing to implement, the UK Government—the Revenue and the Treasury—will not receive the income tax receipts from Scotland on earned income and therefore the block grant will be reduced accordingly. That will be indexed. Box 1 on page 29 of the Command Paper describes how this is intended to work in terms of what we have already passed with regard to the Scottish rate of income tax under the 2012 Act. The noble Lord will see how it is intended to work with regard to the proposal that Parliament has already passed, one that can proceed for income tax as a whole and, indeed, for other taxes.

With regard to the two-thirds majority, it is not such a novel procedure as my noble friend suggests, because, although I suspect that he opposes it, it was nevertheless passed by this House when it introduced the Fixed-term Parliaments Act early in this Parliament with regard to any early general elections that might be called in the other place. We are actually implementing what the noble Lord, Lord Smith of Kelvin, recommended, which is that for matters as fundamental as the franchise, the number of constituencies and the electoral system we will provide “an adequate check”, as he put it in his commission’s report, on the Scottish Parliament. After all, it is a unicameral Parliament and a Government of a single party should not ride roughshod over the interests of other parties on a simple majority and completely change the electoral system. That is why the commission believed that on matters as fundamental as that, given that that power is being transferred from this Parliament to the Scottish Parliament, there ought be an adequate safeguard—and that safeguard is a two-thirds super-majority.

[Lord McConnell of Glenscorrodale (Lab)]

My Lords, first, I welcome very much the announcement that a joint arrangement has been put in place between the UK Government and Scottish Government on the implementation of the welfare provisions because that is an area in which there could be real trouble ahead. I wonder whether a similar mechanism is already in place, or is likely to be in place soon, for the recommendations on improved working between the Scottish Government and the UK Government and between the Scottish Parliament and the UK Parliament. I should be interested to hear the Government’s response on that. Secondly, the power to vary taxation—not the power to retain it—falls quite far short of the spending power of the Scottish Parliament under these proposals. Given the current expectations and instability that exist in Scotland and throughout the union, do the Government really believe that this is a recipe for stability in the medium term?

[Lord Wallace of Tankerness]

My Lords, the noble Lord raises an important point about the other recommendations in the Smith commission report on better intergovernmental and interparliamentary relationships. This is something which the Calman commission looked at although, regrettably, nothing much seemed to come of it. At the meeting of the joint ministerial committee which took place in December, the Prime Minister and the First Minister discussed these matters and there was an agreement, as a start, on looking at how to improve the current memorandums of understanding to address that issue. On parliamentary matters, there was a recommendation that the Presiding Officer of the Scottish Parliament should have an early meeting, after these clauses were produced, with Mr Speaker. I am not sure whether that is in place but I endorse the view that there ought to be better parliamentary relationships, at least for better understanding and for less of the misunderstanding that can sometimes arise.

In answer to the second part of the question, this is an enduring settlement. As was reflected in the comments of the noble Lord, Lord McAvoy, from the Opposition Front Bench, 60% of government spending in Scotland will be the responsibility of the Parliament and 40% of the tax raised in Scotland will contribute to that spending. In each case, that is twice the OECD average for devolved administrations. We are building and creating an enduring settlement, but the noble Lord is right to say that it will require a lot of work and engagement between the respective Governments in terms of both the fiscal framework and the welfare provisions.

[Lord Stephen (LD)]

My Lords, despite the low-key nature of the title of today’s Statement, does my noble and learned friend agree that these detailed clauses are of crucial importance to the future constitutional arrangements for the whole of the United Kingdom? They not only deliver on the vow of the party leaders, but they deliver, for Scotland, the most radical home rule measures ever seen in this country. These measures are now supported, quite remarkably, by the leaders—and the vast majority of the membership—of the major parties in all the Parliaments of the United Kingdom. Does he agree that it is vital that these measures must now be delivered, not only in the Queen’s Speech in May of this year but also in an Act of this Parliament in a new Scotland Act that should be delivered, if at all possible, by the end of 2015? I wonder whether my noble and learned friend can comment on the timetable for the shortest possible time for delivery of these proposals into legislation. Finally, does my noble and learned friend accept that, after home rule for Scotland, the next challenge is to deliver real devolution of powers, right across our regions and nations, in a federal United Kingdom?

[Lord Wallace of Tankerness]

My Lords, I am sure my noble friend would expect me to agree and I do, as my own party aspires to a federal United Kingdom. He rightly used the words “home rule”. This has been a campaigning issue for our party for more than 100 years. I am sure that Mr Gladstone would be very proud of what we have delivered today. He is right that we need to move on from here. There is a lot of work still to be done and we will ensure that today is not the end of the process. At official and ministerial level there is recognition of what more must be done so that a Bill is in preparation and ready to be brought forward after the Queen’s Speech following the election. The legislative timetable is not entirely in my hands, but it must be feasible to deliver this by the end of this year or, if not, in the early months of 2016. Having done it, I think all of us would want the issue to be about how the Scottish Parliament is going to use these powers. For so long we have had debates about what the powers are, whereas many people are asking how the powers can be used to improve the lot, and the social and economic well-being, of the people of Scotland.

Finally, I agree that the devolution of power is something which my noble friend and I in our party aspire to. But, as I have already said, the comments coming from some leading members of the Scottish National Party MSPs in recent weeks about centralising power and the attacks that there have been on local government in Scotland are very alarming. We have seen too much centralisation in the last two or three years in Scotland. I very much hope that a fresh wind of decentralisation will sweep through Scotland.

[Baroness Adams of Craigielea (Lab)]

My Lords, I also welcome the Statement that the noble and learned Lord has made today. I am glad to hear him say once more that all five parties signed up to this. But he will forgive me a little wobble because, on the day after the Smith commission reported, four SNP councillors in Renfrewshire burned that report outside the council offices. I have to wonder just what the commitment of the SNP is to this agreement. Will he clarify further what discussions have been made on further devolution to local Government? As he has already said, the Scottish Parliament has already sucked much of the power from local government to the centre. How far have the talks got on devolving some of that power back?

[Lord Wallace of Tankerness]

Any of us following the Scottish media, and probably even further than the boundaries of Scotland, saw that appalling scene when the report was burned. In fact, I have an instinctive gut horror at people burning any literature or writing and I find it very insidious. The SNP members of the commission signed that report and should be held to that. If they start complaining, they should be reminded of that. Nor was it signed at a low level: the Deputy First Minister signed on behalf of the SNP, along with Miss Fabiani. Therefore, it was signed at a high level and backsliding will be exposed.

What can be done about local government is a matter for the Scottish Parliament, which we can pursue within our respective parties. I do not think that it is really a matter for this Parliament to start legislating for local government in Scotland but we can create some of the mood music. I know from debates we have had in your Lordships’ House that from all parts of the United Kingdom and all parts of the House there has been a strong view of the need to decentralise more power in this country.

[Lord Cormack (Con)]

My Lords, if we are to have stability and if this is going to be an enduring settlement, would it not be reasonable, particularly bearing in mind what the noble Baroness said a few moments ago, to have within the final Bill a clause which rules out a referendum for at least 10 years?

[Lord Wallace of Tankerness]

My Lords, my noble friend will recall that the referendum required a Section 30 order to be passed by this House. It was certainly the view of the United Kingdom Government that there was no legal competence within the Scottish Parliament to do so and there is nothing in these draft clauses that would change that. It would still be a matter for this House and the other place to pass a Section 30 order if there were to be a further referendum.

[Lord Maxton (Lab)]

My Lords, unlike the noble Lord, Lord Forsyth, I am a supporter of devolution and have been for a very long time. I also want to make it clear that, like the noble Lord, Lord Forsyth, I voted by post; I voted before the vow; and I did not vote necessarily for further change or devolution to Scotland. I voted no to the simple question of whether Scotland should be an independent country. That is my first point.

My second point is that it is all right to say, “It’s a matter for the Scottish Parliament and the Scottish Government to deal with local government” but that was part of the Smith commission report, which the SNP accepted. What guarantees does the Minister have from the Scottish Government that they will implement further devolution to local government rather than just say that it is a matter for the Scottish Government and the Scottish Parliament to do that? It is not enough to say that. It has to be a guarantee before we start legislating on anything else.

[Lord Wallace of Tankerness]

My Lords, I too voted by post before the vow was made. However, it is also fair to say that the vow raised an expectation, and if a vow which was made was not honoured then that would be a serious destabilisation of the United Kingdom. With regard to the second point on devolution from the Scottish Parliament, in fairness that appears not in the report itself but in the foreword by the noble Lord, Lord Smith. I seem to recall that when he delivered his report he indicated that those were personal reflections, and those reflections have chimed well with many people. That is why it is incumbent on us within our respective parties to try to make sure that the drive for greater decentralisation and devolution within Scotland is carried forward.

[Lord Steel of Aikwood (LD)]

My Lords, the speed with which the Secretary of State for Scotland and others have managed to put together this package is quite remarkable. It is certainly very welcome that the first signs are that the Scottish Government will co-operate in implementing these proposals. In the previous 10 days I have come across a number of people who voted yes in the referendum, who feel now that they had a narrow escape from what could have been a disaster. We could be sitting here discussing an independent Scotland based on oil revenues which are nothing like those anticipated at the time of the referendum. Therefore, is the noble and learned Lord surprised to learn that a lot of people are now realising that we had a very narrow escape? Finally, is there any sign yet that we will get an all-party agreement on a constitutional commission or convention after the election?

[Lord Wallace of Tankerness]

My Lords, my noble friend is right to say that we had a very narrow escape. I dread to think what kind of discussions we would be having now if the vote had gone the wrong way on 18 September. There have been indications of support across parties with regard to a constitutional convention, although I do not think that there is any concrete proposal in place, or any plans at the moment to set one up prior to the election. I endorse my noble friend’s comments about the speed involved. I pay particular tribute to officials in many departments of government, not least in the Scotland Office and in my own office. They were given 37 working days. When the pledge was made with the deadline of Burns Night no one had worked out that it was a Sunday, so that de facto reduced the number of days that were available. They did a tremendous amount of work, and I am very conscious too that there is more work to be done.

[Lord McFall of Alcluith (Lab)]

My Lords, like other noble Lords I voted by post, and I voted for the fiscal integrity of the United Kingdom. I was very pleased to see that the Smith commission unanimously endorsed that fiscal integrity, whereby there would not be two classes of Members of Parliament, and said explicitly that all Members should vote on the Budget. I am asking the Minister a simple question: is that the case? Will all Members vote on the Budget: yes or no?

[Lord Wallace of Tankerness]

My Lords, I cannot say what will happen in a future Parliament. All Members will vote on the Budget that will take place in this Parliament, for which I have collective responsibility as a member of the Government. I do not know what will happen in a future Parliament. There is a debate, but the noble Lord is right to point out what the Smith commission said on that. The noble Lord knows as well as anyone just how difficult it would be on—for example—income tax. That is a shared tax because, while rates and bands will be devolved, personal allowances will remain a matter for the United Kingdom Parliament. The definition of income and what constitutes a tax base will be a matter for the United Kingdom Parliament, and I do not know how to disentangle that.

[Lord Empey (UUP)]

My Lords, is it not the case that this is the fourth set of constitutional proposals in the past 12 months? Is this therefore not a case of constitutional crazy paving where there is no plan? Each proposal is a different shape and serves a different purpose. The point I want to concentrate on is the first part of these clauses covering the issues of the constitutional composition, and in particular the Sewel convention. When is a devolved Parliament not a devolved Parliament? As a result of these clauses, can the Minister confirm that this Parliament will still be able to vote and decide on devolved matters if and when it felt that that was required?

[Lord Wallace of Tankerness]

My Lords, what we have done is put the Sewel convention on to a statutory basis. The noble Lord can see how it has been set out, although it may not immediately be clear from the clause. However, it has been added after Section 28(7) of the Scotland Act 1998, which makes it clear that the Westminster Parliament can still legislate.

[Lord Lexden (Con)]

My Lords, is it not obvious that today’s proposals are bound to increase the demand for English votes for English laws, on which the Government have produced no firm proposals at all? As to Mr Gladstone and home rule all round, that was not his plan. It was the brainchild of the great unionist, Joe Chamberlain.

[Lord Wallace of Tankerness]

I think he changed his mind after that, but I salute my noble friend’s historical knowledge. There is a legitimate issue here. As I have indicated, last December the Government published a Command Paper, but there would not appear to be any consensus. Three versions have been produced by the Conservative Party, including one from my noble friend Lord Norton of Louth, and there was one from the Liberal Democrats. It is clear that there is no consensus, but there is consensus on what we are proposing today.

Terrorism Act 2000 (Proscribed Organisations) (Amendment) Order 2015

Thursday 22nd January 2015 Lords Chamber

Motion to Approve

18:40

Moved by

[Lord Bates]

That the draft order laid before the House on 19 January be approved.

Relevant document: 19th Report from the Joint Committee on Statutory Instruments

[Lord Bates (Con)]

My Lords, the appalling attacks in Paris earlier this month resulted in the deaths of 17 people and a number of injuries. In December, we saw deadly and callous attacks in Sydney and Pakistan. There can be no doubt that the terrorist threat we face is grave and relentless. The threat level in the UK, which is set by the independent Joint Terrorism Analysis Centre, remains at “severe”. This means that a terrorist attack in our country is highly likely and could occur without warning.

We can never entirely eliminate the threat from terrorism, but we are determined to do all that we can to minimise that threat in the UK and to our interests abroad. Additionally, it is important that we demonstrate our support for other members of the international community in their efforts to tackle terrorism wherever it occurs. Proscription is an important part of the Government’s strategy to disrupt terrorist activities. The two groups that we propose to add to the list of terrorist organisations, amending Schedule 2 to the Terrorism Act 2000, are Jund al-Aqsa, JAA, also known as the “Soldiers of al-Aqsa”, and Jund al Khalifa-Algeria, JaK-A, also known as the “Soldiers of the Caliphate”. We propose to add these groups to the list of international terrorist organisations, amending Schedule 2 to the Terrorism Act 2000. This is the 17th proscription order under that Act.

As noble Lords will appreciate, I am unable to comment on specific intelligence. However, I can provide a brief summary of each group’s activities in turn. Jund al-Aqsa is a splinter group of the al-Nusra Front, ANF, al-Qaeda’s affiliate in Syria. The group has acted against the Syrian Government since September 2013. JAA is a foreign fighter battalion made up of a variety of nationalities as well as a native Syrian contingent. The group is primarily operating in Idlib and Hama. JAA is believed to be responsible for the attack on 9 February 2014 on the village of Ma’an, killing 40 people, of whom 21 were civilians. In July 2014, JAA supported the Islamic Front in an operation to seize Hama military airport. In August 2014, ANF released a document summarising its operations, which included details of an attack targeting a resort hotel conducted in collaboration with JAA.

Jund al Khalifa-Algeria is an Islamist militant group believed to be made up of members of dormant al-Qaeda cells. JaK-A announced its allegiance to the Islamic State of Iraq and Levant, ISIL, in a communiqué released on 13 September 2014. In April 2014, JaK-A claimed responsibility for an ambush on a convoy which killed 11 members of the Algerian army. On 24 September 2014, the group beheaded a mountaineering guide, Hervé Gourdel, a French national. The abduction was announced on the same day as a spokesman for ISIL warned that it would target Americans and other Western citizens, especially the French, after French jets joined the US in carrying out strikes in Iraq and on ISIL targets.

Section 3 of the Terrorism Act 2000 provides a power for the Home Secretary to proscribe an organisation if she believes it is currently concerned with terrorism. If the statutory test is met, the Home Secretary may exercise her discretion to proscribe the organisation. In considering whether to exercise this discretion, she takes a number of factors into account, including the nature and scale of the organisation’s activity and the need to support other members of the international community in tackling terrorism. In effect, proscription outlaws a listed organisation and makes it unable to operate within the UK. Proscription can also support other disruptive activity such as the use of immigration powers, including exclusion, prosecutions for other offences, EU asset freezes and messaging to deter fundraising and recruitment. Additionally, assets of a proscribed group are liable to seizure as terrorist assets.

18:45

The Home Secretary exercises her power to proscribe only after a thorough review of the available relevant information and evidence about the organisation. This includes open source material, intelligence material and advice that reflects consultation across government, including with the intelligence and law enforcement agencies. The cross-government proscription review group supports the Home Secretary in her decision-making process. Her decision to proscribe is taken only after great care and consideration of the particular case, and it is appropriate that it must be approved by both Houses. I beg to move this order.

[Lord Marlesford (Con)]

My Lords, I support this order, as I would any measure that will protect us against the serious and growing terrorist threat that we face. The Joint Committee on Statutory Instruments has noted but not commented on the report, but I would like to make one or two points.

I shall refer in particular to the Muslim Brotherhood. It has been well described as the trunk of the tree that represents political Islam. The root is probably the Wahhabi sect. The branches of the tree include buddies such as those named by my noble friend, as well as other terrorist organisations, spreading from al-Qaeda, Boko Haram and, above all, ISIS. Together, these branches form an international fascist movement specialising in spreading terror and even seeking to dominate Europe—as well, of course, as Muslim lands.

In April last year, my right honourable friend the Prime Minister ordered an inquiry into the Muslim Brotherhood by Sir John Jenkins, Her Majesty’s ambassador to Saudi Arabia. As my noble friend will know, the Muslim Brotherhood is at present in open armed conflict against the Egyptian Government of President Sisi, particularly in Sinai. The Muslim Brotherhood is also politically active in the UK. Indeed, I understand that a summit has been planned in London on 12 February under the umbrella of an organisation called Cordoba, of which the chair, a Mr Tikrit, is well known to security circles in both Washington and London. I also understand that Cordoba has recently had its bank accounts closed by HSBC.

I hope that my noble friend will be able to give some indication of when we shall be made aware at least of the conclusions of the Jenkins inquiry into the Muslim Brotherhood.

[Baroness Smith of Basildon (Lab)]

My Lords, I thank the Minister for his explanation and for writing to me earlier in the week with further information. I am genuinely grateful; like his predecessor, who is also here tonight, he has always been willing to engage with us and assist us by providing information. He will appreciate that we do not have access to the same security information as the Government and we take the information given by Ministers on trust. We support this order and recognise the need to have such protections in place. The judgment that we make has to be based on our trust in Ministers and the information that they provide to the House. The information given here is quite clear.

I will raise just two issues with the noble Lord, which I have mentioned to him. One is about the Prevent programme. It is quite clear when we hear of cases like this, of extremism and the dangers and fear it brings and the horrific terrorist acts that are inflicted, we must do everything we can to deter young people from becoming radicalised to the extent that they wish to commit such violence in this or any other country. The Counter-Terrorism and Security Bill, which we are currently discussing—it has two days in the Chamber next week—addresses just that issue and how important it is to deter young people from being caught up in extremist views. It is a question of extent: holding views is one thing, but if that leads to terrorism and engagement in terrorist activities, clearly that is extraordinarily serious and has to be tackled.

One way of doing that is through the Prevent programme, which the Bill places on a statutory footing, and we welcome that. But we need to think long-term on these issues. Over the past few years the funding for Prevent has been cut from £17 million when we were in government to less than £3 million. If we are serious about tackling such issues, we cannot think, “What’s the next issue? What’s the one after? What’s happening next week or next month?”; we have to think long-term. I was appalled that at one point the number of local authorities receiving funding from Prevent fell from 90 to just 23, although I think that is improving now. We support Prevent being on a statutory footing but I urge some longer-term thinking to ensure that we tackle this at source and prevent any more of our young people being caught up in such abuse of their religion.

I told the Minister as we came into the Chamber that I would briefly raise this second matter. I mentioned the issue of trust and us not having access to the same information as the Government. In this case, I think we do have information. I was reading the Hansard of the debate last night in the other place and was absolutely horrified to see that there is a Twitter account for JAA, glorifying violence and terrorism and directing readers to other places they can get such information. It is an English Twitter account, in English; there are links to the Arabic site as well. This account has more than 14,000 followers. My honourable friend Diana Johnson, the shadow Minister, raised this last night, and I am appalled that when I looked on Twitter today, just minutes before I came into the Chamber, I saw that that account is still active.

If we are serious about dealing with young people and tackling such terrorism, we have to look at how social media is being used and use all the powers available to us to do something about it. Surely the Government are aware of this. The Minister will probably say the same as the Minister said last night—that it has been reported to the appropriate body, which is dealing with it. However, there are powers in place and we have to look to those who engage with social media and those responsible for it. I do not expect to be able at the click of a button to access a Twitter account glorifying such horrendous terrorist acts.

I make a plea to the Government. The powers are there. Referring this problem to a body that is going to look at it and think about it is not good enough, and I hope that by tomorrow if I look at that account it will be closed down.

[Lord Judd (Lab)]

I very much took my noble friend’s point about looking at this long-term and strategically. Will she re-emphasise that there is no way in which we can look at this effectively in the long term, whatever firm action must be taken now, unless we take very seriously why young people feel attracted to join these movements and what the real causes are in their minds that lead them on to this unfortunate path?

[Baroness Smith of Basildon]

I entirely agree with my noble Friend. I think the aim of the Prevent programme, which clearly has not been as successful as we would want it to be to date, is to ensure that we engage with young people and with those in positions of authority, to whom young people listen. I do not know whether my noble Friend saw the account that I did last week, of a young woman who went to, I think, Syria with her child. Her family dropped her off at the airport thinking she was flying to Spain. She went out to Syria, and now she is trying to return home, completely disillusioned by what she has seen out there. She thought she was going to support a cause, and she realised what a terrible mistake she had made. We do not want young people making that mistake, and we want to ensure that there are preventive programmes in place.

Part of the Bill, I have to say, is what the Government are trying to achieve, but, as my noble Friend said, we must think longer term and realise how serious this is for the consequences, not only for the security of the nation but also for those young people themselves, who in many cases have been abused and end up disillusioned and disengaged. That is not what we want for young people.

I say to the noble Lord that we support this order. I repeat my gratitude to him for keeping us informed and writing to me beforehand.

[Lord Elton (Con)]

Does the noble Baroness agree that we should turn our attention to the abuse of freedom of speech? I think that it provokes enormous anger in people otherwise well disposed to a democratic society when they see people they regard as divine slandered and mocked in public media. The noble Baroness looks puzzled, but I am talking about the “Je suis Charlie” episode. I have absolute disgust at the reaction by which the people who were offended by this showed their anger, but I have profound sympathy with their anger. It seems to me that they have been provoked, and are being provoked, over generations, and I think moderation in all things is something that we must try to instil in our people and in our young people.

[Baroness Smith of Basildon]

My Lords, I think that respect for others and others’ views, including on religion, is very important. I think that respect, regard and politeness—not wanting to offend others—is important. It is very difficult, however, to draw the line, and there can be nothing at all that can justify or excuse the behaviour of those who murdered the journalists. If Paris taught us anything, it taught us that, when the crowds came out in Paris, where you had people from all faiths and none linking arms, walking through the streets, they were standing together against violence, but they were also standing together for freedom and democracy and the right to think and speak as they wish. There is, however, a difference between showing that we stand for freedom and making clear that we abhor such violence in any circumstance, and that there can never be any excuse or reason for it.

I was about to say to the noble Lord before that intervention that I support the order, but he will have heard the comments around your Lordships’ House tonight that this is not just about describing groups; it is a battle for hearts and minds as well.

[Lord Bates]

My Lords, I am very grateful to all noble Lords who spoke and contributed in the short debate that we have had on this important issue. I am particularly grateful to the noble Baroness, Lady Smith, for her contribution. What we must do is work across parties to address these important issues. I appreciate that so doing requires a degree of trust. That is the reason I want to set out the safeguards that are there—our own checks and balances and also the evidence, as far as we are able—and that are behind the proposals which we are making and debating today.

The noble Baroness referred particularly to the importance of prevention and talked about hearts and minds. We have the Prevent strategy in place. I noted her comments about funding, although the figure that I have in front of me is £40 million for 2014-15. However, the Prime Minister has recognised that, in view of the increased threat, we need to put extra money behind this effort. He pledged a further £130 million. A large element of this will go to the agencies and security services, which are in the front line of keeping us safe, but there will also be an element for working with the Channel programme and Prevent to try to prevent people being drawn into extremism and radicalisation.

19:00

The noble Baroness’s points about social media were very fair and we take them on board. Some 72,000 pieces of unlawful, terrorism-related content which encourage or glorify acts of terrorism have been removed in co-operation with the internet service providers and the companies concerned. In this particular case, the proscription has not yet come into effect. If your Lordships agree, it should take effect from tomorrow. Before the noble Baroness intervenes, perhaps I may offer a quick update in case it assists her and addresses the point that she raised.

We recognise that the material is still there. We are the first Government to take this action against these two groups. The Twitter account to which the noble Baroness referred is run by an American corporation. The Twitter and Facebook accounts of both groups, and the YouTube channel, have all been assessed and found to be in breach of the Terrorism Act, as she rightly pointed out. These have been referred to the companies concerned, which is the procedure in the first instance. They have also been sent to the Counter Terrorism Internet Referral Unit, which will monitor the action taken. Some content from both groups is in Arabic and the Counter Terrorism Internet Referral Unit is reviewing translations of that material, but we have made very clear what we think of those organisations and we expect Twitter, Facebook and YouTube to act responsibly in these cases—as, in fairness, they have in others.

[Baroness Smith of Basildon]

I agree with everything that the Minister has said. My only question is: did he say or hint at the beginning of his comments that the reason that no firm action other than referrals has been taken at this stage was that this order had not gone through? My understanding was that the action which was taken under the Terrorism Act was not dependent on the proscription order.

[Lord Bates]

The noble Baroness is absolutely right. The content contravenes the Terrorism Act 2000. Action should be taken whether or not proscription has taken place.

My noble friend Lord Marlesford referred to the Muslim Brotherhood. As he said, this issue is under review. The Prime Minister commissioned an internal review of the Muslim Brotherhood. The review considered its philosophies, activities, impact and influence on our national interests at home and abroad. This was an internal review intended to inform government policy. We expect to be able to say something publicly about its conclusions in due course. I appreciate that that may not go quite far enough for my noble friend, but suffice it to say that the work of Sir John Jenkins has been completed and is now being reviewed.

We are conscious of the particular nature of the Muslim Brotherhood, which is a party that is in government in some countries—I think in Morocco, at least. We need an extra level of due diligence in reviewing this, but we certainly take on board my noble friend’s point. If we did not think that there was a problem, we would not have asked Sir John Jenkins, a distinguished diplomat with considerable experience in the Middle East, to undertake a review. We look forward to that review taking place and to being able to say more about it.

Although the interesting contributions made by my noble friend Lord Elton and by the noble Lord, Lord Judd, were not particularly directed at me, I will say in passing that I think we all feel that respect and courtesy are very important elements. When people make light of the faith that I adhere to, I find it hurtful and not comfortable. However, there is a world of difference between that approach and taking the actions that we saw in Paris. I thought that one of the most heroic—if I may use that term carefully—parts of what happened were the actions of the Muslim personal protection officer to the journalist who had been under threat. He lost his life at the hands of the terrorists. I am sure that he was as offended as any other person of his faith would have been, but he chose to defend their right to speak freely.

We have put forward the arguments for proscription of these groups and demonstrated our condemnation of their activities and our support for the efforts of members of the international community to tackle terrorism. I commend this order to the House.

[Lord Judd]

I thank the noble Lord for his response to the points that were made; he is always very helpful in that respect. With regard to the Muslim Brotherhood, does he agree that it would be absolutely essential for the Government, in considering their response to the report, to take into account the coup in Israel, what has happened since and, in particular, the acute anxieties about the state of human rights in Egypt?

[Lord Bates]

Sir John Jenkins is someone who has impeccable credentials in understanding that part of the world. I am sure he will take all those factors into account and will review it.

Motion agreed.

Care of Churches and Ecclesiastical Jurisdiction (Amendment) Measure

Thursday 22nd January 2015 Lords Chamber

Motion to Direct

19:07

Moved by

[The Lord Bishop of Derby]

That this House do direct that, in accordance with the Church of England Assembly (Powers) Act 1919, the Care of Churches and Ecclesiastical Jurisdiction (Amendment) Measure be presented to Her Majesty for the Royal Assent.

[The Lord Bishop of Derby]

My Lords, this Measure makes a number of amendments to existing legislation concerned with the care of churches and the exercise of jurisdiction by the ecclesiastical courts. The amendments will simplify the operation known as faculty jurisdiction, the legal framework under which the consistory court of a diocese regulates the carrying out of works and other proposals to its churches and churchyards.

The faculty jurisdiction is a reflection of the Church of England’s understanding that decisions about what happens in and to church buildings and churchyards are not simply a matter for local congregation decision. It is important both for the safeguarding of the Church of England’s historic buildings and for maintaining the confidence that the Government place in it in allowing it to operate its own procedures, rather than being subject to the secular consent procedure for listed buildings. It also has a role in ensuring that any proposals concerning the church or churchyard are consistent with the church’s doctrine and take proper account of the interests of all those whom our parish churches exist to serve.

The last major overhaul of faculty jurisdiction was carried out in the 1980s and resulted in the Care of Churches and Ecclesiastical Jurisdiction Measure 1991. In 2012, the Archbishops’ Council established a faculty simplification group to look at the operation of the system. It carried out extensive consultation; there was overwhelming support for the existence of the faculty jurisdiction, but issues were raised about the amount of bureaucracy. It was sometimes felt to be resource-intensive and not easy for some to engage with.

Three key proposals for streamlining the process are the basis of this Measure. The first is the establishment of an agreed national list of minor works not requiring a faculty. The second is the establishment of an agreed national list of routine works which would require some input from the diocesan advisory committee and the approval of the archdeacon, but which would not need to go through the full faculty procedure. The third is a more streamlined application process from early-advice stage through to the formal faculty petition—that is the application to the consistory court—with a more disciplined timeframe for routine cases.

That is the nature of the Measure. Something that does not need to be in the Measure is the development of an online system for applications. The most significant provision, Section 5, implements the proposal that there should be nationally applicable lists of minor and routine works that can, subject to certain conditions, be undertaken without a faculty. We believe that that will significantly reduce the burden on churchwardens and others who volunteer a huge amount of their time to maintain and develop our 16,000 parish churches as living centres of worship and mission.

Deregulation will be accompanied by effective safeguards to ensure that the nation’s heritage continues to be protected as effectively as it is currently. A range of matters are expressly excluded from the deregulation provisions. In particular, any works which would affect the character of a listed building are outside the scope of the regulation and would always have to go through the full faculty procedure—which means that, in those sensitive cases, English Heritage and other national amenity societies will continue to be consulted, and they and other interested parties will continue to have the right to object and to be heard by the consistory court. The Measure, and the rules made under it, will distinguish those cases where no or only light-touch regulation is needed from cases which require careful consideration, including consultation and the right to object. The desire is to move to a more flexible system with proportionate means of proceeding.

Other provisions of the Measure include, in Section 4, simplifying the consistory court being able to grant faculties allowing free-standing buildings to be put up on disused burial ground, subject to certain conditions. Section 7 tidies up existing provision about appeals and which appeal courts hear which type of appeal. Section 8 provides for the appeal court to intervene in proceedings in the consistory court if there has been an inordinate delay—although it is hoped that the existence of that power will mean that it does not need to be used.

The Measure introduces some practical, balanced and sensible reforms which should mean that the faculty system continues to serve its purpose effectively but, at the same time, does not impose an undue burden on those who we rely on in the parishes to look after our churches. I beg to move.

[Lord Marlesford (Con)]

My Lords, I welcome what has just been described by the right reverend Prelate. I declare two interests. I am a churchwarden of St Andrew’s Church, Marlesford, which is a grade 1 church. Secondly, I am president of the Suffolk Preservation Society. Suffolk is a county which is blessed with an enormous number of extremely beautiful churches.

I am sure that the reform is very sensible and useful but I would just make one or two very small points. Small things can matter greatly. An example that I would give is churchyards and tombstones. If you have an historic, highly listed church and a traditional churchyard, often with very beautiful tombstones with a particular sort of stone generally used, it can be most unfortunate if the wrong sort of stone is put in. I would like the power to intervene, if necessary, to be delegated to the parochial church council and the rector of the church or benefice concerned. I am not suggesting that the consistory court is necessary.

There are other small things. Again, to take my own church, the church wall is made of flint and is in terrible condition. We are hoping to raise some money to repair it. One thing we were told was, “That is going to need a faculty”, and of course getting a faculty is quite an expense. You have to have the diocesan architect and all that, which adds to the cost. I hope that could be an example of where, provided the church wall is repaired in the vernacular style—the same style in which it was built—it could be done without bureaucracy. Having said these things, I welcome what the right reverend Prelate has said.

17:59

[Lord Judd (Lab)]

My Lords, I want to stress my real gratitude to the right reverend Prelate for the clarity and brevity with which he presented these proposals. I am a member of the Ecclesiastical Committee as are other Members of the House present today. I think we would all agree that it was really encouraging to have the complete unanimity of the committee along with the warmth with which it endorsed the proposals. This was under the leadership and chairmanship of the noble and learned Lord, Lord Lloyd of Berwick.

[Lord Cormack (Con)]

My Lords, first, I commend the right reverend Prelate for the manner in which he introduced this Measure, which of course has my support as it has the support of the noble Lord, Lord Judd, and my noble friend Lord Marlesford. I declare an interest as the vice-president of the Lincolnshire Churches Trust. I want to refer briefly to a matter which I raised in your Lordships’ House when I introduced a debate in June of last year on the importance of the parish church. I talked about the terrible problem of bats. I am afraid that people sometimes express hilarity when one talks about bats. They go off about bats in belfries, and all the rest of it. Even in another place last Friday, when Mr Christopher Chope introduced a Bill to try to tackle this problem, there was some light-hearted banter which did not recognise the terrible danger to the fabric of our churches from bats. Some of the finest works of medieval art are in our churches: wall paintings, monuments et cetera. The corrosive effect of bat urine and bat droppings is in fact gradually destroying many of these wonderful artefacts. This point was highlighted in a powerful letter in the Times only last week signed by Professor Jean Wilson, who is the president of the Church Monuments Society, and a number of other eminent authorities, including the president of my own society, the Society of Antiquaries. It is a real, serious and continuing problem.

I very much hope that it is a problem that will be addressed in a future Measure, which will be presented as elegantly and concisely as the right reverend Prelate has presented this one. I hope that we can tackle this in the very near future because not only is it a real and continuing problem in the way that I have described but it is making it virtually impossible for some churches to be used for proper worship. One has had all manner of disturbing letters, such as that about the couple kneeling to receive the sacrament and receiving bat droppings. The priest administering the sacrament was similarly affected. I cannot stress enough what a problem this is and I would be grateful for a brief, and I hope sympathetic, response from the right reverend Prelate.

[Lord Elton (Con)]

I assured the right reverend Prelate that I would say only “Hear, hear”. In fact, I am going to pinch his “Hear, hear” and say it to my noble friend Lord Cormack because we have suffered with bats, too, and it really is a serious problem. I am not sure whether it is the subject of this Measure or the proper place to raise it but I am very glad that it has been raised.

[The Lord Bishop of Derby]

I thank noble Lords for their interest and engagement and for their churchwardenship and leadership.

As regards tombstones, authority will in general continue to be delegated to incumbents provided that relevant criteria are met. As noble Lords will know, because the external appearance of the churchyard is so important we have to look at the types of stone used.

On the repairs to walls and so on, quite a lot of those issues will be deregulated but we have to remember that, if they are to change the appearance of the building or its presentation, that is a matter for wider concern and consultation.

I thank the noble Lord, Lord Judd, and the Ecclesiastical Committee for processing this so well and agreeing, so powerfully, to support it. I am grateful for that.

As regards the bats, at the moment they are—as the noble Lord, Lord Cormack, will know—largely outside the scope of this Measure and subject to the Wildlife and Countryside Act. However, I share his concern from my own experience, and I am glad that he used the word “future”. Beyond this Measure we have to look seriously at the enormous damage being done to our buildings and put preservation and health at the forefront. We have some way to go, but I totally endorse and support what the noble Lord said. I invite the House to approve the Measure.

Motion agreed.

Ecclesiastical Property Measure

Thursday 22nd January 2015 Lords Chamber

Motion to Direct

19:21

Moved by

[The Lord Bishop of Derby]

That this House do direct that, in accordance with the Church of England Assembly (Powers) Act 1919, the Ecclesiastical Property Measure be presented to Her Majesty for the Royal Assent.

[The Lord Bishop of Derby]

My Lords, this Measure makes a modest change to the statutory framework for land and property held on permanent trusts by parochial church councils. At present, legal title to all PCC land is vested in the “diocesan authority”—usually the diocesan board of finance—which holds it as trustee for the PCC, by virtue of the Parochial Church Councils (Powers) Measure 1956. The diocesan authority’s consent is required to all kinds of transactions, with the exception of leases for a year or less.

The trigger for the Measure before the House was a private member’s motion at the July 2012 group of sessions of the General Synod, which called for PCCs which are registered with the Charity Commission to be able to hold their own property legally and beneficially. The Archbishops’ Council did not support the change in the form proposed, but acknowledged that the PCC powers Measure is over 50 years old and the regulatory environment has changed very significantly. In view of this, the Archbishops’ Council agreed that a degree of deregulation would be helpful, and brought forward legislation which makes three substantive changes to the 1956 Measure.

First, the Measure removes entirely the requirement for a PCC to obtain the consent of the diocesan authority before bringing legal proceedings; for example, to evict squatters or non-paying tenants from parish property. On the coming into force of this Measure it will be for a PCC to decide, in every case, whether it is in its interests to bring proceedings. That is important, because it puts local knowledge to the forefront.

Secondly, the Measure extends the length of lease that can be granted without reference to the diocesan authority. Under the 1956 Measure as it stands, a “short lease” is defined as a lease for a year or less. The amendments made by this Measure define a “short lease” as a lease for seven years or less. That change aligns this requirement with the controls on dispositions of land under the Charities Act 2011, which apply only to leases of more than seven years.

Thirdly, the Measure provides that the consent of the diocesan authority is required only for transactions with a value in excess of a figure to be specified in an order made by the Archbishops’ Council, which will be laid before the General Synod and Parliament. The Archbishops’ Council has not yet determined what the figure should be, as it has committed to consult others before setting the figure.

The Measure also makes equivalent provision for ecclesiastical trusts governed by the Incumbents and Churchwardens (Trusts) Measure 1964, which are subject to a statutory regime very similar to that for PCCs. I beg to move.

[Lord Judd (Lab)]

My Lords, may I just say “ditto” to what I said about the previous Measure?

[The Lord Bishop of Derby]

I thank the noble Lord, Lord Judd, for his support and for the support of the Ecclesiastical Committee. I now invite the House to approve the Motion.

Motion agreed.

Church of England Pensions (Amendment) Measure

Thursday 22nd January 2015 Lords Chamber

Motion to Direct

19:25

Moved by

[The Lord Bishop of Derby]

That this House do direct that, in accordance with the Church of England Assembly (Powers) Act 1919, the Church of England Pensions (Amendment) Measure be presented to Her Majesty for the Royal Assent.

[The Lord Bishop of Derby]

My Lords, this very short Measure makes a single change to the Church of England Pensions Measure 1997. It extends by a further seven years the period during which the Church Commissioners have power to use the capital of their general fund in order to fund their historic pension obligations. The Pensions Measure 1997 conferred the original power on the commissioners to spend capital in order to support their responsibility to pay pensions for clergy service before 1998. The original power came to an end in 2004, and has been extended twice since then, on each occasion for seven years.

The power to spend capital on pensions gives the commissioners the freedom to continue making payments to fund the work of the church. Without it they would have been forced to devote all, or almost all, the income of their general fund to the payment of pensions. Alternatively, they would have had to have invested their funds specifically for high-income returns, potentially eroding the real value of their capital for future generations. The pension payments will continue to increase over the next 20 years or so, especially as clergy and their spouses tend to be long-lived. The power to spend capital for this purpose is therefore likely to be needed for some time to come. I beg to move.

[Lord Judd (Lab)]

My Lords, again ditto.

[The Lord Bishop of Derby]

I thank the noble Lord, Lord Judd, and the Ecclesiastical Committee for their support. I now invite the House to support the Measure.

Motion agreed.

House adjourned at 7.27 pm.