Grand Committee

Monday 7th December 2015 Grand Committee

Monday, 7 December 2015.

Arrangement of Business

Monday 7th December 2015 Grand Committee

Announcement

15:30

[The Deputy Chairman of Committees (Lord Brougham and Vaux) (Con)]

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

Non-Domestic Rating (Levy and Safety Net) (Amendment) (No. 2) Regulations 2015

Monday 7th December 2015 Grand Committee

Motion to Consider

15:30

Moved by

[Baroness Williams of Trafford]

That the Grand Committee do consider the Non-Domestic Rating (Levy and Safety Net) (Amendment) (No. 2) Regulations 2015.

Relevant document: 8th Report from the Joint Committee on Statutory Instruments

[The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Williams of Trafford) (Con)]

My Lords, beginning in 2013-14, this Government and their predecessors have brought major reform to the way local authorities can support local growth. The previous system meant that councils saw no benefit from additional business rates income in their area, even when they introduced policies to support businesses and encourage new investment. To correct this, from 1 April 2013, we acted to allow local government to retain 50% of its business rates. This means that those authorities which see it as their role to support business are rewarded with a share of the additional business rates income that growth creates.

Despite being only two years into our reforms, their success is already apparent. The latest statistics on business rates show that 63% of authorities have seen additional business rates income as a result of the local retention scheme in 2014-15 and, based on their own estimates, this figure is set to rise to over 90% in 2015-16. Furthermore, the scheme is benefiting a wide range of authorities with different service pressures, including those with high levels of deprivation, and both rural and coastal authorities.

Earlier in the year, the Chancellor announced measures to strengthen the incentive in Manchester and Cambridge by allowing those councils to retain 100% of the growth in business rates in their area, and by the end of this Parliament local government will retain 100% of its local taxes, including all £26 billion of its business rates.

The levy and safety net regulations contained in the statutory instrument include some technical amendments to the operation of the current rates retention scheme. They ensure that the payments made between local government, central government and precepting authorities are all correct and can be reconciled accurately. The safety net is designed to protect those authorities that have seen their rates income drop by more than 7.5% below their baseline funding level. It is funded by a levy on other authorities that have seen business rates growth in that year.

However, the calculation is not straightforward. It needs to include a series of adjustments to ensure that authorities are not compensated twice for giving particular reliefs—once through the compensation grants to which they are entitled outside the rates retention scheme, and then again through safety net payments inside the scheme.

Technically, these regulations do this by ensuring that authorities are required to add back the cost of the doubling of small business rates relief. This means that half the cost of the relief granted to ratepayers in 2015-16 will not be included in the calculation of their safety net. Nor will adjustments to certain reliefs made in 2015-16 that are in respect of previous years dating back to the introduction of the scheme. In both cases, authorities will be fully compensated for the relief they have given outside the rates retention scheme through compensation grants, so that they will financially be no worse off.

These are, by necessity, complex technical amendments, but they avoid double counting certain reliefs and ensure that authorities cannot be compensated twice. I can assure the Committee that all these technical changes have been agreed with local government officers on a working group set up to advise on the detailed implementation of the scheme, as well as with the Local Government Association and the Chartered Institute of Public Finance and Accountancy. I commend these regulations to the Committee and I beg to move.

[Lord Beecham (Lab)]

My Lords, I have memories— I cannot necessarily describe them as fond—of dealing with business rates during my period as leader of Newcastle City Council, which ran to some 17 years, five years of which saw me as chairman of the finance committee. It is revisiting old, if somewhat modified territory for me to speak to these regulations.

It is perfectly right that, as the Minister said, the scheme has incentivised business development, although perhaps in a somewhat uneven fashion. The redistribution elements of the scheme have, to a degree, helped to modify this and, indeed, in the ward I represent—and to which the Minister today paid a visit—there is evidence of that early collaboration. To the south of the housing development there is a building that now houses a large engineering company. It formerly housed British Airways and, before that, Vickers. With the Urban Development Corporation in the 1980s, the local authority and the Government were, working together, able to contribute significantly to the development of that employment.

There are, however, some questions I would like to ask, which perhaps go slightly beyond the remit of the regulations. The first relates to outstanding rating appeals. The noble Baroness will not, I suspect, be in a position to update me on this issue today but perhaps she could do so in the future because this has been a considerable problem for local authorities up and down the country. The Government, having collected all the money from business ratepayers, do not expect, in the event of successful appeals, to refund it all. That is something which ought to be addressed. Equally—although I am not up to date with the position—it is said that the time for these appeals is being reduced, but in many cases they still go back some years, which is a considerable worry for local authorities and has an impact of what they can do.

The Minister said that there has been consultation and I assume that there were no reservations on the part of those consulted; perhaps she would confirm that. However, the landscape is changing in a very material respect in many parts of the country, including the parts from which the Minister and I hail. Under the devolution programme, we will have a different structure with economic and related functions carried out by a new authority, which, if the Government have their way, will be headed by an elected mayor. In any event, the new authority will, by definition, extend across a much wider area than any individual local authority. I wonder what the impact of the current scheme will be in those circumstances, even as modified.

The Explanatory Memorandum refers to the position of precepting authorities. It is unclear whether, in the new structure, what I will call a “combined authority”—with or without an elected mayor—is to be regarded as a precepting authority. Of course, if a single body is not levying the business rate, there will be differential collections, relative to population, between the constituent authorities within the new devolved structure. Obviously my thoughts have been anticipated; I congratulate the Minister on her advisory team. The question then arises of who is to determine the business rate. Will that still be at the level of the individual local authority or will it be at the higher level? If it is at the higher level, what is to prevent there being a differential application of the business rate across the constituent authorities? We might be entering an area of some complexity here. I do not blame the noble Baroness if she cannot deal with that today, but perhaps I could hear from her in due course.

The other issue I would like to ask about is the enterprise zones because presently these are in some but not all the authorities in a combined authority area. Again, the question arises of whether, for the Government’s purposes, the proceeds of business rates from this category of property are to be regarded as belonging to the individual authority or, in the event of there being a combined authority or under the new devolution proposals, it is to be regarded as belonging to the whole authority. In any event, how long is it anticipated that the enterprise zone relief, if I might call it that, will continue? Is it indefinite or is there a timescale for that?

My only other reservation is the provision in paragraph 10 of the Explanatory Memorandum, which says:

“An impact assessment has not been produced for this instrument because it amends an existing local tax regime. Publication of a full impact assessment is not necessary for such legislation”.

I do not think that is a very good procedure. If there is to be a change, there should be an impact assessment, whether or not one is formally, legally required, particularly given the changing landscape to which I have referred. This might have pre-empted some of the questions I feel obliged to raise today. I hope, in future, that an existing regime being amended will not be justification for not providing an impact assessment, given the variation of circumstances between individual authorities.

Having said that, I am not minded to resist the regulations. I look forward to hearing further from the Minister in due course. In the event that she should revisit Newcastle, I would be very glad to show her round my ward and, indeed, the city.

[Baroness Williams of Trafford]

I thank the noble Lord for his remarks. I look forward to being shown round his ward, perhaps when phases 2, 3 or even 4 of The Rise are completed.

The noble Lord first asked whether there were any reservations during the consultation process. There were none that I know of. If I am wrong, I will correct that statement but, as far as I know, there were none.

The noble Lord also asked whether the reforms would increase the level of risk in terms of appeals for local authorities. We are looking at the level of risk and reward in the new system and will work with the sector over the coming months in developing the design of the new system. As for the appeals system, I think there is an acceptance that the current system is not working for businesses, hence the point he made. Too many appeals are held up for far too long in the system, creating cost and uncertainty for businesses. Change is definitely what is needed and that is what we are attempting to do. We need a much more structured, rigorous and transparent system. Ratepayers will set out their issues fully and clearly early in the process, so that they can be responded to quickly and cases can be resolved far more quickly than at present.

The noble Lord also made the point about changes in local authorities’ needs. Again, the department will be consulting widely and openly to design a system that provides local authorities with the funding they need to deliver local services and nobody should lose out under the new scheme.

Perhaps I might write to the noble Lord about impact. Yes, the Explanatory Memorandum says that there was no legal requirement. Perhaps I could expand on that point. I will look into it.

The noble Lord asked about enterprise zones. Currently, the income from enterprise zones is guaranteed for 25 years. We will need to consider how enterprise zones fit into the system, as he pointed out. Once we move to 100% business rates retention, we will consult with businesses and local government on the other aspects. I think I have answered everything he asked.

Motion agreed.

Equipment Interference (Code of Practice) Order 2015

Monday 7th December 2015 Grand Committee

Motion to Consider

15:45

Moved by

[Lord Bates]

That the Grand Committee do consider the Equipment Interference (Code of Practice) Order 2015.

Relevant documents: 14th Report from the Secondary Legislation Scrutiny Committee, 11th Report from the Joint Committee on Statutory Instruments (Special attention drawn to the instrument)

[The Minister of State, Home Office (Lord Bates) (Con)]

My Lords, with the leave of the Committee I will also speak to the Regulation of Investigatory Powers (Interception of Communications: Code of Practice) Order 2015.

Members will know that on 4 November 2015 the Government published draft legislation relating to the security, intelligence and law enforcement agencies’ use of investigatory powers for pre-legislative scrutiny by a Joint Committee of Parliament. The intention is for the Bill to be introduced early in 2016 and enacted before the sunset provision in the Data Retention and Investigatory Powers Act 2014 takes effect on 31 December 2016. In the mean time, the Regulation of Investigatory Powers Act 2000 and the codes of practice made under it provide the legal basis for the essential investigatory techniques necessary to acquire the communications of those who mean us harm. Today we debate two codes of practice made under the existing legislation: an update of the existing code of practice on the interception of communications and a new code on equipment interference.

Interception is a vital tool that helps law enforcement and intelligence agencies to prevent and detect serious or organised crime and protect national security. It is also among the most intrusive powers available to law enforcement and the security agencies. For that reason, it is subject to strict safeguards in the Regulation of Investigatory Powers Act 2000 and the code made under it. Interception warrants are issued and renewed by the Secretary of State for a small number of agencies and for a strictly limited range of purposes. RIPA also provides for independent oversight by the Interception of Communications Commissioner and an impartial route of redress through the Investigatory Powers Tribunal.

The interception of communications code of practice first came into force in 2002 and needs updating. There is now far more that can be said about the safeguards that apply to security and law enforcement agencies’ exercise of interception powers and the revised version of the code includes that extra detail. On what is new in the code of practice, the safeguards described in these codes are not new in themselves. In respect of the interception code, the law enforcement and intelligence agencies have always had robust internal arrangements, overseen by the Interception of Communications Commissioner. The draft code provides more detail about those arrangements.

First, it provides additional information on the safeguards that exist for the interception and handling of external communications under Section 8(4) of RIPA—that is, the ability to undertake bulk interception. Secondly, it sets out further information on the protections afforded to legally privileged material and other confidential material. To give an example, the code requires the Secretary of State personally to consider the likelihood that privileged material will be intercepted when determining whether it is necessary and proportionate to grant a warrant. It also requires additional internal safeguards to be applied in cases where legally privileged material is intercepted, including that where such material is retained it must be reported to the independent Interception of Communications Commissioner. Thirdly, it includes minor changes to reflect developments in law and practice since the code first came into force in 2002. For example, it reflects regulations introduced in 2011 which amended RIPA to create the power for the interception commissioner to impose a fine for certain kinds of unlawful interception. Much of the new material on the safeguards that apply to the exercise of interception powers reflects information disclosed during legal proceedings in the Investigatory Powers Tribunal, and it is right that this information is included in codes of practice so that it easy for members of the public to access it.

The equipment interference code of practice is new. Equipment interference is a set of techniques used to obtain a variety of data from equipment. This includes traditional computers or computer-like devices such as tablets, smartphones, cables, wires and static storage devices. Equipment interference can be carried out either remotely or by physically interacting with equipment. It allows the security and intelligence agencies in particular to keep pace with terrorists and serious criminals, who increasingly use sophisticated techniques to communicate covertly and evade detection. Equipment interference has been instrumental in disrupting credible threats to life, including those against UK citizens. MI5 has relied on this capability in the overwhelming majority of high-priority investigations it has undertaken over the past 12 months.

The Security Service Act 1989 and the Intelligence Services Act 1994 provide the legislative basis for the security and intelligence agencies to interfere with computers and communications devices. Warrants may be issued by the Secretary of State only when he or she considers the activities to be authorised are necessary and proportionate. The use of the powers is subject to independent oversight by the Intelligence Services Commissioner. Prior to the draft code, which we are debating today, equipment interference powers have not had their own bespoke code of practice.

The code does not confer new powers, but simply makes public the robust internal safeguards that the intelligence agencies already apply. It brings greater transparency to the robust processes that the agencies adhere to when interfering with computer equipment to prevent terrorism, disrupt serious crime and identify and stop others who seek to harm us and our country. For the first time, this code of practice publicly sets out the stringent safeguards that the intelligence agencies apply to their use of equipment interference. This includes strict rules on how data acquired through equipment interference must be handled, how they must be securely and safely stored, and how they must be destroyed when it is no longer necessary or proportionate to hold them. The code also explains the consideration of necessity and proportionality that the Secretary of State must take before authorising any use of equipment interference. That ensures that this vital capability may be used only when the scope of the interference has been carefully considered and compared to the potential benefits of the operation. Furthermore, the code explains that equipment interference should not be considered a proportionate power if other less intrusive methods of acquiring the same data are possible.

Akin to the interception code of practice, this document also provides reassurance that the acquisition of legally privileged and confidential information is subject to even greater oversight and safeguards. The code sets out a series of tests that must be applied before any authorisation is granted and then the subsequent handling arrangements, should confidential material be acquired.

Finally, the code also provides information regarding the use of equipment interference targeted at equipment outside the British Isles. This section ensures that the public have a comprehensive guide to the use of equipment interference powers by the intelligence agencies and the range of safeguards and oversight that applies to such important activity.

The codes of practice contain no new powers; instead, they reflect the current safeguards applied by the relevant agencies. The purpose of the codes is to make more information publicly available about the stringent safeguards that the agencies apply in their use of investigatory powers. They ensure that the powers can be used only when it is necessary and proportionate and when it will help keep us safe from harm. I commend the orders to the House.

[Lord Paddick (LD)]

My Lords, I must first say that I am not an expert in this area. Our expert on this matter is on the Joint scrutiny Committee, which is about to sit. That is why he is not here. For this to come up when the people considering the draft investigatory powers Bill are elsewhere and engaged in that business is rather an unfortunate clash of tabling.

We are very concerned about interception, but that is and has been a widely known and accepted practice over the years, although the nature of that interception has obviously changed as means of communication have changed. It tends to be specific and targeted at particular individuals who, as the Minister said, intend to cause us harm or who are involved in serious crime. The code of practice on interception, which, as the Minister said, is an updated code of practice rather than a completely new one, is not the major area of concern for us.

We are very concerned about the use of equipment interference and the fact that very little—if any—debate has taken place, in Parliament or outside, about the use of these powers. While the Minister points to legislation that the security services rely on to carry out equipment interference, explicitly setting out what that means was not part of the discussion when those pieces of legislation were presented to Parliament. While what interception of communications involves is reasonably straightforward, equipment interference potentially means gaining complete access to a computer, for example. Speaking for myself, my life is on my computer. Therefore, if there were intrusion through equipment interference on to my computer, practically everything about me would be learnt by the security services, including websites I had visited and passwords that would give access to, for example, online banking. It is a much more intrusive power for the police and the security services than interception.

Hacking into computers and mobile phones was made an offence in the Computer Misuse Act 1990. My understanding is that a clause introduced in the then Serious Crime Bill 2015 exempted the police and the security services from that provision. Does the Minister accept that engagement in equipment interference by the police and the security services between 1990 and 2015 must therefore have been illegal because it was an offence under the Computer Misuse Act 1990, the exemption not coming in until 2015?

As far as I can see, the equipment interference code of practice relates only to the security services. There is no mention of equipment interference being used by the police. Again, I am not an expert on this, but it would appear that the police have to rely on legislation that allows them to interfere with property. That was intended for planting bugs in homes or offices—that sort of thing—rather than interfering with computers. Will the Minister say what the code of practice is for police use of equipment interference, as opposed to that of the security services?

There is also serious concern about general warrants being issued for equipment interference, rather than for named individuals. Indeed, the Intelligence Services Commissioner’s latest report expressed concern that GCHQ was using thematic warrants for equipment interference. How many thematic warrants have been issued?

I have another question for the Minister: why are the Government bringing forward these orders now, when the primary legislation on which they are based is currently being completely reviewed? As he said, the Joint Committee on the Draft Investigatory Powers Bill is currently looking at the primary legislation, so why now?

Among other things, the Government have produced HM Government Transparency Report 2015: Disruptive and Investigatory Powers. I cannot find any reference in it to equipment interference. As the Government are being transparent about these things, can the Minister assist me with where we can learn how much equipment interference has been going on?

16:00

[Lord Jones (Lab)]

My Lords, I support the proposals, which were conscientiously and effectively explained by the Minister. I recollect him in another guise in another place, where he practised, to a degree, the black arts and would have been pleased by a depleted Committee on a Monday when many Members are travelling.

I rise to support the measures and to emphasise a truth with regard to measures such as these. The existence of secret services in a parliamentary democracy always requires debate and scrutiny, which is why we are in Committee this afternoon. We debate and argue, at length, sometimes, as is our duty. We need our secret services. It was possible for our sovereign to attend the 2012 Olympic Games in total safety because of the successful, thorough and patriotic work of our secret services and the allied services alongside them. They always aim to prevent terrorism and to fight it by all means. Praise should go to the then director of MI5, Jonathan Evans—now the noble Lord, Lord Evans of Weardale—and the many people in other services alongside him in that successful approach to the 2012 Olympic Games.

To give noble Lords a little history, I had the honour of chairing the Standing Committee in another place that gave legitimacy and birth to the Intelligence and Security Committee, which is referred to in the measures before us. It was necessary to bring the security services into the public domain because of a hearing in the Strasbourg court. My constituent, when I was in another place, required the legislation. That case brought forward the legislation that brought into being the IS Committee. Later, having taken the chair for that legislation, the late John Smith nominated me to join the Intelligence and Security Committee as a founder member. For something like 10 years I found myself travelling to Washington, Ottawa and European capitals as a member of that committee. As a result of those experiences, I see the relevance of what the Minister has put to this Committee, and I offer it my modest support.

Noble Lords may know that the witnesses at that IS Committee were former Prime Ministers, former Foreign Secretaries, even the onetime archivist of the KGB, many Permanent Secretaries and directors of the secret services. The committee I served on was very ably chaired by the noble Lord, Lord King, who in another place was Tom King MP. Bringing these matters up to date, I note that there was a previous Joint Committee of both Houses that considered legislation not dissimilar from some of the measures referred to by the Minister. I served on that Joint Committee and I noted the evidence given, firmly but politely, by the Home Secretary.

I emphasise that the orders before us are very necessary but they will need to be stringently and carefully examined and debated from time to time, and that is the process in which we are engaged today. I heard the Minister talking about stringent conditions. With regard to the investigatory powers, members of the Joint Committee were able to meet the Commissioner of the Metropolitan Police, the then assistant commissioner, Cressida Dick, and the considerable, able and conscientious team working under their leadership at the offices on the other side of the Thames. I have no doubt whatever that the conditions are stringent and it was right that the Minister made that point.

[Lord Kennedy of Southwark (Lab)]

My Lords, the orders before us today are important. They are tools to obtain evidence of suspected wrongdoing. I can tell the noble Lord that the Opposition support both orders, although we have some concerns. There has to be a balance between the scope of the powers exercised by the state and the rights of individuals who are subject to the exercise of those powers.

The noble Lord will, I am sure, be aware of the concerns raised by the Bar Council in relation to legal privilege. It would be helpful if he could say something about the safeguards against interference with privileged communications and, in particular, how the equipment interference order could result in the acquisition of matters subject to legal privilege, as well as what steps are being taken to mitigate such a risk. What I am looking for today from the noble Lord, Lord Bates, is more reassurance that the balance has been properly fixed. Clearly, technology is moving very fast and I am supportive of the Government ensuring, on the one hand, that the powers are appropriate and up to date and, on the other, that the procedures are properly codified and people’s rights are respected. I also understand that the orders are likely to be in force for only a short time, as of course we will be having the new Bill, which has to be on the statute book by the end of next year.

It would be helpful if the noble Lord could explain to the Committee a bit more about the safeguards that are in place, particularly in relation to the interception of communications code. Can he also say a bit more about the equipment interference code? As he said, it confers no new powers but simply sets out those powers and the safeguards that are in place. The noble Lord, Lord Paddick, suggests that new powers are being conferred, so the comments of the two noble Lords contrast somewhat. Therefore, we need to be clear about whether there are new powers in this code. If the noble Lord says that there are not, can he set out for the Committee why he believes that he is correct and the noble Lord, Lord Paddick, is wrong in that respect? Having said that, the Opposition support the orders.

[Lord Bates]

First, scheduling business is a matter entirely in the inscrutable hands of the Whips’ Office and usual channels. The Home Office has no influence on that. I take it that the noble Lord, Lord Paddick, was referring to the noble Lord, Lord Strasburger, who plays a very important role in the pre-legislative scrutiny of the investigatory powers Bill at present. Of course, we appreciate his expertise in this area. I am sure he will bring that fully to bear when the Bill comes before your Lordships’ House later. Let me try to deal with some of the points that the noble Lord, Lord Paddick, raised.

One was: why choose to do this now when we have legislation going through? I alluded to part of the reason in my opening speech, relating to current or recent cases that have gone through the Investigatory Powers Tribunal service. There is always a balance to be struck there. The legislation proposed is just that: it is proposed—it is not on the statute book. We need to make sure that the powers are in place appropriately and that the code is kept up to date for the purposes of activities that happen in the interim.

That is an important element as well, which I would convey through the noble Lord, Lord Paddick, back to the noble Lord, Lord Strasburger. Given the noble Lord’s strong interest in these areas, I assume he would welcome these codes of practice being kept up to date in the light of case law going through the tribunal and, in particular, in relation to equipment interference. Effectively, there are now 18 pages of guidance that were previously not in the public domain. Those can now be scrutinised and reviewed. They are there to be reviewed by the committee currently sitting, should it so wish. All the way through this process with investigatory powers legislation, we are trying to make sure, at the same time, that the security services have the tools they need to do their job and that we keep the public on our side in feeling that the powers exercised—which are intrusive in certain cases—are necessary and proportionate.

I pay tribute to the work of the noble Lord, Lord Jones, on the Intelligence and Security Committee in the other place. He knows all too well about the work going on. In that context, he will be aware that the powers we are talking about are not notional or academic. Elements of investigatory powers are deployed in response to the majority of serious and organised crime, such as the seven terrorist acts over the past year prevented by the security services. I certainly join the noble Lord in paying tribute to the work those services do to keep us safe.

I shall deal with some of the other issues raised. I will come back to the point raised by the noble Lord, Lord Kennedy, that in a sense our argument is that there is nothing new here and, at the same time, we are introducing some new measures. I will be able to tell him what is new in this.

The noble Lord, Lord Paddick, asked if, before now, it was an offence under the Computer Misuse Act to interfere with equipment. The answer is no. The powers to undertake equipment interference are contained in the Intelligence Services Act 1994 and the Police Act 1997, so we do not believe that at any point the police or security services have operated outside their powers. The noble Lord asked about the number of thematic equipment interference warrants that have been requested. That information is not collected centrally at present. Of course, we also have as part of the investigatory powers a quite sophisticated system of commissioners who oversee these processes, to whom those who feel that their rights have been trespassed on wrongly can go to seek redress—either directly through the commissioner or through the tribunal. Of course, that happens.

16:15

The noble Lord asked whether the police use these powers, too, and why the code does not apply to them. The police use equipment interference alongside other intelligence-gathering and surveillance techniques necessary to investigate serious crime. Activities are currently carried out under property interference authorisations under Part III of the Police Act 1997, alongside other authorisations as appropriate. The code of practice for covert surveillance and property interference refers to these powers for law enforcement use. The use of search warrants and production orders is well understood by Parliament and the public, and these powers are subject to strict safeguards and robust oversight. The investigatory powers Bill referred to both intelligence agencies’ and law enforcement agencies’ use of these powers.

As for whether the power on equipment interference is a new one that has not been debated by Parliament, no, we believe it is an existing power. I have covered that point before. It is currently authorised under Sections 5 and 7 of the Intelligence Services Act 1994 and can be used only when it is necessary and proportionate so to do.

As I said on opening, the safeguards described in the codes are not in themselves new. In respect of the interception code, the law enforcement and intelligence agencies have always had robust internal arrangements, as the noble Lord, Lord Jones, said, overseen by the Interception of Communications Commissioner. The draft code provides more detail about those arrangements. First, it provides additional information on the safeguards that exist for the interception and handling of external communications under Section 8(4) of RIPA, particularly the ability to undertake bulk interceptions. Secondly, it sets out further information on the protections afforded to legally privileged material. Both elements were key concerns when we previously debated the matter in your Lordships’ House. With those reassurances, I hope that the Committee feels able to accept these orders.

Motion agreed.

Regulation of Investigatory Powers (Interception of Communications: Code of Practice) Order 2015

Monday 7th December 2015 Grand Committee

Motion to Consider

16:17

Moved by

[Lord Bates]

That the Grand Committee do consider the Regulation of Investigatory Powers (Interception of Communications: Code of Practice) Order 2015.

Relevant documents: 14th Report from the Secondary Legislation Scrutiny Committee, 11th Report from the Joint Committee on Statutory Instruments (Special attention drawn to the instrument)

Motion agreed.

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

Monday 7th December 2015 Grand Committee

Motion to Consider

16:17

Moved by

[Lord Bates]

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

Relevant documents: 9th Report from the Joint Committee on Statutory Instruments

[The Minister of State, Home Office (Lord Bates) (Con)]

My Lords, this statutory instrument brings into effect a revised Code of Practice E, issued under the Police and Criminal Evidence Act 1984, or PACE. It is laid under Section 67(7) of PACE and governs the procedures for recording interviews under caution of individuals suspected of committing an indictable offence.

Police work is a difficult balancing act. Its main purpose is to prevent, detect and investigate crime; however, the powers needed for this—for example, to stop and search and arrest—require appropriate safeguards to protect the citizen. The Police and Criminal Evidence Act 1984 and its codes of practice are designed to strike this difficult balance between the need for police to have powers to tackle crime on the one hand with the need for safeguards for suspects and members of the public on the other. It is to maintain this balance that these changes are being proposed.

Code E has been revised explicitly to exempt the audio recording of voluntary interviews under caution that are conducted outside a custody suite, referred to as “on the street” interviews, for four specific offence types: possession for personal use of cannabis or khat, low-level theft, and low-level criminal damage. These revisions support the Government’s commitment to put in place necessary protections for members of the public while ensuring that the police have flexibility to deal with low-level offending proportionately on the spot by way of an out-of-court disposal, rather than in a police station in the police custody context. I make it clear to noble Lords that the Government intend to maintain the critical safeguard of a written record and the revised code strictly prescribes the circumstances in which this exemption applies.

PACE Code E was previously revised in October 2013. Those revisions substantially extended the requirement on the police to audio record interviews for indictable offences so that it also applied to suspects who attended the interview voluntarily, as opposed to being under arrest, and to interviews that took place outside a police station. Prior to 2013, the requirement to audio record interviews under caution was confined only to interviews for indictable offences where the suspect had been arrested and which took place at police stations.

The 2013 extension of Code E was done to complement and support substantial revisions in 2012 to other PACE codes, namely Code C, which concerns the detention of individuals in police custody, and Code G, which concerns arrest. Combined, the purpose of these revisions was to promote the wider use of voluntary interviews, particularly for less serious offences, but to ensure that the same safeguards, including the right to free legal advice, applied. However, as a result of the 2013 revisions to Code E, whereby all interviews under caution taking place at a location can be audio recorded, the Government were made aware of situations where the use of out-of-court disposals to dispose of low-level offending swiftly was being undermined. Noble Lords will appreciate that there are certain types of low-level offending that are entirely appropriate to deal with outside of the police station and in the context of an out-of-court disposal.

I will focus on voluntary interviews for four particular offence types: possession of cannabis or khat for personal use; low-level theft; and low-level criminal damage. Given that these are regarded as high-volume, low-level offences, it is right that the police have the ability to deal with them swiftly and the Government do what they can to maintain this. However, the requirement to audio record these voluntary interviews impeded that ability. Combined, there were almost 130,000 of these four offences disposed of by the police by way of an out-of-court disposal between April 2014 and March 2015. The 2013 change of Code E meant that the police had to record on-the-street interviews in every instance. Given the lack of portable audio recording equipment, the recording requirement meant that forces often had to bring suspects into the police stations to comply with this requirement.

These offences are less serious in nature and are common in the sense that the police deal with many of them on a daily basis. While there has been an indictable offence committed under criminal law, the police do not necessarily need to detain the suspect and bring them to the police station. Instead, they can and should deal with these offences quickly and non-bureaucratically on the spot when appropriate to do so.

The offences of drug possession for personal use are dealt with by a cannabis or khat warning for first-time possession offences only. Those of low-value retail theft and criminal damage can be dealt with by a community resolution. These are usually used in instances where the victim does not want the police to take more formal action. They are also often used in cases of young offenders to help them face up to the impact of their behaviour. The Government believe that it is entirely appropriate for such offences to be dealt with in this way, which is the reason for the proposed revision before the Committee. In seeking to exempt voluntary interviews for the offences I have outlined, the Government seek to address an unforeseen consequence of the changes made in 2013.

I point out to the Committee that the police, in their response to the statutory consultation on these revisions, requested a broader exemption that removed the requirement for audio recording of voluntary interviews elsewhere than at a police station for a much wider range of offences. However, in the absence of a firm evidence base, the Government have made it clear that this request would not be supported.

As I have already said, safeguards are central to PACE. It is for this reason that the revision to PACE Code E relates to voluntary interviews for a limited and specified range of offences. Furthermore, the revised code makes it clear that officers are required to make a written record of the interview and to ask the person whether they want to exercise their right to free legal advice before they are questioned. Given the nature of the offences, this approach is considered proportionate and appropriate. Additionally, the circumstances in which the exemption can be used will be limited. For example, where the individual involved is vulnerable and in need of an appropriate adult, the exemption will not apply.

Committee members should be aware that the Government are currently working with the police to identify whether there are other low-level, high-volume indictable offences that it would be appropriate to dispose of on the street and which would thereby require a further exemption to the audio recording requirement. Furthermore, the Government are working with the College of Policing and police forces to examine the possibility of using portable audio recording technology for evidence-gathering, which would include the recording of interviews on the street. This may mean that the need for a written record of an interview under caution can be removed in all cases where offences are disposed of on the street.

For now, the proposed revisions are the right way to strike a balance between the need to safeguard the rights of suspects while supporting the operational flexibility of the police to deal with low-level offending proportionately and swiftly, away from the custody setting. I therefore urge noble Lords to support the revision to PACE Code E and commend the order to the Committee.

[Lord Paddick (LD)]

My Lords, having been a police officer for more than 30 years, I feel qualified to speak on this subject. This is a welcome approach that will cut down on unnecessary bureaucracy. It seems counterproductive that we allow police to dispose of minor offences on the street but PACE, in its previous incarnation, required an audio recording of the interview, which is clearly not practical in many cases—although, with the increasing use of body-worn cameras by police officers, this may become less of a problem.

As for possession of cannabis, having been instrumental in the move towards street disposal of that offence, I cannot help but be supportive. My only concern is about theft offences. This offence involves dishonesty and, therefore, there are implications for the future of the individual. Because the individual is perhaps dealt with informally—it will be a formal disposal but on the street—additional safeguards may be necessary. But again, on low-level criminal damage, I do not have too many concerns. I also appreciate that there are safeguards, for example, in the case of vulnerable people, where an appropriate adult would need to be present and these changes would not apply. Generally, we support these changes.

[Viscount Simon (Lab)]

My Lords, first, would I be right in thinking that the only way one can check the records for a first-time offence is via the police radio? Secondly, on cannabis, how will the police establish whether it is first-time use? Otherwise, I support this order.

[Lord Kennedy of Southwark (Lab)]

My Lords, this order, which the Opposition support, makes important changes by excluding four offences from the code, as referred to by the noble Lord, Lord Bates, in his opening remarks. It will allow officers to deal with the offence at the scene of the crime rather than by bringing people to the station, if the officer deems that to be the correct course of action. Will the noble Lord confirm whether this has been piloted? If so, why have we not waited until we have the results of those pilots? I would be interested to find out about that.

Will the Minister tell us a bit more about why these four offences were selected and which offences were not selected? I know the Minister said there was a review, but it would be interesting to know the thinking on that.

Finally, will the Minister comment on the pilot scheme on body-worn cameras which was referred to by the noble Lord, Lord Paddick? In future, concerns about the lack of a definitive record may be resolved by the record on camera at the scene of the offence. However, we fully support the order.

16:30

[Lord Bates]

On the previous orders we considered in Grand Committee today there was some question about whether the person with the relevant expertise was present, but the noble Lord, Lord Paddick, is here and, with 30 years’ service under his belt, his expertise is beyond doubt. As he was talking, I could see the smile on his face. I recall our exchanges on the Psychoactive Substances Bill. I know that in London he pioneered a low-level police response to low-level crime. However, there were high volumes.

The pilot to which the noble Lord, Lord Kennedy, referred was in relation to body-worn cameras. It is still taking place. As I mentioned in my introductory remarks, that important pilot could revolutionise a lot of community policing. We are talking about 113,000 offences. When I have been out on patrol with the police, situations where there is a need to intervene but where there is no recording equipment require the police officer and others to go back to the custody suite for that process to be undertaken, so there will be a significant saving of police time to focus on serious crimes while not letting up on these points.

The noble Viscount, Lord Simon, went to the heart of it with two succinct questions, to which I shall try to respond. As a distinguished Member of your Lordships’ House, he will have spotted that I am taking a little extra time to make sure that we have the responses, and inspiration has now arrived. The police background check is recorded on the police national computer. If an individual has offended before, there will not be an on-street disclosure. The short answer is that the police national computer will be accessed in the location of the individual who is stopped and that would show whether the individual had been stopped before and whether it was a first offence. If either of those circumstances was not the case, further action of a more formal nature would need to be taken.

On theft and dishonesty, it is important to note that legal advice remains for someone who is accused of theft. Accordingly, a person can obtain advice from a lawyer regarding further information. Some people would regard drug offences as equally serious but both offences are deemed low-level.

The noble Lord, Lord Kennedy, asked why there are only four offences. These four offences cover the highest volume of indictable offences disposed of on the street. Other offences were low-level violence and arson, and we believe they should be dealt with in the custody suite.

The revision of the code was the subject of a formal consultation, as your Lordships would expect, and we got quite a lot of feedback. Quite a vigorous discussion took place. Although the revised code that was produced does not accede to all the representations that were made by the police, as I alluded to, it reaches a point where both parties recognise that this is a significant step forward while we wait and see what happens with further trials that are taking place, particularly with body- worn cameras.

With those answers and reassurances, I commend the regulations to the Committee.

Motion agreed.

Armed Forces (Service Complaints Miscellaneous Provisions) Regulations 2015

Monday 7th December 2015 Grand Committee

Motion to Consider

16:36

Moved by

[Earl Howe]

That the Grand Committee do consider the Armed Forces (Service Complaints Miscellaneous Provisions) Regulations 2015.

Relevant document: 11th Report from the Joint Committee on Statutory Instruments (Special attention drawn to the instrument)

[The Minister of State, Ministry of Defence (Earl Howe) (Con)]

My Lords, my department has laid a single instrument for the Committee’s consideration today. These regulations are required as part of a package of measures to implement a new service complaints process and a Service Complaints Ombudsman for the Armed Forces.

The new legislation is designed to provide a streamlined and more effective internal redress system for our Armed Forces, and new, strengthened external oversight through an ombudsman. It will come into being on 1 January 2016. The new system is provided for in new Section 365B and Part 14A of the Armed Forces Act 2006, as inserted by Sections 1 to 3 of, and the schedule to, the Armed Forces (Service Complaints and Financial Assistance) Act 2015.

This instrument is intended to promote fairness in the new system by preventing conflicts of interest and ensuring that complaints are dealt with by those who have the right experience and knowledge to properly assist the complainant. It also covers procedural matters that provide essential safeguards and aspects of independence for our Armed Forces personnel.

The regulations include four important things, which I shall deal with in turn. First, as for the existing system, we have made rules on who cannot be appointed to deal with a service complaint; for example, because they are implicated in the matters complained about. The second important aspect of the regulations is that we have set out those matters that cannot be raised as a service complaint. This is not a new aspect to the complaints process. These are provided for in the regulations that cover the current system, and have been updated in this instrument to take account of the new process and of experience.

We are excluding for the first time challenges to decisions made in the internal redress system because under the new legislation the ombudsman will be able to review or investigate them. Similarly, the regulations exclude complaints about decisions made by the ombudsman. It is the ombudsman who provides external oversight of the complaints system so it would be contradictory for the complaints system to be able to overturn decisions of the ombudsman. Challenges to the decisions of an external ombudsman are best made in the courts.

A newly excluded matter, which I should mention in particular, is that we have decided to exclude complaints alleging clinical negligence or personal injury against the Ministry of Defence, so these have been added to the list of excluded matters. The redress system is not appropriate for deciding the complex, specialised medical and legal issues that can arise in clinical negligence and personal injury cases. It will remain possible, however, to make a service complaint if a person believes that we have not provided medical care when it was our responsibility to do so. As under the existing system, the regulations also exclude matters for which there are more appropriate alternative remedies. For example, challenges to decisions made at court martial are best decided through the appeals system.

The third important effect of these regulations is to set out when at least one independent person must be appointed for deciding a service complaint. The main circumstance is where a complainant alleges bullying or similar misconduct. This is the same as under the current system and it is there to provide an extra safeguard for fairness in such sensitive cases, and to give a measure of external oversight as part of the internal system.

The fourth main effect of the regulations is the setting out of the matters that must be reported to the Service Complaints Ombudsman when an allegation of a wrong suffered by a service person has been referred by the ombudsman to the chain of command. As with the Service Complaints Commissioner now, the ombudsman will be able to receive allegations of wrongs done to service personnel. For example, a family member of a service person will be able to approach the ombudsman with their concerns. The ombudsman will be able to refer those cases to the chain of command and to track what happens. The regulations will ensure that the ombudsman is kept updated on progress and is able to respond to queries, if raised, without compromising her investigative role.

The Joint Committee on Statutory Instruments has scrutinised this draft instrument and, in doing so, has brought to our attention three drafting points, which we will seek to correct at the earliest available opportunity. However, we do not expect that these points will affect the practical working of the regulations.

On the first point that has been raised with us, we accept that the definition of the expression “in writing” has been included unnecessarily in Regulation 2(1).

On the second point that the committee has brought to our attention, we will seek to provide further clarity at Regulation 6. This regulation provides for the start of the three-week period within which the ombudsman is to be notified of certain events in connection with the progress of a matter that has been referred by the ombudsman as a potential service complaint. It also provides that the ombudsman is to be notified of each event that is listed in the regulation. We will seek to clarify the exact moment of the day from which the three-week period applies and to clarify that the period applies separately to each event that appears in the list.

The third of the JCSI’s points relates to a provision in the schedule to these regulations that excludes a right to make a complaint where there is a right of review as to certain service police or prosecution matters. The committee has said that the regulations refer incorrectly to those rights of review being “under” the code in which they appear, rather than being mentioned “in” that code. Again, we will look to make the correction at the earliest available opportunity.

I hope noble Lords will support these regulations. I beg to move.

[Lord Tunnicliffe (Lab)]

My Lords, I thank the Minister for introducing this instrument, which effectively—with, I believe, four other negative instruments—gives effect to the Service Complaints Ombudsman, established by the 2015 Act, which some of us were privileged to flog through a few months ago.

The concern goes back to the tragic deaths at Deepcut between 1995 and 2002 and the subsequent inquiry. The outcome of that inquiry was the creation of the Service Complaints Commissioner. That role was taken up by a splendid lady, Dr Susan Atkins, who, having taken up the role, declared it not effective, efficient or fair. I commend the Government for reacting to her criticism. My party has long been calling for the introduction of an Armed Forces ombudsman, so we welcome the Act and the instruments designed to put it into effect. Labour is determined that all members of the Armed Forces who serve this country with such professionalism and distinction should be saved from bullying, harassment and other inappropriate or illegal behaviour. Ensuring that this is achieved forms a core component of the Armed Forces covenant. Hence, we support not only this affirmative SI but the negative SIs that go with it.

16:45

However, I have studied the Explanatory Memorandum, the regulations and the Act, and I have to say that it is all stunningly obscure. I did some research to try to find out what we were trying to achieve. Interestingly enough, the office of the Service Complaints Commissioner set out in an information sheet how she will be different from the ombudsman. She says that the extra powers allow her to:

“review and overturn decisions by the chain of command to exclude a complaint or not allow a complaint to proceed, for example, for being out of time … review the handling of a Service complaint once it has finished the internal process, if the complainant feels something is wrong with the way it was dealt with … in certain circumstances, investigate the substance of a complaint once it has completed the internal process”,

and finally to,

“recommend action to the Defence Council to put matters right”.

In the round, put like that, this is a commendable package, but Her Majesty’s Official Opposition have to ask whether the regulations achieve those objectives—to use what I believe is a military term, do they do what it says on the can? I therefore felt a need to probe into them and understand them. Why is it particularly important in this case? It is important because service personnel, of course, have no trade union. Similarly, there was no formal consultation even for these instruments, because in many ways there was nobody to consult. Therefore, it is more important that the limited parliamentary scrutiny we have is of reasonable depth.

I could have looked at every bit of the regulations to see how they cross-referred but I did not have the energy or the time. However, I lighted upon Regulation 3(2), which says:

“A person may not make a service complaint about—”.

However, Regulation 3(2)(a) says that,

“a decision under regulations made for the purposes of section 340B(4)(a) (admissibility of the complaint)”.

Superficially, that looked rather worrying. I then went into the 2015 Act because, while the regulations refer to the 2006 Act, the 2015 Act introduced the new sections into the 2006 Act. New Section 340B(4)(a) says:

“Service complaints regulations must make provision … for the officer to whom a service complaint is made to decide whether the complaint is admissible and to notify the complainant of that decision”.

Superficially, these two things seem to contradict each other. We have a paragraph that says “you cannot make a service complaint about” and refers to Section 340B(4)(a), which says you are unable to make a complaint about the officer who decides that a complaint is not admissible.

Fortunately, I came across Mr Morrison, who has been my tutor on service law over a number of years—on all occasions on the end of the telephone; nevertheless, what little I know he helps me with. He points out that you have to read Section 340B(4)(a) with paragraphs (b) and (c). Subsection (4) states:

“Service complaints regulations must make provision”—

and paragraph (b) of that subsection states:

“for the Service Complaints Ombudsman, on an application by the complainant, to review a decision by the officer to whom a service complaint is made that the complaint is not admissible”.

So you have to read Section 340(B) with paragraphs (a), (b) and (c), and paragraphs (b) and (c) come to life only under the negative instruments which we do not have before us—perhaps we should have done—and therefore paragraph (a) does not contradict itself internally and they all fit together.

I go through all that only to illustrate how incredibly obscure the legislation is at face value. There is clearly a difference between a complaint and an appeal. Essentially, the ombudsman is an appeal service where the complainant is able to appeal the way his complaint is handled. I think that is right. Will the Minister assure me that I have that roughly right—I hope that someone can generate a quick note that says yes—and agree that the regulations are deeply obscure? The problem of the complexity of the detail was illustrated by the JCSI’s concerns. The Minister handled that point by saying that he accepts its criticism and will revise it at a suitable date.

How will this be presented to the average sailor, soldier or airman? You cannot refer him to these regulations. I understand that they will end up in joint service publications and that there will be other material. Will the Minister affirm that there will be a considerable effort to consolidate the legislation into a workable document so that members of the Armed Forces are able to take advantage of the new Act and so that this important step in the creation of the ombudsman is not wasted by the fact that the average person it might affect cannot understand how it works? How can we be assured that the translation into plain language, for want of better, does not defeat the intent of the legislation—in other words, that the strength of the Act is fully clear to the service person?

I assume that the Minister will refer to the commissioner, Nicola Williams, who seems to be an equally splendid lady. I hope he will assure me that she will be fully consulted in the generation of the appropriate joint service publication and any material which is generated to ensure that members of the Armed Forces understand what new capabilities they have. I hope he will also assure me that she will be absolutely satisfied that that material treads what is for any normal human being an extremely difficult path in moving from the legislation, which amends a previous Act, to the order through all four instruments to a situation where the objectives are achieved and expressed in terms that people can understand without in any way diminishing the power of the two Acts and the orders.

Finally, almost in passing, I mention that the previous commissioner from time to time expressed her concerns about the extent to which she had sufficient resources to do this job. I would value an assurance from the Minister that he is confident that there will be sufficient resources for the new office so that this new and important capability—the new ombudsman function—will be able to operate satisfactorily.

Assuming that I receive appropriate assurances on all those points, I enthusiastically welcome the instrument. After the Deepcut tragedy and the issues of bullying, which even now one gets a little hint of but way back was all too prevalent, the Government have moved in the right direction—the direction we pressed for in our amendments in the other place—to a good position. I know that there is a very delicate balance in introducing an ombudsman in the military but I think we are quite close to the right place. It is important that the ombudsman is effective and properly resourced and that the intent is communicated to all service personnel.

[Earl Howe]

My Lords, I am very grateful to the noble Lord, Lord Tunnicliffe, for setting out his concerns so clearly. I am the first to agree that he has raised a very important issue in relation to Regulation 3(2) and the need for clarity for service personnel. Clearly, there must be a fair system for checking whether a decision that a complaint is inadmissible has been properly taken. I agree that the effect of the regulations may not be self-evident to the casual reader. In my experience, that is not unusual, but it is certainly a real issue.

The regulations exclude a complaint being made about a decision by the relevant officer, usually the commanding officer, that a complaint was inadmissible because, for example, it was excluded under these regulations or it was made too late. However, such complaints are excluded only because the main regulations which set out the procedures for making and handling a service complaint provide instead for the complainant to go straight to the ombudsman, who can review any decision made by the officer to rule a complaint inadmissible.

There is a duty to make regulations to provide for this under new Section 340B(4)(b) of the Armed Forces Act 2006, which the noble Lord rightly mentioned. The provision is in the Armed Forces (Service Complaints) Regulations 2015, but these are part of a suite of regulations subject to the negative procedure so they are not being debated today. The noble Lord was absolutely right to draw attention to those regulations and to say that they should be read with the regulations we are now considering.

It is fully recognised that it would be difficult and unacceptable for service personnel to have to navigate the different sets of regulations in order to find out what they were entitled to do. To make things clear, there will be a joint service publication explaining the entire process, including how to make a service complaint and the right to go to the ombudsman. The aim in that regard has been to make the language as straightforward and accessible as possible. I can tell the noble Lord that the ombudsman will indeed be consulted and will provide advice. Moreover, I can reassure him that the current commissioner, who will in turn become the new ombudsman, has been closely involved in considering all the regulations and the joint service publication to ensure that the details of the system will be clear and will meet expectations. So I hope the noble Lord will be reassured that his point is well made and well received.

The noble Lord asked whether the ombudsman will be sufficiently resourced for implementation in January. The commissioner has assessed the likely volume of cases that will come her way in the first quarter of 2016 and has structured her new team to meet that expected demand. This year she has recruited an additional 15 staff, of whom 11 are investigators. The commissioner is pleased to acknowledge that the MoD has met her requests this year for additional resource to carry out the new role. The ombudsman is responsible for determining her own staffing needs. Having said that, her office will be keeping the staffing numbers under review as they gain experience of carrying out the new role. However, we believe that the ombudsman-to-be is satisfied that all is in place to handle the likely volume of cases that she will be required to consider.

I hope that that answers the noble Lord’s questions satisfactorily and that he will be sufficiently reassured to be able to give these regulations his approval. I am grateful to him for his general welcome of the instrument.

Motion agreed.

Disclosure of Exporter Information Regulations 2015

Monday 7th December 2015 Grand Committee

Motion to Consider

17:01

Moved by

[Lord Ashton of Hyde]

That the Grand Committee do consider the Disclosure of Exporter Information Regulations 2015.

Relevant document 10th Report from the Joint Committee on Statutory Instruments

[Lord Ashton of Hyde (Con)]

My Lords, these regulations, which were laid before both Houses of Parliament on 17 November this year, seek to allow Her Majesty’s Revenue and Customs to disclose a limited set of information relating to individual UK exporters and the goods they export. The following information will, I hope, help noble Lords to place this in context.

This legislation promotes the Government’s growth agenda and their efforts to support both UK exporters and small businesses in the UK. It is also in line with the Government’s open data strategy. This seeks to place as much relevant data into the public domain as is reasonable and to reuse collected data for more than one purpose where it is efficient to do so.

By bringing accurate, reliable information about exporters and their products into a single, easily accessible place, the regulations will enable those who provide export services to identify their customers and make it easier for foreign buyers to identify UK suppliers and buy their products. It will also help to increase the export potential of small businesses.

The information to be disclosed will be limited to the following items: business name and address; a code to identify the types of goods exported, known as the “commodity code”; a description of the goods covered by the commodity code in question; and the month and year of export. Similar information in relation to importers has been available to the public for many years, and this measure seeks to bring exporter information into line with that.

The information originates from customs declarations made to HMRC at the time the goods are exported and will be made available via a unique HMRC website called uktradeinfo.com. There will be no charge for accessing it. The same legal disclosure standards relating to importer information will be applied and the same website will be used to disclose the information. Commercial confidentiality will be protected to avoid disclosure when fewer than three exporters export goods under the same commodity code in the same month. Again, this mirrors the arrangement in place for importers. Information relating to the export of sensitive or strategic goods will similarly be protected from disclosure. Again, this mirrors what is already in place for importers. At present, importers may write to HMRC to request removal or opt-out from the disclosure of importers details. HMRC plans to match this opt-out facility for exporters. The opt-out will not be granted automatically. Consideration will be given when the exporter feels disclosure may compromise them or their business interests. This measure was subject to a formal consultation; out of a total of 15 responses, five respondents expressed concerns over disclosure of their information. The measures that I have set out will provide adequate safeguards against such unwanted disclosure. I beg to move.

[Lord Tunnicliffe (Lab)]

My Lords, I thank the noble Lord for introducing this order so thoroughly and informatively. The draft Disclosure of Exporter Information Regulations permit the sharing of certain information on exports for use by both the public and private sectors. We will not oppose these regulations today as we want a more productive and effective export system, but the Minister will not be surprised to hear that I have a number of questions and points of clarification, which I hope he will be able to address in his closing remarks.

HMRC has previously not been allowed to share this information publicly. However, the Small Business, Enterprise and Employment Act 2015 provided it with a power to make these regulations and it authorises the disclosure of specific data in relation to the export of goods. The categories of information are: a business’s name and address; commodity code; description of the commodity code covering the goods; and the month and year of export. Can the Minister explain the criteria for why these areas of information were chosen and what information was ruled out of being made available?

A separate but related point concerns the issue of confidentiality. What measures are in place to ensure that the confidentiality of data is maintained? We have seen in recent months that the UK is susceptible to online breaches, so I am sure that businesses would be grateful for any reassurances that the Government can give. Furthermore, do the Government have any means of putting at ease the concerns raised by one respondent that publishing details would lead to them receiving unwanted marketing mail?

Any measures that could help to improve Britain’s export market are welcome. The latest figures show that these efforts are sorely needed. Last year, the number of UK companies who sell their goods and services abroad fell. Yet in 2011, the Prime Minister said that he intended to increase the number of UK exports by the end of the decade. Are we on course to meet those targets? According to the British Chambers of Commerce, at the present rate of progress it will take until 2034 to double exports. Who does the Minister think is more accurate—the Prime Minister or the British Chambers of Commerce?

A clear area where improvement can be made—extremely apt since this past weekend was Small Business Saturday—is in supporting small businesses access the export market. While more than 40% of larger companies are exporters, only one in 10 small businesses sell their goods and services abroad. How will the regulations we are debating today assist, in particular, SMEs?

Turning to some of the specifics, it will be possible for exporters to opt out of the publication of this information by contacting HMRC. Have the Government an indication of how many businesses will opt out of the disclosure of information? Further, what criteria will the Government or HMRC use to judge whether an opt-out request is valid other than whether an exporter is moving goods of a nature which might give rise to security concerns?

There is no specific time or date at which the Government will review this policy. It seems that the first review should certainly be conducted swiftly to assess and evaluate the take-up. All this, of course, will mean more work for HMRC, at a time when its budget is being cut by 18%. It will make a hard job even harder.

Finally, I will briefly mention the consultation. I would like to put on record how grateful I am to the Delegated Powers and Regulatory Reform Committee for the additional information that it provided from HMRC about the Government’s consultation and for the more detailed analysis. The consultation ran from June to September last year and during this time the Government received 15 responses. Of those, only five were from businesses. Does the Minister really believe that this small number is enough to gauge public opinion? I look forward to his response.

[Lord Ashton of Hyde]

My Lords, I thank the noble Lord, Lord Tunnicliffe, for his support and for his interesting questions. I will answer them as well as I can, perhaps with a little help from my friends, but I may need to write to him about some of them.

On the areas chosen for inclusion on the website, these were selected following discussion with the Cabinet Office and they mirror the information that is currently published in respect of importers. Any more than that would allow confidential details of values, markets and customers to be transparent and would put HMRC at odds with other legal obligations towards data protection.

The noble Lord asked about confidentiality and the measures in place to ensure it, which, of course, is extremely important. Again—this will be a recurring theme—the same safeguards are in place as for the website for importers, which have been in place for 25 years. A lot of these features are merely replicating—

[Lord Tunnicliffe]

The noble Lord will allow that in 25 years the cyberworld has changed a little.

[Lord Ashton of Hyde]

I understand that and am not suggesting that it is as it was 25 years ago. I am merely saying that the importer system has been in place for 25 years and has been operating well, as I will show in a minute.

We will not publish things like national strategically sensitive data, such as data about armaments exporters and their products, or commercially sensitive data. For example, we will not publish data where there are only a small number of exporters of a given product and actual levels of trade could be identified or deduced. There is also the opt-out, which is possible for those exporters not covered by the exceptions I have mentioned. They will be able to ask HMRC to opt out in the same way that importers can. As far as online breaches are concerned, the idea of the website is to let people see this limited amount of information. We want them to see it.

The noble Lord mentioned unwanted marketing mail. We are not disclosing email addresses, although we will include a mail address. It is possible that some marketing mail will be received as a consequence of this development but, of course, part of the reason for introducing this measure is to help exporters market their goods to a wider audience.

The noble Lord talked about exports. The export target set by the Prime Minister for 2020 was ambitious and it remains so. We are one of the most open economies in the world so external weakness, particularly in our biggest export market, Europe, does reduce demand. The slowdown in world trade is expected to continue, resulting in the OBR forecasting a weaker outlook for UK export markets. We still think it is right to set a stretching ambition that will motivate us all to do everything possible. This is one small part of the strategy to help encourage exports.

17:15

These measures are also part of the strategy to help SMEs. The primary intention of this measure is to assist all UK exporters. Of course, if the exporter is an SME, we hope it will be able to take advantage of the benefits of this website, for which there is no charge.

The noble Lord mentioned the opt-out, which I also mentioned. It is an important safeguard. Only 18 importers out of a population of 105,000 are opted out from the provision of importers’ details. There are approximately 75,000 exporters and we hope the number will be roughly proportionate, particularly when the system has been under way for a few years. In deciding to accept an opt-out HMRC will take into account the impact that disclosure might have in the business in question. For example, if there is genuine concern that disclosure would endanger the health or personal safety of directors, partners or proprietors, their employees or their premises, it will receive sympathetic consideration. Examples include those who deal with precious, high-value commodities, armaments or animals, but that list is not exhaustive.

The noble Lord alluded to the consultation process to which there were 15 responses and questioned whether that was an adequate survey of public opinion. The survey was done in line with the required protocols. We take the view that it is not a matter of huge concern, and the importer website is working well. HMRC circulated the details of the consultation widely among the standing group for trade consultees, which is known as the Joint Customs Consultative Committee. Trade sectors are represented on that committee and it distributes details to its members.

I thank the noble Lord for his support. I hope that I have answered his questions. I commend the regulations to the Committee.

Motion agreed.

Payment Accounts Regulations 2015

Monday 7th December 2015 Grand Committee

Motion to Consider

17:17

Moved by

[Lord Ashton of Hyde]

That the Grand Committee do consider the Payment Accounts Regulations 2015.

Relevant document: 10th Report from the Joint Committee on Statutory Instruments

[Lord Ashton of Hyde (Con)]

My Lords, I am pleased to introduce these draft regulations which aim to ensure the UK’s compliance with the EU payment accounts directive. The directive sets common standards across member states that payment service providers—in this context, principally banks and building societies—must meet. First, for the account that we use for day-to-day transactions—in most cases, a current account—the directive aims to make fees and charges clearer and more comparable. Secondly, it seeks to make it easier to switch to another provider of such an account in order to facilitate competition. Thirdly, the directive creates a right of access to a payment account with basic features for all consumers legally resident within the EU—these accounts are more commonly known as basic bank accounts in the UK.

The Government supported the directive and had already taken action in many of these areas. Agreements with industry already aim to improve the transparency of fees and charges. We have established the seven-day current account switch service and for more than 10 years our largest banks have offered basic bank accounts and have recently committed to improve that offer even further. The regulations that we discuss today comply with the directive where necessary, but minimise negative impacts on industry and consumers, and preserve structures that are already working well in the UK.

I shall start with a few words on the scope of the directive—namely, the definition of the term “payment account”. For the avoidance of doubt, where I refer to a payment account, I am doing so in line with the definition used in the draft regulations. The definition of this term in the directive could capture very simple types of payment account, well beyond the types of account used for day-to-day transactions that were discussed in negotiations. However, the recitals to the directive make it clear that savings accounts, credit card accounts where funds are usually paid in for the sole purpose of repaying a credit card debt, current account mortgages or e-money accounts should in principle be excluded. The exception to this is when such accounts are used for day-to-day payment transactions. Accordingly, the Government defined payment account in these draft regulations in a way that uses this language to describe and clarify the accounts that will be in scope. It is the Government’s view that this definition should be sufficient to limit the application of PAD to current accounts, or accounts that have functionalities directly comparable to those of current accounts, in the UK.

The Government have given as much clarification as the text of the directive allows. To go further, and entirely exclude some types of account, would be to risk a failure to comply with the directive. It will be for firms themselves to determine whether each of their products falls within the scope of the regulations, and whether the regulations therefore apply to them. The Financial Conduct Authority will supervise and enforce most of the requirements set out in the draft regulations.

When firms offer a payment account in line with the draft regulations, they will need to make new documents available to consumers: a fee information document, which sets out the fees that may be charged before the consumer decides to enter into a contract; an annual statement of fees, provided each year to explain the fees that have been charged; and a glossary to explain the main terms used in the documents, and their definitions. Some of the terminology used in these documents, and in related contractual, commercial and marketing information, will be standardised at European Union level. The process for carrying out this standardisation is rather involved, but is already under way.

As required by the directive, the Financial Conduct Authority established a provisional national list of the most representative services that are linked to current accounts in the UK and subject to a fee. Each member state submitted its list to the European Commission and the European Banking Authority, so that they can develop EU standardised terminology for the services that appear on a majority of member states’ national lists. After the European Commission adopts the EU standardised terminology, the FCA will integrate the standardised terminology into its provisional national list when necessary, and publish the final list for UK payment service providers to use. In addition, the Money Advice Service will operate a comparison website that allows consumers to compare at least the fees that appear on this final list.

The directive also requires action on packaged accounts—that is, payment accounts that offer an additional service or services, such as insurance or car breakdown cover. Consumers will now need to be informed whether the account is available without the additional services. If any of the additional services can be purchased separately from the same firm, the firm should tell the consumer how much each of those additional services would cost. Taken together, these measures should help consumers to understand and compare how much they are charged.

I shall move now to set out the approach to account switching. As I have mentioned, the UK already has a world-leading Current Account Switch Service, which has been recognised by the European Commission. It is managed and operated by BACS, a not-for-profit organisation. But not all member states are in this position, so the directive sets out some rules that all EU payment service providers must abide by when a customer wishes to switch to another payment account in their member state. When a UK payment service provider is not a member of the Current Account Switch Service, and it offers a current account-type product, it must at least follow these rules. However, for the vast majority of the current account market, the regulations allow our Current Account Switch Service to continue to work as it does today.

Compared to the switching rules set out in the directive, our Current Account Switch Service must meet three very simple criteria. It must continue to be in the interest of the consumer, present no additional burden to the consumer and be at least as fast. As the directive makes clear, we can maintain existing services where they meet these three criteria. There is no requirement to exactly mirror the switching rules set out in the directive.

The Government’s clear view is that the Current Account Switch Service that we have now exceeds the three criteria. However, the UK’s compliance with the directive has to be beyond question. That is why the independent Payment Systems Regulator will be responsible for confirming that the Current Account Switch Service meets, and continues to deliver against, the three criteria. We have agreed a proportionate set of powers for the PSR as a competent authority to use, should it ever become necessary, in this limited role. The PSR will provide further information on the designation and monitoring process in due course.

I move on to the provisions in the draft regulations on basic bank accounts. Basic bank accounts help to ensure that everyone is able to access essential banking services. They should be without fees and not offer an overdraft or cheque book. The draft regulations on basic bank accounts reflect the UK’s existing basic bank account policy, particularly where that is more advantageous to consumers, but they bring the UK into line with the requirements in the directive where necessary.

As noble Lords may recall, in December last year the Government reached a new agreement on basic bank accounts with the nine largest providers of current accounts. That agreement clarifies who should be eligible for a basic bank account and brings to an end the widespread practice of charging basic bank account customers for a failed payment, such as a failed direct debit or standing order.

We have taken action in these regulations to ensure that we do not move backwards as a result of implementing the directive. For example, the directive would allow us to establish arrangements that would be less advantageous to UK basic bank account customers by allowing banks to charge fees. However, the Government believe that a basic bank account and its standard services should continue to be provided free of charge provided that the services are provided in sterling. Nor should basic bank account customers be charged for failed payments or for overrunning, given that a key principle underpinning these accounts in the UK is that they should not be offered with an overdraft.

The directive would also allow us to restrict these accounts to only the “unbanked”. However, we are clear that basic bank accounts are also necessary for access to banking for those who may already be “banked” but are unable to use their existing account due to financial difficulty. That is why the eligibility criteria in the draft regulations establish that a consumer should be offered at least a basic bank account if they are unbanked or if they do not meet the bank’s stated eligibility criteria for a standard current account.

As I said, we do not want to move backwards but we also have to ensure that the UK can demonstrate its compliance with the directive. For example, we have had to legislate in order to establish a clear legal right of access to a basic bank account and a right to challenge banks’ decisions before a court. A voluntary agreement could not establish these rights with sufficient legal certainty.

We have also had to limit and make more specific the reasons why a bank may refuse an application for a basic bank account or close one. However—I recognise that there has been some concern from the industry on this point—no bank is required to open an account, or to continue to operate one, where it would otherwise be unlawful to do so.

I hope that I have assured the Committee that these regulations meet the UK’s obligations in implementing the directive in a sensible and pragmatic way, and that all noble Lords will therefore support the Motion. I beg to move.

17:30

[Lord Tunnicliffe (Lab)]

My Lords, I thank the Minister for outlining the regulations before us today. I listened to his presentation with some care. Of course, realistically, I prepared my remarks in advance, so there may be a little overlap.

The theme that came through, which I found almost joyous, was the way in which the European regulations have been gold-plated. I personally have no objection to regulation; I am a great believer in regulation provided it is good regulation that does good things without disproportionate costs. I think I heard the Minister say, over and again, “We could have introduced a lower standard in this area, but we do not believe we should go back to that lower standard. We should retain and, in one or two cases, enhance the standards in the UK regulations because the EU regulations allow permissions in certain areas”. I would like the Minister, when he has contemplated this, to assure me that there has been a little bit of gold-plating, that it is very fine gold and that it meets the key test of regulation which is that it is good for consumers and for the markets they are in.

The EU payments account directive has three main principles: first, to improve the transparency of fees relating to accounts that are principally personal accounts; secondly, to make it easier for consumers to switch accounts; and, thirdly, to ensure that all EU consumers can access banking services by ensuring that a sufficient number of accounts with basic features are available.

I will start by picking up a point raised in the Explanatory Memorandum. The Government say that they are content with the definition of “payment service providers”, despite representations for further clarification of the scope of the term. The Government state that,

“the definition of the term ‘payment account’ that is used in this instrument gives as much clarification as the text of PAD allows, and that the term covers what are generally referred to as current accounts in the United Kingdom or accounts that have functionalities directly comparable to those of current accounts”.

I think the Minister went on to say that it is for individual firms to determine whether their products are covered, and that the FCA has the role of checking that they have made the right decisions. Perhaps the Minister can confirm that I understood that correctly. If the Treasury will not publish further information on the scope of the term, will the Minister at least say what bodies, aside from banks and building societies, the Government believe will be affected by these regulations?

Quite rightly, the Government emphasise the need for existing initiatives, such as the Current Account Switch Service and the new payment accounts directive, to accept that they may have to be adapted in order to achieve the best outcomes. I think the Government have tried to do that. Therefore, in the relevant sections the Government have said that a copy-out approach has not been taken. With this is mind, how do the Government anticipate that the Competition and Markets Authority’s report on the banking sector will be integrated into this framework? The issues being investigated in its review have a great deal of crossover with what is set out in these regulations. The integration of a further framework could prove challenging. Can the Minister say how each of the important pieces of the jigsaw will fit neatly together?

One particularly important aspect of the regulations relates to the transparency of fees. Research from TSB suggests that banks in the UK make between £7 billion and £8 billion a year from supposedly free current accounts. Any measures that could contribute to helping to make the customer more aware of these fees are important, and we welcome them. It is often in packaged bank account deals that hidden fees are found and under the Payment Accounts Regulations 2015 providers of packaged bank accounts will be required to inform the consumer whether it is possible to purchase the payment account separately from the same provider. If so, customers will need to be provided with separate information regarding the costs and fees associated with each of the other products and services offered in the package that can be purchased separately from that provider.

In the consultation response the Government confirmed that:

“If the payment account is available separately, the payment service provider must provide separate information regarding the costs and fees associated with each of the other products and services offered in the package that can also be purchased separately … The government therefore does not consider that the assumption made by certain firms, i.e. that they will not be required to disclose the costs and fees of products and services available separately because they are not offered on identical terms and conditions, is correct”.

That is welcome news. However, the consultation made clear that a number of firms incorrectly considered themselves exempt from the draft regulations concerning packaged bank accounts. I know the Government made changes to the original wording of the regulations but how else do they intend to communicate these changes to banks to ensure that they are aware of their responsibilities?

A broader concern for payment service providers and trade associations is the limited time available for implementing changes. Payment services providers will have more time to implement these changes as the Government extended the deadline to six months after the FCA publishes the linked service list. When do the Government anticipate that the linked service list will be published and what more can the Government do to assist PSPs in the interim?

On the issue of switching, research conducted for the Competition and Markets Authority found that 37% of people had been with their bank for more than 20 years and that a further 20% had had an account for between 10 and 20 years. Have the Government undertaken analysis into this? If so few people change banks, as has been suggested, then is failing to extend these regulations to cover existing customers undermining the effectiveness of these regulations?

The Money Advice Service will be required to operate a comparison website. Can the Minister go into more detail about the timescale? When does he expect this resource to be available to consumers?

Finally, during the consultation no information was received regarding the anticipated costs to non-Current Account Switch Service members as a result of the proposed approach on switching, nor did the responses address the costs or benefits to consumers as a result of the proposed measures. Will the Minister comment on these issues?

As I said at the beginning of this speech, we do not oppose these measures. Indeed, we feel they are good and that the enhancements and nuances included are to the benefit of consumers. Nevertheless, the UK does not have public confidence in the banking system, and that needs to be addressed urgently. We will support any measures that seek to do that.

[Lord Ashton of Hyde]

My Lords, once again, I thank the noble Lord, Lord Tunnicliffe, for his support and in-depth scrutiny of these rather extensive regulations. I will try to answer as many of his questions as possible.

The noble Lord felt some joy over my remarks. I am always anxious to give noble Lords as much joy as I can—and hope I always do so. However, in this case I will disappoint the noble Lord a bit. We do not think that these regulations have been gold-plated, if by gold-plating we mean making the regulations more onerous than they need to be, either by commission or omission. We used the latitude available to the UK within the directive to maintain existing policies on financial inclusion, such as on fees. For example, the directive allows banks to charge reasonable fees for basic bank accounts but we are not doing that because the existing agreement does not do it and so it would be to consumers’ detriment. We are using the flexibility not to do that.

We could have required all banks to offer basic bank accounts, but we chose not to do that because we want to maintain access to basic bank accounts for UK customers without discouraging newer, smaller entrants. That point has been raised in other debates. We welcome competition in banking and want to help challenger banks. I am glad to say that at the moment 25 are applying for licences. We want to limit the impact on the industry wherever possible.

The noble Lord asked what types of firm, other than banks and building societies, might be within the scope of these regulations. We want to minimise any negative impact. The directive allows member states to exempt certain entities from the application of all or part of its provisions, so we have used that flexibility where organisations offer some form of payment service, such as for credit unions, municipal banks, National Savings and the Bank of England. Ultimately, it will be for firms themselves to determine whether each of the accounts they offer falls within the scope of the regulations and whether the regulations therefore apply to them. We have been as clear as we can within the directive to determine what payment accounts are covered, but we have used the recitals to explain some of the accounts that are excluded, and broadly, the Government’s view is that current accounts or any other account that is used for normal day-to-day payment purposes are covered.

[Lord Tunnicliffe]

What would be the process if a firm made a misdetermination of an account? In other words, if it took a view that a particular product was not covered by the regulations but the correct interpretation of the regulations would be that it should be, what process would come into play to require that firm to correct that decision?

[Lord Ashton of Hyde]

The competent regulator is the Financial Conduct Authority. Ultimately, enforcement action could apply, but in the normal course of dealings, particularly with new regulations, I would expect a conversation to take place with the regulator if there was any doubt. For the vast majority of current accounts, it will be straightforward, but if there were a grey area around the edges, I would expect a sensible conversation to take place with the FCA. In the normal course of events, banks and other financial institutions are required to have an ongoing relationship with their regulator. I would expect that to apply unless something serious went wrong, in which case enforcement action could take place.

Action to comply with the payment accounts directive will certainly not prevent the UK pressing ahead with domestic initiatives to improve competition in banking, provided that the initiatives remain consistent with the regulations. The CMA’s provisional findings, which were published at the end of October, still need to be consulted on. It will issue its final report next spring, and the Government stand ready to take action as appropriate once we have those final recommendations.

I turn to packaged accounts, which also offer separate services such as car insurance, breakdown insurance or something like that. The consultation the Government produced set out the Government’s intended approach to packaged accounts in the draft regulations, which firms scrutinised and commented on. After these regulations have been made, if they are agreed to, the FCA will also consult in the usual manner on any changes to its handbook that it considers necessary to give effect to those regulations, including on packaged accounts.

In addition to its public consultation, the FCA will continue to engage with relevant industry stakeholders to discuss the implementation of the measures, including the extent to which services and their terms and conditions need to be identical to be caught.

The noble Lord referred to the Money Advice Service and asked when the comparison website that it has to set up will be ready. The comparison website will need to use, where applicable, the terms set out in the linked services list. We expect the final list to be published by the FCA during the first half of 2017, once the EU-wide standardised terms and definitions have been adopted by the European Commission. Although the Money Advice Service may choose to set up the website sooner, there is no obligation for it to do so until six months after the FCA publishes the final linked services list.

17:45

The noble Lord asked about current account users whose payment service provider is outside the Current Account Switch Service. Consumers who currently bank with firms outside CASS may benefit from being able to switch in line with the new rules set out in Schedule 3. However, given that only about 1% of the current account market is not covered by CASS and that only a proportion of those customers are likely to switch accounts, we do not expect those benefits to be very significant. Therefore, we would also expect the costs to be minimal.

In bringing forward these regulations, I believe that the Government have sought to minimise any negative impact on the industry and on the consumers who rely on these services. I am grateful for the noble Lord’s questions and I commend these draft regulations to the Committee.

Motion agreed.

Exclusivity Terms in Zero Hours Contracts (Redress) Regulations 2015

Monday 7th December 2015 Grand Committee

Motion to Consider

17:47

Moved by

[The Earl of Courtown]

That the Grand Committee do consider the Exclusivity Terms in Zero Hours Contracts (Redress) Regulations 2015.

Relevant document: 7th Report from the Joint Committee on Statutory Instruments

[The Earl of Courtown (Con)]

My Lords, on 26 May this year, the Government commenced the provision introduced by the Small Business, Enterprise and Employment Act 2015 which renders unenforceable the use of exclusivity terms in zero-hours contracts. As a result, individuals can now ignore any exclusivity term in their zero-hours contract. Once these regulations commence, any employer who treats someone on a zero-hours contract unfairly simply for taking a job elsewhere could face an employment tribunal and the possibility of paying compensation.

The use of exclusivity clauses in zero-hours contracts is wrong. No one on this type of contract should be prevented from boosting their income if they want to. While the Government anticipate that only a minority of employers are likely to ignore the ban, I am confident that we all agree that a route of redress is a welcome measure. The regulations before the Committee create a route of redress for an individual on a zero-hours contract who suffers a detriment or is unfairly dismissed as a result of doing work under another contract or arrangement. They allow that individual to make a complaint to an employment tribunal and be awarded compensation if their complaint is upheld.

These regulations have been drafted as a result of the Government’s consultation. A clear majority of 71% of respondents to last summer’s consultation supported redress via an employment tribunal. The regulations create a deterrent for employers, making them think twice about ignoring the law. In addition, we will be laying an order that will ensure that those individuals on zero-hours contracts wishing to make a complaint will benefit from the early conciliation regime. This is in line with other employment protections.

Zero-hours contracts have a place in today’s labour market. For individuals who cannot commit to regular hours, they can provide a pathway into employment. That is why many people, young and old, choose to work in this way. These contracts provide choice and the ability to combine work and other commitments. But the use of exclusivity clauses in these contracts is wrong and that is why Government have banned them. These regulations strengthen that ban, adding another layer of protection for individuals and ensuring that employers cannot simply ignore the law. By creating a route of redress, individuals will have the right to make a complaint to an employment tribunal if they are dismissed or treated unfairly as a result of their employer attempting to demand exclusivity. I commend these regulations to the Committee.

[Lord Stevenson of Balmacara (Lab)]

My Lords, I am grateful to the Minister for introducing these regulations. He was not, I think, involved in the previous Government’s detailed work on the Bill from which these regulations stem. In that sense perhaps he could be forgiven for not really getting to the heart of the issue before us. While I reluctantly agree that these regulations are a step in the right direction, I hope to persuade him that they are nothing like what was intended when the matter was debated in the Bill to which he referred. The Small Business, Enterprise and Employment Act should have outlawed people being discriminated against for having more than one zero-hours contract. Instead, it offers a false choice for those who are affected to seek redress—at their cost, let us be clear—through the employment tribunal system.

The key issue I would like the Minister to focus on is that these regulations do not in fact ban exclusivity clauses. They will exist after these regulations go through and I would be grateful if the Minister would confirm that. Individuals will not have many rights in terms of how they get redress against that, as I will explain. As I said, the regulations represent a small step in the right direction but they will not provide zero-hours workers with effective protection. The Government’s proposals really fail to address the main abuses expressed by those who have studied this issue—and, indeed, the points that were raised when the Small Business, Enterprise and Employment Bill was discussed. They are little more than window dressing. The Minister said that the abuse of zero-hours contract workers seeking a second job was wrong but he has not taken the opportunity to outlaw it.

There are a number of points worth making. The regulations use a much narrower definition of zero-hours workers than is allowed for in the Act. I would be grateful if the Minister will confirm that the Act would permit the Government to extend the ban to individuals who are employed in freelance arrangements, for instance, but are economically dependent on a limited number of employers. The Government have decided not to act to protect this group—perhaps the Minister will explain why.

In March 2015, the coalition Government indicated that they were minded to extend the ban on exclusivity clauses to all workers, not just those on zero-hours contracts, who earn less than £20 an hour. The aim expressed then was to ensure that those employed in more insecure and lower-paid forms of work could not be forced to remain available for one employer but could seek employment from a range of employers. This is a very good idea and we welcomed it at the time. The Government seem to have backtracked on that approach. Will the Minister explain the thinking behind that decision?

The Government claim that providing a right for zero-hours contract workers to go to an employment tribunal and, after the next regulations come forward, a chance to go into conciliation services using a fast-track system, will actively deter employers from using exclusivity clauses. I think the Minister said that it would make employers “think twice” before acting. That seems a very weak form of protection. They should not be thinking about this at all. The idea that they should think twice about it is rather risible.

We are talking here about very poorly paid employees—who often are not paid at all because they do not get called in for work—and about those employed on zero-hours contracts in any way having to pay up to £1,200 for any claim for unfair dismissal. As well as being low-paid and not being offered the right possibility of a range of work, they will have to pay £1,200 upfront in order to take this forward. Obviously, if they want to do a detriment claim it is £390, but I think even that would be difficult.

The MoJ statistics reveal that only around two-fifths of individuals who have applied for a remission in employment tribunals have been successful. This low success rate is well understood to be due to the fact that remission claims have to be based on household income rather than the income of the individual concerned. The individual has a choice to make if he or she has a partner who is working because the cut-off point at which they will be able to do a remission may well have been breached by the partner’s earnings, and the cost of going themselves is £1,200. It is a rock and a hard place.

Finally on this catalogue of defects in the process, the regulations make it clear that any compensation awards will actually be very limited because they have to be linked to losses or expenses which the individual incurred as a result of the employer’s actions. A zero-hours contract worker is going to find it rather difficult to prove that they incurred any loss. Individuals such as hotel and bar staff, many of whom make up this group, are often working on a series of zero-hours contracts with different employers. Under these contracts, they have no legal rights to ongoing employment so it is very difficult for them to prove that if they had not remained available to work for employer A they would have been guaranteed a certain amount of pay from employer B. This test will also trip up a number of people.

A lot of rethinking is required in this area if we are going to make this stack up in any sense to the issues that were raised by the Minister. He thought that these regulations have resolved matters but I think they are actually making things worse. What is needed is a new think about redress in matters of this nature. What we really need is legislation that includes those on zero-hours contracts, as well as other people in casual employment, to make sure that they have the basic employment rights—including, for example, redundancy pay, the right to request flexible hours, and the right to return to work following maternity or paternity leave—which are often not available in these areas because of a misunderstanding of the law, although technically employees are entitled to them. That could be rolled back into an overarching arrangement around issues to do with exclusivity terms. As I said, these regulations are a step in the right direction but it is really a very small step.

[The Earl of Courtown]

My Lords, I thank the noble Lord, Lord Stevenson, for even reluctantly agreeing that this is a step in the right direction. He made a number of points, which I will deal with. If I do not deal with them, I will of course write to him. We agree that these regulations are a welcome step for those on zero-hours contracts. We must, however, send a message to the minority of employers who may attempt to ignore the exclusivity ban. As such, it is important that the Government create this additional layer of protection for individuals.

The noble Lord, Lord Stevenson, suggested that exclusivity still exists. No, an individual cannot be prevented from looking for work elsewhere and should simply ignore the exclusivity terms made by the employer. The individual has no obligation to inform the employer. We understand that employers could potentially offer no further work as a result of finding out that the individual has worked elsewhere, and that is why it is important that these redress regulations create a route of redress for individuals who suffer a detriment in such a case.

The noble Lord also asked why we have backtracked on the income threshold. This Government’s first priority was to introduce the ban on exclusivity clauses in zero-hours contracts. As I said earlier, we did this on 26 May this year. Our next priority was to introduce a route of redress to ensure that individuals on zero-hours contracts with exclusivity clauses were protected from employers who dismissed them or subjected them to unfair treatment if they sought work elsewhere. We are introducing that route of redress now.

18:00

[Baroness Burt of Solihull (LD)]

I am grateful to the Minister for giving way. This is the first time that I have taken part in a Grand Committee. He said that pressure is put on people to comply, and an ordinary worker may find the legal redress a little confusing. Do the regulations contain a provision to deal with situations where emotional pressure is put on an individual who may not have an official exclusivity contract but it is understood that if they contravene the contract and go to work elsewhere they will not be asked to work again?

[The Earl of Courtown]

I think that, in a nutshell, the noble Baroness is talking about protection for the vulnerable worker. I cannot give her an answer at this moment but I will write to her.

Concerning the income threshold, during the last Parliament the Government announced the idea of extending the ban on exclusivity clauses to contracts that did not guarantee a set income threshold. We will now look at this aspect further, considering any evidence of avoidance of the ban. To date, the Government have seen no evidence of employers finding ways to get round the ban on exclusivity clauses.

The noble Lord, Lord Stevenson, asked why the self-employed are not covered. The exclusivity ban protects all employees and workers who have exclusivity terms included as part of their zero-hours contract—that is, a contract which does not guarantee paid hours of work. These provisions do not cover those who are genuinely self-employed and undertake work on a zero-hours contract arrangement. For example, a self-employed contractor might take up work offered on a zero-hours basis from a number of regular clients but remain self-employed. This is because self-employed individuals will negotiate their own terms as part of their contractual arrangements with their clients.

The noble Lord also raised the important issue of employment tribunal fees and said that they represented a prohibitive cost for those on zero-hour contracts. As in the case of any other complaint submitted to an employment tribunal, anyone who feels that they cannot afford to pay the associated costs can make an application for a fee remission—that is, to have the fees waived or reduced. An individual can apply for remission of the fee-paying stage and so would not be out of pocket. Complainants who are in receipt of universal credit and have less than £3,000 in savings and gross annual earnings of less than £6,000 would automatically qualify for remission of fees. Complainants will qualify for full remission of their employment tribunal fees if they have savings of less than £3,000 and are in receipt of certain qualifying benefits, such as income-based jobseeker’s allowance or income support. They may also qualify for full or partial remission if their household savings and gross income fall below or within a specified threshold.

The noble Lord also mentioned compensation. We do not believe that the regulations should stipulate the level of compensation to be awarded. This is a matter that the court should decide, given the individual circumstances of each case.

The noble Lord, Lord Stevenson, also mentioned the rights of those on zero-hours contracts and on other casual contracts. There is a misconception that those on a zero-hour contract do not have employment rights or have fewer rights than those on other types of contract. Everyone, regardless of contract type, has employment rights. The employment status of an individual will determine whether they are an employee or a worker; employees and workers have different employment rights. However, let me be clear that people working under a zero-hours contract have the same day one rights as any other worker or employee. When there is a qualifying period for certain rights—for instance, entitlement to maternity pay—they must meet this condition, just as with any other worker or employee.

I welcome the noble Baroness, Lady Burt, to the Moses Room. She asked whether emotional pressure could be taken into account. It would be a matter for the court to consider what the detriment is in each case.

Finally, I reiterate that the Government are committed to ensuring that exploitative practices identified around zero-hours contracts are eradicated, so that those on this side of the contract have a fair deal. The regulations are supported by the majority who responded to a consultation period on this matter. I commend the regulations to the Committee.

Motion agreed.

Legislative Reform (Further Renewal of Radio Licences) Order 2015

Monday 7th December 2015 Grand Committee

Motion to Consider

18:06

Moved by

[The Earl of Courtown]

That the Grand Committee do consider the Legislative Reform (Further Renewal of Radio Licences) Order 2015.

Relevant documents: 1st Report from the Regulatory Reform Committee

[The Earl of Courtown (Con)]

My Lords, the effect of this order will be to allow the holders of certain types of analogue radio licences to renew those licences for a further five-year period. The changes cover the three national analogue radio licences—the national FM licence held currently by Classic FM, and the two AM national licences held by Bauer, for Absolute Radio, and UTV, for Talksport. All three licences were renewed in 2011 under Section 104A of the Broadcasting Act, and local licences were renewed under Section 103A of the Broadcasting Act; they include some names from the list. For stations that have not yet had their licences renewed under Section 103B or Section 104AA, the net effect is to substitute the seven-year licence renewal period introduced into the Broadcasting Act by the Digital Economy Act with a 12-year period.

The measure meets the tests set out in the Legislative and Regulatory Reform Act 2006 and has been approved by the Lords committee and by the Regulatory Reform Committee in another place as being appropriate for a legislative reform order with the affirmative procedure.

In all, around 60 commercial analogue licences, including the three national licences, are due to expire between 2017 and 2021 and will benefit from this measure, though licences that expire after that date will also benefit from the change. This is a change that is strongly supported by Radiocentre, the Commercial Radio Companies Association, and most of the radio industry. Before I get into the detail of the measure, it is probably worth me taking noble Lords through the background to these proposed changes.

In 2009, the previous Labour Government set criteria for a future switchover of digital radio in their Digital Britain report. Their criteria were that DAB coverage should match the coverage of national and local services in analogue, as the case might be, and that digital listening should reach 50% of all radio listening. In July 2010, the coalition Government adopted these criteria.

To facilitate a future switchover, the Labour Government included in the Digital Economy Act 2010 various measures to facilitate a future switch-off of analogue radio services. They include providing Ofcom with the power to terminate analogue radio licences with a minimum of two years’ notice. A key measure in the migration to digital radio by encouraging commercial radio to continue to support the development of DAB was the new powers for Ofcom to grant licence renewals for FM and AM stations. The effect of these changes was that radio stations licenced on or after 8 April 2010, or which had already been renewed for 12 years under Section 104A or Section 103A of the Broadcasting Act 1990, were able to apply to Ofcom to renew their licence for one further period of seven years. To qualify for the renewal, licensees were required to simulcast—that is to broadcast on analogue as well as digital—the service on an appropriate DAB multiplex.

In July 2010, the coalition Government launched the digital radio action plan. The purpose was to bring together the various interested parties to help drive uptake in digital radio. Through this process, a number of key barriers to radio’s transition were dealt with. First, the issues surrounding limited DAB coverage have been tackled: the BBC, Government and commercial radio agreed to support investment collectively to extend local DAB coverage from 72% in 2013 to more than 91% by the end of 2016, so matching the existing coverage of local commercial FM services.

Secondly, through the digital radio action plan real progress was made on cars. In 2010 fewer than 5% of new cars had DAB installed as standard. Through the collective efforts of the Society of Motor Manufacturers and Traders and the radio industry, almost 75% of new cars now have DAB radios fitted as standard—a figure we expect to increase to close to 100% in two years. Some 20% of radio listening in cars is now to digital.

However, even with this momentum, it was clear by December 2013 that while steady progress had been made it was not the right time to commit to a radio switchover for the UK or to set a firm or indicative timetable for a future switchover. Building on the momentum created by the action plan in 2013, the Government announced a package of measures to support UK radio’s transition. This included a £7.75 million commitment to extend the local DAB network to match current commercial FM equivalents, funding for feasibility work by Ofcom to help more small stations go digital, support for the radio industry’s digital radio tick scheme and efforts to accelerate DAB car conversion.

However, a consequence of the Government’s decision in December 2013 was that the licences of more than 60 radio stations renewed under the 2010 Act’s provisions will expire between 2017 and 2021. This is before the date when a switchover will be possible. It is this issue that the order seeks to deal with. At the time that the Digital Economy Act 2010 was passed, the Government and commercial radio anticipated that a timetable for switchover could be set as early as 2015 and that, with good progress, a switchover might even be completed in 2017 or 2018. The proposed seven-year duration for FM and AM licence renewals in the 2010 Act reflected that expectation. However, the reality is that the assessment made in 2009 and 2010 was too optimistic.

The Government strongly support a digital future for radio and want to ensure that policy continues to support the investment in extending choice and services. In November 2014, we launched a consultation to look at the issue and set out three options. First, there was to do nothing, not to legislate but instead to allow licences to expire and to be readvertised in the usual way by Ofcom. Secondly, we could allow the renewal for a further five-year period of licences renewed under Section 103B and Section 104AA of the Broadcasting Act 1990 and for 12 years for stations that had not yet been renewed under those sections. Finally, we could allow the renewal of licences for a longer period of time not specified above.

18:15

Having fully considered all the consultation responses, both written and oral, we concluded that option 1, allowing licences to lapse, could impose significant costs on commercial radio at a time when we are trying to maintain certainty of direction and encourage the sector to maintain investment in DAB. As we set out in the impact assessment, our estimation is that these costs are likely to outweigh any potential benefits of allowing licences to be readvertised. More importantly, this option would run the risk of sending mixed signals to the radio industry about the future transition to digital radio at a time when it faces challenges from online aggregators such as Deezer and Spotify.

While there are some merits to option 3, a longer renewal period, including that it would provide licensees with absolute certainty until the point of a future switchover, we believe it would be a fundamental change to the regulatory framework for commercial radio. As noble Lords will recognise, this is something which requires much more detailed examination, and the Government announced in October that we and Ofcom have started work on that. In our view, allowing an extension for a further five years, which is option 2, is the best approach to support the policy objective of working towards a digital future for radio and supporting industry through this transition. In particular, it maintains the incentives for commercial radio to invest in digital radio and develop new services.

We believe the analogue radio licence extension set out in the order strikes the most effective balance between addressing the issues arising from the slower than expected digital radio migration while at the same time reducing the burdens on commercial radio that would otherwise arise if no steps were taken. I beg to move.

[Lord Stevenson of Balmacara (Lab)]

My Lords, I thank the Minister for the quick transition from department to department, the fluency with which he adopts his new brief and the quality of his representation which I have much enjoyed.

However—there is always a however—the reason for this legislative reform order, which is an interesting choice of vehicle for the process, although I do not disagree with it, is because the previous coalition Government and this Government are shooting themselves in the foot on this matter. There would not be a problem if the Government would face up to the fact that what is required is an early and specific date for digital switchover. That would drive the responsibilities of commercial and public service broadcasting and would build on the very successful change that has already happened in the automotive industry from FM and analogue radio to digital radio. The huge majority of new cars sold in this country now have digital radio.

It is all there for the taking. Covered in glory, crowned in his new raiment and wearing the arm of the digital reformer that at heart he surely is, the noble Earl could rise from his seat and proclaim to the world that at last there was a decision from a department not known for giving many decisions— or if it does, they are not very good ones—and we could all get back to normality. Is it not true that the emperor has no clothes and that this is a stop-gap measure? Choosing to extend radio licences in the commercial sector for five years—we are talking about three national radio stations and more than 60 local radio stations, which is a fair whack of the radio stations in this country—is simply going to repeat the uncertainty and chaos that has bedevilled us over the past five years and we will have to be back here in five years’ time extending this yet again. Who knows what we will do the next time? Will we be standing here suggesting that we just give them a permanent licence to print money, a permanent licence for radio broadcasting in order to continue to serve, I suppose faithfully, the 80% of people who say they are satisfied with what they have? I do not know, but the Government are making a mess of this and they ought to ’fess up and set a date, even at this late stage, which will give everybody a chance to work together to make it the success that the television changeover was.

Having said that, I enjoyed the document that was provided, and I thank the officials for it. It is one of the best I have seen in terms of explaining what the issue is and of setting out the context in which the decision has been reached. I do not agree with a lot of things said in it, but that does not take away my admiration of the way in which it attempts to be as transparent as possible. I recognise that and I am glad it is being minuted. Too often these things are just passed over.

I have five issues that I want to log at this stage. Our feeling on this side of the Committee is that this is the wrong way to go. We should set a date for digital switchover, stick to it and put all our effort into making that a success. If we are not going to do so, the proposal made is probably the least worst of the options presented.

First, will the noble Earl be a little more transparent than he has been about what will happen if there is no switchover by 2021? The order is effectively a five-year pause in a process that has an ineluctability about it. Will he give us any idea about what he thinks will happen in 2021? A lot of the evidence from the consultation meetings reflected on the fact that the worst thing for those involved in this area is uncertainty. While they will get certainty now as a result of the order, it will be for only a limited term. Many will have to think very hard about their business plans and whether they will extend beyond 2021.

Secondly, I am not at all clear that the explanatory document is right in suggesting that the issues that have swayed thinking on this were based on the possibility that, by advertising these licences now, there would be a churn, fuelled mainly by competition, that could be a stipulation on the product that comes out of the radio system as a whole. Those are my words, not exactly how it is put in the document. The Government—and the Opposition, too—believe that competition is a great spur to creativity. If we are interested in a broader and more successful creative economy, surely the right thing to do is to seek all the opportunities we have for competition, not to avoid them. Here we have an option where, although it would have been extra work for Ofcom—poor Ofcom—it could, in a reasonably short period of time, have advertised and received submissions from those who currently have licences and those who want them, in order to try to redraw the map of radio as we currently have it.

The document reflects a failure of the process. It says:

“Whilst there is little to no quantitative evidence on how many, and which, new entrants, might bid for any re-advertised licences, research by Value Partners demonstrated anecdotally that, should these licences be re-advertised, there would be some interest in them from new entrants particularly for the national and large city licenses”.

So we have some evidence that there would be interest in the larger franchises—even in some of the local ones. That would have provided some change. The document goes on to explain that that might have been about 10%. A 10% increase in competitiveness and creativity is not to be sneered at. If we had that in other industries we would be quite pleased with it. However, the document—signed off by Ministers—says:

“We do not believe that the hypothetical benefit to listeners and industry of a small number of new services outweighs the cost to the wider industry and to listeners of a wholesale re-advertisement process. We therefore consider that, taken as a whole, the provision in the draft Order strikes a fair balance between the public interest and the interest of any person who might be adversely affected by it”.

Not to readvertise is quite a big decision. I hope the noble Earl will not take it wrong when I say that this bit is a bit thin. We could have had more evidence. He could have sent this document back to officials and said, “I think if I’m going to stand up here and try to defend this against the fearsome Lord Stevenson, I need better evidence than just simply saying ‘anecdotally’ and ‘on balance’”.

I mentioned my concerns that some of this decision has been driven by worries that Ofcom might be troubled by having to do all this work. Ofcom is, of course, a body that covers most of its costs by recouping them from those concerned. Therefore, it is not a cost issue, but a volume or process issue. That is really in the hands of government. Again, it is infelicitous to blame Ofcom, which might be too busy to do this, for a decision that is being taken for different reasons. I would be interested to hear the noble Earl’s responses on that.

If we are not minded to support competition and creativity, we are worried about poor little Ofcom and we are not concerned about having to do this again in five years’ time, what are the other issues? There are two things I want to mention. The first relates to the paper provided in support of the LRO, which goes through the things that Ministers must decide. One of the things that Ministers must decide, as I am sure the Minister is aware, is whether or not the provision is of constitutional significance. The Government cannot be serious about this, surely. We are talking here about a range of diverse views and opinions; the ability of people up and down the country to receive news, comment and opinion; and the freedom of the press, independence and plurality. For the document to say the provision is not of constitutional significance does not bear scrutiny. I really think that is something that the Government should think very hard about. If they do not have that view about commercial radio on a national basis, why are they bothering? They may as well just give operators’ licences in perpetuity because it is obviously not important enough for them to be concerned about. I disagree. I think this is really important, and as part of our understanding of how the constitutional process works we need the contribution of a free and independent press, including radio and television, and a plurality of voices in order to make good decisions about that.

My final point is about the consultation process. There are many good things about the document but the best thing is the fact that at last we see some of the notes from the various meetings that have been held. Reading these through, there is just a slight feeling that we were talking to the establishment rather than the wider context. I did not see much there from people who might have been considered to be applicants for radio licences. Obviously, we might not know who they are but looking at the lists of people who were invited to these consultation meetings in Edinburgh and London, they were largely the establishment of radio. Again, looking at the written responses, we did not get much of a range of the general public. There were one or two freelance media consultants, I note, but not very much from the wider public. The Minister praised Radiocentre for supporting this proposal. Actually, it did not support the proposal in its evidence; it supported option 3, not option 2. It subsequently said that it supports option 2 and wishes it to go through—it would, wouldn’t it? It is involved in part of this process.

But enough from me—we are faced with a fait accompli in this matter because without a digital switchover date there is not much we can do about it. But I hope these points might be considered.

[The Earl of Courtown]

My Lords, I thank the noble Lord, Lord Stevenson, for his comments. Although he had concerns, I think he was generally supportive of the move. I do not want to put words in his mouth.

[Lord Stevenson of Balmacara]

I said that we are facing a fait accompli, which is certainly not the same thing as being supportive.

18:30

[The Earl of Courtown]

I withdraw my remark. I also thank him for his congratulations to the officials in the department on the work they have done and the document that he received.

The noble Lord mentioned a number of different points. Once again, if I do not cover them all, I will ensure that I write to him. He mentioned a number of points relating to when the Government will make a decision on when the switchover will actually take place. He felt that it would be far better if we made a firm decision on that. Our position on the switchover decision remains the same. A decision about the timetable for a future switchover will be considered only once the listening and coverage criteria have been met; for example, when at least 50% of all listening is through digital, national DAB coverage is comparable to FM, and local DAB reaches 90% of towns. The noble Lord also asked when that stage will be reached. According to the radio industry source, on current trends digital listening should reach the 50% threshold sometime in late 2017 or 2018. We have always linked switchover to listener take-up and that has not changed.

The noble Lord also commented on the research commissioned from Value Partners and its findings. The research we commissioned on the various options for addressing the expiry of analogue licences was extremely useful as a starting point for a more detailed consideration of the future of radio licensing. However, we believe its conclusions are only partially developed, particularly when it comes to assessing the level of interest there will be around contesting commercial analogue radio licences in the open market. We concluded that the wider disruption caused by a major licensing round would outweigh the benefits of new entrants to the market. There is scope, as the noble Lord mentioned, for new entrants, through acquisition of existing stations or the development of services on DAB online. The launch of the second national multiplex in March 2016 will open the way to new providers coming into the UK radio market.

The noble Lord also asked why we are not setting a firm date for 2022 or 2023. We have always said that a switchover must be listener-led. If progress with listener take-up of digital radio continues, it is quite possible to envisage a scenario where a switchover takes place in the early 2020s, although the exact timing and process is something that will need to be carefully considered by the radio industry and the Government. I stress that we will not be in a position to commit to a switchover unless or until listeners are ready.

The noble Lord also mentioned the situation of smaller radio stations following a switchover. The Government recognise the vital role that local stations play in supporting the communities they serve. That is why we have always said that, in the event of a future switchover, part of the FM spectrum will be retained for smaller, independent local and community radio stations for as long as it is needed. At the same time, we recognise that some smaller stations want more choice in terms of broadcasting on the DAB platform and are concerned about being left behind as more radio goes digital. That is why DCMS has provided £500,000 to Ofcom to support further feasibility work on small-scale DAB solutions to enable smaller stations to broadcast on digital.

The noble Lord, Lord Stevenson, also asked why we are afraid of an open licence competition. We agree that there is a difficult balance. Stations can start on digital and online and broaden the market that way. He also drew attention to Ofcom as a resource that could undertake a licence reapplication process. Not at all—relicensing will create a period of instability for radio and this will make a future switchover decision harder.

The noble Lord, Lord Stevenson, also said that the subject of the order is not of constitutional significance. That is why we have opted for the smallest possible change: a five-year renewal. The scrutiny committee of both Houses, as I said, agree that it is not of constitutional importance. We are not seeking to restrict access to news or radio. I thank the noble Lord for his contribution, all the same. He certainly raised a number of important points. I commend the order to the Committee.

Motion agreed.

Committee adjourned at 6.34 pm.

House of Lords

Monday 7th December 2015 Lords Chamber

Monday, 7 December 2015.

14:30

Prayers—read by the Lord Bishop of Bristol.

Introduction: Lord Stunell

Monday 7th December 2015 Lords Chamber

14:38

The right honourable Sir Robert Andrew Stunell, Knight, OBE, having been created Baron Stunell, of Hazel Grove in the County of Greater Manchester, was introduced and took the oath, supported by Baroness Maddock and Lord Greaves, and signed an undertaking to abide by the Code of Conduct.

Introduction: Lord Bird

Monday 7th December 2015 Lords Chamber

14:44

John Anthony Bird, Esquire, MBE, having been created Baron Bird, of Notting Hill in the Royal Borough of Kensington and Chelsea, was introduced and took the oath, supported by Lord Hope of Craighead and Lord Alton of Liverpool, and signed an undertaking to abide by the Code of Conduct.

Sex-selective Abortion

Monday 7th December 2015 Lords Chamber

Question

14:48

Asked by

[Baroness Knight of Collingtree]

To ask Her Majesty’s Government whether they plan to take action to protect unborn girls from abortion for the sole reason of their sex.

[The Parliamentary Under-Secretary of State, Department of Health (Lord Prior of Brampton) (Con)]

My Lords, abortion on the grounds of gender alone is illegal, and we have made this very clear on a number of occasions. The Government published an analysis on 27 August this year which found no substantiated evidence of gender abortions taking place in Great Britain. We are committed to continuing to monitor this issue carefully and will examine any evidence that comes to light.

[Baroness Knight of Collingtree (Con)]

My Lords, I am most pleased to hear what my noble friend just told us. Why are there constantly reports in the papers of such abortions being carried out? It seems to be fairly usual if we look at the papers. Is he as concerned as I am that there seems to be no great battle against this?

[Lord Prior of Brampton]

My Lords, abortion on the basis of gender alone is illegal; there should be no doubt about that. There is no evidence at all on a population basis of any such abortions taking place. However, my noble friend has mentioned that there is anecdotal evidence to the effect that that may not always be the case. To that extent, she is right to be eternally vigilant about these matters. If it is happening, it is totally unacceptable, abhorrent, and against everything we stand for in this country.

[Baroness Walmsley (LD)]

My Lords, with which stakeholders are the Government working in order to fulfil their commitment to explore pressure and coercion on women in relation to boy preference and its possible link with domestic violence?

[Lord Prior of Brampton]

My Lords, I have a long list of stakeholders, which covers all the usual suspects in this area, if I can put it like that. In the way that the methodology was developed to assess whether there was a population basis for gender abortions taking place, we took advice from the Office for National Statistics and a number of the royal colleges.

[Baroness Armstrong of Hill Top (Lab)]

My Lords, has the Minister yet had the opportunity to consider the judgment made last week about abortion in Northern Ireland? What advice and work are the Government going to do with the devolved Administration to ensure that women in Northern Ireland get the same human rights as women in the rest of the United Kingdom?

[Lord Prior of Brampton]

My Lords, it is a devolved matter for the Northern Ireland Executive and not really for me or for us.

[Lord Dobbs (Con)]

My Lords, there may not be sufficient evidence for gender-based abortion prosecutions, but there is sufficient evidence, surely, for greater effort to be made about female genital mutilation. Tens of thousands of women in this country have suffered from it yet we still have not had a single successful prosecution. Does he accept that far more needs to be done to deal with this evil?

[Lord Prior of Brampton]

My Lords, my noble friend makes an important point. Gender-based abortion, female genital mutilation, honour crimes and various other issues still take place in some ethnic communities in England. Across the board, we have to be vigilant about all of these issues and make it clear that they are not acceptable. They are against the law and anyone aware of these practices going on should report them to the police.

[Lord Elton (Con)]

My Lords, my noble friend has twice referred to evidence on a population basis, which I take to mean that the evidence is taken without distinction of which part of the country it comes from. Has any effort been made to correlate the evidence with clusters of cases, which might point to some social activity that would be possible to countermand?

[Lord Prior of Brampton]

My Lords, the statistics are collected on the basis of birth across the population. They are then analysed in 500 different ways. In only one of those 500, which concerned the third or further child given birth to by women from Nepal, was there any variation from what one would expect. I can assure noble Lords that the statistical analysis is very robust.

[Baroness Nicholson of Winterbourne (LD)]

My Lords, while welcoming the appointment of the noble Baroness, Lady Verma, as the Minister with responsibility for women and children and for tackling violence against women and children overseas, given the prevalence of this abortion of female foetuses and the prevalence of FGM among certain girls under five, are the Government thinking of appointing a Minister for violence against women and children in the United Kingdom?

[Lord Prior of Brampton]

My Lords, I am not aware that we are giving consideration to that, but I will find out and write to the noble Baroness.

[Baroness Masham of Ilton (CB)]

My Lords, can the Minister confirm that unborn babies are covered by the discrimination Act?

[Lord Prior of Brampton]

My Lords, I am afraid I cannot confirm or deny that. I will write to the noble Baroness.

[Baroness Hayter of Kentish Town (Lab)]

I thank the Minister for his original reply; it is one with which we concur—we do not have the evidence and, like him, we consider that the Act is sufficient as it is. Some of the stories are partly, I think, just about the lack of self-worth that some girl children sometimes feel; that is partly about their education and that of their mothers. Can the Minister say something about what the Government do to encourage greater self-worth among young women and, indeed, older women?

[Lord Prior of Brampton]

My Lords, I encourage anyone with an interest in this matter to read some of the case stories put together by Jeena International—they are really quite shocking. They are anecdotal, but they are very real for a small minority of women who lack self-worth. That is, tragically, part of some of the cultures in England and we must do everything we can to improve women’s self-worth. I think that, in the long run, that will be done by education, education, education.

[Baroness Hussein-Ece (LD)]

My Lords, if, as anecdotal evidence suggests, there are such terminations of female foetuses, surely that would be reflected in the overall population of girls being born. The figures I have seen show that women are, thankfully, still in the majority in this country.

[Lord Prior of Brampton]

The statistical evidence is absolutely clear and points to the fact that there is no widespread gender abortion happening in this country. One would expect a ratio of 105 to 100 boys to girls and it is actually 105.2 to 100 in England, Scotland and Wales, so it is exactly where we would expect it be. There is one exception, which is the third and fourth born of Nepalese women, but this has been looked at two or three times and it is just a random variation in the statistics that we use.

India: Human Rights

Monday 7th December 2015 Lords Chamber

Question

14:57

Asked by

[Lord Harries of Pentregarth]

To ask Her Majesty’s Government what is their assessment of the current human rights situation in India.

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

My Lords, India has a strong democratic framework and its constitution guarantees fundamental human rights. However, it also faces numerous challenges relating to its size and its social and economic development. My right honourable friend the Prime Minister discussed human rights with Prime Minister Modi during his visit in November and welcomed Mr Modi’s commitment to preserve India’s traditions of tolerance and social harmony and to promote inclusive development.

[Lord Harries of Pentregarth (CB)]

I thank the Minister for her reply. India does, indeed, have vast problems because of its size, but the human rights situation is extremely worrying in a number of aspects. My particular concern is access to justice for minority groups and, in particular, for the Dalits. Every week 13 Dalits are murdered and five have their homes burned, and every day three Dalit women are raped. The problem is that while legal mechanisms are in place, their enforcement and implementation are weak or non-existent. Will Her Majesty’s Government encourage the Indian authorities to strengthen the whole legal justice system so that perpetrators are charged and brought to justice?

[Baroness Anelay of St Johns]

My Lords, the noble and right reverend Lord is right to point to the importance of implementation of laws where they exist on these matters. The British High Commission in India regularly discusses the treatment of minorities with India’s National Commission for Minorities and with state governments across India. It is important that we are able to continue dialogue with India about how best it can implement the strong legislation it already has.

[Lord Singh of Wimbledon (CB)]

My Lords, reference to respect for human rights in a constitution does not necessarily guarantee those human rights, and there has been disturbing evidence of discrimination in particular against the Christian and Muslim communities since the coming in of Mr Modi’s Government. Does the Government agree that human rights should be respected everywhere, without any considerations of trade?

[Baroness Anelay of St Johns]

My Lords, when we discuss human rights matters with countries around the world, we never allow issues about our economic relationship to get in the way of upholding international law and international humanitarian law, and it is important that that should be the case. I can say of course that during Prime Minister Modi’s visit to the UK, my right honourable friend the Prime Minister discussed intolerance in India with him. We should note that Prime Minister Modi has on numerous occasions reaffirmed his commitment to and respect for India’s core values of tolerance and freedom, as well as reaffirming the importance of social harmony and inclusive development. That is most welcome.

[Lord Wallace of Saltaire (LD)]

My Lords, we have a thriving Indian diaspora in this country, and many British NGOs have counterparts in India and work very closely with them. However, the Foreign Contribution (Regulation) Act 2010 in India does now inhibit the extent to which our NGOs and theirs can co-operate, and discriminates against British NGOs providing finance for their Indian counterparts. Have we raised that major and very illiberal Act with the Indian Government?

[Baroness Anelay of St Johns]

The noble Lord is right to point to the importance of the work of the diaspora, which is a valued part of our community. We are aware of concerns that some Indian NGOs have about the use by the Indian Government of the Foreign Contribution (Regulation) Act to which the noble Lord referred. We are monitoring the situation closely. When, for example, Greenpeace has made representations about the Act, we have encouraged it to pursue these matters through the courts in India.

[Baroness Morgan of Ely (Lab)]

My Lords, we are aware of an escalation in the number of rapes against women in India, including several allegations made against Ministers in the Modi Cabinet against whom criminal cases are pending. Was the issue of violence against women raised by the Prime Minister in his discussions with Prime Minister Modi—and, if not, why not?

[Baroness Anelay of St Johns]

My Lords, my right honourable friend discussed a wide range of human rights issues with Prime Minister Modi, and I am sure that the noble Baroness will be aware of the speech that the Prime Minister made at Wembley underlining his commitment to human rights. Certainly through both the British High Commission in India and the Department for International Development, we look closely at the issue of violence, whether in the public or the domestic sphere. With regard to violence against women per se, we are currently helping to implement India’s domestic violence Act—but clearly it is important that all justice systems should respect the needs of those who are victims within it. That is the case in India as in other countries.

Syrian Refugees: Settlement in the UK

Monday 7th December 2015 Lords Chamber

Question

15:02

Asked by

[Lord Roberts of Llandudno]

To ask Her Majesty’s Government what progress they have made to implement the Prime Minister’s pledge to settle 1,000 Syrian refugees by Christmas.

[The Minister of State, Home Office (Lord Bates) (Con)]

My Lords, the charter flights which have arrived represent a significant upscaling of the Syrian vulnerable persons resettlement programme. We are on track to meet the Prime Minister’s ambition of 1,000 arrivals from the region by Christmas.

[Lord Roberts of Llandudno (LD)]

I thank the Minister for that reply. Is he aware of the requests that have come from many places that we accommodate 3,000 unaccompanied children? Following the Prime Minister’s promise made last Wednesday—

“I am very happy to look at that issue again … to see whether Britain can do more to fulfil our moral responsibilities”—[Official Report, Commons, 2/12/15; col. 339.]

—what progress has been made towards Britain fulfilling its moral responsibilities?

[Lord Bates]

In terms of moral responsibilities, it should be recognised that we have committed to take 20,000 refugees by the end of the Parliament, which represents a significant upscaling of the scheme. The Prime Minister said last week that he would look at this issue again. He is doing so, but a key group that is concerned here is the UNHCR, which we are working closely with. It is concerned that if we offer special treatment to unaccompanied minors, that may encourage more of them to be trafficked or might take them away from the region where they would actually stand more chance of remaining with their families. In fact, that is being exploited by the people traffickers, who send the children first in the hope that they might be resettled, and that others may follow afterwards. The Prime Minister is looking at this again because on the face of it, there is a compelling humanitarian case. However, no decision has been taken yet.

[Lord Tomlinson (Lab)]

Will the Minister reflect on the fact that another of the Prime Minister’s pledges was to reduce net migration from hundreds of thousands to tens of thousands? Can he update your Lordships’ House on the statements made by the Chancellor of the Exchequer last week, in which he seemed to suggest that the Government are minded to take migration for the purposes of higher education out of the net migration count?

[Lord Bates]

I have two thoughts on that. First, of course, it is absolutely right that there needs to be downward pressure on the wrong sort of immigration into this country. We have got to get those numbers down, precisely so that we can also offer more generous support to the genuine refugees and asylum seekers. On the specific of students, whatever the change in the calculation of the numbers, it will make no change to the student policy. There is no cap on the number of students who can come here for genuine courses at genuine universities, and that will remain the case.

[Baroness Sharples (Con)]

How can we be sure that these people seeking refuge are indeed from Syria?

[Lord Bates]

Yes, my noble friend is absolutely right to point this out. That is one of the reasons why we want the investigations and checks to take place in the refugee camps in the region, under the auspices of the UNHCR, rather than encouraging people to make the perilous journey here and then try to establish whether their bona fides and credentials are as they say they are.

[The Lord Bishop of Bristol]

My Lords, I return to a question I previously hinted at, and in the light of the rather high-profile reportage of the plan of the most reverend Primate the Archbishop of Canterbury to house refugees in a cottage in the grounds of Lambeth Palace. Given that we understand there is some necessary bureaucracy associated with the proper placement of refugees, have we got the balance right? It is not just a question about the Archbishop, but about the good will shown by a good many people, which seems to be turned back by unnecessary bureaucracy.

[Lord Bates]

We do not want that to happen, of course. We must remember that the priority consideration regarding the vulnerable persons scheme is that the people in question are vulnerable. First, we are talking about women and children who are at risk, along with people who have been subject to torture and those in need of acute medical care. They may not be the ideal people to take up the offers coming forward under the community-based sponsorship scheme. Like the right reverend Prelate, I read that report over the weekend. A meeting is going to take place on Thursday between Lambeth Palace and the Home Office to resolve that difference—I am sure it can be resolved—and to make sure that that very generous offer is accepted and taken up.

[Baroness Hamwee (LD)]

My Lords, is the Minister aware of the recent thoughtful report from the Children’s Society, entitled Not Just a Temporary Fix, on the search for durable solutions for separated migrant children? One of its recommendations is that Home Office decision-makers should be trained in how to assess a separated child’s best interests, rather than simply referring to Section 55, the welfare duty, as if such a reference was enough.

[Lord Bates]

I read that report, which I think is good. We are looking at it and it raises a number of issues. Under the unaccompanied asylum-seeking children scheme—UASC—there is an additional level of guidance from the Department for Education, and the Minister for Children and Families, Edward Timpson, has lead responsibility for it. Also, we cannot get away from the fact that although the Home Office might have such responsibility under the Children Act 1989, local authorities have the statutory duty of care for any children under their care, whether or not they are asylum seekers.

[Lord Kennedy of Southwark (Lab)]

My Lords, can the Minister tell us exactly why progress has been so slow in getting these refugees to the UK, and what work has been done with the UNHCR in organising migration with the refugee community to get the refugees here?

[Lord Bates]

It is a slow process because we are undertaking the vetting and prioritising procedure in the camps in Jordan, Lebanon and Turkey with the UNHCR. The UNHCR undertakes its checks, as then does the Home Office. It is a lengthier process at that end, but the whole purpose of the vulnerable persons scheme is that, once they are given leave to remain or international protection, they come to this country and do not have to go through any such process. They have accommodation to go to, they have schools, hospitals and medical care, and benefits if they need them. Therefore, although it is taking slightly longer at that end, we hope that that will shorten the process when they actually arrive here.

[Baroness Walmsley (LD)]

My Lords—

[Lord Swinfen (Con)]

My Lords—

[Lord Dubs (Lab)]

My Lords—

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

My Lords, I suggest that it is the turn of a Back Bencher—the noble Lord, Lord Dubs.

[Lord Dubs]

My Lords, what advice, support and help are the Government giving to local authorities to ensure that they have a satisfactory settlement, so that people can be helped into move-on housing and that the local medical and education support services, for example, are there? Given that we have previous experience—for example, when the Bosnians came here—please let us not waste it.

[Lord Bates]

Exactly. Taking precisely from that experience is the reason why the Prime Minister appointed a Minister for the Syrian resettlement programme. Richard Harrington is based in the Home Office and is liaising with the DCLG, which is conveniently in the same building, to ensure that such joined-up work happens and people get the support they need when they arrive.

[Lord Swinfen]

My Lords, what is being done by the Government to help Kent and Dover, in particular, to deal with the large number of unaccompanied minors arriving in the country?

[Lord Bates]

That, of course, was one of the big pressures. There is now in place the Kent dispersal scheme, for which Richard Harrington is responsible: rather than people being concentrated in a given local authority area, they are redistributed nationally. So far, 55 local authorities have signed up to that scheme, through which they can receive unaccompanied asylum-seeking children.

[Baroness Walmsley]

My Lords, will the Minister note the activities of Siemens in Germany, which is offering—

[Baroness Stowell of Beeston]

My Lords, I am so sorry. Although I understand why the noble Baroness is trying to get in, there are occasions when we should give priority to Back Benchers rather than Front Benchers. I suggest that if we are to have one more speaker, it should be a Back Bencher.

[Lord Judd (Lab)]

While no one would underestimate the complexities, and indeed the pressures on the Minister and his colleagues, is it not important for the consistency of our position to remember constantly to emphasise the values we are trying to protect in our society, one of which is the Christian value of generosity and warmth towards people in situations such as this? Must we not keep that in mind and remember to consider, with all our preoccupations, what we are adding to the preoccupations and problems of Jordan and Lebanon?

[Lord Bates]

Part of that is the generosity of people directly making offers under the community resettlement scheme. But I am also very proud of the generous commitment the Government are undertaking on behalf of this country in providing £1.1 billion of aid to Syrian people in the region to allay their suffering there. That is the second largest figure in the world.

Cyberattack: UK Defences

Monday 7th December 2015 Lords Chamber

Question

15:13

Asked by

[Lord Giddens]

To ask Her Majesty’s Government what is their assessment of the vulnerability of the United Kingdom to organised cyber-attack.

[The Parliamentary Secretary, Cabinet Office (Lord Bridges of Headley) (Con)]

My Lords, as the Chancellor of the Exchequer said in his speech to GCHQ on 17 November, despite a huge amount of investment, effort and world-class tools and capabilities, we are not where we need to be, particularly given the pace of innovation in cyberspace. Since 2011, we have invested £860 million in a national cybersecurity programme. As announced in the national security strategy and strategic defence and security review 2015, we plan almost to double investment in cybersecurity over the next five years.

[Lord Giddens (Lab)]

My Lords, I thank the Minister for that very helpful reply. One of the most serious threats we face is that of a co-ordinated cyberattack against the UK financial sector. The Bank of England has shown that individual banks, especially the large banks, are pretty well protected but there are huge vulnerabilities in the connections between the banks and the rest of the economy, which some people say could lead to panic. One quite seasoned observer described the possibility of financial Armageddon—the meltdown of the system—given that most money today is electronic and no longer held in the form of cash. This is a matter for the Government, not just for the Bank of England, so what concrete steps are the Government taking to address this issue?

[Lord Bridges of Headley]

I pay tribute to the work of the noble Lord and a number of other of your Lordships in this area. On the specific point, the financial sector, including the City of London, has undertaken a number of exercises in recent years: Waking Shark I, Waking Shark II and the Market Wide Exercise, as well as the more recent Resilient Shield exercise between the US and the UK last month. In June, the FPC agreed that the Bank, the PRA and the FCA should also establish arrangements for CBEST tests to become one component of regular cyber resilience assessment within the UK financial system.

[Lord Sugar (Non-Afl)]

My Lords, the Minister may be aware that the infrastructure in most of the exchanges of internet service providers in this country is supplied by a Chinese company, Huawei. In the previous coalition Government, Sir Malcolm Rifkind was commissioned to inquire about this country’s vulnerability to a possible instruction by the Chinese Government to shut our systems down. Does the Minister have the results of this investigation? He should also be aware that the United States does not allow that company to operate there.

[Lord Bridges of Headley]

I will write to the noble Lord about his specific point. However, we are not complacent on this issue. As the noble Lord, and other noble Lords, will know, virtually every telecommunications network in the world incorporates foreign technology. Most manufacturers have some of their equipment built in China and use technical components from a global supply chain, regardless of the location of their headquarters.

[Lord Clement-Jones (LD)]

My Lords, I should declare an interest as a former adviser to Huawei. Given that 90% of larger companies suffered a security breach last year, I welcome what the Chancellor and the Minister have said about setting up a national cyber centre. To date, the Cabinet Office has been responsible for the national cybersecurity programme. Can the Minister confirm that it will continue to be so, and to be responsible for the national cyber centre, rather than handing it over to the tender mercies of the Home Office, which is not known for its business-friendliness?

[Lord Bridges of Headley]

I can confirm that and draw the noble Lord’s attention to paragraph 7.7 on page 82 of the National Security Strategy and Strategic Defence and Security Review, which sets out a very nice organogram for who is responsible for what.

[Lord West of Spithead (Lab)]

My Lords, will the Minister confirm that the firing chain for Trident is air-gapped in its entirety, as it certainly was until 2006, and is therefore invulnerable to cyberattack? Will he also confirm that any upgrades that may be planned for that firing chain will remain air-gapped? If not, there will clearly be a vulnerability.

[Lord Bridges of Headley]

The noble Lord speaks with immense experience in this area and I will write to him on the specific point. I cannot comment on the detail of the security arrangements for our nuclear deterrent but we can, and do, safeguard it from threats, including cyber.

[Lord Hennessy of Nympsfield (CB)]

My Lords, will the Minister update the figures on substantial attacks on British government institutions and businesses which last year were running at between 150 and 200 per month? Has that figure changed substantially and has there been the slightest indication that, since the Chinese leadership pledged to the Prime Minister that they would lay off, there has been an easing from that quarter?

[Lord Bridges of Headley]

I can give some figures. GCHQ typically responds to an average of 70 sophisticated attacks on government networks per quarter. In summer 2014, GCHQ responded to approximately 200 incidents and this figure doubled to nearly 400 during summer 2015.

National Insurance Contributions (Rate Ceilings) Bill

Monday 7th December 2015 Lords Chamber

Third Reading

15:19

Bill passed.

Welfare Reform and Work Bill

Monday 7th December 2015 Lords Chamber

Committee (1st Day)

15:19

Relevant document: 13th Report from the Delegated Powers Committee

Clause 11: Changes to child tax credit

Amendment 1

Moved by

[The Lord Bishop of Portsmouth]

1: Clause 11, page 13, line 11, after “person,” insert—
“( ) the child is in the household as a result of a kinship care or private fostering arrangement,”

[The Lord Bishop of Portsmouth]

My Lords, my concerns about this measure, along with those of other faith groups and organisations, are set out in the briefing note that my colleague the right reverend Prelate the Bishop of Durham circulated to all Members of the House prior to the Second Reading debate. In that note we expressed our belief that children are a blessing and that anything that sends an implicit or explicit message that a child is unwanted or burdensome should be strongly resisted.

The stated rationale for the policy outlined in this measure is to ensure that people on benefits and tax credits face the same financial choices around the number of children they can afford as do those supporting themselves through work. I understand, and support, the Government’s desire to encourage responsibility through the welfare system. However, it is important that personal responsibility is not defined too narrowly or in purely financial terms, and that it encompasses our responsibilities to our families and neighbours, and to the communities to which we belong.

I turn to the amendments in this group. Kinship carers, for example grandparents, older siblings and other relatives and friends who step in to care for children, many of whom would otherwise be in the care system, are affected by these proposals. We have a responsibility towards these people and the Bill does not adequately reflect the share we all properly have in caring for and supporting them. These children are unable to live safely at home because of domestic abuse, their parents’ mental health problems, alcohol or drug misuse or the death of a parent.

In purely financial terms, becoming a kinship carer is an unwise decision. Kinship carers face significant additional costs and often a loss of income as the majority are forced to give up work temporarily or permanently to look after these children. Yet many people take on this responsibility sacrificially out of a commitment to love and care for their extended family, often at great personal expense to their own emotional and physical health. Thanks to their dedication, children in kinship care do significantly better than children in unrelated care, despite having suffered similar adverse experiences. In personal financial terms, it is an unwise decision: in social and community terms, it is a generous and good decision.

For example, Jane is a paternal grandmother and kinship carer. She and her husband are raising four grandchildren who are all under six years old. The children cannot live with their parents due to severe physical abuse. Although Jane and her husband get some special guardianship allowance support from the local authority, they are reliant on tax credits.

Jane tried to continue at first working full time when she and her husband took on the children, but it was too much. The children were suffering with their health and their well-being. They were upset, too. And she did not get any help with child care. Eventually her husband gave up his business to care for them so that Jane could work three days a week. If their tax credits are reduced, she would obviously have to go back to work full time in order for them to manage financially, at the expense of the needs of those very vulnerable children.

It has been estimated by the Family Rights Group that there are around 200,000 children being raised by kinship carers across the nation. More than one in five kinship-care families contains three or more children, and nearly two-thirds of these receive tax credits—around 18,000 families in total. The changes proposed in the Bill with the consequent reduced financial support for these families could well stop potential kinship carers from being able to take on the care of a sibling group of children, or lead to the splitting of a group of three or more siblings, or discourage carers from taking on an additional child if they already have dependent children of their own.

This is clearly not in the children’s best interests, nor in society’s—and nor is it in the Chancellor’s best interests. Exempting this group from Clauses 11 and 12, as I and others are proposing, would reduce the savings to the Exchequer by an estimated £30 million in 2020-21. That is down from £1,365 million in savings to £1,335 million. It would require only 200 kinship carers to be financially prohibited from taking on a sibling group of three or more for the extra care and court costs to outweigh any public savings. In care, the cost per year of a child is about £40,000: the one-off court costs are about £25,000.

The Government’s long-standing commitment to ensuring that families are stable is welcome. Will the Minister be able to agree with us that creating the best possible environment for children to flourish would be best enabled by reviewing this proposal? The moral case for supporting this group of amendments is sufficient, in my view, but the economic case is strong, too.

[Baroness Sherlock (Lab)]

My Lords, I rise to speak to Amendments 16 and 17 in my name and that of my noble friend Lord McKenzie of Luton and to support the other amendments in this group. I fully support the case on kinship care set out so carefully by the right reverend Prelate the Bishop of Portsmouth. There are some common arguments that apply to adoption and kinship care, the two subjects in this group, and reasons that the Government should think very carefully before deciding not to provide tax credits and universal credit to third and subsequent children in those settings.

First and most obviously, we should not be putting financial barriers in the way of families willing to take on what are often very vulnerable children. As the right reverend Prelate has pointed out, if such families are deterred, the state is likely to find that the costs go up, albeit not to the Department of Work and Pensions, but I hope the Minister would not be so parochial as to allow that in any way to influence him.

The average child tax credit claimed for a family of three or more children is £3,670, but, as the right reverend Prelate has pointed out, the NAO found in 2014 that it cost £40,000 a year to foster a child, aside from the one-off costs. How can that make sense? In many cases, had those children been able to stay with their birth families, tax credits would have been payable for them anyway, so it is not as though the cost is increasing. As we have heard, there is clear evidence that children in kinship care settings do better than those in unrelated care, despite having similar adverse circumstances.

15:30

As we have also heard, kinship carers will be affected in a range of other ways, which we may come on to later in the Bill, but I, too, have had some examples given to me which were very moving. As well as grandparent care of the kind described by the right reverend Prelate, there are cases of sibling care. In a case brought to my attention of a lone parent who died of cancer leaving three children, the eldest of those children was over 18. So, supported by a charity and planned jointly with the mother, it was arranged for her to become the responsible carer of the two younger siblings when the mother died.

As an example of relative care, when another lone parent died leaving three children—all under 12—they were taken in by the lone parent’s sister and husband, who already had two children of their own. Both parents were in low-paid work but felt that offering a permanent home to these three children was the right thing to do. Without child tax credits, kinship care simply would not be an option for such families. They could not afford to maintain the children. Even with the support that they were getting, the reason that I came to know about them was that they applied to the charity Family Action for a grant to provide school uniforms and bunk beds for the three extra children who they were taking on, because they simply could not afford to pay for them otherwise.

There are also a number of other private fostering arrangements where friends or other relatives provide what may be shorter-term care—for example, when somebody may be hospitalised for a mental health issue or for cancer treatment. Private fostering arrangements can be registered where that is felt by the social workers or carers to be in the interests of the child. A social worker may sometimes seek an interim placement to avoid taking a child into care temporarily. If the Minister is willing to indicate at the end that he will look further at kinship care, will he look at the small group of private fostering arrangements along with that?

Amendments 16 and 17, which are in my name, would exempt children who enter a household as a result of adoption. It is government policy to increase the number of children who are adopted. Ministers have spoken much about this—they have already devoted £150 million to the adoption reform grant—but this policy will directly undermine that policy objective. Adoption provides huge savings to the public purse because the family takes on responsibility for the children as though they were their own biological children. It also has demonstrably better outcomes for children. There are very small numbers of children affected in these cases, and any savings for the DWP will be dwarfed by costs elsewhere in the system.

I have been trying to get a sense of the scale. In March 2015, there were 69,540 looked-after children—virtually 70,000. Only 5,330 of those children were adopted from care during that year and 1,930 of those, which is 36%, were part of a sibling group. I do not know how many of those sibling groups consisted of at least three children but it means that, in this relatively small group, this is potentially a significant issue. Adoptive parents often have children of their own, in addition to the children whom they adopt, and there will be a clear financial disincentive if adopting would take them over the two-child limit. I am also very concerned that there will be a disincentive to adopt sibling groups if the two-child limit applies. Adopters are often specifically asked to take on sibling groups together, but if there are three or more siblings or children already in the household, that will be too much to ask of them. One of the consequences is that children will stay in foster care for longer, waiting for an adoption placement at £40,000 per annum but also making it harder for them to be adopted.

I have one brief case study. I spoke last week to a delightful woman called Ruth, who gave me permission to tell her story. She and her husband adopted three children who were siblings. She spoke movingly about the wonderful family that she had but said that it had not been easy, either emotionally or financially. She gave up work when the children were placed with her for quite a time because, overnight, she and her husband suddenly had three children under four who had significant attachment issues and needed her undivided attention. Part of the decision to place the children with her was the fact that she would give up work in the early years to look after them. Her husband is a vicar, however, so money was tight. She told me that tax credits made all the difference to her ability to take on those children and care for them. As she put it, “Tax credits helped us hugely. It is not like growing into a family of three kids. Expenses increase immediately”. Of course they do, when there is no handing down of clothes or toys, or buggies or beds, and no time to save up as the family grows. Suddenly, overnight, you are a family. She also described some of the hidden costs of adopting because of the extra pressure on families where there are children who have significant attachment issues. Families end up spending quite a bit of money on extra tuition and other external support.

There is already a shortage of parents willing to adopt sibling groups. Social workers struggle to find placements for three—and, occasionally, four or five—siblings so they stay in the care system for longer. Of course, the longer they stay in care, the harder it gets to place them because, unfortunately, it is harder to place older children. This costs vastly more than adoption but also damages the children, and the only alternative is to break up sibling groups, which is also very damaging to the children. Ruth spoke very movingly of how the sibling bond can often be the only stabilising factor in a group of children who have otherwise lost everything.

Kinship care and private fostering and adoption provide huge savings to the public purse and better outcomes for children. Relatively small numbers are affected and any money saved here will be offset by higher costs elsewhere in the system. Can the Minister tell the Committee what attempts the department has made to assess whether the effect of this Bill will be to deter families with children from adopting more children? What assessment has the department made of whether it is likely that sibling groups will be less likely to be adopted as a result? Has the Minister discussed the impact of this change with his DfE colleagues? Finally, what assessment has he made of whether costs will increase elsewhere in government? I hope the Minister has some information for us because, if he was simply to say that no attempt has been made to consider those impacts, that would obviously be irresponsible. I know he is not an irresponsible Minister, so I look forward to hearing his reply.

[Baroness Manzoor (LD)]

My Lords, we on these Benches also agree with kinship care as an adoption exemption. According to the Children’s Society, kinship carers support an estimated 200,000 children across the UK. These, as we have already heard, are families who have taken in children, often in difficult circumstances, out of love and kindness. They could find it all the harder to do so if they are unable to access any additional support through the tax credits system. Although the Government and David Cameron personally have said that they want to dramatically improve the adoption process, stopping child tax credits and universal credit for those who adopt or take in family members or friends runs counter to what they have said in the past. Can the Minister say what has changed?

[The Earl of Listowel (CB)]

My Lords, my name is attached to Amendments 1 and 16 in this group. First, can I make an apology to the Minister and the Committee? On Second Reading, I feel I was rather too soft on the Government. I commend the Government for their achievements in terms of employment, but there are several areas in this Bill that cause me real concern the more I contemplate them, and I should have said more about them at Second Reading.

I agree with the right reverend Prelate—if I may agree with him—that it would be unwise for the Government not to pay full attention to these amendments. I was speaking to a kinship carer earlier today. She was a godmother to a child. About six years ago, the child’s mother came into difficulties so she became a kinship carer. It was very challenging for her because local authorities do not offer much support at all for such carers. The child must have been about 11 when she came into the godmother’s care. Over the last six years, the girl has done well and done well at school. About a year ago, the carer adopted the girl. Currently, the girl is making applications to university and it is very good to see how well she has thrived, first under the kinship care arrangement and now under the adoption arrangement.

As the noble Baroness, Lady Sherlock, said, people in care often lack stable relationships and the only one they may have is with their siblings, yet it can be difficult to find a foster carer or an adoptive parent who will take on a sibling group. We should be very careful to avoid any disincentive to potential adopters to do that. I take this opportunity to pay tribute to the work of Delma Hughes, a care leaver herself, who never got to know her five siblings. As an adult with care experience, she set up a charity called Siblings Together, which she has now been running for about 10 years. It provides holiday gatherings for siblings in care and opportunities for them, for example, to go to the Young Vic and perform in plays together or to go off to write poetry together, which bring together separated siblings and are immensely important for them.

I am sure the Minister will give a very sympathetic response to these concerns, which I look forward to. I also thank the Family Rights Group, which provided a very helpful briefing for this amendment on kinship care and has been working in this area for many years. I very much value its work, as I am sure all those in this area do.

[Baroness Armstrong of Hill Top (Lab)]

My Lords, I, too, support these amendments, although as I have a debate tomorrow in the dinner break on kinship care, I will not detain the Committee at great length. As my noble friend on the Front Bench said, both the outcomes for kinship carers and the financial issues point to the Government needing to think again.

Kinship care is, by any measure, the most successful means of looking after vulnerable children who cannot live with their parent or parents. All the evidence points that way. However, the evidence also shows that more than 70% of kinship carers are technically in poverty. I know that there will be arguments about what that means, but the reality is that these families struggle. They do this because they want the children to have the very best opportunities, but when people become a kinship carer, as my noble friend and the right reverend Prelate said, they take the family on immediately. Very often, the children whom they are now taking care of will be traumatised and have real challenges. That also means that many of them are unable to work—certainly until they have got the children settled and the children are strong and resilient enough to be able to manage with their carer at work.

The costs of care are enormous, both in terms of the outcomes for children and financially. Have the Government considered, across government, the financial burden that they will be putting on to families that may then break down because kinship carers will not be able to maintain the care of more than two children? Have they considered the emotional and other burdens that they will also be inflicting on those kinship carers who end up having more than two children to care for? They have not sought this or set out to have two children: they do it because arrangements with the parents, for whatever reason, have broken down. I hope that the Government have thought about this and realised that this is an area that they really do have to exempt.

[Baroness Drake (Lab)]

My Lords, I support the amendments in this group, because Clause 11 removes eligibility for the child element of child tax credits for the third and subsequent children and Clause 12 introduces the two-child limit for receipt of the child element of universal credit for families making a new claim. Families with three or more children could lose up to £2,780 per year for each additional child, and may also face the loss of the family element of tax credits—currently £540 per year per family.

Like other noble Lords, I am deeply concerned about the impact of these changes on the families of friends and kinship carers. Some 22% have three or more children in their household—about 29,000 families. That is why these amendments seek to exempt kinship carers from the two-child limit. Otherwise, future carers voluntarily taking on vulnerable children will hit a financial barrier to support, even where the third child is disabled. Yet these carers will still incur significant costs and may face financial distress from taking on these children. Kinship carers provide vital support for some 200,000 children when parents are unable to care for them, often because of urgent circumstances. The children frequently have emotional difficulties, often because they have been living with parents who are drug-dependent or who have abused or neglected them.

The Family Rights Group estimates that exempting carers from the two-child limit would cost £30 million. Yet these carers already save taxpayers the cost of placing the children in care. To restate the figures referred to by the right reverend Prelate the Bishop of Portsmouth, the cost of keeping a child in care for a year is £40,000. The cost of care proceedings is £25,000. The savings that the 132,000 kinship families deliver by voluntarily caring for these 200,000 children run into billions. The disincentive effect of the two-child limit needs to deter only 200 kinship carers from caring in the future for three or more children, and the £30 million saving would be wiped out. That is without counting the human cost to the children.

This disincentive effect on kinship carers is compounded by the benefit cap, which will be set at an increasingly lower level. Kinship carers are not entitled to paid leave while children are settled; they care for the children at their own cost. Some 49% have to give up work when the children move in, or reduce their earnings, because they need to take time to settle a distressed child—often a requirement imposed by the social worker, for good reason. Children can arrive with no notice, after a late evening call from the social worker asking the carer to take the children. The impact of the two-child limit on the kinship carer is deeply unfair, and could act as a disincentive to care for the children. It will impact on future carers, whether working with modest incomes or not working. It will impact harshly on carers who already have their own children, or who are young themselves and want to have their own children—such as the family that Grandparents Plus is in touch with, a sibling carer and his partner who are raising four brothers and sisters since their father’s death as well as their own baby.

Let us look at the reasoning for withdrawing support for any child beyond the first two. The impact assessment advises that the Government expect the limiting of the child element of child tax credit and universal credit to the first two children to,

“encourage parents to reflect carefully on their readiness to support an additional child”.

Of course, such a statement is a nonsense—in fact, contrary to common sense—in the context of kinship carers. The need is not to get such carers to reflect carefully on their readiness to care for the vulnerable child. To the contrary, public policy needs to support such carers in their readiness to care for an additional vulnerable child. That is better for the children and secures savings for the state by not placing them in the care system. Kinship carers are not the birth parents of the children, but voluntarily embrace their care. The Government stress that the limits on benefits beyond the first two children is a behaviour-related measure, because,

“encouraging parents to reflect carefully on their readiness to support an additional child could have a positive effect on overall family stability”.

However, such reasoning is incoherent when applied to kinship carers. Encouraging carers to pause and reflect on the disincentives in the Bill on taking responsibility for a vulnerable child could, perversely, have a negative effect on the family stability available to the child. Kinship carers should not be disincentivised; they should be supported.

During the passage of the Children and Families Bill, I listened to a BBC radio programme examining the experiences of kinship carers and interviewing a lady who recounted the night—she remembered the date, having celebrated her birthday with her own two children—when her doorbell rang around midnight. She opened the door to see a police officer, a social worker and two distressed children, her sister’s children, at risk of domestic violence. She told movingly of how she had raised those children along with her own two, and had struggled, with little support from the local authority services, and of how proud she was of the recent graduation of the little girl on her doorstep that night. That alone was a powerful story but she went on to recall how, a few years after that night, the doorbell rang, again late at night. This time, the policeman and the social worker were holding her sister’s baby. The interviewer asked if she was tempted to decline to take the baby in view of the lack of support that she had received previously. I remember the incredulity in the woman’s voice at the question, and the power of her answer to the effect of: “How could I abandon a little baby just because I had been poorly treated?”. She brought up five children, two that she gave birth two and three that she embraced. I ask the Minister: if someone like that lady were faced with a similar scenario in future, under this Bill, what behavioural response would the Government be seeking to achieve from them with the two-child limit on benefits?

If the Government disincentivise kinship carers, the people they will hurt are vulnerable children. I doubt that that would pass the public litmus test. The Minister has previously demonstrated his understanding of the importance of kinship carers to vulnerable children, so I ask him to commit to considering that kinship carers be exempted from the two-child limit on benefits. It does not make sense, either for the interests of the child or in terms of public expenditure.

[Lord Kirkwood of Kirkhope (LD)]

My Lords, it is a pleasure to follow the noble Baroness, Lady Drake. The House owes her a debt because of the exemplary work that she has done over many months and years on the subject of kinship caring. Her speech will repay careful study, and I shall look forward to doing that when the Official Report is printed.

This is going to be a harder Committee stage in social security terms than some that we have had in the past. This is basically a Bill that reduces money but does little else of interest. However, it is a very important one. I noticed that the very mild-mannered noble Lord, Lord McKenzie of Luton, characterised it as the most wretched Bill that he had ever seen in his life. That is a considered view from a moderate man, so we need to be careful about how we take our proceedings forward.

The Bill dramatically changes the money and resources available to the social security system. I am sure that everyone understands that there is a case in periods of austerity for making special arrangements to deal with immediate and urgent circumstances. However, we need to be careful that we are not making changes that, as if by magic, get woven into the social security fabric in perpetuity. What I am most worried about—this is really a discussion for clause stand part on Clauses 11 and 12—is that the two-child limit is going into universal credit. That is a matter of great concern to me. I say in passing that the noble Earl, Lord Listowel, was contrite earlier about having been too nice to the Government. Indeed he was, but I am pleased that he has put the record straight.

The department has certainly done a very good job, because the universal credit situation could have been a whole lot worse, which would have overshadowed all these proceedings in Committee. The way we contrive to support people is important, particularly those with larger families; it is mainly ethnic minority communities which have that culture, which we know predisposes them to risk of poverty, and we need to take that into account along with everything else as we go forward.

The Minister needs to listen carefully to the case for exemptions. The Committee will be faced, certainly at the later stages of proceedings on the Bill, with deciding to what extent what the Government are trying to do is reasonable in the long term as well as in the short term. As far as I am concerned—I put it bluntly on the record and cannot make it any clearer than this—I am willing to work with the Government to mitigate some of the sharp edges of the Bill as regards the savings that they hope to make. If the Government are willing to make concessions and think carefully, which the Minister in the past has demonstrated he can successfully do, and if he is willing to go away and look at some of these exemptions we are talking about today, I would be much more disposed to decline to support attempts on the Marshalled List to vote against Clauses 11 and 12 standing part. I will approach the Bill in that way. I will not be unreasonable; I perfectly well understand the financial exigencies that we must face and the continuous battle the department has with the Treasury—it would be unrealistic not to accept that. However, the onus is on the department to look at ways of mitigating some of the changes in the Bill, because it needs to be changed.

I said at Second Reading that I wanted to pursue preventive spending. After the cases that have been made, by the right reverend Prelate and others, I find it hard to believe that a saving of £30 million would not risk a much greater public cost in other silos within Treasury spend across central government as a whole. Therefore the question asked by the noble Baroness, Lady Sherlock, on whether the Government have done any work about what it would cost if we reduced the support to kinship carers in this way is important.

The situation we face as a Committee will be difficult to reconcile unless the Government are able to answer some of these questions, certainly about spending money and investing to save in future. I certainly hope that the Government will think very carefully about some of the powerful speeches that have been made, in particular on kinship carers.

[Baroness Massey of Darwen (Lab)]

My Lords, I will say a few words about kinship care. I remember the Minister speaking twice on this topic at previous Committee stages. I think that he knows the issues and is sympathetic to them—he certainly was the last time we met to discuss the issue of kinship carers. My noble friend Lady Armstrong has tabled a debate on this topic tomorrow, when I shall say much more, but this issue of adding complexity to the lives of kinship carers is important. Kinship carers deserve all the help they can get not to be landed with some other complex issue of how many children they can care for.

I recall being chair of the National Treatment Agency some years ago, where I came across quite a few grandparents who were carers—I think grandparents make up some 40% of kinship carers. The grandparents called themselves the midnight grannies, because they were often landed with children. But I am talking about complexity because they do not have the support they need. I met people who were getting no support—neither advice nor financial support from the local authority; it seemed to me to be hit or miss as to how local authorities behaved. Some grandparents had court battles about the children they were caring for. These are people in distress, as are the children. The grandparents have lost a daughter or son—they may be in prison, be dead or be using drugs and alcohol—and the children have lost their parents. So there is a lot of distress in the family, and yet these kinship carers are coping with that. One of them said to me, “I’m tired of filling in these forms when I should be reading to my grandson”. That is how it works: they have to fill in forms and go to court, rather than being able to spend time caring for the children as they would want to.

It is a complex issue and I think that we ought to be aware of that—I am sure the Minister is aware of that. Therefore, we do not want to heap complexity on these people who, after all, save the state a huge amount of money a year for each child they care for.

16:00

[Baroness Lister of Burtersett (Lab)]

My Lords, if I were the Minister, I would grasp with alacrity the olive branch—or is it fig leaf?—that was offered by the noble Lord, Lord Kirkwood of Kirkhope. Personally, I oppose the principle of these clauses, but I will talk about that later. I will speak only very briefly now in support of all the amendments in the group. We have heard some very powerful speeches that show the unintended and undesirable social policy consequences of these clauses, which I cannot believe the Government wish to happen. I hope that the Minister will reflect very carefully on these speeches.

At Second Reading, the Minister gave a little hint that, at least on kinship carers, he might be willing to consider an exemption, although I understand that nothing has been taken forward on that. He also said that the Government,

“will look at the important issues around exemption through secondary legislation and will provide more detail in due course”.—[Official Report, 17/11/15; col. 125.]

As well as adding my support to these amendments, I simply want to ask the Minister what he means by “due course”. We really have to have these details before Report. We should not go to Report until we have these details about exemptions.

I remind the Minister that on the previous Welfare Reform Bill the Joint Committee on Human Rights made very clear how important it is that, even if we cannot have the regulations themselves—I can quite understand why that is not possible—from a human rights perspective we should have full details of what will be in the regulations. I hope that, at the very least, the Minister can give us that assurance today and that he will think hard about the arguments that have been made already.

[Baroness Howarth of Breckland (CB)]

My Lords, I want to speak extremely briefly because the speech I might have made has already been made by other noble Lords in terms of detail.

Having listened to the Minister talk in various venues about wanting to ensure that there are no unintended consequences from this legislation, I want him to think carefully on the speeches that have been made and about what basis of philosophy or principle the Government have underlying this legislation. I know the basic tenet is that they want to make sure that parents can work and that all children are able to achieve the best educational outcomes—those are the Government’s own words. But some of these measures will undermine that and take families into greater financial hardship. I am particularly interested in the children, because taking those families into greater financial hardship will reduce the life chances of those children. Those of us who have worked with children down the years have seen the consequences of that, not only the emotional consequences but the financial consequences.

All the arguments around larger families, kinship care, adoption and the very many informal arrangements that families make to ensure that their children are emotionally cared for have been made. Again, I hope that the Minister will reflect on that in the context of his own Government’s policy and objectives.

We are a nation that should care. Indeed, the Minister’s party described itself as a “caring party”. I also admire the Government’s objective of ensuring that children make their own way and are not left in poverty because of parental behaviour. However, we know that you can affect that behaviour, as the noble Baroness, Lady Sherlock, and others have said, by the kind of care that they receive themselves and are able to reflect with their children. Therefore, will the Minister tell us how he intends to ensure that the Government’s philosophy and principles are reflected in the way that they deal with large families, particularly those from disadvantaged groups?

[The Minister of State, Department for Work and Pensions (Lord Freud) (Con)]

I thank noble Lords for some very good speeches. To pick up the point made by the noble Lord, Lord Kirkwood, I have listened to those speeches very carefully, although I am not in a position today to provide much satisfaction as I stand here. Let me begin by setting the context for the policy.

[Baroness Hollis of Heigham (Lab)]

Does that mean that the Minister will give satisfaction to us before Report?

[Lord Freud]

No, it means that I am not in a position to provide any satisfaction and, by definition, that position does not change.

Let me begin by setting the context for the policy, which will remain relevant for the other amendments on these clauses. At the 2015 summer Budget, the Government announced their plans to move from a low-wage, high-tax and high-welfare economy to a higher-wage, lower-tax and lower-welfare society. This is part of the Government’s plan to deliver a new deal for working families, which also includes incentives to ensure that those who are in work are rewarded fairly. As part of this, we announced reforms to child tax credit and universal credit to help put welfare spending back on to a sustainable footing.

The tax credits system has become too generous. As introduced by the last Labour Government, it was originally forecast to cost £11 billion in its first year. In fact, tax credit expenditure more than trebled in real terms between 1999 and 2010; and increased by £9.6 billion in real terms between 2004-05 and 2014-15. Currently, the benefit system adjusts automatically to family size, while many families supporting themselves solely through work do not see their budgets rise in the same way when they have more children. The average number of dependent children in families in the UK in 2012 was 1.7, so the Government feel that it is fair and proportionate to limit additional support provided by the taxpayer through child tax credit and the child element of universal credit to two children.

[Baroness Howarth of Breckland]

My Lords, I am sorry to interrupt the Minister, but may I ask him about the difference between those families who choose to have more children—which I understand, in relation to the policy—and those who find themselves with more children, which saves the state money because of circumstances that have been described today?

[Lord Freud]

That is the point of these amendments, which I am in the process of dealing with, so I will provide the government response to those exemptions.

Turning to the amendments themselves, these are intended to specify circumstances in which the policy to limit child tax credit and the child element in universal credit would not apply. Amendments 1, 9 and 17 are intended to allow exemptions where the child is a member of the household through kinship care or a private fostering arrangement, and Amendment 16 where the child is a member of the household through being adopted. Amendment 10 is an enabling amendment to allow for exemptions to be made in relation to Clause 12.

Amendments 1 and 9 are intended to provide an exemption for particular children who are,

“in the household as a result of a kinship care or private fostering arrangement”.

Amendments 16 and 17 would not apply to particular children or young persons but would exempt households from the limit of two children in child tax credit and universal credit where the specified circumstances applied to,

“a third (or subsequent) child”.

Thus a household with three children, limited to two children, who adopted a fourth child would then receive the child element for the four children. By limiting support to two children in child tax credit and in universal credit, the Government are ensuring that the system is fair to those taxpayers who fund it, as well as those who benefit from it.

The Government do recognise the vital role that kinship carers play. For example, in universal credit, kinship carers will have to attend periodic interviews only for the first year after a child joins their household, which enables the carer to focus on helping the child through this difficult period. To pick up the point made by the noble Baroness, Lady Sherlock, about the Government’s attitude to adoption, the Government take the importance of adoption very seriously. In the summer Budget, the Government provided £30 million to support the creation of regional adoption agencies to help speed the adoption process.

The noble Baroness, Lady Lister, mentioned the exemptions outlined at Second Reading. The Government have been consistent since the summer Budget in saying that we will exempt a third or subsequent child or young person who is one of a multiple birth where the multiple birth takes the number of children or young persons in a household above two, and that we will exempt a third or subsequent child born as the result of rape. Those are the exemptions that we have spelled out. We have also been clear that the exemptions will be dealt with in secondary legislation and we will provide more detailed information on those exemptions to noble Lords ahead of the next stage of the Bill.

The noble Baroness, Lady Sherlock, asked about the assessment that we have done in terms of the policy deterring adoption and the taking on of sibling groups. That was contained in the impact assessment of 20 July. We have considered the impacts, which in effect meet our obligations set out in the public sector equality duty.

Amendment 10 is unnecessary as regards recognising the need for exemptions to apply in certain circumstances. We have the power in Clause 12(4) to specify exemptions to the limit. As I said, as was set in the summer Budget, we will make those particular exemptions.

Amendments 16 and 17 propose to establish an appeals process. Comprehensive appeals arrangements already exist in relation to social security and tax credits, and these arrangements will apply to any decisions made under the provisions in the Bill, as well as to exemptions set out in regulations. There is therefore no need to establish a new appeals process. For the reasons I have set out, I urge noble Lords not to press their amendments.

[Baroness Lister of Burtersett]

At Second Reading, when the Minister talked about the exemptions that the Government have made clear will be included, he said:

“The situation with kinship carers is similar”.—[Official Report, 17/11/15; col. 125.]

Why is he today saying that he is now not prepared even to consider the situation of kinship carers? What has changed?

[Lord Freud]

If I misspoke at Second Reading, I apologise to the Committee. I was saying that they were a similarly important group; I was not trying to say that there would be an exemption. I did not make that statement.

16:15

[Baroness Hollis of Heigham]

My Lords, the Minister made much of the financial probity argument and said that tax credit expenditure had raced away out of control, with a threefold increase between its first year and today, at £30 billion. Will he confirm that, at the same time, the bill for income support has fallen from nearly £16 billion in 1996-97, when we inherited it from the noble Lord, Lord Fowler, to £2.9 billion now, because tax credits have helped people who depended on out-of-work benefits to come into work, as we all wanted? Will he also confirm what the OBR has told us: that welfare expenditure, including pensions, was 12% of GDP in 1983-84, was 12% of GDP in 1993-94 and today is 12% of GDP? So the untrue cliché that expenditure is racing away and out of control is not supported by the facts.

[Lord Freud]

I think the facts that the noble Baroness is comparing are somewhat spurious. Working age IS was £15.8 billion in 1996-97 in real terms, but when you apply that to lone parents—which the noble Baroness was, I think—the figure was only £6.4 billion. The best way to do this comparison is to take all the figures for tax credits and their predecessors—family credit, disability working allowance, child allowance, IS and JSA—and see where they have gone. Those figures have gone up from £7.1 billion in 1997-98 to £30.8 billion in 2010-11. It is really important, when we get into the figures in this area, that we look at like for like.

[Baroness Hollis of Heigham]

Would the Minister like also to give us the figures for the number of self-employed people who have been able to move into the labour market, alongside those for lone parents, whose median income is £10,000 a year, who are also dependent on tax credits and who, 10 or 15 years ago, were among the unemployed?

[Lord Freud]

Of course, one of the most interesting things about the way tax credit has moved is that people who might have gone into the benefits system may well have gone into the self-employed tax credit system, but the figures I have just provided are the best comparison and include the self-employed on tax credits. They show an enormous increase in the overall figure. Because this is clearly a complex set of figures, I am very happy to write formally to the noble Baroness setting out the true figures on this important matter.

[Baroness Sherlock]

My Lords, I wonder whether the Minister can help me. When I asked what assessment the Government had made about the impact on the likelihood of couples to adopt sibling groups, and whether costs would increase elsewhere, he kindly referred me to the impact assessment. I spent quite a bit of time this weekend reading the impact assessment, being a slightly sad person, and I cannot actually find the section which refers to adoption at all, to sibling groups in particular, or, indeed, to costs elsewhere in any government department. If he can point me to the page or paragraph number, it would be very helpful.

While I am on my feet, the Minister may have forgotten to answer the question raised by the noble Baroness, Lady Howarth of Breckland, who asked specifically about the impact on couples who had not made a choice. The Government mention in the impact assessment that one of their objectives is to ensure that families make the same choice about the number of children they have as might other families who are not in receipt of tax credits—of which more later; watch this space. I think the point the noble Baroness was making is that the kind of choice you get at midnight, when the knock on the door comes, as described by the noble Baroness, Lady Drake, is not quite the same as the choice other families make. Has any distinction been made?

[Lord Freud]

It is actually extraordinarily hard to draw up a system. Those choices are different for different groups. What we are trying to do in this measure is make the choices the same whether you are reliant on the state support system—tax credits—or whether you are reliant on your own resources. That is the parity we are looking for here. That, I am afraid, is the best I can do in terms of the government response.

[Baroness Sherlock]

Has the Minister responded to the question about the impact assessment? I am sorry, which page is it on?

[Lord Freud]

Again, all I can say is that the impact assessment looks at all the impacts. The costs and savings derived are based on the full gamut of impacts.

[Baroness Drake]

Perhaps I may say this to the Minister. That is why I was looking back at the reasoning for this policy. When it comes to kinship carers, it cannot possibly be directed at influencing the decision of the carers as to whether or not a woman conceives and has another child, because kinship carers are taking on other people’s children. The choice is whether you embrace a vulnerable child or you abandon them. That is a totally different choice from someone in a family where their parent decides to get pregnant and have three, four or five children. Therefore the reasoning that applies to the person choosing to become pregnant is not the same reasoning that is applied when someone says at midnight, “I will take on this child rather than see them abandoned to the care system”.

[Lord Freud]

Clearly there is a difference between the voluntary and involuntary taking on of children, whether they are your own or anyone else’s. That is what our exemptions are for. We are seeking to try to draw the line between where it is involuntary, as in the case of rape, and where it is not.

[The Earl of Listowel]

First, I thank the Minister for his response, in which he said clearly that he is listening to the concerns raised in what has been expressed in the debate. Perhaps I should speak only for myself. I feel very anxious indeed about the welfare of the children whom we are discussing. I am anxious that children in care or on the edge of care might not have the prospect of a secure home that they currently have if this legislation is brought into being. I would be grateful if the Minister could act as soon as possible to reassure me on this. I am sure that this is a concern for all noble Lords in the Committee.

The question I want to raise with the Minister relates to his introductory comments on the rationale for the two-child limit in terms of child tax credit. I am sure that he will correct me if I am wrong, but he said that the Government are assuming that people make a rational choice when they choose to have a third child, and therefore, given that they are making a rational choice, that it is fair to say, “Of course the state will allow you to have another child, but it will not subsidise that additional child, or at least not to the extent that it has in the past, so you should bear this in mind if you are thinking of having a third child”. That is my rough understanding of what the noble Lord is saying.

When I think about young people in care, I know that most of them come from poverty in the first place, and many of them will go on to have families in poverty. Many will not get good qualifications; only 6% currently go on to university compared with 40% of the wider young people’s population. Their educational attainment remains stubbornly low. On apprenticeships, one hears all the time that these young people do not have the basic mathematical and literacy qualifications to get on to an apprenticeship scheme. So many young people leaving care will end up in poverty.

But we also know that many of them will have children very early. Many young women have children while they are still in care, and many will have them immediately after they leave. This, I suggest, is not a rational choice on their part. One reason that is often given, which seems to me plausible, is that, because they have never been loved themselves, they want to have a child who they believe will love them—and they will have other reasons for starting a family so early. However, they are not starting from a rational point. So my concern—which we will debate this more fully—is that this aspect of the Bill will be particularly disadvantageous to care-experienced adults and care leavers. They will be penalised because their lives are sometimes so chaotic and unhappy that they will start large families and they will be poor, and this area of the Bill will make them poorer still. I wonder if the Minister might say whether he has thought through the implications for care leavers and care-experienced adults of this aspect of the legislation in terms of penalising people who seem to choose to have larger families and who are poor.

[Lord Freud]

I know that the noble Earl is very concerned in this area of the care leaver and I understand exactly where he is coming from. Clearly the Government have a great deal of concern about some of these outcomes for young people in care—the noble Earl touched on some of the figures—but the choices, rational or not, should not be different from those of people who have to support themselves. I know that we will come back to this issue slightly later so I will stop on that particular point because we are dealing with another one today.

[Baroness Armstrong of Hill Top (Lab)]

My Lords, I understand where the noble Earl, Lord Listowel, is coming from and, indeed, I talked about the outcomes for the individual children. On the financial side, have the Government considered the expenditure that other departments will now—or would probably—have to make if this provision goes through as it is currently drafted? My noble friend Lady Sherlock asked the Minister about that and I do not think that he addressed it. While the Department for Work and Pensions may save, other departments will then have to pay more—and the cost of care, of course, is much greater than the cost of tax credits for kinship carers. Have the Government built in the assumptions around that, which are clearly very important?

[Lord Freud]

My understanding is that when we do these assessments we look at all of these aspects. But I have now been asked this question twice and I will go back and double check in this area and write to noble Lords on exactly how we did that set of calculations.

[The Lord Bishop of Portsmouth]

My Lords, I am sure we are grateful for the very thoughtful contributions made in Committee and for the powerful case that these amendments bring to us. I am grateful to the Minister for his recognition of the vital role of kinship carers—albeit that it is a limited recognition in terms of the amendments. I was disappointed by—if I heard the Minister correctly—the inflexibility of his position but grateful for the courtesy with which he heard from us and responded to us, and offered to return with further information.

A lot of emphasis has been placed on the choice that is involved. I fear that a rational choice for many potential kinship carers, if these amendments were not passed, would be the agonising one of not really being able to accept the responsibilities that they would like to accept. I will add that the rational choice for the Government and our society would be to accept the amendments and support these people as they fulfil those responsibilities and offer that love and care.

There has been a lot of emphasis on the cost savings: the potential anticipated initial cost savings and the subsequent costs that might occur to other departments and elsewhere. The important costs are those borne by our society—by the children—which may be significant. Failing to do our best for children is always wrong. Doing less than the best for those who are in these challenging circumstances is a poor reflection on us.

I hope that the Minister may be able to give further consideration to the matters that have been raised this afternoon, to which we may wish to return on Report. I beg leave to withdraw the amendment.

Amendment 1 withdrawn.

16:30

Amendment 2

Moved by

[Baroness Manzoor]

2: Clause 11, page 13, line 12, at end insert “, or
“(c) subsection (3C) applies.”

[Baroness Manzoor (LD)]

My Lords, in moving Amendment 2, I shall speak to Amendments 4, 7 and 12 in my name. As we have heard, the Bill introduces a two-child limit on receipt of child tax credits for children born before 5 April 2017 and the child element of universal credit for families making a new claim, whether or not the child is born before April 2017.

My Amendments 2, 4, 7 and 12 are about introducing exemptions. On this, I concur with my noble friend Lord Kirkwood because I understand the budget restrictions that the Minister is facing in relation to the welfare budget. My exemptions also highlight the importance of sensitivity in implementing these provisions. Many exemptions are needed. There are groups of people who cannot make rational decisions—or rational choices, should I say? The problem is about determining whether these exemptions are met, which can be very difficult.

Amendment 2 is an enabling amendment to Amendment 4, which addresses the need for exemptions for,

“the person or persons claiming an individual element of child tax credit”,

if the person,

“has been a victim of rape … is a kinship carer”,

which we have already discussed. Again, I concur with what the noble Baroness, Lady Drake, said so well. Exemptions would also apply to an individual who,

“has previously claimed tax credit as a single parent but is now part of a stepfamily, or a cohabiting multiple family … has fled domestic violence, or … has suffered a bereavement of their husband, wife, civil partner or cohabiting partner who is the parent of the child or children for which an individual element of child tax credit is being claimed”.

Families are complex units. If two single-parent families, each with two children live together, they are entitled to retain or claim the child tax credit but not if they marry. This is because their change in circumstances mean they will fall under universal credit and the two-child limit. Transitional arrangements are supposed to ensure that existing claimants are unaffected by these changes. However, households in receipt of child tax credits and which are migrated into universal credit will be protected only in so far as they maintain their current claim—in this case, if they stayed single.

Iain Duncan Smith has talked about encouraging dual-parent families but this Bill, as I said previously, runs counter to that. However, let us be clear. We on these Benches do not necessarily agree that two-parent families are in some way better, as Iain Duncan Smith effectively believes. All family types are valid and important. In my view, not exempting families where single parents come together is difficult to understand, given the commitment made in other statements.

In domestic violence cases, a woman—it usually is a woman—with more than two children who flees a violent relationship must know that she will be able to afford to care for all her children so that she is not trapped into staying in a violent or abusive relationship due to financial hardship. It is also clear that if a working husband or wife dies, the income in the family will fall. It is logical that these families should be exempt from the two-child tax credit limitation.

The Bill also impacts on many families who already have three or more children if they make a new claim for universal credit as a result of common, but unpredictable, life events. Anyone can lose their job at any time; we can all get sick; we can all have a disability in the future. So this is totally unfair and unreasonable. The DWP’s own analysis demonstrates the risk of child poverty, which is already significantly higher among families with three or more children: 35% compared to 25-26% for families with one or two children.

Other noble Lords will, no doubt, speak on these important issues. As has already been identified, other exemptions may need to be applied in areas such as private foster care arrangements and disability. This is why I have put down Amendment 4, proposing that:

“The Secretary of State may, by regulations, make further provisions relating to the operation of subsection (3C).

The main point of my amendments is that there are lots of complex family situations and many areas could be considered for exemption. However, the ability to exempt these people requires knowing what exemptions they meet. Some exemptions will be easier to assess than others, but how will DWP caseworkers assess if a child is born as result of rape? How intrusive will the questions be and what evidence will caseworkers look for? As we know, many people sadly do not report rape and, when they do, convictions are low, so that will not help. The Minister has already stated that cases of rape will be exempted. How will the DWP know whether a claimant’s child is indeed a result of rape? The only way would be to ask, and I shudder to think how deeply upsetting and totally inappropriate it would be for a caseworker to venture into such traumatic, deeply sensitive and personal issues.

Therefore, although the Government should include exemptions in the Bill, they will also need to consider how exemptions will be assessed and applied. To safeguard against deeply intrusive questioning, Amendment 7 would insert in the Bill the provision that the DWP must,

“have regard to the importance of the person’s right to respect for private and family life”, under Article 8(1) of the Convention for the Protection of Human Rights and Fundamental Freedoms as set out in Schedule 1 to the Human Rights Act 1998”,

and should not,

“in seeking to determine whether the exemption applies, request any information about the claimant’s private medical or sexual history”.

I turn to Amendment 12. As the Bill stands, Clause 12 will mean that families with children born before April 2017, making a new claim under universal credit, do not receive the same protections as those available to claimants of tax credits and may have their child additions within universal credit limited to two children. This seems totally unfair and I do not understand the reasoning behind it.

My Amendment 12 would afford the exempted people I have previously identified, such as people who have been raped and single parents, the same protections once universal credit comes into force through the child element in universal credit. Proposed new subsection (1C) in Amendment 12 states:

“The Secretary of State may, by regulations, make further provisions relating to the operation of subsection (1B)”.

This is a very difficult and sensitive debate. I listened carefully to the discussion on kinship carers and concur with everything that was said. For many of the categories that we have outlined this is not about rational choice. People sometimes find themselves in certain circumstances for the right reasons—for example, the joy of bringing an additional child into a family. However, circumstances such as rape are not so pleasant or nice. I think that noble Lords around the Committee want the Minister to commit to look at exemptions very carefully. As has been outlined by other noble Lords, I want to avoid unintended consequences. I cannot believe for one minute that the Government want such unintended consequences to arise. I believe that they want to do the right thing. Putting exemptions on the face of the Bill will give many people in our country great hope. We are talking about a lot of people—millions, in some cases. I beg to move.

[The Earl of Listowel]

My Lords, my name is attached to Amendments 4 and 12. It is a privilege to follow the eloquent noble Baroness, Lady Manzoor, and I shall concentrate on one or two aspects of her comments. As regards the need for these exemptions, someone commented to me that the poor have always had the largest families. The austerity that we are experiencing is due in large part to the fact that some vastly wealthy people made some very poor choices. Yet today we are looking to penalise the poorest in our society, and most especially their children, by taking money away from them. Therefore, I support very strongly the noble Baroness’s call to make the exemptions as wide as possible.

Last Friday a report on the education of children in care was launched at the Nuffield Foundation. The Children’s Minister, Edward Timpson MP, addressed the launch. The report highlighted the fact that the educational performance of children in care was still a long way behind that of the rest of the general population of young people. That is a matter of concern. However, children in need who have stayed with their families and not been taken into care, fostered or taken into a children’s home do far better once they are taken into the care of the state than those children who have not been subject to intervention by the state. We all know that due to pressures on local authorities, the threshold for being taken into care is quite high. Many more children in need live in fairly dysfunctional families but those families are not dysfunctional or abusive enough for the children to be taken into care, and those children are struggling. We need to think about families in which the parents grew up in deprivation, not just financial but emotional deprivation. Often the parents will have had issues around drink and drugs, and have not been able to show the children very much love.

16:45

I have been trying to put a face on the sort of families who will be affected by the Bill. I think a significant number will be those that I am familiar with, coming through the care system, and those who have grown up in need. What I hear again and again from people who have come through the care system is that it did not meet their need to learn how to relate comfortably with other people. They feel uncomfortable around people, they feel uncomfortable about intimacy. My fear is that we are penalising people who struggle anyway to make and keep relationships, making it harder for them to keep their families together.

This takes me to the other point that the noble Baroness, Lady Manzoor, raised. I hope I understood her correctly. She was pointing out that these proposals actually discourage single parents from joining another single parent to make a two-parent relationship. She said that she did not want to place any particular value judgment on two-parent families, but we know that boys, particularly, growing up without a father in the family, are much more likely to get involved in criminal matters. Some of your Lordships may have read the speech by President Obama, made when he was a senator, talking about his experience of growing up in a lone-parent family and reflecting on the fact that so many young men in America were growing up without fathers.

There are real consequences to the Government’s proposal. The OECD’s report on family formation—from 2010, I believe—highlighted the fact that in about 2030 or 2035 we will overtake the United States in the numbers of children growing up without a father in the household. I think the Prime Minister is quite right to be concerned about supporting two-parent families. We should look very carefully at what this Bill does to disincentivise parents joining together to bring up their children. I look forward to the Minister’s response.

[The Lord Bishop of Portsmouth]

My Lords, I highlight two particularly vulnerable groups in my Amendments 5, 6, 13 and 14, groups that I believe should be exempted from this measure. These are bereaved parents and victims of domestic abuse. In focusing so heavily on promoting personal responsibility, there is always a danger with welfare reforms that we neglect our collective responsibility to look after those who fall on difficult times, people we will probably never meet but whom we support through our taxes in their time of need so that we, too, will be supported when we need help.

It is not as simple as there being two groups in society, those who contribute and those who receive. I know that one of the most tragic events a child can experience is the death of a parent. When my first wife died, I was the sole parent of my children and a recipient of some benefits. Quite apart from the emotional upheaval, the impact on a family’s situation can be drastic, much more drastic than the situation I faced. It is common for families to require additional support in these circumstances, either because the main earner has died or because the surviving parent must give up work or reduce hours to care for the children. According to the Childhood Bereavement Network over 23,000 parents died last year, leaving around 40,000 newly bereaved children. One in three of these children live in larger families with two or more siblings and will potentially be affected by the two-child limit, if it goes ahead in its current form. It feels particularly unfair that the families who have experienced such a traumatic event should have to cope with additional financial pressures on top of it.

Likewise, parents who are the victims of domestic abuse should not be put in a position where they have to choose between staying with the abusive partner and leaving them for a life in poverty for themselves and their children. I understand that, at any given time, there are around 250 children staying in refuges for women fleeing abusive relationships and that one-third of those are from larger families. Many women remain in abusive relationships for long periods, in part due to the financial considerations. Unless this group is exempted from Clauses 11 and 12, this could prolong their abuse and put them and their children at risk, making it even harder to leave their partner.

As with kinship carers, who we considered in the last group, the cost of exempting bereaved parents and victims of domestic abuse would be relatively small by comparison with the total projected savings, and would help to address the most obvious cases of injustice. I therefore bring before the Committee these amendments in my name, seeking to reflect the circumstances of these children and their parents.

[Baroness Sherlock]

My Lords, I shall speak to Amendments 15, 18 and 20, which are in my name and that of my noble friend Lord McKenzie of Luton. I shall also speak to the other amendments in this group.

Amendment 15 seeks explicitly to exempt from this measure children entering a household as a result of a multiple birth. In the light of the Minister’s commitment on the record that such children will be exempted, I will not dwell on this for very long but ask him to clarify a couple of things. First, he mentioned that this will be done by regulation. Will the regulations be of the affirmative or negative kind, given the question raised by the Delegated Powers Committee on that point? Secondly, can he confirm that the Government intend that the exemption will apply to any means-tested benefits, not just tax credits, and irrespective of the number of children who may come along at the same time in that multiple birth?

Amendment 18 is a simple amendment which provides for exemptions to apply in exceptional circumstances, as defined by the Social Security Advisory Committee. The thinking behind this amendment is that, as we have heard already today, there are a number of special circumstances which Ministers may not have thought about when devising the Bill. I know that Ministers never like to admit that things can crop up which they have not already thought of but, just every now and again, things that none of us has been clever enough to work out may suddenly turn up and make a difference. To protect the Minister from the exigencies of such a disastrous situation befalling him, I offer the Committee this amendment today. It would enable the Social Security Advisory Committee—a statutory body with huge expertise—to spot these things that, unaccountably, none of us had managed to spot and to bring forward to the Minister recommendations for exemptions which could then be put into legislation. I commend this idea to the Minister; he may have it free of charge. If he does not like it for any reason, and I cannot think that he would not, he might instead like SSAC to undertake a formal review of the impact of this policy 12 months, say, after its enactment and to advise him and his colleagues of any additional exemptions that might be needed. I would settle for that.

Amendment 20 proposes to exempt from this provision couples with dependent children who, if living in separate households, would not be affected by the two-child limit. This is a broader exemption than that proposed by the noble Baroness, Lady Manzoor, in Amendment 4, although I also support her amendment should mine not go forward. Her amendment would seek to exempt someone who is a single parent and previously claiming tax credits; my amendment seeks to address all such reformed families. This is one of the issues which exposes why this whole measure is such a bad idea. The Government have spent a lot of time advocating the importance of family life and making much of their support for marriage. I approve of them doing that, yet they are again proposing a policy which will run in direct contravention to that other policy objective. If two people meet and fall in love and they each have two kids, if they get married or partner and set up home together then overnight this measure alone will make them worse off to the tune of £5,560 a year. The irony is that they may find by coming together as a household—for example, if they are both working—their entitlement to benefits would go down naturally as a result of the means test. It seems particularly unfair to deprive them of support for the children when they would have been supported by the state had those two people decided to stay separate.

I have been struggling to get a handle on data on stepfamilies. Maybe the Minister can write to me. I have had to work my way through official statistics trying to make sense of them. It seems to me that more than 20% of adoptions registered in 2014 were in stepfamilies, and ONS data based on the 2011 census seem to suggest there are 326,425 children living in stepfamilies with three or more children where the parents are either married or in civil partnerships. There are another 196,173 children living in stepfamilies with three or more children where the parents are co-habiting. I make that more than half a million children. They will not all be eligible for tax credits or universal credit, but up to half a million children could be affected by a measure not because they themselves were third children but because their parents made the unconscionable error of falling in love with somebody else who already had children, and by coming together the household suddenly becomes ineligible for those benefits for the third and subsequent children.

I used to run a charity that worked with single parents. Unless the trends have changed significantly, there was a tendency that lone parenthood was a state someone would stay in for an average of five years. It tended not to be a lifetime choice. People tended to repartner or remarry. We are increasingly putting barriers in the way of people ever doing that. I wonder if that is wise. I also wonder whether it is an intention of the Government’s policy. If not, has the Minister given any thought and has the department done any assessment on the likely impact on second marriages or repartnering?

I want to comment briefly on the other proposed exemptions. The noble Baroness, Lady Manzoor, expressed the concern I think many noble Lords will share about how intrusive a process might have to be to establish that a woman had been raped. I certainly hope the Minister realises that he will find it a challenge to get the Bill through this House in its entirety without explaining how a proposal that somebody should be tested to see if they have been raped would be implemented. At the very least, is the intention that it is only when a woman has made a complaint to the police or someone has been charged or convicted? If not, who will she give evidence to in DWP and how will that be assessed? How will the Minister guarantee that the process will be confidential? If any other official in a benefit or tax office or school could see that a woman was getting benefits or tax credits for a third or subsequent child, there are only two ways at the moment that that could happen—a multiple birth, which would be evident, or the pregnancy being the result of rape. I wonder where that leaves us in terms of confidentiality. Has the Minister given any thought to that? Given that, has the Minister considered the impact on the child if at some point they discover they had been conceived as a product of rape—something the parents may have gone to considerable pains to disguise from them? The Government mentioned in the impact assessment that they would consult stakeholders before deciding how to deal with this. Can the Minister tell us who the Government have consulted and who they intend to consult?

I also asked at Second Reading—but got no answer—what the rationale was for exempting children in multiple births or those conceived as a result of rape. The Minister has indicated that this is about choice. Does he accept therefore that there are other circumstances where a woman may not be able to exercise choice? The noble Baroness, Lady Manzoor, mentioned domestic violence. The proposal, which I support, to exempt people in cases of domestic abuse rests on two arguments: first, that a child may have been conceived under duress, rather than as a result of a clear choice; and secondly, that the two-child limit may make it harder for a parent of more than two children to leave an abusive relationship as they would struggle to support the children.

We have heard how widespread domestic abuse is. Each year more than 2 million people suffer some form of domestic abuse. Its impacts are severe and hard to escape. About 42% of domestic violence victims have been victimised more than once. On average victims experience 20 incidents a year, which can often increase in severity every time. While 80% of victims report physical abuse, it is not just that—nearly 90% of high-risk victims report experiencing emotional abuse and/or coercive control or behaviours. Those are exactly the kind of things that could lead a woman to become pregnant without exercising choice. Abuse can include a refusal to allow a woman to use contraception. It can include rape and pregnancy as a result of rape which she may have been reluctant to report to the authorities because of fear of the abusive partner. Of course, the use of power and coercion are the very things that make it hard for someone to leave an abusive relationship. Sometimes they do manage to leave, often by getting advice or support and by meeting other victims; sometimes things go too far, such as when a child is caught in the cross-fire of domestic abuse. At the point at which they flee, they need all the help they can get. Too often they leave just with the clothes they stand up in. They are homeless and need to move and often hide from their abuser; they leave behind schools and jobs. It is hard enough to rebuild a life in those circumstances but this policy could act as a further barrier, so I hope very much that the Minister will consider this exemption very carefully.

17:00

Finally, I will comment briefly on the amendment from the right reverend Prelate the Bishop of Portsmouth about bereavement. I thank him for sharing his own experience with us, very movingly, and for describing the wider implications that this amendment raises. My mother died when I was a child and I am very conscious of just how hard it was for my father to manage in those circumstances. When a parent dies, as the right reverend Prelate pointed out, the remaining parent has to not only deal with their own grief but do all the practical things, including all the practical tasks that their late spouse had done before they were bereaved.

In the Pensions Act 2014, despite the best efforts of many of us on many Benches of the House, the Government decided to reform bereavement benefits to reduce significantly the time that bereaved parents could get support from the state before they had to return to work. We are now going to compound that by cutting the support they will get even if they are working. Parents with three or more children who have been bereaved will not therefore be able to get adequate support for all their children. This is obviously a particular problem where the deceased was the main earner, but even where the surviving partner was the main earner, they may well end up having to reduce their hours or even give up their job because they cannot manage it now they are the full-time or sole carer for the children, as the right reverend Prelate pointed out.

Bereavements are sometimes sudden, as a result of a medical emergency, an accident or an assault, which can be very difficult for a family to deal with. This whole situation is a perfect example of where a family with existing children who had not needed recourse to benefits or tax credits while there were two earners might well do so now there is a single parent, as the right reverend Prelate pointed out. It is an example of what the welfare state was designed for and I very much hope the Minister will consider these amendments carefully.

[Baroness Hollis of Heigham]

My Lords, I think the Minister must by now be feeling pretty miserable at the wretched nature of this two-child policy. It is quite striking that there has not been a single voice in support of these propositions from his own Benches. There are Members here with the expertise to offer that, but they are not giving the Minister the support one would normally expect. We all understand how wretched this policy will be as it plays out—and I am sure the Minister, who is a good man, also understands that.

This is a broad set of amendments, so I will pick up something which perhaps covers almost all the people who have been mentioned as exemptions so far in these amendments today. Poverty has been well researched by the DWP itself, in its evidence review of January 2014. Has the Minister read—I am sure he has—and accepted his department’s Evidence Review of the Drivers of Child Poverty for Families in Poverty Now and for Poor Children Growing up to be Poor Adults, which is at the centre of these child-related policies in the Bill? If so, would he explain to us why not one of the 323 pieces of research that this review analyses supports his policy? Indeed, in my view, they destroy it. Are we dealing with evidence-based public policy or private ideology offered as moral and financial rectitude?

The Minister knows better than anyone—but I will remind him—who are most at risk of serious long-term poverty. They are the third and subsequent children of lone parents. Three-quarters of such children will be in either persistent or recurrent poverty for four out of any seven years. One family in seven has three or more children; within that group, lone parents are twice as likely as couple families to be in poverty, and three-quarters of their children will be in persistent or recurrent poverty.

It is not temporary or transient poverty, deeply unwelcome though that is, which scars families. After all, one-third of the UK’s population falls into poverty at some point over a four-year period, usually when they have lost their job, their health or, desperately, a partner. Many will leave poverty within a year, perhaps to enter work. But the poverty that comes with additional children is not temporary or transient poverty; it is persistent poverty, because those children, for whatever reason, do not conveniently disappear. Yet it is long-term poverty that most damages families. Poverty builds upon itself: the longer you are in poverty, the harder it is to escape from it—and if you do, you have one or, at most, two deciles, and too often, with a year or two, you fall back to the bottom. Any mobility is short-distanced and short-lived. Such children, because they are in larger families, and thus even now facing long-term poverty, have unhappy childhoods, more strained relations with their parents, are more likely to be in contact with the police, and so on.

What does the review last year by the DWP tell us about the drivers of poverty, and how consistent is this Bill with its research? The answer is: not at all. The DWP report says on page 19 that the strongest driver is worklessness, which I am sure we all accept; though even that is a diminishing problem, and of course conceals the unwaged work of caring. Yes, two-thirds of poor children are in a working household, which is a shocking statistic. That is of course because most children are in working families. Proportionately three times as many children in workless families are in poverty as children in working families, so we need to address poverty both in and out of work.

After worklessness, what is the second biggest driver of poverty, according to the DWP? According to the Government in this Bill, it is educational attainment. But that is not so: it is family size. Some 25% of all children are in families of three children or more, and 38%—nearly 40%—of those children in poverty live in larger families. According to the review, other drivers include family instability, parental ill health and lower parental qualifications, but none of those matters anywhere near as much as family size. The DWP’s review concludes on page 30 that other possible drivers—much quoted by the Secretary of State—such as substance abuse and child educational attainment have only limited, indeed marginal, effect.

I repeat: what counts, from the DWP’s own research, are worklessness and a family size of three or more children. Obviously, poverty results from a combination of too low income and family need. Larger families are hit on both counts, because additional and younger children take the single parent or the potential second earner out of the labour market at just the point when family need increases. Research shows that families not in poverty are more likely to enter poverty when they have a third child and not be able to climb out of it.

That is not rocket science, but is recognised across the whole of the OECD—except in this country. Many countries rightly increase financial support for additional children: the rates go up with three, four or five children. Any Government who cared about child poverty, and therefore child life chances, would do the same. Instead, the Government are going to do exactly the opposite, making each child in that family poorer, because the money for two children will now have to be spread over three or four, making their poverty cumulative and inescapable. What a dowry to give to a child: not only are you as a third child not going to be financially supported or helped by tax credits, but your very existence will make your brothers and sisters poorer as a result. You will bring them sliding down the slope of poverty with you.

Every child matters except to the DWP, yet the DWP’s own research shows that families with more than two children, whether through kinship care, through reformation or more generally, will be locked into persistent poverty from which many will never escape, and which will play out for some of them, alas, in troubled lives. The DWP will then piously moralise at them about the very situation that it has itself constructed in this Bill, along the lines of the Reverend Thomas Chalmers in 1819, almost 200 years ago, who said that,

“character is the cause, and … comfort is the effect”.

Today the DWP, just like the Reverends Malthus and Chalmers before it, bleats about poor, large families’ lack of moral or financial continence. This policy is no better than early 19th-century class-superior sermonising, and with little respect for the facts as evidenced in the DWP’s own report. But Malthus and Chalmers, clergymen both, at least had the excuse that they did not have the evidence of statistics, which were not collected then. The Government have no such excuse. They have nowhere to hide. The Minister’s policy today—I cannot believe he wants this at all—is the exact opposite of his department’s own research findings, and will lock large families into persistent poverty.

We know whom the Bill will hit. I have no doubt that it will, directly or indirectly, discriminate against faith and ethnic minority groups. One last thought: we are all living longer, with fewer workers to support pensioners who are living much longer. We need children and, if they are not born British, we will be encouraging Mrs May to bring in immigrants instead.

I ask the Minister again: has he read his own department’s research of last year? If so, or indeed if not, why is the DWP so flagrantly ignoring it? It is abundantly clear that removing financial support, not just from these exempted groups but from the third child and beyond, is the single most powerful way for the Government to increase child poverty and to increase persistent poverty. It is the very worst thing that the Government can do, and they are doing it. Why?

[Lord Lawson of Blaby (Con)]

My Lords, I had not intended to take part in this debate but it seems to me, listening to the noble Baroness who has just sat down, who spoke with her usual eloquence, that she has given only one-half of the story. Government is a matter of making difficult choices. There are always good points on both sides, so it is right that another point of view should be expressed. I speak, incidentally, as the father of a very large number of children.

The late Dick Crossman was a friend of mine; he was Secretary of State for Health and Social Security, as I think it was called then, in the 1960s. He told me how surprised he was when he discovered that the family allowance, which was the precursor of child benefit, was unpopular. Whenever he increased family allowance he expected it to be very popular, but it was not. He set out to discover why. The reason why it was unpopular, so he told me, was that the great majority of people in this country felt it was unfair to those parents who had decided to limit the number of their children—having children is an expensive business, what with clothing them and looking after them and so on—that improvident large families were getting all this family allowance. That sense of fairness is very acute among the people of this country, and that has to be weighed in the balance on the other side of the totally one-sided evidence that the noble Baroness presented.

17:15

[Baroness Lister of Burtersett]

My Lords, I hate to intervene, but I point out that the evidence to which my noble friend referred was the Department for Work and Pensions’ own evidence. However, at this point I will go back to the amendments, which I support, as we will have another chance to talk about the principle of these nasty clauses later. I just want to ask a couple of questions.

In the impact assessment and elsewhere the phrase is used:

“The Government will develop protections for women who have a third child as the result of rape, or other exceptional circumstances”.

We have not yet had any clue as to what those “other exceptional circumstances” might be. My noble friend Lady Sherlock has suggested that domestic violence should perhaps be one of them because of the coercion that can be involved in domestic violence and abuse, which are not just about physical abuse but emotional and financial abuse—a kind of controlling which is very relevant in this situation.

Points have already been made about the potential intrusiveness of the questioning that might be required to decide whether a woman has had a child as the result of rape. Can the Minister assure us that there will be no requirement either for a conviction or evidence of a police report for the claim to be accepted? As I understand it, according to Rape Crisis only 15% of victims of sexual violence make a police report, and we have already heard about the potential intrusiveness of any questioning there might be. I hope that the Minister might be able to tell us a bit more about what will happen.

Can he assure us that Jobcentre Plus staff will be trained to handle any such conversations sensitively and to provide women who report that they have been raped or assaulted with information about available support services? Will lessons be learned from the experience of women who were subject to very intrusive and deeply personal questioning about the paternity of their children when the requirement to co-operate was enforced under the Child Support Act 1991? As I understand it, extensive guidance was developed at the time but this rule was subsequently abandoned as unworkable. I suspect that the same will apply now.

[Baroness Stroud (Con)]

My Lords, I thought the House might just like an issue to be clarified. I have the document with me which the noble Baroness, Lady Hollis, referred to. While nobody in the Committee would want any child to be brought up in poverty, the evidence clearly displays that the two key main drivers for poverty in the UK are, first, long-term worklessness and low earning and, secondly, low parental qualifications. Therefore the first key driver is current poverty and the second is a clear indicator of future poverty.

[Baroness Hollis of Heigham]

My Lords, I hesitate to challenge the noble Baroness, but if she looks on pages 19 and following she will see that that is not the case.

[Baroness Stroud]

I can clarify that again but it is here, quite clearly. Perhaps we can discuss this later.

[The Earl of Listowel]

Can the noble Baroness say which page she is referring to?

[Baroness Stroud]

Page 18.

[Lord Freud]

I thank noble Lords again for another interesting debate, to which I have listened very attentively. Without wanting to get into the evidence, I read this report when it came out, although I may have forgotten all the page numbers.

As I have already said, the current benefits structure adjusts automatically to family size and removes the need for families supported by benefits to consider whether they can afford to support additional children. The mean number of dependent children per family is 1.7, and 86% of families have only one or two children. The amendments that we are looking at now relate to exemptions from the policy.

Amendments 2, 4, 5, 6, 12, 13 and 14 isolate five different groups: victims of rape; kinship carers; those who have previously claimed tax credits as a single parent but are now part of a step-family or cohabiting multiple family; those who have fled domestic violence; those who have suffered a bereavement of their husband, wife, civil partner or cohabitating partner. Amendment 15 would allow an exemption where the child is a member of the household through being part of a multiple birth. Amendment 18 would allow for an exemption in exceptional circumstances, as defined by the Social Security Advisory Committee. Amendment 20 would allow couples to claim the child element for three or four children plus any children to which an exemption would apply.

I make clear to noble Lords that most of these amendments are not actually necessary for inclusion in the Bill because we have already identified the need for exemptions to apply in certain circumstances. Clause 11(4) and Clause 12(4) provide the necessary powers to specify exemptions to the limit of two children or young persons for the purposes of calculating the child element in the two different benefits.

We already have special provisions in the benefits system for people fleeing domestic abuse and suffering bereavement, and we have already talked about kinship carers. On bereavement, to pick up the point made by the noble Baroness, Lady Manzoor, and the right reverend Prelate the Bishop of Portsmouth, we are introducing a system of paying a lump sum of £5,000, with 12 payments of £400. Those payments will be disregarded from other benefits such as universal credit.

On the point made by the noble Earl about care leavers, we recognise, as I said before, the additional barriers that care leavers experience and we have a series of policies to support them already.

As I have mentioned, we will exempt a third or subsequent child or young person who is one of a multiple birth where the multiple birth takes the number of children above two—clearly, if it is more than twins, that is covered in that category. I cannot at this stage go further on exemptions, but, as I said earlier, I will provide more information on them on Report.

I turn now to the exigency offer—that is how I read it—from the noble Baroness, Lady Sherlock, to bring in SSAC to define exemptions. The committee clearly has an important role to play in scrutinising draft social security legislation, but it is not right or proper, in our view, for the committee to have a role in policy development and delivery. Accepting this amendment would mean the Government handing policy, and therefore expenditure decisions, to the committee. I should point out, however, that the committee has an independent research capability and so is fully able to look at particular things that it thinks are of interest. The committee can then discuss those with us in some detail. I know that because I have had several of those discussions and found them rather valuable.

Amendment 20 would apply additional support for families that are larger than the average family and have a significant additional cost. Clearly, this amendment goes straight to the heart of the Government’s aim to get welfare expenditure under control and reduce its costs by the significant amounts for which we are aiming.

Amendments 15, 18 and 20 propose to establish an appeals process similar to that which we discussed under Amendments 16 and 17. We already have those arrangements in place.

Amendment 7 has three primary objectives. It would allow claimants to receive additional individual elements of child tax credit where they believe that an exemption applies to them, and where there is no evidence to the contrary. It would require HMRC to have regard to the claimant’s right to respect for privacy and family life under Article 8.1 of the European Convention on Human Rights. It would also mean that HMRC could not ask for information about the claimant’s private, medical or sexual history in seeking to determine whether the exemption applies.

We are looking at exactly how this exemption will be applied. In response to the question from the noble Baroness, Lady Sherlock, we talked to a number of stakeholders to ensure that these exemptions are delivered in the best possible way. Clearly, to the extent that JCP is involved in doing it, we will be providing that training. We are already required by the Human Rights Act 1998 to respect claimants’ right to a private and family life, so the specific provision introduced by the noble Baroness, Lady Manzoor, is not necessary, as it is already in place through that mechanism.

As I said, we are working on the best way to deliver this exemption; there is clearly a difficult line between voluntary and non-voluntary, which we discussed under the last group of amendments. It is interesting—I remind noble Lords—that we recognise domestic violence in universal credit, and we have got that process organised. Some of the other areas are extraordinarily difficult to introduce in practice, as noble Lords will appreciate, because of the complexity that they would bring to the operation of universal credit, but some of them are more straightforward than others.

Turning to the amendment on making a claim without evidence, if the Government were to allow a presumption in favour of the claimant for all exemptions, it would regrettably leave the policy open to very significant levels of fraud and error. However, we are now working on a way to do it without undermining claimants’ rights to privacy and family life.

The noble Baroness, Lady Sherlock, asked about applying the two-children policy to all means-tested benefits. Clearly, universal credit will combine all of the means-tested support for families once it is introduced. There will be a need to adjust the calculation of housing benefit to ensure that it remains at current levels, and it will not affect the room allowances in that particular measure.

17:30

[Baroness Sherlock]

Just to clarify, I was talking in this case about the exemption for multiple births, although it applies to all of them. Will the exemptions apply to all means-tested benefits—for a family not getting universal credit, for example?

[Lord Freud]

I am trying to think of another example because, as the noble Baroness knows, we are trying to incorporate all means-tested benefits. The main one is housing benefit and the other one that the noble Baroness may be thinking of is support for council tax where we have not made any provision because each council has its own policies. I cannot think of any other means-tested benefit to which, once universal credit is in and working, that would apply. I think that I have dealt as best I can with all the points raised and, for the reasons set out, I urge noble Lords not to press their amendments.

[The Earl of Listowel]

My Lords, I am grateful to the Minister for his responses. I am reminded by what he said of the importance of universal credit, which I think we all support in terms of enabling more people into work. I pay tribute to the Government one more time for their achievement in getting so many of our people into work after a time of such austerity. It is hugely important for families and for all of us.

I also thank the Minister for his acknowledgement of the work that I do and the interest I take in looked-after children. I have a specific question. The Minister talked about important strategies that the Government have developed for care leavers, which are very welcome indeed. But we know that outcomes, despite this good work, are often still very poor for care leavers. Will the Minister consider making an exemption among those that he is considering specifically for care leavers in this regard? Separately, will he consider making a similar exemption for care-experienced adults? These young people and adults have had a disastrous start in life and often their experience in the care system is unsatisfactory, with much instability. As a society, we should consider exempting them because of the histories that they have experienced.

I listened with interest to the noble Lord, Lord Lawson, in his riposte to the noble Baroness, Lady Hollis. If I understood him correctly, he said that we should bear in mind that for the taxpayer, payments of this kind are not popular. Hard-working taxpayers may well not wish to pay other people to have more children when they have had to make hard choices themselves about clothing and schooling their own children. I take his point, but just because a measure is not popular, it is not necessarily not the right thing to do.

As an example, the decision by the Prime Minister to make a commitment of 0.7% of gross national income to the Department for International Development seems to have been pretty unpopular, but I certainly think that it was the right one. It becomes clearer and clearer that it was the right decision when we look at what is going on in Syria. I may well be mistaken, but my personal view is that it seems more and more right when we consider the instability in Syria and other places.

[Lord Lawson of Blaby]

Is the noble Earl, whom I greatly respect, aware that Professor Deaton received earlier this year the Nobel prize for economics? His subject is global poverty and one of his important findings is that official aid does more harm than good.

[The Earl of Listowel]

I thank the noble Lord for drawing that to my attention and I shall make it my business to read that finding.

Perhaps I chose a poor example, but often decisions that are unpopular can be the right decisions to make. Governments have a little more time to reflect and can decide that the cost of bringing children up in poverty has such long-term problems in terms of poor educational outcomes, imprisonment and later dependency on the state that despite such a policy being unpopular it is worth while investing in large, impoverished families to prevent their offspring becoming dependent on the state later on.

The Minister said that the average size of families was 1.7 children. What is the average size of families on benefit and the average size of a family in poverty? My sense is that they tend to be larger families and that this particular legislation will penalise larger families.

[Lord Freud]

Taking the noble Earl’s points in order, we need to have good strategies for care leavers. Clearly, the statistics are disturbing, and they have been for decades. I am not utterly convinced that exemptions in this particular area are the best way of supporting care leavers. There are other things that we can do that are way ahead of this. However, we do now flag care leavers in the benefit system so we know who they are and we can look at what they are doing, certainly with JSA, and I hope that we will be putting that into UC, although I am not absolutely up to date on where we are with that system.

On the noble Earl’s point about popularity, it is important that the benefits system does not become unpopular because that will undermine its legitimacy. It could be argued that one thing that we are doing now is creating a benefits system that has legitimacy and acceptance because it is perceived to be fair and to drive the right outcomes, which is not something that people feel about the legacy benefits system. That is a subtle point and closely related to what we are doing here.

The figures that I have seen, which I am afraid I cannot recall off the top of my head, show that very rich families and very poor families tend to be larger than those in the middle—thereby hangs a tale that goes to my noble friend’s point about who can afford to have large families. But I will have to write to the noble Earl with the exact figures.

[Baroness Sherlock]

When the Minister does that, will he look at the study circulated to most noble Lords which specifically used ONS statistical data to assess the population? One of the things it concluded was that:

“These data show that socio-economic class, perhaps contrary to popular belief, does not affect family size”.

In the higher managerial and professional classes, 6.8% of families had three or more children compared with 6.4% at the very bottom. I can share the reference with the Minister but the data are not as he suggested. Maybe we can compare notes and come back at Report, but as I understand it—and I pay tribute to the noble Earl’s passion for caring for the very poor—one of the reasons that these things are popular is a presumption that poor people have lots of children, which is not true. Even if they did, if they were not working the benefit cap would cut them off once they had two children, if they were renting anywhere—even modest—in Plymouth.

[Lord Freud]

We can cut through debating this by getting the facts, which I shall get to noble Lords.

[Baroness Manzoor]

My Lords, this has been a fascinating and passionate debate and I thank noble Lords who have taken part. I particularly thank the Minister. I know that he is a kind and caring man and I have spoken to him about some of these issues. But I want to bring him back to the exemptions, which are really very important. I hope that he will forgive me if I did not hear him correctly. I assume that he was saying that other regulations addressed some of the issues that noble Lords and I raised. I will certainly read what he said very carefully to see if that is the case. If those regulations do not apply elsewhere—and they cannot, because we are talking about tax credits and universal credits limited to two children—would he please think again very carefully about these exemptions? It really will make all the difference to some of these very hard-working, low-income families we all want to support and help. I beg leave to withdraw the amendment.

Amendment 2 withdrawn.

House resumed.

Flooding

Monday 7th December 2015 Lords Chamber

Statement

17:40

[Lord Gardiner of Kimble (Con)]

My Lords, with the leave of the House, I shall now repeat a Statement made earlier today by my right honourable friend the Secretary of State for Environment, Food and Rural Affairs in another place. Since my right honourable friend’s Statement, the Lancaster electricity substation has failed and every effort is now being made to restore power as soon as possible. The Statement is as follows.

“With permission, Mr Speaker, I would like to make a Statement about the impact of storm Desmond and flooding in the north of England.

As the House will know, this weekend has brought some enormously difficult and extreme weather conditions, and I would like to begin by expressing my deepest sympathy to those who have been affected in all parts of the United Kingdom. I would also like to commend the emergency responders, volunteers and the Environment Agency, who have been working tirelessly throughout the weekend, often in horrific conditions. People have come from all over the country, as far as south Wales, Lincolnshire and Somerset, to help. I am sure the whole House will join me in paying tribute to their work, and the generous community spirit of those who have been offering food, transport and even beds to neighbours.

Over the course of Friday 4 December it became increasingly clear that storm Desmond would bring an exceptionally high volume of rainfall across the United Kingdom. The Environment Agency responded by mobilising its people and assets, moving temporary defences and pumps to north-west England through Friday. On Saturday morning it became clearer which counties would be impacted and that we would see very high levels of rainfall that evening. Therefore, the Government mobilised a full national emergency response. At midday on Saturday I held a cross-departmental meeting to assess the projected impacts, shortly followed by the mobilisation of 200 military personnel and supporting assets, including making available a Chinook helicopter. Local commanders were able to call upon more than 50 high-volume pumps, as well as specialist tactical advisers and rescue boats from around the UK, adding to more than 200 emergency responders already on the ground.

My honourable friend the Floods Minister travelled to Cumbria on Saturday to ensure that the emergency responders on the ground got all they need. He has remained in the north-west throughout. On Saturday night we saw an unprecedented amount of rainfall. More than a month’s rain fell in one day. During Saturday night main rivers all across Cumbria exceeded the highest levels ever recorded. There is a mark on the bridge in Carlisle showing the flood level in 1853. The 2005 flood was half a metre higher than the 1853 flood, which was the highest on record until then. This flood was half a metre higher again. It was 0.6 metres higher than previous records in Kendal, 0.7 metres higher in Keswick and 0.3 metres higher in Appleby.

Although more than 8,000 properties were protected by our flood defences, by Sunday morning more than 3,500 properties had been flooded across the country, with the majority in Cumbria. In Carlisle, more than 2,000 properties flooded. More than 600 properties flooded in both Kendal and Keswick, with more than 200 in Appleby. Flooding was also seen in Northumberland, with more than 60 properties flooded at Hexham. Some 55,000 properties lost power in Lancaster following the flooding of the electricity substation. Transport was severely disrupted, with roads closed across the north-west and bridges damaged. The west coast main line was suspended.

Tragically, I can also confirm to the House that there were a number of weather-related fatalities, with a number of incidents caused or exacerbated by flooding or poor weather. I am sure the House will want to join me to express our deepest sympathy to their families and friends. It is a tragic reminder of how dangerous these conditions can be. On Sunday morning I chaired a cross-Government COBRA meeting to ensure the emergency responders on the ground had all the resources they needed and to address immediate issues, including the threat to the power supply in Lancaster and Carlisle. I spoke with gold commanders in the worst affected areas during the day to ensure they had sufficient national resources to deliver their emergency plans.

The Prime Minister chaired a further COBRA meeting this morning and is visiting the affected areas today. I am pleased to confirm to the House that progress is being made on recovering from some of the impacts. The number of homes affected by power outages has been reduced to fewer than 5,000 following restoration of power at Lancaster substation. Electricity companies are working around the clock to restore power as soon as possible. Transport remains disrupted across much of the area. Many roads remain closed and will need to be repaired. The west coast main line remains suspended between Preston and Scotland, and service is unlikely to be restored until Wednesday at the earliest.

The Government will continue to ensure all resources are made available to support recovery from this flooding. COBRA will continue to meet daily to oversee recovery efforts and I will be travelling to Cumbria and Lancashire after this Statement to continue to ensure we are doing all we can to help those affected. I know local communities will want to know what action Government will be taking to support the recovery phase. I am pleased to confirm to the House that my colleague the Communities Secretary will shortly be opening the Bellwin scheme for local authorities affected by floods, and that 100% of eligible costs will be met by Government. We will be announcing support schemes in coming days.

Since 2009 we have invested £45 million in new defences in Cumbria, but we will need to reflect on any lessons we can learn from this extreme weather event. In the last Parliament there was a real-terms increase in investment in flood defences and in this Parliament there will be another real-terms increase in spending. We are investing £2.3 billion in 1,500 schemes throughout the country that will protect 300,000 homes. The spending review has also confirmed we are protecting flood maintenance spending throughout this Parliament, as well as capital spending.

I am sure the whole House will join me in expressing our sincere sympathy to those affected by this weekend’s extreme weather conditions. I can assure the House that the Government will continue to do everything we can to support those affected”.

I commend this Statement to the House.

17:49

[Baroness Jones of Whitchurch (Lab)]

My Lords, I join the Minister in passing on our condolences for the very sad loss of life reported in Cumbria. We wish to offer our compassion and support for all those whose lives and livelihoods have been damaged by the recent floods. It is sometimes hard for us to fully comprehend the scale of the ongoing trauma and pain being experienced by these communities, but our thoughts go out to them.

I also join with the Minister in thanking all those working for the emergency services, the local councils and the Environment Agency. They have responded to the challenge with speed, calmness and efficiency. The priority in the next few hours and days must be to make people safe and to return essential services to full working capacity. Clearly the latest news about the Lancaster substation is a particular cause for concern, so our response will involve the need for co-ordinated action across local authority, energy, transport and health services.

I welcome the statement from the Minister that the Bellwin scheme will be applied to give local authorities some helpful financial relief, but can the noble Lord clarify what additional financial help will be given to other essential services such as transport and health to make up the shortfall caused by these events?

There is also a personal crisis being experienced by thousands of householders and businesses. Many of these individuals have only just put their lives back together after the previous floods. There have been countless stories about individuals waiting years to receive the insurance money that they needed to rebuild their lives. I know that the noble Lord promised to look into this issue when it was raised last week by my noble friend Lady Symons, but, given the events of recent days which have underlined the urgency of this issue, I hope that the noble Lord will commit to a summit of the insurance companies to see what can be done to speed up the process of reimbursement.

Sadly, we also know that the new government-sponsored insurance scheme, Flood Re, will not come into effect until next year, so can the noble Lord say what if anything can be done to prevent the insurance premiums for properties in the affected areas rocketing in the mean time? As we know, the Flood Re scheme applies only to domestic households, but the flooding of town centres has brought its own heartbreak to local businesses. Many of them have spent years building up their businesses, so it is a matter of compensation not just for lost stock but for all of those customer relations which have made their businesses a success.

If we are not careful, these businesses will simply pack up, and, in doing so, they will rip the heart out of those communities. Can the noble Lord give some hope to those businesses that they will receive all the necessary support to help them stay and rebuild? In particular, can he update the House on the expenditure from the repair and renew grant which was meant to provide grants for flooded homeowners and businesses after the previous events of the past few years? Figures published earlier this year show that only 1,680 claims were met, despite the fact that more than 11,000 properties were flooded during the winter of 2013-14. Of those, the average payment was £1,666, which is much lower than the £5,000 maximum.

Meanwhile, the Government’s Farming Recovery Fund, which promised £10 million to help flooded farmers restore their land, has paid out only £2.8 million, with another £2.3 million in the pipeline. Is the Minister content with the limited scale of these payments—and, if not, what else is he doing to make sure that the money is put to the use for which it was originally intended?

Obviously we need to take all necessary steps to make amends for this disastrous event, but ultimately that is not the point. What everyone caught up in this crisis really wants to know is why it happened and what is being done to make sure that it does not happen again. The Prime Minister has again pledged support and financial aid for those affected by the floods, but the track record of this Government tells a different story. We are dealing with the aftermath of a disastrous decision by the incoming coalition Government in 2010 to downgrade flood defences as a priority. In one year alone, the coalition slashed flood spending by more than £100 million. So, despite the money now being pledged for capital expenditure on flood defences, we are spending less than we were in 2009-10. In addition, the Government are preventing the Environment Agency from carrying out long-term planning on flood maintenance by restricting its budget to year-on-year announcements. Will the Minister agree to revisit the allocation policy and give the Environment Agency some longer-term certainty about future expenditure?

The mistake we have been making so far is to concentrate on flood defences rather than on the wholesale countryside management that contributes to these problems. In particular, we should be paying greater heed to upstream river management. We know, for example, that trees absorb water much faster than grass, so it should be a priority to reforest upland areas. Equally, we need to ensure that rivers are encouraged to flow and meander more slowly, if necessary flooding adjacent farmland. We need to address the impact of the CAP and the single farm payment to ensure that they are not offering perverse incentives to clear land that would otherwise trap water and prevent flooding. Moreover, we need to intervene to prevent farming practices such as overploughing, which cause rapid water drain-off. I would be grateful if the noble Lord could confirm that these policies are being co-ordinated to ensure that we make the best use of scientific evidence on these issues in the future.

Finally, we will not have a serious strategy at the heart of government until the Government fully embrace the fact that extreme weather events are the result of climate change. The Government have been repeatedly warned by the Committee on Climate Change that these catastrophic events will become more and more common, and that they require a whole-government response. The fact that the Paris talks are taking place is an opportunity for our Government to show real leadership by committing to a low-carbon economy and investing in low-carbon technology. Perhaps the noble Lord could take this opportunity to update us on the Government’s proposed offer to the Paris talks. Ultimately, we are not going to overcome the impact of extreme weather simply by building higher defences. We need to address the fundamental causes, and I look forward to the noble Lord’s response.

[The Lord Bishop of Portsmouth]

My Lords, I add my—

[Lord Gardiner of Kimble]

My Lords, I hope that the right reverend Prelate will forgive me, but it is traditional that the Front Benches of the two parties have the first 20 minutes.

[Baroness Parminter (LD)]

My Lords, I add from these Benches that our thoughts and prayers are with those who are affected at this very difficult time, and we offer our thanks to those who are helping them. After the severe flooding in Cumbria six years ago, some £134 million was made available to the UK by the European Union fund for major natural disasters. It is very welcome news that the Bellwin scheme is going to be opened imminently, but, given the scale of the clean-up, the need for temporary accommodation and the need to rebuild vital infrastructure after the record-breaking floods in the north of England, can the Minister say on this occasion whether the Government will be applying to the European Union Solidarity Fund in order to help these devastated communities?

Perhaps I may add from these Benches that I welcome what the noble Baroness said about an update on the climate change negotiations in Paris. It is important that we do not forget at this time of personal tragedy the wider implications of these events, which are occurring far too often.

17:58

[Lord Gardiner of Kimble]

My Lords, I thank both noble Baronesses for their comments on what is overwhelmingly a personal tragedy for many families, and obviously the fatalities are a great upset to so many people and communities. One thing that has come across strongly is the way in which communities have come together, as noble Lords would expect, to help each other. The other point raised by both noble Baronesses is the extraordinary and exceptional way in which the emergency services from across the country have come together to help. I acknowledge their comments in this regard, and it is something that we should all acknowledge.

The noble Baroness, Lady Jones of Whitchurch, raised a number of points, and if there are matters of detail that I do not cover, I will be in touch with her. Looking at the investment both in capital and maintenance, it is interesting to note that from 2005 to 2010, there was an investment of £2.7 billion in flood defences. In the last Parliament, it was £3.2 billion. We now have a six-year programme involving a £2.3 billion investment in 1,500 schemes. The maintenance budget has also been protected and that is very important. We obviously have lessons to learn from what happened in Cumbria and other parts of the country.

However, there were a number of key points to which I must respond. A major one was insurance, because, clearly, this is going to be a matter of considerable concern to householders and businesses. The noble Baroness, Lady Jones of Whitchurch, is absolutely right that this came up in exchanges with the noble Baroness, Lady Symons. I understand that my right honourable friend the Secretary of State at Defra met the Association of British Insurers recently and, because the Communities Secretary will deal with the recovery element of this, there will be a meeting of the insurers imminently. However, the department is in regular touch with the Association of British Insurers to discuss not only the situation in Cumbria but beyond, and the industry’s responses.

We are assured that the action taken by insurers—we will work closely with them and make sure that this is the case—includes arranging and paying for temporary alternative accommodation or, for businesses, temporary trading premises; drafting in additional claims staff; prioritising elderly and vulnerable customers; doing all they can to ensure repairers are available to start repairs as soon as it is safe to do so; and making interim emergency payments to support flooded customers. Insurers are aware of the need for prompt payment but the need clearly is for the waters to recede before damage can be assessed. Therefore, I assure the noble Baroness and your Lordships that both the Secretary of State at Defra has already had discussions with the ABI, and that the Communities Secretary will take this forward as we ensure we get into a proper recovery situation.

On repair and renew, I think the noble Baroness, Lady Jones of Whitchurch, and I need to compare our statistics. My understanding is that more than £24 million was granted for repair and renewal to 6,000 households and businesses who were flooded in 2013-14. My understanding—and therefore we must compare our information—is that on the farming recovery fund all claims were met in full. I think we need to ensure that we both have the right figures in front of us but I am grateful to the noble Baroness for raising this matter.

The other point was on farming practices. Clearly, we need to think very carefully about how we work with farmers who are going about their business and looking after their land to make sure that we achieve the best for the environment. We need to think, too, about the way in which farmland can be included, not only the protection of properties but also of agricultural land, which is so important for the production of our food. I mentioned in Questions last week the example of the slow the flow project in Pickering—I am conscious my noble friend Baroness McIntosh of Pickering may be in the Chamber. This is an important way of proceeding: looking at the use of land and how we work with the farming world to ensure that floods can be accommodated. While we should be mindful that farmland is valuable—it produces a crop—there may be certain parts of the country where we should be working together much more strongly to ensure that we slow the flow. I am a great tree planter. The planting of trees and the way in which we farm alongside watercourses are all going to be important.

Climate change is clearly an area which is of particular importance when, for instance, the Environment Agency is considering how best to work on our behalf to get the right results with the right investment to secure the best overall result. All flood risk management schemes are required to take into account climate change during their design and construction. The Environment Agency also produced its long-term investment scenario study in December last year, which sets out national long-term investment scenarios for flood and costal risk management over the next 50 years and includes adaption to climate change. Therefore, that is also going to be very important.

Clearly, important discussions are taking place in Paris. It is important that we are all responsible custodians of the planet in our generation. We need to have a result that ensures that the planet can—we hope—be better restored, and that there are ways in which we can work together with all countries. We need to do our part in this country but also we need to ensure that around the world there is recognition that many aspects of the way in which we live need to be addressed. I think what the noble Baronesses both raised about changes in climate is important in the way in which we deal with flooding.

The statistics on the floods and the levels of the rivers in Cumbria are extraordinary and unprecedented. A rain gauge in Cumbria in Honister recorded rain of 13.4 inches. This is the scale of what happened and the reason why many of the defences, which were above the level of the previous floods, were over-topped. If there is any positivity to come out of this, it is that those investments enabled fewer properties to be flooded and bought time for us to help the evacuation, the informing of the warnings and getting people away. I am sorry, obviously, that these flood defences held but were over-topped, but when I looked at the statistics for the level of rainfall and what the rivers and the defences had to cope with, it is quite extraordinary what the people of Cumbria had to withstand over the weekend.

18:08

[Lord Spicer (Con)]

My Lords, in the almost 40 years that I represented Worcestershire in the House of Commons flooding was one of two issues that came up the whole time. Does my noble friend accept that you cannot hide flood water? If you build barriers in one place, particularly on a river, and keep out the water in a particular place it is quite likely to be pushed on to another place. That happened continually in my old constituency. Upton-on-Severn was always flooding and was almost a national treasure for that at one point. Once we got that sorted out the whole lot went down to Tewkesbury and flooded that out. Therefore, when people call on the Government to spend more money on barriers, I hope he will bear that in mind.

[Lord Gardiner of Kimble]

My Lords, my noble friend has great experience of the flooding in his constituency and we have all seen the difficulties when many residents and businesses on the River Severn have been so affected. It is important to note that in Cumbria all the flood storage reservoirs were utilised—at Carlisle, Wigton, Longtown, Kendal and Penrith—and, indeed, the flood basins at Garstang and Catterall on the River Wyre were immensely valuable in preventing more properties being flooded. Therefore, how we stall water or how to slow the flow are things that we need to look at more rigorously.

[Lord Judd (Lab)]

My Lords, I live only a short distance from Honister, and indeed from Cockermouth, and not far from Keswick, and I was at home during the weekend. The situation is hard to overdramatise. Obviously I could speak at great length about the experience but I will not. Suffice to say that we cannot thank the volunteers and the specialist services enough. They worked tremendously hard; they were very prompt in their arrival; and they worked effectively.

However, we cannot overemphasise the resilience of the people. I do not want the House to be under any illusion. There is a great deal of despondency in the area about how seriously the situation is taken. First, for a long time, ever since the last major incident, there has been scepticism about whether all the money was being spent to good effect and whether what was done was sufficient. Secondly, people had anticipated and discussed—I have heard them over the years—that because it was not enough it would create new problems. Indeed, this has happened. There were predictable knock-on effects from some of the defence work that was done, which aggravated the situation just along the road, or just down the way, or wherever. That has to be considered very seriously. In other areas, the work was just useless because the floods completely overpowered it. There is a lot to be examined about the effectiveness and how far public expenditure was put to good use.

Thirdly, there is the impact on people. There will be trauma for a long time to come with consequences for the health service and others. While the resilience of the people is magnificent, there will be others who are completely broken, which will place a heavy demand on the psychiatric as well as the physical aspects of medicine. I bring these points to the attention of the Minister.

[Lord Gardiner of Kimble]

My Lords, I am most grateful to the noble Lord for raising these points today. Absolutely, volunteers came from all parts of the country to help the people of Cumbria. I know there is a very strong flood warden system in Cumbria and I acknowledge, because of the resilience of those communities, that somehow they will get through it but it is going to be very difficult and very painful. I realise that and we need to take all these matters extremely seriously. As the Secretary of State and the Prime Minister have said, we need to learn further lessons from this. Obviously, there is the whole issue of river systems, and the way in which we deal with these enormous flows of water is absolutely crucial.

[The Lord Bishop of Portsmouth]

My Lords, I apologise to the House and in particular to the noble Baroness, Lady Parminter, and the Minister for my earlier ill-timed intervention. I add an expression of my compassion and sympathy, and the assurance of my prayers, to all those whose lives and livelihoods have been affected and particularly to the families of those who died.

The right reverend Prelate the Bishop of Carlisle lives in Keswick so has seen for himself the terrible problems caused by these storms. I know that the House will appreciate that he cannot be in his place today. In the past 10 years we have seen in Cumbria three so-called once-in-a-lifetime flooding events. Does the Minister believe that there may be a category problem here, and that some redefinition may be appropriate? Further, will Her Majesty’s Government reassess not only how they categorise these events but prepare for their apparent more frequent occurrence? We have heard of the help given by some of the flood protection measures that are in hand, but does the Minister believe that reconsideration of present flood prevention measures is not just needed—that is the reflection and learning that the Statement mentions—but urgently needed when we see so graphically the results of this particular circumstance?

Finally, will the Minister confirm that, alongside short to medium-term flood prevention measures, these ghastly events have surely confirmed the vital significance of the deliberations in Paris on climate change for a deep-seated change, so that floods and such awful events occur, if not never, certainly less frequently? Meanwhile, I know that Christian churches of all denominations are working alongside the huge number of volunteers, and we welcome that.

[Lord Gardiner of Kimble]

My Lords, I am grateful to the right reverend Prelate. I think that all Members of Parliament from Cumbria are in their constituencies and I am not surprised that the right reverend Prelate the Bishop of Carlisle is in his diocese.

The definition of how we deal with and approach what continue to be unprecedented circumstances is a difficult one. All I can say is: having seen the scale of the rainfall, I hope that what we saw over the weekend remains unprecedented. The point is that lessons always have to be learned when we have such emergencies. We need to look at the flood protection measures. As I said, very considerable sums of money are being spent not only on capital projects but on maintenance, but we clearly need to continue looking at whether they are the best value for money and whether they secure the best safety, which is obviously paramount for people. There are lessons to be learned and, as I have already mentioned, the deliberations in Paris on climate change are clearly of huge importance.

[Lord Inglewood (Con)]

My Lords, I must declare an interest as I was born in Carlisle, I live in Cumbria, and I have property and business interests that have been damaged by these floods. However, they are nothing compared to the misfortune that has fallen on the head of a number of other Cumbrians, many of whom for the second time have been flooded out of house and home at the beginning of a wet and cold winter.

Over recent years the Cumbria Community Foundation, of which I am vice-president, has had a lot of experience after the various floods and the foot and mouth outbreak in distributing money to those who need it. The crucial lesson that you learn is that you need money up front for distribution now. In response to this flood, I understand from the net that the foundation has already raised £100,000, and I ask the Government whether they will make a contribution for immediate distribution to those who are in desperate immediate need of help. I should like to suggest a minimum of £1 million.

[Lord Gardiner of Kimble]

My Lords, I know of my noble friend’s connections and strong affinity with Cumbria and the communities there. I am sure that the Cumbria Community Foundation is an excellent local charity but obviously it is not in my gift to make such a donation. However, I can say to him that my right honourable friend the Secretary of State for Defra announced in her Statement that the Government will look over the coming days at what further steps they might take in support of those affected. I will ensure that his suggestion is put forward.

[Lord Campbell-Savours (Lab)]

My Lords, as a former Member of Parliament for Workington, Cockermouth and Keswick, in expressing my sympathy I declare an interest as the convener of one of the flood action groups in Cumbria, occasionally meeting with the Environment Agency and United Utilities officials.

A lot of money has been spent on flood alleviation and resilience projects. However, none of the authorities concerned has been prepared to spend money on the big-ticket projects that are necessary if this unprecedented and unpredictable scale of flooding is to be avoided in future. Will Ministers now consider upstream storage, even including new reservoir projects, pump-primed with state money but ultimately transferred to the private sector? Will they consider the urgently needed re-engineering of outflow valves on the dam at Thirlmere? Will they consider statutory month-by-month limits on water asset management at Thirlmere? Will they consider the removal of the Gote Bridge in Cockermouth and the Greta Bridge in Keswick and their replacement by single-span bridges that stop the blocking of water flows? Will they consider strengthening the course of the River Derwent below Cockermouth, to remove some of the meanders, as raised by my noble friend on the Front Bench? Can we have a complete ban on housing development on the west Cumbrian flood plain? Finally, can we have a review of the coverage of Flood Re, which is now exposed as fatally flawed, as thousands of people will find that they are not covered, even under the new scheme when it is introduced?

[Lord Gardiner of Kimble]

My Lords, I thank the noble Lord for raising those important issues. I will take his comments back, with some of his detailed points on upstream storage, re-engineering, water levels at Thirlmere, bridges, and the use of reservoirs and other places to keep water back when we can. The whole area of water asset management is clearly going to be important. On housing, the planning guidance on new development has been very clear. I will look into the particular point about Cumbria, but well over 95% of new housing is now not built in flood-risk areas. The noble Lord and I had a conversation about Flood Re after Questions last week. I am looking into the particular point of long-term leaseholders: I hope I can at least help to address this situation.

[Baroness McIntosh of Pickering (Con)]

My Lords, I thank my noble friend for his Statement. Storm Desmond was clearly an act of God and resulted in flooding of biblical proportions. No matter what preparedness there was, I would defy anybody to find any flood defences that could have protected all the properties. I greatly regret the loss of life and damage to property.

When my noble friend looks at the role of insurance companies in rebuilding homes, will priority be given to developing greater resilience and lowering insurance claims where householders look to increase and improve the resilience of their properties? I declare an interest, as referred to in the register. Also, the first seat I fought was Workington and it is a delight to follow in the footsteps, in this House, of the noble Lord, Lord Campbell-Savours. I support his bid to have a review of the Flood Re categories, particularly for businesses, farms and leasehold properties. There is also the vexatious issue of those on low incomes who cannot afford contents insurance. What regard can we have for them?

Will my noble friend respond to the concern of farmers who will have lost livestock and the use of the land through contamination by these floods and those in 2009? Will he recognise the role of farmers and drainage boards in clearing minor watercourses to allow the flood waters to recede in events such as this? Will he look to introduce novel means of financing future flood defences by levering in private funding? It is in the interests of insurance companies, and water companies, to fund major flood defences in future. If the Minister can be part of that debate, the whole of Cumbria and the United Kingdom will benefit.

[Lord Gardiner of Kimble]

My Lords, my noble friend spoke about the flood defences. I have now studied this: the extent of the rainfall was so extraordinary that the defences held but were overtopped because of the exceptional levels. However, we obviously need to look at where we can best devote our resources. It is very important that insurance companies work with policyholders: we want remedies there. Greater resilience is going to be very important. There are all sorts of ways in which we can start to encourage people, particularly in areas where flooding is a possibility or even a probability. I should have declared that I am a farmer myself. I therefore recognise the importance of the farming community working to maintain ditches and watercourses going through their property. It is important that we work closely with them, which is why we have regular meetings with the National Farmers’ Union and farming organisations. My noble friend asked about further funding. Partnership funding is going to be very important. It plays a significant role and may well help us ensure that there will be other sources, in addition to the £2.3 billion of government funding, to fund working closely with local communities to get good results.

[Lord Stoddart of Swindon (Ind Lab)]

My Lords—

[Lord Dubs (Lab)]

My Lords, I declare an interest, because I have a house four miles south of Cockermouth which, according to neighbours, has been flooded. I was not there—

[Baroness Chisholm of Owlpen (Con)]

We have not heard from the Cross Benches yet and we have got just two minutes.

[Lord Stoddart of Swindon]

I have two short questions for the Minister. First, will he encourage people against non-permeable structures? Secondly, because electricity supply is so important, will he discuss with the electricity companies and National Grid protecting their substations from flooding?

[Lord Gardiner of Kimble]

My Lords, the noble Lord rightly mentions how we can best prevent flash flooding in particular. It is important that the policy guidance should be that developers and householders do not concrete everywhere. On the electricity grid, it is also essential that we protect our infrastructure. We are working on this.

[Lord Dubs]

My Lords, as the Minister will be aware, the last time Cockermouth was badly flooded, in 2009, it took a long time for the town to get back to normal and some of the businesses had to struggle very hard to survive. When he meets the insurance companies, will he make reference to the fact that it is partly a matter of being covered and partly a matter of the cost? I fear that some businesses and householders in places like Cockermouth will be charged so much to reinsure that they will not be able to afford it. Could he please get them to be sensible about this and not slap up the charges? Last time there were floods, my insurance went up six or sevenfold.

[Lord Gardiner of Kimble]

My Lords, the noble Lord makes a very good point, which I will feed back. The best thing everyone could do is support Cumbrian businesses next spring and summer. That would be a gesture of support for the great communities of Cumbria, which is a tourism Mecca for so many.

Welfare Reform and Work Bill

Monday 7th December 2015 Lords Chamber

Committee (1st Day) (Continued)

18:29

Amendment 3

Moved by

[Baroness Meacher]

3: Clause 11, page 13, line 12, at end insert—
“( ) The limit on the number of children or qualifying young persons for whom an individual element of child tax credit can be claimed, as set out in subsection (3B), shall not apply to households where one or more of the children or qualifying young persons are disabled (including, but not limited to, those persons in receipt of the disability element of child tax credit).”

[Baroness Meacher (CB)]

My Lords, Amendment 3 seeks to exclude all families with a disabled child from the two-child limit on receipt of the child element of child tax credit and the child addition within universal credit.

I have also tabled Amendment 8, which is more limited in the protection it affords. Amendment 8 would exclude any disabled child from the number of children considered in relation to the child element of universal credit. Thus, if Amendment 8 were accepted by the Government, a family with four children, one of whom is disabled, would still lose the child element for the third non-disabled child. I argue very strongly for Amendment 3, but Amendment 8 would be a great improvement on the Bill as it stands. At this point, I pay tribute to Rob Holland from Mencap for his considerable help with the Bill.

Families with disabled children face financial and other stresses which are not faced where all the children are healthy and able-bodied. These families have extra costs for special aids, adaptations to their homes, and additional clothing and travel costs. The travel costs of medical appointments alone can be very considerable. One family, for example, reported regularly having to get to three appointments a week, and this can rise to as many as seven. The appointments are at four different hospitals, involving additional petrol costs, depreciation of the car and, most particularly, parking fees. Another family talked of their child often breaking bedroom furniture and other items due to the frustration of their disability, which then had to be replaced.

The enormity of the cuts envisaged for families with disabled children is quite extraordinary. While I know that the Government are committed to a much smaller role for the state in future, can it be right to hit the most disadvantaged the hardest? Without these amendments, the two-child limit for claims of child tax credit means that if a two-child family has a third child who is disabled, the family will be £2,780 per year, or an average of £50 or so per week, worse off than they would be under the current provision. This loss must be considered alongside the substantial fall in the level of the disability element of child credit under universal credit. The current value of that benefit is £57 per week, whereas the disability addition in a family’s universal credit entitlement will be worth only £28 a week—a loss of £29 per week. I understand that, in all, a new claimant family with three children, one of whom is disabled, will be about £79 per week worse off when these two changes come into effect than a family currently claiming equivalent benefits. Will the Minister confirm whether or not he agrees with these figures?

Research conducted by the Children’s Society and Citizens Advice in 2012 into the two-child limit for child tax credit found that the impact could be disastrous for the health and well-being of the children. Two-thirds said that they would have to cut back on food, more than half said that it would lead them into debt and more than one in 10 feared that they would have to give up their home.

Have the Government assessed the impact of these cuts on the number of children placed in residential care? There seems little doubt that all parents will be less able to cope with a disabled child at home if money is as tight as highlighted by the Children’s Society and Citizens Advice. What would be the net savings to the Exchequer, having taken into account residential care costs of a proportion of the children involved, as well as other costs of health and social care? I would be grateful if the Minister could clarify whether work has been done to clarify the net savings from the two-child limit in the context of the other planned benefit cuts, and taking account of increased government spending on other services. If this analysis has not been done, does the Minister agree that these changes should not go ahead until the Government have a clear understanding of these points? As one parent put it, “We would face the choice of increased debt or the eventual institutionalisation of our child”.

The Government may be assuming that local authorities will take over the burden of these family costs. I understand that this simply will not happen. In fact, among the families already receiving additional support from local authorities, about 60% said that that support had been cut over the past year, and there will be more cuts to local authority services in the coming years.

A big concern is lone parents with disabled children. Many years ago when I was training to be a social worker, which I did for a few years, I spent six months working in a school for severely handicapped and disabled children. I found myself running a group for the parents of those children. The group comprised about 14 parents, every single one of whom was a single mother. The fathers had apparently walked out some time after the disabled child was born. If these mothers had also abandoned their disabled children, the state would have had to take care of the children and pay the bill. The impact of the two-child limit will be greatest for these parents.

In a meeting with Ministers about tax credits, I was told that the Government expected claimants to work extra hours to make up for their losses. However, these lone parents with disabled children are not able to make up the shortfall by working extra hours. The simple fact is that the disabled children and their healthy siblings will suffer if this measure goes ahead. I understand that the Government recognise that some groups—I think it is two groups—should be exempted from the two-child limit for the child elements of child tax credit and universal credit. I hope very much that the Minister will today assure the Committee that he will give serious consideration to exempting families with disabled children from this particularly savage cut. I beg to move.

[Baroness Pitkeathley (Lab)]

My Lords, I support these amendments. It is very important to remember that being the parent of a disabled child is not the same as being a parent. It is sometimes very difficult to get that point over. I remember that when we discussed the Children and Families Bill, officials and even Ministers said, “I am a parent and I do not need any extra support”. However, this is not the same as being a parent of a normal child, if I can put it that way. We all expect to care for our children until they are 18, and many of us for much longer than that but, for a parent who is caring for a disabled child, that caring is likely to be a lifelong commitment— your life or their life. That is the point we have to remember. That lifetime commitment means that these parents face huge problems. They face practical problems, particularly when services are being cut and there is not enough support. They also face very severe emotional problems. As the noble Baroness reminded us, marriage breakdown is very common where there is a child, or more than one, with disabilities. These parents also face financial problems, which is what we are concerned with here. I suggest that most households with a disabled child already face financial hardship, even without these changes. More than half—53%—of parent carers answering the State of Caring survey in 2015 said that they were struggling to make ends meet.

Research shows that it is three times more costly to bring up a disabled child than a non-disabled child, as we have been reminded. Some 34% of sick or disabled children live in households where there is no adult in paid work compared with 18% of children who are not sick or disabled. Four in 10 disabled children live in relative income poverty once the additional cost of their disability is accounted for. Last year, the Carers UK Caring & Family Finances Inquiry found that parent carers of disabled children were one of the groups least likely to be in employment. As one carer said: “I gave up work thinking I would be able to return within a year or two once I got my daughter the support she needed. Little did I know how poor local services were and I am still caring years later”. That carer will probably be caring all her life and certainly for all the life of that disabled child. Surely we are not thinking of making hard lives even harder by these pernicious changes. I support the amendment.

[Baroness Sherlock (Lab)]

My Lords, I wish to speak to Amendment 19, standing in my name and that of my noble friend Lord McKenzie of Luton, and to the other amendments in this group, which I support.

The case has already been so well made by the noble Baroness, Lady Meacher, and my noble friend Lady Pitkeathley that I will not add much more. However, I want to get a sense of scale. Contact a Family reports that there are 770,000 disabled children under the age of 16 in the UK. That equates to one child in 20. Most struggle on alone with only 8% of families getting services from their local social services. As we have heard, it costs up to three times as much to raise a disabled child as it does to raise a child without disabilities. We have heard the figures from official statistics showing the much higher rate of poverty among families with a disabled member and the high proportion of children with a disability who live in households in poverty

Families are already struggling. It is very good that we will retain the disability element, which covers some of the additional costs of disability, but the child will still have to be fed and clothed and cared for. The reality is that not only do disabled children cost much more but it is much harder for parents to increase their income, a point made by the noble Baroness, Lady Meacher. Suitable childcare for disabled children is much harder to find and more expensive when it is found. For some children the nature of their disability makes it very hard for anyone other than the parent to be able to take care of them.

As the Children’s Society pointed out in its briefing, the child disability element for children other than those on the high-rate care component of DLA has already been effectively halved within universal credit. Currently a family with a disabled third child would receive a maximum child tax credit entitlement of £5,920. Following the reduction of the disability component and the two-child limit, they get a maximum of just £1,513, little more than a quarter of their entitlement in the current tax credit system.

The Minister has said repeatedly today that this is about choice and that we want to enable families who are on tax credits and universal credit to make the same choices as other families. Will he acknowledge that having a disabled child is not a choice a family makes? Often the family will not know that the child is going to be disabled when the child is conceived. Either the disability may not be known, or the child may develop a disability or an illness which causes a disability after birth. The family are therefore not in a position to know the additional costs they are going to be taking on. I have problems in general with this policy, as I will explain in a later stand part debate, but one of the reasons for having so many exemptions is to try to get the Government to explain the rationale of exempting certain categories of person and not others. The Minister needs to be consistent. If his intention is all about clear-eyed choice, then can he explain how that applies in this case?

[Lord Kirkwood of Kirkhope (LD)]

My Lords, I put my name to Amendment 3, and I support the powerful speech made by the noble Baroness, Lady Meacher, and other contributions that we have had in this short debate. I want to make a simple point about disability. I had the distinct impression that, although the Government were determined to force through their £12,000 million savings, health and disability were going to be a priority for Ministers over the next five years. There are signs that that is true. Some of the attempts that we are watching unfold to bridge the disability employment gap and issues of that kind are welcome, as far as they go. That should give the Minister some cover to go back to the Treasury and say that there should be some identified exemptions for working families in particular. We are trying to encourage people to sustain employment in the future. Some families have young members with different levels of disability as well as mental health issues and disabilities. There is a little more emphasis on this, thanks to the excellent work that was done during the coalition Government days. There is a real peg on which the Minister can hang an approach to these tragedies which says that something needs to be said and some provision made for disability in the context of Clauses 11 and 12.

I say again to the Minister, and I mean it, that the Committee will weigh carefully what he says in terms of the exemptions or otherwise. So far he has been playing a pretty straight bat and holding the line on behalf of the Government, by which I think he means the Treasury. I understand all that, but he has to be very careful. I have said this before, and I will say it again in the clause stand part debate, that he risks losing some of these clauses, if he is not careful, if he does not appeal to good moderates such as the noble Lord, Lord McKenzie, and me. No, I take that back—it will damage his political career in the new Labour Administration.

There is an opportunity in the context of Ministers rightly focusing again on work and health. If that is applied to the amendments that have been so ably moved, I think there is some room for compromise. If there is not some give and take, I think that the Minister is going to have trouble carrying some of this Bill through the rest of its proceedings.

18:45

[Baroness Hollis of Heigham (Lab)]

I was not going to add to the very powerful opening speech by the noble Baroness, Lady Meacher, but I will just say to the Minister that, when he faced a similar problem with housing and the cut in benefit to those with a so-called spare bedroom—I refer to the bedroom tax—the Minister understood the degree of disquiet around the House and invested in discretionary housing payments, which he increased and increased. In other words, there was a recognition that there needed to be some head space in the system for dealing with difficult issues, many of which we have discussed today. I suggest to him that we have had so many of those in the previous amendments and most powerfully again on the issue of disabled children that he should seek a similar discretion which then the Government can come back with in proposed draft regulations which the House can discuss before they then become part of the legislative process by the time we get to Report.

[The Earl of Listowel (CB)]

My Lords, I support my noble friend Lady Meacher in her amendment, which she so eloquently moved. A couple of years ago a woman called Stacie visited Parliament to talk to your Lordships in preparation for a childcare Bill. She talked about her difficulty, as a mother of a disabled child, in finding appropriate childcare. I think she went through more than 20 childcare providers who just said, “Look, we cannot deal with the needs of your child”. Eventually she found a very good provider that was prepared to go the extra mile. I know that this is an issue we have to take seriously and are looking to improve in terms of making childcare more easily accessible. It continues to be a problem. So there is that additional issue that I would highlight to your Lordships.

My noble friend also highlighted the fact that so many of these women are bringing up disabled children on their own. I invite your Lordships, women and men, to think about trying to bring up a child on your own when that child has a disability. The risks of isolation, of being overwhelmed—all those things must be exacerbated.

The Minister, in the early discussion about popular feeling with regard to taxation, made his response. It made me reflect a little that perhaps part of the way the public sees these issues is mediated by how the Government present them. I encourage the Government to be very careful, and I hope that this will not be taken the wrong way. On Saturday morning I was speaking to a mother with a two week-old baby, and she was speaking with another mother. The other mother, perhaps a little unkindly, because this two week-old baby had an elder sister, who was three, said, “Has the older sister started trying to kill her yet?”. What this highlighted for me is that it is such a basic element of human nature to be envious, to resent something that somebody else has, that one has to think through very carefully how one presents sharing resources with somebody else, or giving resources to somebody else and not giving it to another person. I am afraid that that may not come across very well. I say to the Government that I hope they are being very careful about how they present these things.

[Baroness Manzoor]

My Lords, we on these Benches support these amendments, too—Amendment 3 in particular. The House needs some assurances from the Government that the disability premium for each disabled child in both tax credits and universal credits will be protected, regardless of the number of children in the family. However, the child element in tax credits and universal credit will be paid only in respect of two children in a family, even when the third child is disabled. That is the point. We need to look at those exemptions, so if the Government have already said that there is some protection, surely that same protection should be afforded to the third child who is disabled.

[Baroness Lister of Burtersett (Lab)]

My Lords, I want to make a brief point in support of the powerful case that has already been made. I believe that the latest HBAI statistics showed an increase in poverty among disabled children. Can the Minister tell us his assessment of the impact of these clauses on the number of disabled children living in poverty?

[Baroness Tyler of Enfield (LD)]

My Lords, very briefly, I lend my support to these very important amendments. We have heard some extremely powerful arguments. I want to draw attention to one point in Amendment 3, which refers to child tax credits and says that the limit should not apply,

“where one or more of the children or qualifying young persons are disabled”.

I remember vividly a meeting that I attended during the course of what became the Children and Families Act, organised by the noble Baroness, Lady Pitkeathley. The very point which she was talking about was the impact on parent carers trying to bring up disabled children. One of the mothers was bringing up three disabled children. I remember that vividly because I think it brought tears to most of our eyes, including those of the Minister. Can the Minister say what the Government’s thinking is about households which have more than one child who has a disability?

[The Minister of State, Department for Work and Pensions (Lord Freud) (Con)]

I thank noble Lords for this debate and, particularly, I heard the point made by the noble Baroness, Lady Meacher, about how the lone parent—the mother—is so often left on her own with a disabled child. That is a very moving point and clearly rings true.

Perhaps I may look at the technical position. Amendment 3 would exempt those families who have at least one disabled child from the policy which limits support to two children. The intention of this amendment is to allow families with a disabled child to claim the child element of child tax credit for an unlimited number of children. Under Amendment 19, that intention would apply to both tax credit and universal credit. I should point out, as a matter of information, that the difference in having the child element allowed for a third child is not actually that great, if you look at the statistics. That is because the number of parents who go on to have more children is actually very few, as the noble Baroness, Lady Meacher, will probably know, so there is not a lot of difference in the cost. I know that she will appreciate the thinking behind that point. Amendment 8, meanwhile, which goes on to the point about paying the child element, is technically a bit misdrafted, but I know that the intention of the amendment is to allow that child element to be paid.

The noble Baroness, Lady Sherlock, drew on the issue of whether a choice has been made. Clearly, we have considered the issue of disabled children carefully and looked at the challenges which these families face. We are committed to supporting those families with disabled children by paying the disability element of child tax credit and the equivalent in universal credit. That is true for all disabled children, although there are in practice rather few—I mean that there will be some, but relatively few—so, however many there are, it will be for not just the first disabled child but all of them. From what I am hearing, I think that the debate is now around the child element as well as the disability element and that that is where the differences lie in practical terms.

I acknowledge broadly the figures to which the noble Baroness, Lady Meacher, drew attention in regard to the reduction without the child element. When that is in UC as a unified benefit, it will be only one part of the total payment. On the amount that the family gets, the reduction will be much less than the “down to a quarter” figure to which she was referring. On top of the disability element that we are exempting, we are exempting from the benefit freeze all those benefits which relate to the additional costs of disability, including PIP and DLA.

On Amendment 19, which would create a duty for an appeals process, I repeat the point that I made earlier: we already have comprehensive appeal arrangements and therefore do not need this amendment.

The noble Baroness, Lady Lister, made a point about what happens to HBAI figures. As we have found out year after year, it is impossible to predict with accuracy future HBAI figures. As is customary, the noble Baroness, Lady Hollis, has a solution to it all, but I am not convinced that the discretionary approach would be the optimum one in this area. Whatever happens, I do not think that any kind of solution would come from that.

[Baroness Hollis of Heigham]

Given the amendments that we have debated so far—in the first group, the second group and now this one—what proportion of the estimated £1.3 billion in savings that I think the Government were expecting to make from this would therefore be lost to the Government?

[Lord Freud]

I am simply not in a position to deal with what are entirely hypothetical issues. I am not in a position today to offer very much satisfaction in these areas, as noble Lords know.

[Baroness Hollis of Heigham]

Can I push the Minister on this? In earlier debates, he was saying that the two main drivers for these proposals on the two-child policy were, first, the need to get financial control—he quoted very large figures that he expressed great concern about—and, secondly, the need to produce a level playing field between working families and non-working families. He must know the cost of all these amendments, because he will have had the briefing from the Box about them, but I have not heard him tell us that. How much would the cost be of the previous exemptions and, in addition, the exemptions referred to so powerfully by my noble friend Lady Pitkeathley and the noble Baroness, Lady Meacher? How much of those savings would the Government lose if they were to meet the exceptions that all the Committee has, so far, argued for today?

[Lord Freud]

I am not in a position to answer those questions because I have had all kinds of amendments tabled—including one from the noble Baroness, which would remove the policy and lose all of the £1.3 billion. I am not in a position to go through the exemptions at this stage like that.

[Baroness Hollis of Heigham]

So are the Government really saying, “We are opposing amendments because we can’t afford them”, but do not know what they will cost?

[Lord Freud]

I have given out as much information as I can on the questions at this stage and indicated what the relative positions are. On this amendment in particular, I was careful to make it clear that there is not a huge difference in cost terms—and I will double-check this—between allowing a child element for the disabled and exempting the family which has a disabled child. That is the main cost implication which I have been able to provide today.

[Baroness Pitkeathley]

If the Minister is not in a position tonight to answer those questions, can he give an indication of when he might be?

19:00

[Baroness Sherlock]

My Lords, before the Minister answers that, can I just say that I have found his responses today a little surprising. Many noble Lords have experience of being in Committee with him and having careful, detailed and well-informed debates. We are used to the Minister regularly getting up and telling us how much things cost and I find it almost impossible to believe that his department does not know how much these elements will cost. They have been proposed a long time. The department has had every opportunity and there are very good statisticians and modellers in the DWP. I can conclude only one of two things—either they know and have not told him or he knows and is saving it up for Report to launch it at us from the Box when we try and press a vote. Which is it?

[Lord Freud]

I would never launch something at noble Lords on Report in that way. Let me go and think about how I might present some useful figures in a reasonably timely way. That is not a promise to produce anything more than I have but I will look and see whether I can be more helpful, given that I clearly have not been now.

[The Earl of Listowel]

My Lords, will the Minister consider writing me a letter about improving access to childcare for disabled families?

[Lord Freud]

Can I look at that? I am not sure quite how much of this is in my own purview. If I can, I will.

[Baroness Hollis of Heigham]

I am amazed this information was not available at the Commons stage of this Bill, given it has been discussed in Parliament for several months— I think it was back in July that Second Reading took place—and to still not to know these figures surprises me enormously. While the Minister is being helpful in producing information, given that we know that 85% of the welfare cuts proposed by the Chancellor will fall on women and given we know that nearly all the “victims”—the recipients of concern in the exempted groups that we were talking about in previous amendments—are women, will he also do us a gender breakdown? He is absolutely right, as other noble Lords have also said, that it is usually the mother who is left caring for disabled children. I remember meeting vaccine-damaged children—part of the Minister’s responsibility, I think—and every parent there with a disabled child was a woman. Can I ask the Minister if he will add a gender analysis to the financial analysis of where some of these cuts fall and who the exemptions, therefore, would help to protect?

[Lord Freud]

I think I have to fall back on the position that we have produced an analysis that is published and is available to noble Lords. I just make the point that often these statistics refer to households with both a man and a woman in them and it depends on who the recipient is. It is a household payment, not a payment to women specifically. One has to be rather careful of that when one looks at those statistics in the way that the noble Baroness has.

[Baroness Lister of Burtersett]

The noble Lord is correct but women still tend to bear the main responsibility for the care of children, so the impact on a household is borne particularly by the mother.

[Lord Freud]

We are getting way off but our evidence is that the vast bulk of households share financial resources, so although someone in a household may receive a particular amount of money it does not necessarily mean that they do not share the burdens evenly. One can make a lot of false assumptions out of some of these data if one is not careful. I urge noble Lords not to press these amendments.

[Baroness Meacher]

My Lords, I thank the many noble Lords who have spoken in this relatively short but very powerful debate. The Minister certainly got a clear message that this is a matter of considerable concern to Members in most parts of the House. Perhaps I can say again that one-nation Tories of the past have always supported families with disabled children. I still hope that this Government too can show that they will follow the traditions of their party and not leave these families bereft and in severe straits. That is what these provisions will do in the absence of any amendments to them. I thank the Minister for his thoughtful responses as always. I think he always gives us a pretty good innings, but I hope that before Report he will feel able to clarify the relative costs of these various amendments, and then we can perhaps sit down and really think where the need is the greatest. If we are all in the dark it really is quite difficult to make sense out of things, unless the Government have implacably decided they will not change anything in this Bill at all. I hope that is not the view of the Government and of the Minister. I thank all noble Lords and the Minister and beg leave to withdraw the amendment.

Amendment 3 withdrawn.

Amendments 4 to 7 not moved.

Debate on whether Clause 11 should stand part of the Bill.

[Baroness Sherlock]

My Lords, I propose that Clauses 11 and 12 do not stand part of the Bill. We have heard during the debate today that this measure will have all sorts of, presumably, unintended consequences disincentivising kinship care and private fostering, disincentivising adoption, separating sibling groups, incentivising the break-up of larger families and acting as a deterrent to the formation of stepfamilies. It could require intrusive inquires of women who have been raped and, of course, will take large amounts of money from families with children. Another problem with the policy is the lack of any mitigation. Impact assessments often have a section that explains how the policy will be mitigated but here there is nothing. Of course that is because, once a child is conceived, there is no mitigating action that parents can take other than to have an abortion or to give up the child for adoption. I presume that nobody is advocating that. However, the Government are offering no help to families to mitigate the impact of these losses except where a woman has been raped or in the case of multiple births.

The Minister still has not explained the rationale for the exemptions. I am not satisfied with the question of choice. We also are left with the question of domestic violence and the 16% of pregnancies that are unplanned. Ministers sometimes talk as though conception were simply a matter of choice. The NHS website says very clearly that no contraceptive is 100% reliable. Where contraception has failed a woman has not exercised a choice to have a third child, unless the Minister is suggesting that a refusal to have an abortion constitutes a choice to have a baby, which it clearly does not. So why is that family penalised for having a third child? As we have discussed and will discuss again in a moment, it will affect some children who are already alive, as people making fresh claims for universal credit will get no money for their third child.

Given those effects and the lack of mitigation, the Government need a pretty compelling case for this policy. Have they made their case? The impact assessment says:

“The objective of these policies is to reform tax credits and Universal Credit to make them fairer and more affordable. They will ensure that the benefits system is fair to those who pay for it, as well as those who benefit from it, ensuring those on benefits face the same financial choices around the number of children they can afford as those supporting themselves through work. Encouraging parents to reflect carefully on their readiness to support an additional child could have a positive effect on overall family stability”.

That is what it is meant to do, so does it? Let us deconstruct it. The first objective is to make the system,

“fair to those who pay for it, as well as those who benefit from it”.

This contains an implied fallacy from the start, suggesting that there are two categories of person—those who pay for benefits and those who receive them, and ne’er the twain shall meet. We know that this is not true. As my noble friend Lady Hollis pointed out in a compelling Second Reading speech,

“over the course of 18 years, half the population has needed and received a means-tested benefit”.—[Official Report, 17/11/15; col. 57.].

People move in and out of entitlement to benefits and tax credits and the amount of tax they pay, and the degree to which they are a net recipient or contributor to the system changes over their lifetime and as things happen to them.

What about the second part, namely,

“ensuring those on benefits face the same financial choices around the number of children they can afford as those supporting themselves through work”?

Again, that paints a picture of people who are not working and having lots of children that hard-working families, who pay the taxes that fund the benefits and tax credits, could never afford to have. Let us test that. First, are those affected unemployed? The IFS figures show that, at the moment, 872,000 families receive an average of £3,670 for three-plus children. Of these families with three-plus children, 548,000 have parents in work, so approximately 63% of those getting benefits at the moment are in work—the typical victim of this policy is not the unemployed mother of a large family.

Of course, if the benefit cap is reduced, as the Bill proposes, to £23,000 in London and £20,000 elsewhere, then any family out of work with three-plus children is unlikely to get to enjoy the benefit of the child tax credit in any case. Shelter has pointed out that a typical couple with two kids renting a house in somewhere like Plymouth or Leeds—so not Mayfair—will be hit by the cap. Most of those affected are working, which means that tax credits are only part of their household income and top up their earnings, with the exact amount they get at any point depending on how much they earn. They are already funding much of the cost of raising their children in any case from their own resources and their own earnings. In that case, is there evidence that those in receipt of tax credits are having lots of children in a way that other people are not? No. We began a debate on this earlier. I have looked quite carefully at a study based on ONS statistical information which looked specifically not just at very large families but at what proportion of families had three or more children. It put it very starkly:

“These data show that socio-economic class, perhaps contrary to popular belief, does not affect family size”.

The third policy aim was:

“Encouraging parents to reflect carefully on their readiness to support an additional child”.

That raises two questions. First, do the Government believe that cutting funding will reduce the number of children born to poorer families? Although it mentions in passing a study on working tax credit, the impact assessment acknowledges there is “no evidence” on the strength of any such effect. My reading of the global evidence is, frankly, that it is inconclusive. Secondly, to what extent is this about choice and, more specifically, economic choice? Ministers—to be fair those of more than one Government—have in my view a surprisingly touching faith in the rational-actor model of humanity. In fact, the evidence shows that plenty of us make economically irrational decisions, or rational non-economic decisions, all the time. People may have cultural or religious reasons for wanting larger families, or be unwilling to take steps that might limit family size because of ethnical views on contraception or abortion. If people had children only when they were sure they could support them, that would mean conceiving only if they knew for sure their household income would be secure for the next 18 years. How many people can be confident of that? Who would have children if that were the case? Eighteen years ago, people might have thought working in steel factories could be a job for life, but factories close and economies falter; even MPs can lose their jobs. Things happen to people and working patterns change.

I then began to wonder whether this could be a way of managing population change. Ministers have not claimed that, but maybe it is a secret option which is so politically sensitive that they cannot mention it. But that does not make sense either, because again the latest ONS population studies, published in 2013 using 2011 census data, showed the fertility rate. They focus on women born in 1968 because they assume that when you reach 45 you are past your child-bearing years—many of us certainly hope we are. The assumption at that point is that you can assume that the child-bearing period has finished. Women born in 1968 had an average of 1.92 children—it is worth noting, as Naomi Finch and others do, that a replacement rate, which would maintain the population, would be a fertility rate of 2.1. The studies also show that fertility rates are remarkably constant. The ONS notes that for over 70 years the two-child family has been the norm, while the numbers for families with three children and no children are also broadly consistent for women born in 1968. Interestingly for those worried about large families, one in 10 women born in 1968 had four-plus children, down from one in five for women born in 1941. That is clearly going in a direction that need not worry the Minister.

I have the following questions for the Minister. If the policy were to result in families on benefits and tax credits having fewer children, would the Government regard that as a good thing or a bad thing, or would they be indifferent to it? Secondly, what will the Government do to mitigate the effects on children of the hardship and damage to life chances that must result from increasing poverty in large families? If this policy succeeds in persuading poorer families to have fewer children, our society will suffer. As my noble friend Lady Hollis mentioned, since our birth-rate is below replacement rate, if the Government are serious about wanting to clamp down on immigration as our population ages, who is going to be around of working age to pay our pensions, fund our health service and care for us when we get old?

19:15

However, in fact there is little evidence that that will happen. If this policy does not change the number of children being born, then it must increase child poverty—it can do nothing else. One or the other must happen. It will take money away from larger families when child poverty is already 35% higher in those families, so the real losers from these policies will be the children who happen to be born into larger families, especially as younger siblings.

The policy also undermines the fundamental point of our welfare state, which is to protect the vulnerable and insure citizens against the hazards of life such as illness, disability, unemployment and bereavement. Given all that, the onus is very much on the Government to provide the evidence that this policy is necessary and proportionate. I look forward to hearing the Minister do just that.

[Baroness Lister of Burtersett]

My Lords, I was so disappointed with the Minister’s responses to the olive branch that the noble Lord, Lord Kirkwood of Kirkhope, held out and the inflexibility in response to all the suggestions of how these clauses could be mitigated. In support of the contention that these clauses should not stand part of the Bill, I want to address two main issues: one is the mentality underlying the clauses, and the other is the equality and human rights implications.

My noble friend Lady Hollis referred back to the 19th century in her earlier speech. I will go back just one century. The mentality of the Bill was summed up rather well in a letter to the Scotsman in 1931 which was quoted in The People by Selina Todd, which I just happened to read on holiday—it is a very good book. The letter complained that:

“Many of the workless marry and breed families while in receipt of the dole”,

adding to the taxpayers’ “heavy burden”. Nearly a century on, perhaps we are a bit more subtle, but that sums up the mentality. We have this constant false division, referred to by my noble friend Lady Sherlock, between taxpayers who fund the tax credits system and those who benefit from it and references to how families supporting themselves solely through work do not see their incomes increase when they have another child. Who are these families? Apart from the very wealthiest, those families will be in receipt of child benefit, so they are not supporting themselves solely through work. If they have another child, they will get extra child benefit, and rightly so.

The main difference between now and the situation referred to in the letter to the Scotsman is that the Government do not want those in work and on low incomes to breed too many children either, given that, as we have heard, the majority affected will indeed be in paid work. Incidentally, could the Minister tell us what the rationale is for the abolition of the family element and its universal credit equivalent, which I think perhaps we have rather overlooked in focusing—rightly—on the two-child limit? Is that to discourage people in poverty from breeding altogether?

I turn to the human rights and equality implications. The Equality and Human Rights Commission has raised concerned under a number of articles of the UN Convention on the Rights of the Child, the International Covenant on Economic, Social and Cultural Rights and the Convention on the Rights of Persons with Disabilities. The impact assessment and the Government’s human rights memorandum do not adequately address these issues at all, although I commend the department for providing the latter.

Relating back to the point made by my noble friend Lady Hollis about the gender impact, the legal officer of the Child Poverty Action Group—I declare an interest as honorary president—refers to Article 14 of the ECHR and the disproportionate impact on women as mothers. Indeed, the impact assessment notes that women are more likely to be affected than men. Article 16.1(e) of CEDAW guarantees that women have the right,

“to decide freely and responsibly on the number and spacing of their children and to have access to the information, education and means to enable them to exercise”,

that right. The International Conference on Human Rights proclaimed:

“Parents have a basic … right to determine freely and responsibly the number and the spacing of their children”.

With regard to families and children, as the Government acknowledge in their human rights memorandum, it may be argued that the clauses discriminate against large families and that large families have status for the purposes of Article 14. They discriminate against religious groups with a conscientious objection to contraception and abortion, which is contrary to Article 14, read with Article 9, of the ECHR. We have heard a lot from different faith groups about their very real concerns about the impact of these clauses.

It is difficult to see how these clauses are in the best interests of children affected, in line with Article 3 of the UNCRC. The Government’s justification in their human rights memorandum is that the articles are,

“justified, proportionate and not manifestly without reasonable foundation”.

That is based partly on all the usual guff about fairness and the encouragement,

“to make the same financial decisions as families supporting themselves solely through work”.

However, we have already heard that the majority of the families affected will be in paid work anyway. The overwhelming response, from a wide range of organisations, suggests that the clauses are not justified, are not proportionate and are without reasonable foundation.

Article 3 of the UNCRC is addressed with what I would call unconvincing arguments in the human rights memorandum, which says:

“The best interests of children … is to have parents in work”—

as we have already heard, the majority of these parents will be in work—

“and work remains the surest way out of poverty”.

These clauses will mean that it is a less sure way out of poverty than it is at present, and that is saying something.

The memorandum says that the savings,

“will allow the Government to protect expenditure on education, childcare and health and the improvements to the overall economic situation will have a positive impact on children and their best interests”.

I draw attention to the arguments of the noble and learned Baroness, Lady Hale, in the recent judgment on the benefit cap. She said that,

“article 3(1) … requires that first consideration be given to the best interests, not only of children in general, but also of the particular child or children directly affected by the decision in question”.

I suspect that the noble and learned Baroness, Lady Hale, would give the arguments in the human rights memorandum pretty short shrift. She will probably have the opportunity to do so quickly, if this Bill becomes law. I look forward to hearing her judgment on it.

The EHRC is also concerned about the disproportionately negative impact on particular black and minority ethnic groups, which are more likely to have large families. It says that this could be at risk of breaching Articles 2 and 5 of the International Convention on the Elimination of All Forms of Racial Discrimination. The statistics bear this out—of course, those statistics are not provided in the impact assessment, as it would be asking too much to have statistics in the impact assessment. For example, an analysis of the HBAI statistics, pooled for 2010-13 by Professor Lucinda Platt for the Women’s Budget Group, shows that just under two-thirds of children in Pakistani and Bangladeshi families with three or more children are already in poverty. Two-thirds is a staggering figure, and I dread to think what that figure is going to be like if these clauses go ahead.

[Lord Kirkwood of Kirkhope]

My Lords, I will make just two points. First, although it makes me sound old-fashioned, I am in favour of using the social security uprating rules, established over years, for looking at the total spend of the department and what proportion of the national wealth goes to social protection. I am always frustrated and angry when Chancellors of the Exchequer stand at the Dispatch Box. The Treasury knows the square root of nothing at all about social protection. In the run-up to the Budget, we have purdah, so nobody knows what is going to issue forth from the Chancellor’s Budget briefcase. We get things landed upon us that we all have to live with as a consequence.

I want to try to persuade Governments in the future to stick to the established rules, because there are very clear ways of changing rates and benefits. In the annual uprating, Parliament has a chance to look at trends and how things are changing, make decisions and support the Government or make suggestions otherwise. That is a sensible, well-established way of doing business.

My objection to clause stand part, absent any further exemptions, is that we now have a two-child rule. It is a precedent that I believe is very dangerous, because Chancellors of the Exchequer in future could start importing it to other parts of the social security system without let or hindrance. We might start asking ourselves: what are the intrinsic differences between the child element of tax credits and child benefit itself? They are semantic and subtle; we could be entirely wrong. My point is that a clause such as Clause 11, interfering with child tax credits, and the way in which it has been done, leaves the House with some really serious thinking to do about whether this is supportable.

My view is an olive branch, and I will probably be off the Christmas card list of the noble Baroness, Lady Lister, as a result of taking this weak-kneed position. But if the Government do not come up with serious responses to the powerful speeches that have been made this evening, it will condition how I will approach any future support for Clauses 11 and 12. Of course, it is technically true that clause stand part is not necessarily available to us on Report or at Third Reading, but there will be ways of trying to address this in other ways. I was put right on that by a stern note from the noble Baroness, Lady Hollis, a moment ago. She is of course right, as she always is.

I am quite clear about this: it is dodgy procedure and a dangerous precedent. The Minister might be able to sell it to people like me if there is serious consideration of the powerful speeches that have been made. I understand the constitutional context; we are not in easy territory. I am not looking for trouble or to pull the Government down, defeat manifestos or any nonsense of that kind, but I have a conscience to deploy in deciding how to vote on some of these really important things and I will follow my conscience. I am not frightened of constitutional rows, if that is what it comes to. However, we do not need to get into that territory if the Minister carefully reflects, as he has done in the past, on what he has heard this evening and comes back with further and better particulars in terms of exemptions.

[The Earl of Listowel]

My Lords, in listening to this debate, a few things have become clearer to me. One is how important it is that the Government have been so successful in securing employment for so many of our people. In the debate that the noble Baroness, Lady Hollis, had and the noble Baroness, Lady Stroud, spoke to, both agreed that getting work is the most important way out of poverty. I pay tribute to the Government again for being so successful in that.

The Minister opened by saying that we are in an atmosphere of austerity and may need to make some tough choices. But it seemed to me that the language changed later on, to say that this is not just about austerity but is the right thing to be doing. I challenge that sincerely. It does not seem at all right to put these burdens on people. Just think: at the moment there is a storm in the north of England—Storm Desmond—flooding many families’ homes. A family in poverty, who may be working but on a very low income, may think to themselves, “We won’t take out insurance on this, that and the other, and we will hope for the best. We hope that there won’t be a storm”. Then this storm comes along and they have not insured their home, and they are already borrowing money anyway for various things because that is the only way that they can afford them, so they already have that debt and now they have lost more. The point I am making is that we are dealing here with some of the more vulnerable families in our society, and we are reducing their resilience.

19:30

Every family is challenged, maybe by bereavement, ill health or a flood, and we are challenging them further by taking money out of their pockets by doing this. I challenge the Government to think more about this. I encourage their Back-Benchers particularly to do so; I hope that, having listened to what has been said today, they might go away with some concerns that they want to sleep on, think about and take up with the Minister, because whatever they say will be particularly important and, I am sure, helpful. Maybe I am mistaken in my concerns, though, and maybe they will wish to put the other position.

I will give another example. I have spoken with homeless parents in the past. Barnardo’s used to run a project called Families in Temporary Accommodation. Something that came out of speaking with the mothers there was the importance for them of contact with others—being able to visit their family, friends and community. One of the issues of living in temporary accommodation is that when one is shunted around the place, one loses contact with all those human connections. Things such as bus fares are important, for instance, as is being able to use a mobile phone and having the money to pay for it. Again, if you impoverish these families and take money out of their pockets, where are they going to find the money to pay bus fares, which seems very basic, to go to see their friends and families, and for their children to see their friends and so on?

To my mind, this is a very harsh way of treating some of our poorest, often working families. I very much regret that the Government are taking this step. I hope that we can reduce the harm in the way that the noble Lord, Lord Kirkwood, referred to. Having listened to this debate with its very well-informed contributions, though, I feel more concerned than I did when it began.

[Baroness Hollis of Heigham]

My Lords, this is a Bill that my noble friend Lord McKenzie has gone on record as saying—and I certainly support him in this—is one of the most wretched that he has known in this House. Most of it deals with cuts that many of us find objectionable because they fall on the poorest and most vulnerable in our society. We will oppose those, and on Report we will try to persuade the Minister to make some mitigation if that is possible.

However, the two-child policy is of a different order from the issue of cuts, primarily because it is saying to those families who have a third child, “We are hugely increasing the odds that you as a family will descend into poverty, that your poverty will be persistent, that you will not be able to get out of it and that your children will carry that poverty into the next generation”. We know this to be the case, yet the Government, and the Minister on their behalf—I cannot believe that his heart is in this—are actually willing to go down a policy route that knowingly sends poor children into longer, deeper and more persistent poverty, not only for their childhood but for a substantial chunk of their adulthood as well. We know that the children of poor parents are twice as likely to be poor at the age of 30 as others of the same age, yet the Government are going down a route that, to me, is deeply morally offensive. As opposed to the cuts, over which we have argued and will continue to argue, this seems to be a knowing castigation of poor children into permanent poverty for sums of money that we do not even have any evidence for. I say to the Government that they really should not go down this path: it is a damned path to go down.

[The Lord Bishop of Portsmouth]

My Lords, I express my strong concern about these clauses remaining part of the Bill. I offer three straightforward and, I hope, succinct comments: first, about the implications of these clauses; secondly, about the motivation of parents that is implied; and, thirdly, about where responsibility lies.

First, the Government place great emphasis on choice and personal responsibility for family size. I have to say that that assumes a remarkable assumption about the fail-safe effectiveness of contraception—or, if not, an apparent willingness for abortion to be appropriate as a sort of emergency contraception to keep family size to two children. I doubt the assumption, and would deeply regret driving people to seek termination on economic grounds. Is that really what the Government wish?

Secondly, over 35 years now I have played some part alongside others in preparing engaged couples for marriage and have often heard myself saying, “If you wait until you are sure you can afford children, you will never have them”. Religious traditions other than my own go further and specifically enjoin the blessing of children and family life. Are the Government aware of how these clauses will be received?

Thirdly, as I mentioned earlier in Committee, we—that is, a number of faith groups and organisations—made clear, in a letter circulated to all Members of the House prior to Second Reading, our belief that children are a blessing and not burdensome, a problem or a difficulty. To consign a child to being a financial problem over which the child himself or herself has had, and has, no control is indeed a singular responsibility—a responsibility for the mother and father indeed but, if these clauses go forward, it is a responsibility in which we shall all share. How sad it will be that a child growing up, becoming increasingly aware, will one day hear or discover that he or she is responsible in part for the family’s level of income simply by having been born. Although the Government seem to place that responsibility wholly on parents, I fear that the responsibility for this change would rest with us all. Is that what the Government want, and are we all prepared to accept that responsibility?

[Lord Freud]

My Lords, Clauses 11 and 12 introduce the Government’s reform to the child element of child tax credit and universal credit, which was announced by the then Chancellor in the Summer Budget of 2005. The purpose of child tax credit is to provide support to low-income families to help them with the cost of raising children, while universal credit, which replaces the child tax credit, is a unified benefit that provides support to low-income families both in and out of work. As it is being rolled out across the country it is providing a clearer and simpler system of support for families and provides real incentives for work. However, it is important that universal credit is kept on a sustainable basis and encourages families to make similar decisions to those who support themselves fully through work. The Government believe that child tax credit has become unsustainable, with expenditure trebling in real terms between 1999 and 2010, and going up the income scale to a level where a family with three children earning up to £40,000 will still be eligible for support. Last year the Government spent almost £30 billion on tax credits.

I will deal with the issue raised by the noble Baroness, Lady Sherlock, on the dependency ratio. In recent decades Britain has had a higher total fertility rate than the average of the older EU member states. Most families will not be affected by this measure. The mean number of dependent children per family is 1.7, and 86% of families have one or two dependent children. In fact, those families with two or fewer children are remarkably stable, whether they are lone parents, at 88%; opposite-sex cohabiting couples, at 87%; or married couples, at 84%.

[Baroness Hollis of Heigham]

My Lords, the point my noble friend was making was not just about replacement fertility rates. Given the time all of us hope to live longer, one of the responses of government has been to say that unless we can improve the worker-to-pensioner ratio we have to defer the age at which people begin to draw their state pensions, even if they have had hard lives previously. We do not have the resources to pay for it from existing workers as we do not have enough of them to sustain that pensioner support in the future. Nothing the Minister has said has challenged that.

[Lord Freud]

We are going way off the core issues by looking at the times people retire. A lot of things are changing, and it is almost impossible to fine-tune for that.

I will address the challenge set by the noble Baroness, Lady Sherlock, on what our rationale for this is. It is very simple: the Government want to ensure that the system is fair to those who pay for it as well as those who benefit from it. That is the government position. I should add that the Bill should not be taken in isolation. We are introducing a number of measures to support households in work by reducing income tax through increasing personal allowances, increasing wages and increasing free childcare.

The right reverend Prelate the Bishop of Portsmouth and the noble Baroness, Lady Sherlock, raised the issue of those areas where there is a cultural disposition for larger families. To that, we make the point that all families need to think carefully and ensure that they can afford to provide for a new child in their household.

I make it clear that these changes will not mean a reduction in entitlement for those families already receiving child tax credit for children born before the 6 April 2017. In universal credit, for families already receiving the child element of universal credit, the changes will apply only to children joining the household on or after that date. I think that we have another amendment on which we can go into that in more detail.

Families moving to universal credit from child tax credit and receiving child tax credit for more than two children, and families claiming universal credit within six months of a previous universal credit or child tax credit claim that included the child element, will continue to be able to receive the child element for those children.

On the point raised by the noble Baroness, Lady Lister, on the EHRC, as she knows, the Government set out their assessment of the impacts of the policies in the Bill on 20 July, and the memorandum to the Joint Committee on Human Rights was published on 8 September. Ministers have considered impacts with regard to all the relevant legal obligations when formulating the welfare policies announced in the Bill. The intended impact of these reforms is to incentivise work and ensure that work always pays.

[Baroness Lister of Burtersett]

Subsequent to that, the Equality and Human Rights Commission has produced its own assessment, which says very clearly that it believes that the human rights statement from the Government was inadequate. I welcome the fact that the DWP produced such a statement but given its inadequacy, will the Minister now respond to what the EHRC is saying?

[Lord Freud]

I believe there has been correspondence with it, which I think is public.

[Baroness Lister of Burtersett]

That is not an answer.

19:45

[Lord Freud]

That is the best I can do at this stage. However, I accept that that is a bit tentative as an answer, so I will look to get the noble Baroness a better answer, or as full an answer as I can provide after talking this through with colleagues.

The Government believe that these changes strike the right balance between protecting the vulnerable—we have discussed the extra support for families with disabled children—while encouraging families which receive both child tax credit and universal credit to make the same financial decisions about the number of children they can afford as are made by those families who support themselves solely through work. They help to make the welfare system sustainable and the move towards a high-wage, lower-tax and lower-welfare country. Clauses 11 and 12 should therefore stand part of the Bill.

[The Earl of Listowel]

Before the noble Baroness responds—and I do not wish to keep the Committee from its dinner—while I thank the Minister for reminding us about the very welcome new higher minimum wage that the Government are introducing, looking at figures from the Institute for Fiscal Studies on projections for the difference that that will make, it has been clear to me that the complex way in which the tapers work will often mean that, for instance, lone working parents will not benefit that much more from this new, very welcome offer. Therefore I encourage your Lordships to keep that in mind. It is a very welcome offer but it may not make that much difference to the families that we are concerned about today.

[Lord Freud]

I will just deal with that. In universal credit we are producing something very clearly tapered, without the trap at the 16-hour point, which is in the current legacy welfare system. Therefore we have a pathway. One of the things we are doing, particularly for lone parents, is that once you are freed from that tyranny of the 16-hour rule, it is interesting how firms in the north-west, where that is already happening, are able to work with those people and start moving them up the earnings progression—not just as regards the number of hours but earnings progression—and we are beginning to see signs of a transformation. That is behind some of these changes—we want to make people independent of the state as much as we can.

[Baroness Sherlock]

My Lords, I have debated a lot of subjects with the Minister over the last few years, and I am not sure I have ever been as disappointed in a Dispatch Box performance as I have been today. I know that the Minister knows these issues very well, and that he normally comes back. When noble Lords take a lot of care to mount arguments, take apart his arguments and engage, as many have done today, he normally does us all the courtesy of taking them on and responding to them carefully. He simply has not been doing that today.

I asked him only two questions and he did not answer either of them. I deconstructed the argument, and all he did was repeat it. He did not even engage with it. This is only a suspicion, and I am sure I am wrong, but it may just be that the Minister does not have any more enthusiasm for these provisions than I do. However, I am sure that that cannot be the case, and we will find that he comes back from supper enthused with zeal to take on and defend these proposals—which, frankly, has been sadly lacking so far.

I will say a couple of things. One is to reassure the noble Lord, Lord Kirkwood. He mentioned worrying about constitutional implications. He need not worry, of course, as he will well know, being much longer-serving than I am. Since this is primary legislation there is absolutely no reason why we should not send matters back to the House of Commons. The Companion makes this very clear at paragraph 8.181, where it says that,

“with regard to Commons financial privilege, the Lords may properly make amendments to Commons bills (other than supply bills) which, when they come to be considered by the Commons, are deemed by them to infringe their financial privileges. It also follows that the Lords need not anticipate what view the Commons may take of any Lords amendments with respect to”,

that. I hope that as a result he will sleep more easily tonight and will feel able to pursue this at a later stage.

I will make just one final point. I agree with the point made by many noble Lords that this two-child policy is qualitatively different from all the other measures. What we have traditionally done in support is to recognise in social security that children are a public and a private good and therefore that the costs of raising them should properly be shared between the taxpayer and the family. Traditionally, in the case of child benefit, we have said that we should all contribute something to the raising of all children; that where there are particular needs—for example, for disabled children—we should all contribute more; and that where people’s needs are greater, we should contribute more through means-tested benefits. This is a very dangerous day indeed if we move away from that and I hope very much that we will return to it at a later stage in the Bill. But I beg leave to withdraw my opposition.

Clause 11 agreed.

Clause 12: Changes to child element of universal credit

Amendments 8 to 10 not moved.

House resumed. Committee to begin again not before 8.50 pm.

NATO and the European Union

Monday 7th December 2015 Lords Chamber

Question for Short Debate

19:51

Asked by

[Lord Wallace of Saltaire]

To ask Her Majesty's Government what plans they have to strengthen defence and security co-operation, bilaterally and multilaterally, with their European partners in NATO and the European Union.

[Lord Wallace of Saltaire (LD)]

My Lords, my aim in putting down this Question for Short debate is to draw attention to the constructive co-operation in defence which the UK now pursues with its neighbours within the context of NATO and the European Union. I am conscious that much more co-operation is going on than is reported in the British media—or even reported to Parliament. The gap between the rhetoric of national sovereignty and the realities of international interdependence has been demonstrated by the admission that French maritime patrol aircraft have been searching for non-NATO submarines in the Irish Sea, protecting the access routes to the UK’s submarine base for us while we lack maritime surveillance aircraft of our own.

The British public, and indeed most Members of both Houses of Parliament, remain unaware of how far Franco-British defence collaboration has moved since the Lancaster House agreement of 2010. Several major exercises between the two countries have been conducted—well covered in the French press but scarcely noted in the British. Co-operation in nuclear research and facilities is moving forward. Co-operation in defence procurement has continued to prove more difficult, but joint work on drones and missiles continues. It is a matter of regret to both Governments that the construction of the new British aircraft carriers reached a point in 2010 beyond which it proved financially unjustifiable to install catapults to permit the flexible operation of aircraft between British and French carriers. I remember the efforts that Liam Fox made to achieve this, sadly without success.

Small British contingents are working with their French counterparts in the Sahel, and the two air forces,

“work closely together on operations in the Middle East and North Africa”.

Also, a,

“Combined Joint Expeditionary Force, which will be operational in 2016, will provide a potent combined reaction force of up to 10,000 personnel available to plan for and respond to crises, including beyond Europe”.

I am quoting from page 52 of the SDSR White Paper. I wonder whether the Government will wish to celebrate the achievement of this significant step forward through any public ceremony or joint parade, to catch the attention of the public, or whether they will leave awareness to the tiny number of us who actually get as far as page 52 of the SDSR paper, with Ministers hoping that the Daily Mail and the Telegraph will not notice and that the French Government will not complain that our Government appear to want to keep its existence as private as possible.

I am struck that the SDSR paper makes no mention of the oldest and most closely integrated joint force in which we share with a close partner: the British-Dutch marine Amphibious Force, through which Dutch troops train in the UK and are integrated for operational purposes into the UK marine brigade. This was, after all, established in 1973, although I know from its website that joint operations between British and Dutch marines stretch back to the joint operation that captured Gibraltar in 1704. British and Dutch troops served together in Iraqi Kurdistan in 1991, and train together regularly in Arctic warfare. Yet I would guess that at most a dozen MPs are aware of the existence of this force, and I am not aware of any occasion on which the British Government have wished to publicise, let alone to celebrate, this pattern of shared defence that has been going on for more than 40 years.

The SDSR paper does mention,

“our partners in the Northern Group”.

However, it does not explain what the northern group is or how it operates. I have heard from Swedish and Baltic officials that the UK has played a very helpful and constructive part in assisting the development of integrated forces among the Nordic states, and in working with them to strengthen shared defence capabilities in the Baltic Sea, across the Baltic states and into the Arctic north. It is good to learn from others how much they appreciate the quiet work that British officers and men have undertaken over an extended period to assist states that are members of NATO and the EU, and some that are not formal members of one or the other of these two closely linked bodies. However, again, I regret that so few people in the UK have been told by our own Government what has been achieved.

Quietly, German tank forces and aircrew have trained in Britain over many years. The SDSR paper commits the Government to,

“intensify our security and defence relationship with Germany”.

That includes closer collaboration in procurement of equipment and common support facilities for common aircraft such as the Typhoon and the A400M transport. There is a passing reference to the withdrawal of the remaining British forces from Germany by 2020, and efforts that will be made to continue, nevertheless, joint training exercises with German forces. But there is no indication that our Government cherish the close collaboration that we have built up with the German armed forces in the 50 years since they were recreated, while a substantial proportion of the British Army and Air Force was stationed in Germany.

When in government, I argued that the withdrawal of British forces from their garrisons and bases across Germany, after 60 years and several generations of soldiers and airmen, with much interaction and some considerable intermarriage, should be marked by joint parades and ceremonies to celebrate the transformation of our relations and our commitment to future partnership. I was told by a Conservative Cabinet Minister that something like this was entirely unnecessary, that the Germans “are very transactional” and unemotional, and that in the circumstances a silent and unceremonious withdrawal was the best way to let sleeping dogs lie.

I welcome the slow but real progress that successive British Governments have made in developing closer co-operation with our European partners since Tony Blair first signed a bilateral treaty with the French in 1998. I actively supported the further moves forward made during the coalition Government between 2010 and 2015. I hope that these moves will go further: towards more common procurement, and the shared training and maintenance economies that go with it; towards more effective combined forces, both bilaterally and multilaterally constituted; and towards greater specialisation, rather than each European state struggling to hold on to smaller and smaller units in every military field. We all recognise the problems of sovereignty and command that follow such efforts, but they are not insuperable and not novel.

I recall meeting Liam Fox as I came out of an exchange in the Lords in which a Cross-Bencher had declared that it was unthinkable that British troops should serve under foreign command. His response was to list all the different NATO member states under whose rotating command British troops had served in Afghanistan, adding that some of our forces had also served under French command in the last year of the First World War, in 1917 to 1918.

I recall the French and German Governments building mutual confidence out of previous hostility through joint military parades and ceremonies, as well as through efforts at practical co-operation. The depth of German inhibitions over defence deployment has held that practical co-operation back until recently, although the recent German decision to deploy significant air, sea and land forces to the Middle East suggests that at last that inhibition is giving way.

Practical co-operation between the British and the Dutch has, as I have said, been close since the 1970s, and practical co-operation between British and French forces has developed with, I am told, growing mutual respect since contingents worked closely together under very difficult circumstances in Bosnia in the 1990s.

We all know why successive Governments—from Tony Blair in 1990-91 onwards—have shied away from spelling out to the British public the implications of unavoidable, mutually advantageous, defence co-operation with our neighbours. In 1990-91, the Daily Mail mounted a campaign against Franco-British and wider European co-operation, labelling it “the European Army”, and first Blair, and then those followed him, shied away. Eurosceptic myths have sunk into so many aspects of British public policy that it takes courage to disentangle reality from fantasy. Some in Brussels, and others in Berlin, have wanted to create fully integrated European forces with a common European command, but their national Parliaments would without doubt have refused to vote for their proposals, and issues of sovereignty and legitimacy would have blocked their overseas deployment.

Over the past 20 years or more, therefore, British Governments have found themselves in the uncomfortable position of pressing for closer practical military co-operation, spending more money on the defence of Europe than most of our partners and neighbours, while at the same time working desperately hard to downplay the significance of what they were doing for fear of domestic misrepresentation.

There are now, as the 2010 SDSR has already spelled out, no security threats to Britain that we do not share with our neighbours, so it makes sense to share our military response, as far as we can without abandoning the principles of national sovereignty and accountability, with our neighbours. It makes for more effective use of scarce resources and expensive weapons systems. Liberal Democrats have supported these efforts as they have slowly moved forward. However, our partners and neighbours read our newspapers, and some even watch our TV—the disadvantage of English as an international language is that it is easy for others to follow our domestic debate—and note the almost clandestine way in which our Government operate on defence co-operation, hiding its extent from Parliament and the public.

Having sat through innumerable interventions from the noble Lord, Lord Forsyth, and others, insisting that NATO has nothing to do with the EU and the EU has nothing to do with defence and security, I was glad to see on page 53 of the SDSR White Paper some substantial paragraphs on the security dimension of the European Union, and the several EU operations in which British forces have played an active—sometimes even a leading—part. These included, most strikingly, the various operations around the Horn of Africa, such as Operation Atlanta, the anti-piracy force directed from the UK Joint Operations Centre at Northwood. That was another shared operation of which our Government should have been proud, but which they have made too little of.

If we are to move further along this path towards more effective co-operation, as the SDSR White Paper quietly recommends, we have to engage more widely with political elites in our partner countries to make sure that we build their support. It was, for example, a mistake for the FCO to cut its grant to the Franco-British Council by 80% in the latest spending review, when that council, among other activities, sponsors one of the most useful dialogues on defence and security between British and French parliamentarians and outside experts. The Government are right to wish to take European defence co-operation further—bilaterally and multilaterally—but wrong not to publicise it or celebrate it, which would help to build a broad base of public support both within the UK and within our partner countries.

20:02

[Lord Selsdon (Con)]

My Lords, I am most grateful to the noble Lord, Lord Wallace of Saltaire, because it brings to an end a most interesting period I have had of some six months of sitting through presentation after presentation, as a member of the House of Lords defence group, from the various parts of our Armed Forces. Over the years I have seen these presentations, but I have never been so impressed as I have been in the past six months. I believe that we might possibly end up with the best Armed Forces in the world.

The question is: what do we do with them and what is the bureaucracy that keeps us at bay? We have 22 member states of the EU and 22 members of NATO. It is quite interesting, however, that members of NATO are also members of the EU, so there is an interrelationship that I find quite interesting. The position that we are facing now is that we are a global nation, and perhaps one of the most global in the world, without actually realising it. We have had historic co-operation with our neighbours, but not within the Armed Forces area until recently.

I would like to draw your Lordships’ attention to the interesting position in which we find ourselves under the UN Convention on the Law of the Sea. The territorial land area belonging to the United Kingdom extends outwards to 200 nautical miles and is known as the economic exclusion zone—the EEZ—and this also applies to overseas territories. Just for fun, I looked at the world’s EEZs of some 45 million square kilometres, and found that 60% of this area, or 26 million square kilometres, is represented by the EEZs of the United Kingdom together with those of the Commonwealth and the British Overseas Territories. Some 16% of the EEZ area is represented by France and its overseas territories. Thus, together with France, we have an interesting control of the waters of the world. These zones account for the area almost from heaven above to hell beneath. On the other side, 15% of the EEZ area belongs to the United States, and a further 10% to NATO. In our future thinking on our Armed Forces, therefore, we must look at the maritime sector very closely. The world shipping fleet includes 21,000 Commonwealth vessels. That is about the same as those of Japan, Greece, Germany, China, USA, Russia, Norway and the Netherlands combined. We are therefore, to some extent, a very great maritime nation.

When we come to our trade, one of the fascinating issues when regarding it—and I was on the Trade Board for many years—is that we have always had a deficit on manufactures and a surplus on services that has made up for that. That is because we do not make as many things as we used to, and our raw materials, in general, are sourced from abroad. This deficit on manufactures, therefore, is supplemented by a surplus on services. It means that we have played, and should continue to play, a global role.

This makes me look at the situation with France—and I declare an interest because I am technically a French peasant farmer, as I grow a small amount of wine in France and have been attacked by wild boars, the biggest one of which weighed 300 kilos. There is therefore a certain sensitivity and I have worked closely with French companies over many years. The relationship between the United Kingdom and France is particularly good at this time, and there is much more co-operation and going together in various territories.

I turn, inevitably, to Africa—that vast continent that has many problems—and to the “pays francophone” in Africa, which were very substantial providers of raw materials for France. We cannot look at the defence of the world or of the realm without looking at the requirement to solve the problems in some of these territories, particularly Africa, where migration has occurred, production has fallen and raw materials have been left in the ground. Therefore, if you go back to the past and look at the scramble for Africa and such, there should be a new scramble for these areas, where we, with the protection of our Armed Forces, could help to regenerate much of the production of the past.

In looking at some of the recent migration figures, and trying to determine how accurate they might be—on who came from where to go where for what reason—it seems strange that much of the migration comes from countries that were originally colonised because of their raw materials and the capabilities that they had for produce and products that were required in the western world. That still applies. However dreamy it may be, it would be nice to think that a review of all the production areas of central Africa and others today might be undertaken, and consideration given as to how some of the mines might be reopened or the agricultural production put in place by those immigrants that we have here.

It is a very interesting time for us, and I am very proud of my belief that we have, man for man, the best Armed Forces in the world.

20:08

[Lord Davies of Stamford (Lab)]

My Lords, I congratulate the noble Lord, Lord Wallace, on bringing this Motion forward, and he could not have found a more pertinent moment to have done so. We all need the Armed Forces, and we have had a reminder in horrifying terms just recently of how much we need them.

We do not just need Armed Forces; we need the best Armed Forces. That is to say that we need to select people very carefully, pay them decently, look after them properly and, above all, give them the best training and equipment that we possibly can. We cannot ever fight in this country, or in any democracy, labour-intensive warfare; it must be capital-intensive warfare. We must make sure that, to the greatest degree possible, human lives are protected and that we achieve maximum effect through the capitalisation of the equipment that we provide. That has been the principle on which we have based our defence policy and defence procurement policy for quite a long time, and it was certainly the principle we adopted when I was Defence Procurement Minister during the Iraq and Afghanistan engagements.

The trouble, of course, is that such a policy is extremely expensive. The defence cuts that we have had over the past five years have been egregious and quite disgracefully irresponsible—thoroughly irresponsible. Reference has already been made this evening to the problems raised in the maritime surveillance area. Of course, we always have constraints. We had financial constraints in our time, and there will always be financial constraints. At present, the RAF supposedly has eight squadrons of combat aircraft. That should mean 96 combat aircraft. What have we actually been fielding in theatre? For a long time, there have been eight Tornado jets and there may be two Typhoons as well—a tiny proportion of the aircraft that should be available. That shows how much our defences have been, sadly, run down. We cannot now sustain deployment of more than about 5,000 men—a brigade, really, with various supporting units. I am afraid that, as a result of the defence cuts, we are in a very thin situation.

Nevertheless, there will always be financial constraints and we have to think intelligently about how we can save money. Far and away the greatest potential for saving money in defence—and this has never been properly exploited—is international collaboration. That is a field of which I know something. When I was Defence Procurement Minister, I negotiated some substantial projects involving international collaboration in procurement. For example, I negotiated tranche 3 of the Typhoon programme, which has been a great success, and the renegotiation of the A400M programme, which had run into problems but is now doing very well and will be the greatest turboprop transport aircraft in the world for the next 30 or 40 years—replacing the Hercules in that important role. In my time, although I did not start it, I was also concerned with the F35 programme, which is a splendid piece of co-operation with the United States in which we provided, for the first time, $2 billion towards the R&D cost. That programme is also going well, although I am afraid to say that our uptake of the aircraft is much lower than it should be.

I had a particularly good relationship with my American counterpart, who was then Ash Carter, and with my French counterpart, Laurent Collet-Billon. Laurent and I managed to do together quite a lot of things in terms of common collaboration and providing various naval systems. As a result of that, I was the first Minister—probably the only British Minister—invited to go to Île Longue, the French SSBN base. Of course, I invited my counterparts to Faslane with the full knowledge and support of the Americans. We entered into a collaboration in that area, of course not involving anything to do with the weapons or the weapon delivery systems, which has been very promising. I also brought the French into the Mantis programme to develop an unmanned interceptor. We started to discuss with them something that has always been close to my heart, which is a theatre or tactical anti-ballistic missile capability. That project was completely buried when the new Government came to power in 2010, but I was delighted to see it revived and mentioned again in the SDSR the other day.

So a lot has been going on, but we have not really done more than scratch the surface in terms of getting those very valuable savings. The Typhoon programme, like all previous programmes, was based on a system known as “juste retour”, which meant that each participant in the programme expected to get back, in terms of the work on the project and the employment that flowed from that in his own country, exactly the proportion that corresponded to the money that he put up front to pay for the development of the particular system or platform concerned. That is a very inefficient system. It means that you deprive yourself at the outset of the benefits of competition and the economic pressures on suppliers that you can get through competition, so that is no good. We then set up a body called OCCAR, which is supposed to be an objective body based in Paris, which had some good civil servants from various EU countries seconded to it. It was supposed to act as an agent on behalf of procuring countries to deal directly with suppliers and solve their problems. The trouble was that countries had very little inclination to give major projects to OCCAR because they wanted to go back to the juste retour system.

This matter should be taken very seriously. Although I have never done a study of it myself, it is quite clear that savings to be made by intelligent joint and collaborative procurement run into the tens of millions. They are enormous and it is utterly irresponsible for us not to do what we can to try to secure them. Two things need to be done, and in the time that I have I will mention them. They are both very important and both politically extremely difficult. They are both obstacles in front of us, and we must find a way to surmount them.

One is that, in due time, we need to aim to remove the protection that exists in the treaty of Lisbon—in the Treaty on European Union—for defence procurement, which protects it from the principles of public procurement policy, which apply in every other sector. In other words, we should be prepared to lift all protection of our defence industry. Our defence industry is extremely capable, productive and innovative. Of course, there would be losers along the way, but, on balance, we would do very well from that. I do not know why we are so reluctant to go down that route. We should be championing such a move. It would have enormous economic benefits and dividends for us all.

The second very difficult thing that we need to do, which we must grasp in good time—I hope in my lifetime that we see some real progress towards it—is to go in for defence specialisation to make sure that we do not all have to have exactly the same parallel range of equipment. We can actually expect certain of our allies to deliver certain inputs. It is perfectly all right if we have that sort of relationship with the French for them to provide maritime surveillance aircraft, and we might be permanently out of the business. It would be very unsatisfactory to do that on a unilateral one-off basis, but as a general rule it could have been a practical possibility. We have so many helicopter systems, most of which I bought—I bought 22 Chinooks, and the new Government cancelled 10 of them. We have Pumas, which I got re-engined. We have the Wildcat, which I ordered. I think we still have some Sea Kings but we have got rid of the Lynx. We have Merlin—even I can hardly remember all the types of helicopter. It represents a fantastic logistical cost to keep all those different systems going and to keep men and women trained to operate them. It is very inefficient and something that should be spread over a much wider range of countries.

That is a very difficult thing to do politically, and initially everyone has 10,000 arguments why it cannot and should not be done, but it will be have to be done if we want to go on being able to defend our civilisation effectively, be able to make a success of our alliances and go on being able to respect that essential principle that our young men and women in uniform go into battle with the best possible support that money can buy.

20:16

[Lord Lee of Trafford (LD)]

My Lords, there were two crucial votes last week. There was the vote in the House of Commons to support air strikes against Daesh and there was the vote in the Bundestag to commit German forces in support. I was particularly pleased with the decision and position taken by my party, the Liberal Democrats, in the Commons. Had my party gone the other way, I would have had to very seriously consider my position.

I speak in this debate as a very committed European. Indeed, one of the prime reasons I left the Conservative Party was that in the 1990s that party became, very sadly, increasingly Eurosceptic. I think that going as far as having a European army is probably going too far, but I believe that we need much more multilateral integration of army units across Europe, as was referred to a little earlier. Similarly, there has to be a much greater rationalisation of procurement. We have far too many production facilities in Europe. Obviously, one is conscious of the sovereignty arguments. Until we have greater integration in military units and consolidation and rationalisation of defence companies, the problem of procurement excess will remain. It was very disappointing to me and to others when there was an immediate outcry when it was suggested, some years ago, that there might be a merger between EADS and BAE.

In my short time allocation this evening, I should like to focus on the UK-French relationship. I have to say that a failure to support France in Syria would have been a near disaster in relationship terms; indeed, in my view it would have been a national humiliation, so I repeat how pleased I was at the decision that was taken in the other House. The truth, of course—it was referred to by my noble friend a little earlier in his excellent opening contribution—is that co-operation between ourselves and France is far greater than is acknowledged and the public is aware of. We are conscious of what we did to help the French in Mali, in terms of heavy lift, and, more recently, the reciprocal help by France in maritime patrols, where we are currently sadly deficient.

I remember a very early briefing that the current Secretary of State gave to a number of us when he told us that the one thing that had really surprised him was the degree of co-operation that he found existed between our military and the French. He almost implied that he was speaking daily to his French opposite number, but there is a great reluctance by the Government to acknowledge just how much and how deep co-operation there really is, as my noble friend said.

I have a number of questions to put briefly to the noble Baroness arising from the SDSR. If she cannot answer the points tonight, perhaps she could write to me. Paragraph 450 says of the SDSR:

“We will … collaborate on complex weapons”.

Can she indicate what these complex weapons are?

Paragraphs 512 and 535 refer to the UK-France Combined Joint Expeditionary Force. Paragraph 535 says:

“Our Combined Joint Expeditionary Force, which will be operational in 2016, will provide a potent combined reaction force of up to 10,000 personnel”—

a crisis-responding force. We are nearly in 2016 now, so what is the latest situation with this force?

Finally, reference is made in paragraph 535 to “shared opportunities” when our new carriers enter service. In a number of briefings that I have been at over the years there have been very strong hints from the Navy that we will be looking to our allies—and, I suspect, particularly France—to provide escort support for our carriers, given the sadly inadequate number of escorts that we have. Can the noble Baroness give some indication of current thinking in this area?

20:21

[Baroness Ludford (LD)]

My Lords, I, too, thank my noble friend Lord Wallace of Saltaire for initiating this very timely and important debate. The European Council only had its first discussion on a common security and defence policy since the Lisbon treaty in December 2013—so only two years ago—but it had another fairly quickly, in June this year, when it vowed to keep security and defence policy regularly on its agenda. There are preparations under way to renew both the EU internal security strategy and the global strategy on foreign and security policy. It is clear that there is considerable overlap and convergence between those two: where does the fight against ISIS/Daesh as a terrorist organisation stop and that against it as a military threat start? European cyberdefence against organised criminal hacking networks shades into defence against cyberespionage and cyberwarfare conducted by states.

Indeed, the way that internal and external security are intertwined is shown by France invoking Article 47.2 of the Treaty on European Union on mutual assistance. It suffered a terrorist attack but the response is a mixture of intelligence policing and military capabilities. None of this means a European army, even if that aim has been supported fairly recently by the Commission President, Mr Juncker. Indeed, to quote Mrs Mogherini, the high representative, the convergence of internal and external security has,

“led to a renewed impetus in the EU-NATO relationship”.

She meets regularly with NATO Secretary-General Jens Stoltenberg.

European states are facing common threats. Europe needs a common response through the pooling of resources and equipment, joint procurement and interoperability so that EU and NATO capabilities and operations are increasingly integrated. The European Defence Agency is getting into its stride with a number of effective pooling and sharing projects, including pilot training, satellite communications, medical capability and air-to-air refuelling. I think that there was a Conservative pledge, possibly in the 2010 manifesto, to review UK membership of the European Defence Agency. Can the Minister confirm that that has been quietly shelved?

As my colleagues have mentioned, there are informal examples of co-operation through the French maritime patrols off the coast of Scotland, and indeed the UK offer of the use of RAF Akrotiri in Cyprus to France. It was most welcome that the strategic defence and security review vowed to further strengthen the UK-France defence and security relationship, and was perhaps a little unexpected. The plans include, as my noble friend mentioned, a combined joint expeditionary force of up to 10,000 personnel, collaboration on equipment, including the procurement and development of missiles, the exploitation of shared opportunities with the new aircraft carriers, and stronger links between the Army’s 16 Air Assault Brigade and its French counterpart. Obviously the joint working in Iraq and Syria against ISIS, although the subject of a particular vote, is part of that trend.

Mention is also made in the SDSR of the relationship with Germany. That makes sense as Germany seems to be emerging from its chrysalis on defence. Germany and Poland should take on more of the role in NATO territorial defence, leaving the UK and France, which are more willing to deploy forces outside Europe, to continue to fulfil a wider range of responsibilities.

All this is taking place against a background of historic weaknesses in terms of waste and duplication, and a reluctance to co-procure and specialise. That is for a variety of well-known reasons: loss of strategic autonomy and sensitivity of the defence sector, along with a reluctance to give up the strategic industrial base which is seen as a matter of national prestige. Then there is nervousness about specialisation, including whether others are going to pull their weight in funding. I think that we need to look at the dangers of free-riding.

While there has been considerable bilateral co-operation, there is no invoking of the facility for permanent, structured co-operation under Article 46 of the Treaty on European Union to develop “differentiated integration”, to use the EU phrase, among member states. Can the Minister tell us if there is any prospect of invoking this structured permanent co-operation so as to streamline the variety of initiatives taking place?

Finally, I shall quote Professor Malcolm Chalmers, the director of RUSI:

“Most of all, the UK needs to work to maintain and strengthen the partnerships on which its security and prosperity depends. The grand strategy which it adopted in the 1940s, anchored on a community of fate between the countries of Europe and North America, remains the right one for the country today. Those who argue for a return to nationalism, and for a fragmentation of European institutions, remain on the fringes of politics”.

I hope that that remains the case. Can the Minister elaborate on an intriguing mention in the SDSR of the formation of a cross-Whitehall joint Euro-Atlantic security policy unit, apparently to bring together diplomatic and defence expertise and foster EU and NATO co-ordination and co-operation? I would be interested to know how this encouraging initiative will work and whether personnel from our allies will be somehow associated with this unit.

20:28

[Lord Collins of Highbury (Lab)]

My Lords, I, too, want to thank the noble Lord for initiating this debate and for his introduction, which as usual was an excellent lesson in history. I welcome much of the new national security strategy, with chapter 5 setting out how the Government will use diplomats, development assistance, the Armed Forces, the security and intelligence agencies, law enforcement and soft power to protect and promote our interests and values. If we are to have the international security and stability that we seek, development, defence and diplomacy have to go together.

The SDSR needs to demonstrate a joined-up, whole-government approach. Of course, this is also recognised in the new policy statement, UK Aid: Tackling Global Challenges in the National Interest. My noble friend Lord McConnell referred to that statement in the debate last week, and welcomed the new £1 billion fund for conflict stability and security. However, as he remarked, the strategies for these new funds are far from clear. Although he failed to get an answer from the noble Earl, Lord Howe, I hope the Minister will respond today to my noble friend’s request that the Government consider allocating time in the new year for a debate on the strategies behind these two critical new commitments.

The Government’s commitment on defence spending and to the 0.7% for development spending is also welcome, but cutting back on diplomatic analysis and research strength may in the long run cost us more. Better understanding foreign societies at risk of instability and improving the UK’s ability to respond intelligently and appropriately to international crises are vital, as the Ukraine crisis taught us. The UK now spends less per head on diplomacy than the US, Germany, France, Australia, Canada and New Zealand.

To multiply what we can achieve alone, the Government talk of investing more in our relationships with our traditional allies and partners and building stronger partnerships around the world. Since we joined the European Union many years ago, British foreign policy has had two key pillars. The first is exercising a leading role in Europe and the second is being the principal ally of the United States. As President Obama made clear, leaving the EU would have an impact on not just one but both of those pillars.

Unfortunately, the strategy section on the European Union is weak, failing to mention the potential of the External Action Service and the Development Commission to build stability in the world. One Eurosceptic myth often repeated is that we were never told when we joined the European Community that it had implications for foreign policy and that it was just a common market for trade. In the debates we have had on the EU Referendum Bill we have heard from the Eurosceptic side of the Conservative Party about the sort of future relationship they would like us to have with the European Union and its leading member states.

One model we heard about was, of course, Norway’s, although the Prime Minister now appears to have decided against that. Whatever model is considered, to turn away from our closest neighbours in the rest of Europe who share our democratic values hardly seems credible when determining what our place and role in the world should be. As the strategy points out, Russia’s illegal annexation of Crimea and the destabilising activities in Ukraine directly challenge European security and the rules-based international order. In challenging Russia over Ukraine, the European members of NATO have worked closely together, imposing EU sanctions to parallel those NATO measures.

Of course, as the strategy states, we need to keep open the possibility of co-operation, seeking to engage with Russia on global security, including international efforts to tackle the ISIL threat and building on the successful co-operation that we shared in negotiations on Iran’s nuclear programme. But one of the difficulties that we have in assessing the long-term sustainability of the review is that we have yet to conclude what future relationship we wish to have with our nearest neighbours. As recent tragic events have taught us, the threats—as the noble Lord, Lord Wallace, said—that we face as a nation today, such as international terrorism, migration and cross-border crime are all shared with our closest neighbours. Key to this debate is understanding that Britain shares values and interests with our European neighbours, and that any coherent British foreign and security strategy has to be founded on that European strategy.

20:34

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

My Lords, this has been a short—QSDs always are short—and wide-ranging debate. I am certainly grateful for the contributions of noble Lords. I shall seek to address some of the main issues raised tonight. Indeed, the noble Lord, Lord Collins of Highbury, in asking for time in the new year for two more debates put into context what we have had here tonight, which is a debate that has gone far wider than the subject put to us by the noble Lord, Lord Wallace of Saltaire. Some of the questions about material, which the noble Lord, Lord Lee of Trafford, addressed, are absolutely key issues, but we will have to wait for that because they need to be considered across the whole issue of procurement. I hope to be able to answer one or two of the questions posed by the noble Lord, Lord Davies of Stamford, within the context of this debate.

It is clear that European security must respond to new and changing threats, from terrorist outrages such as those in Paris, to which noble Lords have referred, to state-based threats such as Russia’s illegal annexation of the Crimea. I am glad that the noble Lord, Lord Collins, referred to the importance of that. The Government’s strategic defence and security review builds on the unique strengths of the United Kingdom and it deepens our co-operation with our international partners. After all, we are the only nation to be at one and the same time a permanent member of the United Nations Security Council, a leading member of NATO, the EU, the Commonwealth, the G7, the G20, the OSCE, the OECD, the World Trade Organization, the IMF and the World Bank. Nobody can say we are not international in our co-operation.

We have the second largest defence budget in NATO and the largest in the EU. We are also the only country in the world committed to spending both 2% of our national income on defence and 0.7% on development assistance. This strength is vital in promoting peace overseas. However, as noble Lords have recognised tonight, the threats we face do not recognise borders. That is why we must indeed invest more in our alliances and make these relationships international by design—building our forces and capabilities in ways that complement and integrate with those of our allies. NATO is the bedrock of our national and collective defence. Last year’s summit in Wales saw new initiatives to tackle new threats and secured an unprecedented commitment from 28 Heads of State and Government to halt the decline in defence expenditure.

Under our commitments, the UK will invest more to counter cyberthreats. We will more than double our investment in our Special Forces and will contribute to NATO exercises, reassuring allies against the threat from Russia. In 2017, the UK will lead the very high readiness joint task force, again formed in response to Russia’s actions in Ukraine.

We are working closely with allies to ensure that the Warsaw summit in July next year delivers an alliance that is transparent, accountable and capable of responding to any threat. We will also continue to encourage our other allies to meet the NATO 2% commitment, as we have done.

In addressing modern security threats, it is important, as noble Lords have stressed tonight, to build greater co-operation between NATO and the European Union. It is a high priority of the United Kingdom. Good work has already been done, but we will work with High Representative Mogherini and Secretary-General Stoltenberg of NATO, whom I met earlier this summer when I was at the Croatian forum, and other allies and member states—of course—to drive this agenda forward, particularly on hybrid, ensuring that both institutions’ strategies are consistent with a view to a joint exercise next year.

Cyber—the co-operation between the two organisations—was formalised through the enhanced NATO cyberpolicy agreed at the Wales summit last year, and we are pressing both sides to explore joint training and shared best practice—I hope that that will please the noble Lord, Lord Davies. Also we are building capacity in third states. Both organisations are developing capacity-building initiatives and have much to offer in security sector reform. We will encourage them to co-ordinate efforts where it makes sense to do so.

A secure and prosperous UK relies on a secure and prosperous Europe. As my right honourable friend the Prime Minister has said, meaningful reform of the EU in the areas that he has already set out would benefit our economic and national security. That is why he believes that Britain’s best future lies within a reformed EU if necessary changes can be achieved.

As for the European Union’s own work on security, I would highlight in particular what it has called its comprehensive approach—to which noble Lords referred this evening—which combines military, civilian, diplomatic and development tools. I was asked what this cross-Whitehall body was and how it would work. I have to encourage the noble Baroness to be a little patient with us: the report only came out less than two weeks ago. However, it is a signal of our intent to work across Whitehall and to deliver that combination of military, civilian, diplomatic and development work. Because of the work I do on the prevention of sexual violence in conflict, I already see joint working with the MoD in ways I never thought possible before and I find its response absolutely encouraging. People are prepared to share their experiences and enable me to meet the Armed Forces overseas. This is a way forward which will bring great benefits.

This approach offers the UK an effective way to project stability in our neighbourhood and across the world. For example, the successful EU missions in the Horn of Africa, referred to by the noble Lord, Lord Wallace, and in Bosnia and Herzegovina, in which the UK has played a leading role, have directly contributed to UK objectives. I am not backward in coming forward about praising co-operation with the EU. How could I be? Tonight I have the chance to put on the record my admiration for the work of EUFOR Althea in Bosnia and Herzegovina. When I visited there this summer, they enabled me to spend much of the day with some their forces in a helicopter. I was able, thereby, to see the challenges they face and the success they have in carrying out their task of overseeing the military implementation of the Dayton agreement. Co-operation with the EU works, but it is not the only co-operation that works. EU sanctions on Russia have also been an important element in our response to the illegal annexation of Crimea.

We will continue to press for improvements to the effectiveness of the Common Security and Defence Policy, with a focus on making existing structures work better, rather than creating new ones. The noble Baroness, Lady Ludford, the noble Lord, Lord Lee of Trafford, and other noble Lords mentioned some people being concerned about a European army. We are not, because it is not going to happen, but we do welcome closer co-operation between the armed forces of EU and NATO member states. However, that of course needs to be based on improving deployable defence capabilities across Europe, not creating new institutions. We have consistently made it clear that we would oppose any measures that would undermine member states’ competence for their own military forces or lead to competition and duplication with NATO.

I was also teased a little by the noble Baroness, Lady Ludford, about the European Defence Agency and whether we were silent on it. Silent no more: here we go. We welcome the reforms that the EDA has begun, in particular the addition of a three-year planning framework and the project management tool which is in development. This is encouraging progress which will support the agency in delivering greater transparency and enhanced stakeholder communication. We are encouraging the EDA to focus on the existing project areas of cyber, remotely piloted systems—commonly known as RPAS—air-to-air refuelling and government satellite communications, but not to embark on new projects unnecessarily. However we want to look at the budget involved. While we are making further reforms to meet our commitment to cut the budget deficit, and when the wider European economy is still recovering, it is not appropriate to increase UK taxpayer funding to the EDA. Subject to further reforms, we will review our position with a view to considering whether we support an increase to the budget in 2017.

Going further with regard to co-operation, the revised European global strategy, led by High Representative Mogherini, will be an important part of that goal. We welcome the strategy’s broad scope and believe that it should also form a basis for greater institutional co-ordination within the EU, particularly between the Commission itself and the EEAS, where there remains significant room for improvement. As I mentioned earlier, we will also use our influence as a leading member of the OSCE. Not only will we support the ongoing work of the special monitoring mission in Ukraine but we will work through implementation of the conventional arms control regime.

Bilateral engagement is, of course, crucial. It is important to note that the US remains our pre-eminent partner for security, defence, foreign policy and prosperity. We will strengthen co-operation on national security issues and improve interoperability between our Armed Forces, and we will deepen bilateral co-operation with European partners. Since 2010, we have built an exceptionally close relationship with France. Following the appalling attacks in Paris on 13 November, we have expressed solidarity and offered bilateral support, including personnel and logistical support. We are committed to strengthening this important defence and security relationship further. As agreed in the Lancaster House treaties, the Combined Joint Expeditionary Force of 10,000 personnel will be operational next year.

Germany was rightly mentioned. The action it has taken in parliament is so important. Its technical assistance will be crucial and shows the joint European effort against Daesh. We will further deepen our co-operation with Germany, too, in areas ranging from intelligence-sharing, cyber and procurement of equipment to energy security and military support for humanitarian work and deployment.

We are working further with our wider European partners, including Norway, the Netherlands and Denmark—the noble Lord, Lord Wallace, rightly mentioned the northern group. In almost every aspect of our national security and prosperity we must work with others, not because we cannot work alone but because the threats, opportunities and challenges are global. That is what underlines my response tonight. We work together because that is the only way we defeat evil opponents such as Daesh.

20:47

Sitting suspended.

Welfare Reform and Work Bill

Monday 7th December 2015 Lords Chamber

Committee (1st Day) Continued

20:50

Relevant document: 13th Report from the Delegated Powers Committee

Amendment 11

Moved by

[Baroness Sherlock]

11: Clause 12, page 13, line 23, at end insert—
“( ) Subsection (1A) does not apply in respect of persons who are either children or qualifying young persons born before 6 April 2017.”

[Baroness Sherlock (Lab)]

My Lords, I rise—albeit a little slowly—to move Amendment 11 in my name and that of my noble friend Lord McKenzie of Luton. This is a very simple amendment which would ensure that the two-child limit applies only to children born after 6 April 2017. The impact assessment for this measure states:

“Entitlement will remain at the level for two children for households who make the choice to have more children in the knowledge of the policy”.

That simply is not true. If someone has more than two children and needs to make a claim for universal credit after 6 April 2017, and if they are not getting tax credits or UC and they have not in the past six months, this measure will apply to them. Entitlement will remain at the level of two children for those households, even though they quite clearly have not made the choice to have more children in the knowledge of the policy.

I suppose that it is just about possible that there will be those who manage to conceive and deliver a child between the passing of the Bill and April 2017, though they would have to get a move on, but most of the children affected by this will be living, breathing, existing children, conceived and born when this policy was just a glint in the eye of a cost-cutting Chancellor.

I know that various attempts have been made to get the Government to explain their rationale for this. I understand that it was indicated to Peers during a briefing session that the reason was that, if someone had not needed to claim benefit or tax credits during the past six months, they clearly have enough money to protect themselves against unforeseen events, so should not have access to the full support of the welfare state. I may be mistaken, but if I am the Minister can correct me. If that is right, however, surely that is precisely what the welfare state is for—to protect all of us against unforeseen circumstances.

Let us suppose that a couple have two primary-school children, and then they have two year-old twins. One day the husband dies or disappears or is paralysed in an accident and cannot work, and they turn to the welfare state. Those twins will be invisible for the purposes of universal credit, so you can see that the dream scheme that Ministers have boasted would swing seamlessly into action as soon as someone’s circumstances changed will not help that family feed, clothe and house the twins.

The family will potentially lose £5,560 a year every year until the twins are adults. We are talking about the best part of £90,000. How should the family have provided for that when they did not know they had to? What should they have done? Saved that much when they are raising toddlers? Maybe they should have bought a PPI policy, the cause of the biggest mis-selling scandal in modern financial history—and I should know, since I am the senior independent director of the Financial Ombudsman Service. But even if that were a good idea, why would they do it? They thought the welfare state was there to help them at such times. That was what they had been led to believe when they had those children.

As I indicated in the previous debate, I think that this whole measure is a terrible idea. But perhaps I can pass on some advice to the Minister from the greatest Cabinet Secretary of modern times, the legendary Sir Humphrey Appleby. Sir Humphrey once said to his Minister: “If you’re going to do this damn silly thing, don’t do it in this damn silly way”. If the Minister is going to reduce support for larger families on the grounds that families on universal credit will have to make the same choices as those who are not, he should at least not apply it to people who have already made their choices because their children are already here. I beg to move.

[Baroness Lister of Burtersett (Lab)]

My Lords, I support my noble friend, who made a very powerful case. The joint briefing from the churches and faith groups that was circulated to all Peers made a very good point. It said:

“A policy designed to incentivise families to make responsible choices, becomes an unavoidable financial penalty for anyone confronted by relatively common life events”.

This amendment in particular puts that quotation into relief. The Office of the Children’s Commissioner has raised similar concerns.

I made the point at Second Reading that this provision sits oddly with the Government’s own emphasis in this and earlier legislation on the importance of a dynamic perspective on family behaviour. Indeed, in a letter of 13 October to the EHRC about impact assessments for the current Bill, the Secretary of State made as his main point the need,

“to take fully into account the dynamic nature of people’s lives”.

So why are the Government refusing to do so now, especially, as my noble friend said, in relation to existing third or subsequent children where there is a new universal credit claim? What is the justification?

As my noble friend said, when this was explained to us I think the way it was put was that there would be an unfair advantage to richer families if they were able to claim universal credit for third and subsequent children. Perhaps these families were not claiming tax credits or universal credit before, but they could still be on a low income and simply not have claimed. We know that take-up is far from perfect. I know that the Government expect take-up to be higher for universal credit, but that remains to be seen. I have been around this game for quite a long time with the expectation that take-up would be improved by various benefits and so forth. However, it remains stubbornly at less than 100% for means-tested benefits. Even if they were better off—my noble friend made a powerful point here—financial circumstances can change very quickly in the event of life events or shocks. So where is the fairness in refusing support to, say, an early teenage child who is the third in the family and who was born many years ago?

[The Minister of State, Department for Work and Pensions (Lord Freud) (Con)]

I thank the noble Baroness, Lady Sherlock, and the noble Lord, Lord McKenzie, for bringing forward this amendment and I thank the noble Baronesses for making their points so succinctly, but effectively.

This amendment would change our approach to applying the two-child limit in universal credit so that it would apply only to children born on or after 6 April 2017. That effect would apply in existing and completely new claims for universal credit. This reform, which sees support for children in universal credit limited to two children, is primarily about fairness to the taxpayer. The tax credits system has grown unsustainably, and spending on tax credits for the 870,000 households which have three or more children is around £9.4 billion. To accept this amendment would, we estimate, increase projected universal credit expenditure by around £250 million in 2019-20. I am pleased that at least on this amendment I am able to provide the Committee with some costings.

The Government were elected on a manifesto commitment to reduce welfare expenditure by a further £12 billion during the lifetime of this Parliament, as part of the plan to eliminate the deficit and eliminate burdening the next generation with additional debt. There is no strong justification for the taxpayer to provide more generous financial support for completely new claims in respect of children born before 2017 than in respect of those born after that date.

Families already claiming universal credit or child tax credit, whether in or out of work, will not be affected in relation to children or qualifying young persons in their households before the key date while they remain entitled to benefit. Similarly, any household that has claimed universal credit or child tax credit in the past six months will be protected if their previous award included a child element for more than two children or qualifying young persons and they continue to have responsibility for them. I urge the noble Baroness to withdraw this amendment.

21:00

[Baroness Sherlock]

My Lords, I congratulate the noble Lord on being able to cost one of tonight’s amendments. I find his defence genuinely impossible to understand. I think he actually said that there is no stronger justification for exempting existing children than children who have yet to be born. I simply cannot understand how he can say that with a straight face because he has spent much of this evening telling us that this was all about choice and that parents who are on tax credits should make the same choices before having additional children as parents who are not. These are parents who already have children. These children already exist. They are not making a choice at all. The only reason they are making a claim for tax credits, or universal credit in this case, is because something has happened which means they have then had to fall back on the support of the welfare state. I do not understand how that is a justification and I invite him to think about it and maybe come back before I sit down and give me a choice.

The Government need to think very carefully. They keep giving justifications about choice until they do not hold, in which case they suddenly go, “Oh, look over there. Look at fairness”. This is either about choice or it is not. It cannot be about choice and when that breaks down a different defence is pulled out. It surely has to be one or the other. If it is about choice, how can it apply to people who have not made a choice? If it is not about choice, will the Minister please stop telling us that it is. Can I tempt the Minister to explain to me again why there is not a stronger justification for existing children than new claimants because I think I may have misheard? Is that what he meant?

[Lord Freud]

No, that is exactly what I meant.

[Baroness Sherlock]

At least my hearing is better than my understanding. I find that a profoundly disappointing response, even by the standards of tonight. But given that we are in Committee, I beg leave to withdraw this amendment.

Amendment 11 withdrawn.

Amendments 12 to 14 not moved.

Clause 12 agreed.

Amendments 15 to 20 not moved.

Amendment 21

Moved by

[The Lord Bishop of Portsmouth]

21: After Clause 12, insert the following new Clause—
“Limiting the child element of child tax credit and universal credit to two children: reporting obligation
Within six months of the day on which this Act is passed the Secretary of State must consult and lay a report before Parliament, assessing the social and economic impact of sections 11 and 12 of this Act, including—(a) the potential impact on family relationships and functioning, with reference to “The Family Test: Guidance for Government Departments” produced by the Department for Work and Pensions, and(b) the potential economic and social impact on different faith communities.”

[The Lord Bishop of Portsmouth]

My Lords, I tabled Amendment 21 to highlight the impact of this measure on different faith communities who share our concerns with this part of the Bill in particular. Noble Lords who attended the special briefing we organised two weeks ago will have heard Chaya Spitz, chief executive of the Interlink Foundation, speak passionately about the implications for the Orthodox Jewish community that she represents and is a member of. For her community, larger families are the norm and the central pivot around which everything else revolves. There is a positive, faith-based imperative to have children, to create the next generation in service of God. There is also a commonly held conscientious objection to the use of artificial contraception, except in prescribed circumstances, and to abortion, except in rare circumstances. By limiting financial support to the first two children, this policy is making a judgment that touches on deeply personal and strongly held religious and cultural beliefs about the family, and that threatens the viability of whole faith communities.

According to the 2011 census, 52% of Jewish children lived in families with three or more children, compared with a national average of 31%. In Muslim families, the proportion is even higher—60% live in larger families. This measure will have a hugely disproportionate impact on these particular faith communities. Although it is difficult to see how this could be framed as an exemption, the effects will be profound, and I do not believe they have received the consideration they deserve.

A recent report by the Child Poverty Action Group highlighted serious human rights concerns relating to this and other parts of the Bill and argued that the regulations would need to include “extensive exceptions” protecting women,

“family integrity and religious freedom”.

One of the issues it raises is the potential discrimination against members of religious groups who have a conscientious objection to the use of contraception or abortion contrary to Article 14, read with Article 9, of the European Convention on Human Rights. There are other hard cases as well, including situations where women in abusive relationships are pressured into having more children or where a woman uses contraception in good faith but it fails. In all these cases, the assumption that women have a free choice about whether or not to have a child is called into question.

For these reasons, I have tabled this amendment calling on the Government to consult and report on the economic and social impacts, focusing in particular on the implications for family life and for different faith communities. The Government’s own impact assessment is inadequate in this respect, offering only a superficial assessment of the likely effects. To argue, without supporting evidence, that substantially reducing the level of support for larger families will somehow increase their financial resilience and support improved life chances for their children seems wishful thinking at best and requires further investigation. As part of a more rigorous assessment, will the Minister agree to seeing the Government apply their own family test to this policy, using the guidance published by the DWP in October last year?

In an earlier intervention in Committee, the noble Lord, Lord Lawson of Blaby, spoke about perceptions of fairness in legislation, citing the example of family allowances. Would the Minister agree that the perceived fairness of these policies will be judged not only by their overall popularity but by the respect they give to deeply held convictions of faith communities that enrich our common life? I seek not an exemption but a clear analysis of the impact.

[Baroness Lister of Burtersett]

My Lords, in speaking in support of this amendment, I will pick up what the right reverend Prelate said about the inadequacy of the impact assessment. This point was also made by the Equality and Human Rights Commission from the perspective of equality and human rights. It argued that it does not “enable proper scrutiny” or meet the requirements of the public sector equality duty; nor is there an assessment of the “aggregate effect” of the changes on people.

In fact, the impact assessment is inadequate from any perspective. In particular, there is no assessment of the impact on child poverty, despite the Joint Committee on Human Rights recommending that the Government should assess the impact on child poverty of any new law, as child poverty is a human rights issue—I declare an interest as I was a member of the committee at that point. I asked a Written Question about the impact, only to be told to look at the impact assessment—the implication being that I had not read it, which I found rather insulting.

Not only is there no assessment of the impact on child poverty, but this is the quality of distribution analysis:

“The policy has the impact of redistributing income from Universal Credit/tax credit recipients to the Exchequer (i.e. society as a whole)”.

Actually it is not society as a whole, because when I last thought about it, universal and tax credit recipients were themselves members of society. The assessment continues:

“The policy therefore has distributional impacts”.

That is the distribution analysis—and the impact assessment on life chances is similarly risible.

I remind the Minister of what it says in the Companion—that Ministers should be as open as possible in answering questions, because this is inherent in ministerial accountability to Parliament. I therefore ask him again now: what is the department’s assessment of the impact of these clauses on the number of children living in poverty? I simply do not accept that it is not possible to make an assessment. I accept that there might have to be a fairly wide margin of error—we cannot just say that it will be exactly x thousand—but I do not accept that there is no assessment. It is not possible.

The right reverend Prelate also mentioned the family test. That is drawn up by the Department for Work and Pensions itself. It is supposed to be equivalent to the public sector equality duty. According to the DWP, its application should be documented and the relevant department should consider publishing it. Given that this clearly has a family impact, why did the department decide not to publish the family test? As part of its equality statement for reforming asylum support, the Home Office set out very clearly each of the questions that the family test is supposed to answer and gave its answer. I might not agree with those answers, but that was a model of how a department should deal with it.

Will the Minister undertake to provide noble Lords with the documentation of the application of the family test before Report? There must be documentation, according to the DWP’s own guidance. Given that the measure has a clear family focus, can he tell us what additional analysis was undertaken involving stakeholders, as is recommended in the DWP’s own guidance on the test? Finally, will the Minister tell us which other countries restrict payment of benefits for children to smaller families in this way? I am reliably informed that there is no other country, but I accept that I may be wrong. When I last looked at this, I found that countries that cared about family policy and child poverty tended to pay more to larger families, rather than less, but I would welcome elucidation on that.

[Baroness Sherlock]

My Lords, I rise to support Amendment 21 in the name of the right reverend Prelate the Bishop of Portsmouth. I fully support the requirement in the amendment to report on the impact on family relationships and functioning, for the reasons that have been articulated in the debates we have been having this evening. Until now we have not discussed in any detail the impact on faith communities, so I am going to concentrate on that.

As we have heard, larger families are strongly prevalent within some faith traditions and cultures, which leads to legitimate concerns about the differential ways this policy will be felt throughout society. There is an issue of equality for children born into families of faith. This measure will disproportionately affect families where, perhaps because of the parents’ faith, there is a devout desire to avoid contraception and abortion. As we have heard and discussed this evening, family planning is not infallible and many people of faith and other like-minded people are concerned that unexpected pregnancies could lead to a rise in the number of abortions. This point was made by the right reverend Prelate the Bishop of Portsmouth earlier.

As my noble friend Lady Lister pointed out, the most damning evidence about the differential impact of this measure on equality grounds comes from the Equality and Human Rights Commission. I declare an interest, in that I am a former commissioner of EHRC. It says:

“The proposed changes may have a disproportionate negative impact on people from particular ethnic or religious groups … The impact assessments and human rights memorandum which accompany the Bill do not assess the effect of the Bill on equality and human rights in sufficient detail to enable proper scrutiny of the legislation”.

It is not kidding.

Disgracefully, the Government have resisted all pressures to conduct cumulative impact assessments of these measures, giving impact assessments only for individual measures. Even within that, however, I was staggered to find that there had been no attempt to conduct an equality impact assessment on the two-child policy. The short section in the IA on the impact on protected groups mentions gender and disability in passing, acknowledges that ethnic minority households may be more likely to be impacted, though offers no detail, but makes no reference at all to the protected characteristic of religion and belief. Can the Minister explain why there is no such reference, when even a cursory glance at the data suggests the possibility for significantly differential impacts on the grounds of some protected characteristics, particularly religion and belief?

21:15

Since the impact assessment did not tell us, we can look at the 2011 census data, which indicate that Muslim and Jewish families are the religious groups with the largest number of families with three-plus children. On average, the figure is 31%; among Jewish families it is 52%; among Muslims 60%; and among Christians 28%. The EHRC points out that this may put the Government at risk of breaching Articles 2 and 5(e)(iv) of the International Convention on the Elimination of All Forms of Racial Discrimination.

The commission goes on to note the point made by my noble friend Lady Lister that Section 149 of the Equality Act 2010 imposes a public sector equality duty requiring government departments and Ministers to have due regard to the need to eliminate unlawful discrimination, advance equality of opportunity and foster good relations—the three aims of the PSED. This is an ongoing duty that applies throughout the policy-making process, from the development of options and draft proposals through to legislation and implementation.

The EHRC wrote to the Secretary of State for Work and Pensions asking him how the DWP planned to improve its analysis, and offering its help. In his response, the Secretary of State simply said that the Government had used,

“the most robust analysis available to give a good assessment of … the impacts of the reforms”,

contained in the Welfare Reform and Work Bill. As the EHRC points out, though, the DWP analysis fails to demonstrate proper consideration of the effect of Clauses 11 and 12 on any of the three aims of the public sector duty. Nor is it clear how the impact of the proposals will be monitored and tackled if adverse impact is identified during implementation. This point was behind the amendment tabled by the right reverend Prelate the Bishop of Portsmouth.

The EHRC analysis suggests that this policy,

“could have an adverse impact on some religious groups, in particular those for whom family planning may be against their religious teachings. This may mean that children in some religious communities are more likely to be brought up in poverty”.

The commission’s conclusion is stark:

“Until the Government shows that it has properly considered the potential impact of these proposals on equality, and how any adverse effects can be mitigated, as required by section 149 of the Equality Act 2010, we recommend that Parliamentarians vote to oppose the Question that Clauses 11 and 12 stand part of the Bill”.

That is a very serious position to be taken by a statutory body such as the EHRC.

I have two simple questions for the Minister. First, why did the Government make no attempt to analyse the impact on the grounds of religion and belief, as they are required to do—or, if they did, why was it not published, as my noble friend asked? Secondly, why did the Secretary of State fail to respond to the EHRC when it pointed out the deficiencies of his department’s analysis and offered to help?

Given the above, I hope that at the very least the Minister will accept the amendment and show good faith, at this late stage, so that at least the Government can monitor the impact on faith communities.

[The Earl of Listowel (CB)]

Briefly, my Lords, I welcome the introduction by the previous Government of the family test. It was good to see in a recent Bill—it might have been the Education and Adoption Bill—that, just as the European Convention on Human Rights is written down, it was stipulated on the Bill itself that the family test had been gone through as the Bill had passed. I am sorry to hear that the results of the family test have not been published, because that test is very welcome.

The right honourable Iain Duncan Smith, the Secretary of State, did good work with Graham Allen MP in looking at early years interventions to begin thinking in this country about how important it is to support families so that their children do well from the very start of their lives, because more and more evidence shows that supportive families, good relationships and bonding early in life have huge and beneficial impacts on society, and that is hugely important. That was really wonderful work but I am afraid that it may be getting lost somehow. I would like to be reassured that that focus has not been lost and that the Secretary of State is still worried about “broken Britain” and broken families, and is still putting that right at the top of his priorities. I wonder if the Minister can say whether it is intended in future, as I gather has been the case in the past, for the Bill to say that it has passed the family test.

[Baroness Hollis of Heigham (Lab)]

Can the Minister help me? I was just checking, and as far as I can see from handbooks, we continue to support various partners in polygamous marriages and we do not say, “After two partners you won’t get any more support for your third, fourth or fifth member of a polygamous marriage”. Why is it okay to have several spouses who are financed by benefit, but if you have more than two children they are not?

[Lord Freud]

I thank the right reverend Prelate the Bishop of Portsmouth and the noble Earl, Lord Listowel, for this amendment. On the ECHR point, the Government set out their assessment of the impacts of the policies in the Bill on 20 July, as I think I have already said. It is important to ensure that the dynamic behavioural effects of the changes are considered within that. Many of these analyses suffer from the fact that they are too static when considering gains and losses and too focused on notional changes.

On the question posed by the noble Baroness, Lady Lister, on child poverty impacts, I say that the intended impact of our reforms is to incentivise work, ensure that it always pays, and to allow people to keep more of what they earn. That is why, as we will go on to discuss, we are moving towards a life-chances analysis of poverty as our approach.

[Baroness Lister of Burtersett]

I am sorry to intervene, but that is no answer, my Lords. I asked a very clear, factual question. At present, the Child Poverty Act still holds; therefore this House deserves the respect of being given an analysis of the impact of the increase in the numbers of children in child poverty on the measures, which are still the law, and which will still be measured under the HBAI statistics, as the Minister has said. I do not expect to have it now, but I hope that the Minister will give us those figures before Report.

[Lord Freud]

As I said, projections on the HBAI are difficult, and everyone gets them wrong because they are done on a static basis.

I pick up the point from the noble Baroness, Lady Hollis: she will be pleased to know that universal credit does not recognise polygamous marriage.

On the family test raised by the right reverend Prelate, the noble Baroness, Lady Lister, and the noble Earl, it is not a tick-box, pass-or-fail test but is about looking at how policies support or potentially undermine family relationships, and about trade-offs. The family test ensures that family considerations are explicitly considered and recognised when making those trade-offs. These measures will ensure fairness for all families, both encouraging parents into work and giving a fair deal for the taxpayer.

[Baroness Lister of Burtersett]

I am very sorry to intervene again. As I said, the Home Office, which is not the author of the original family test—the DWP was—published the questions in the family test and how its policy met those questions. Of course the department must have carried that out not on a tick-box basis—I am not saying yes or no—but by carrying out a considered analysis around these questions. I simply ask why, therefore, the Department for Work and Pensions is not prepared to make available to this House the documentation of how the family test was applied to this clause?

[Lord Freud]

As I said, the documentation that we have published is the documentation that we need to publish to comply with our public sector equality duties. We have done that, even though the noble Baroness may feel that it is inadequate.

[Baroness Sherlock]

I do not presume to know any more than others about this subject—no one knows more than my noble friend Lady Lister. But on a number of occasions this evening, Peers from different Benches have asked the Minister very specific questions and he has simply got up and said, “What we have published, we have published”. The question he was asked just now was: “The Government must have conducted this test, because they are required to do it, so why won’t they publish it?”. “We have published what we have published” is not an answer. I am getting increasingly anxious about the quality of the responses this evening.

Take the example of dynamic benefits. Could the Minister explain that to me again? If he does not think that static analysis is good then he needs to find another way of analysing it. He simply cannot come to this House and say, “I cannot tell you the impacts of this because it is all dynamic”, because otherwise we will never be able to assess anything that the Government are going to do before they do it. That cannot be reasonable, surely.

[Lord Freud]

This amendment is asking us to do an analysis over the next six months. In practice, that is what will be happening on a dynamic basis, because we have introduced as part of universal credit a test-and-learn approach in which we are able to assess what happens to families and learn the lessons in order to roll out universal credit. That is a pretty public process and we publish what we learn. So, in practice, we have a process that incorporates the dynamic effect of these changes in its overall impact, rather than taking individual bits and pieces of the policy. That is the best answer that I can give to the question. On that basis, I urge the right reverend Prelate to withdraw this amendment.

[Baroness Hollis of Heigham]

I want to come back at the Minister. I was not trying to make a cheap jibe but, unless I am misreading a handbook that I have used over the years, if you are in a polygamous marriage and your spouse is married to someone else, you may claim as a single person within it, which is an allowance for you, including if the other person still lives in the same household with you. In other words, under UC—this is on page 154—there is continued financial support for other partners in a polygamous marriage. If that is so, why is it acceptable to apply that to adults but not to children?

[Lord Freud]

The noble Baroness has a long memory. Polygamous marriages were recognised in JSA, income support and ESA. We took a decision not to recognise those marriages in UC. Only the first marriage is recognised for universal credit purposes.

[Baroness Hollis of Heigham]

Except that financial support will, presumably, continue to be given to the other women who are in a polygamous marriage by virtue of their polygamous status.

[Lord Freud]

No. If there is a third person in that household they would be treated as a single person.

[Baroness Hollis of Heigham]

The point I am making is that they may be treated as a single person but they are getting financial support by virtue of that polygamous marriage, whereas the third or fourth child will get nothing.

[Lord Freud]

This is really becoming arcane. We have said that we do not recognise polygamous marriage in universal credit. But clearly there is an individual there, and we will treat them as a single person. It is actually, ironically, a little more expensive than treating them as a wife.

[The Lord Bishop of Portsmouth]

Can I make what I hope is not an arcane point? I invite the Minister, in responding to my amendment, which relates quite specifically to faith communities, to add something about that. He has not mentioned the word “faith” in his response, unless I have misheard.

[Lord Freud]

No, I have not; the right reverend Prelate is correct. In this policy we have looked through that to people’s choices, whether they are those in the benefits system or the people supporting those on the benefits system. I have not made an explicit comment on race or religion.

21:30

[The Lord Bishop of Portsmouth]

My Lords, I am grateful for the Minister’s response, but I think he will understand that I am disappointed that he cannot respond more positively to my amendment, which seeks some specific analysis of how these proposals would affect the lives of those with deeply held religious convictions who feel actual anxieties about what is proposed. In the course of the coming weeks, I am sure that these matters will be raised again and I hope that we can begin to have conversations about the specific issues that I have tried to raise. We could do that sympathetically and generously, recognising the respect in which these communities, in my judgment, should be held. I beg leave to withdraw the amendment.

Amendment 21 withdrawn.

Clause 4: Workless households and educational attainment: reporting obligations

Amendment 22

Moved by

[Lord Ramsbotham]

22: Clause 4, page 4, line 32, at end insert—
“( ) the progress of children living in England at age 5 in the following developmental areas—(i) cognitive;(ii) personal, social and emotional; and(iii) physical;( ) the progress of disadvantaged children living in England at age 5 in the following developmental areas—(i) cognitive;(ii) personal, social and emotional; and(iii) physical;”

[Lord Ramsbotham (CB)]

My Lords, in speaking to the two amendments in my name, I regret that I was unable to raise at Second Reading the issues that they contain. I also regret that, yet again, I find myself tabling amendments to legislation produced by one department in silo, which does not appear to have taken into account that achievement depends on co-ordination with the activities of several other departments. My amendments, and others in the next groups, are intended both to point out and, hopefully, to rectify what will no doubt be claimed as the unintended consequences of not appreciating the impact of factors for which the DWP is not responsible.

The Minister will no doubt remember a seminar during the passage of the Welfare Reform Act 2012 focusing on the Wednesbury principles. Afterwards, he told the House:

“The department strives to ensure that no decision is influenced by irrelevant factors and that decision-makers act in a rational and fair manner”.—[Official Report, 25/01/12; col. 1061.]

Parts of this Bill—and particularly the proposal to do away with the child poverty targets contained in the Child Poverty Act 2010, which Alan Milburn has forecast will be missed by a “country mile”—suggest that, rather than being influenced by irrelevant facts, decision-makers appear to have ignored extremely relevant facts related to the responsibilities of other departments. Rather than acting in a rational and fair manner, they have acted irrationally and unfairly by ignoring what they should have taken into account.

In moving Amendment 22, I must declare an interest as co-chair of the All-Party Group on Speech and Language Difficulties. In 2012, we published a report on the links between social disadvantage and speech, language and communication needs, which included an extremely alarming graph that showed that children with very low IQs from supportive families would overtake children with higher IQs from disadvantaged families at the age of five unless they were helped. One of our recommendations, discussed with both the Department of Health and the Department for Communities and Local Government, was that every child in the country should be assessed by a health visitor—trained or accompanied by a speech and language therapist—by the age of two so that remedial treatment could be initiated aimed at ensuring that every child could engage with education when starting school. We also recommended regular reassessments to measure both progress and change of circumstance. This should continue until school-leaving age for those with special educational needs, whose statutory education, health and care plans continue until age 21.

Assessment of a child’s progress at age five provides a critical measure of their cognitive, emotional, social and physical development. In this connection, I should declare two other relevant interests. I am president of the Institute of Food, Brain and Behaviour, which has reported frequently on the vital importance of correct nutrition for brain development, not least before birth, and chairman of the Criminal Justice and Acquired Brain Injury Interest Group, which has campaigned for better understanding of the impact on young people of neuro-disability, which covers a multitude of conditions, including the effects of head injuries. The earlier that you can identify problems, the more likely you are to be able to initiate remedial treatment aimed at ensuring that children achieve the best educational attainment they possibly can and so have the best chance of finding and keeping work, which will help them to break cycles of intergenerational poverty.

What worries me most about the dropping of the targets contained in the Child Poverty Act, inadequate though they are for obtaining a detailed picture of the actual material condition of those in poverty, is that, now, neither central nor local government are to be required to make strategies for reducing child poverty or preparing and publishing assessments of the needs of children living in poverty. Meaningful improvement can be based only on particularised fact, in which regard much of the official data on which judgments will be based are little better than generalised fudge because they hide so many pockets of problems. The same detailed facts are required not only by the DWP for benefit purposes and by the Prime Minister and Chancellor for strategic purposes but by the Department of Health, the Department of Education, the Ministry of Justice and the Department for Communities and Local Government so that they can sing from the same hymn sheet when planning early years provision and the deployment of social and other remedial workers, to name but two responsibilities.

On Amendment 34, having already voiced my concern that the Bill is yet another example of a department legislating in silo, it appears to me that the Treasury and the DWP have not considered the impact on the mental and physical health of United Kingdom citizens when setting the level of statutory minimum incomes or the cost of treating consequent mental and physical ill-health in the NHS. Provision of the minimum income needed for healthy living is a means of preventing mental and physical ill-health and its cost. Currently, and even more so under the provisions of the Bill, too many parents are frustrated in their attempts to provide for their children by inadequate statutory minimum incomes. The difficulty in understanding the extent of this is exacerbated by the lack of up-to-date information, which Amendment 34 seeks to rectify. The amendment also seeks to open up a debate about the link between inadequate incomes, sanctions and the inevitable and unmanageable debt on the one hand and their impact on the mental and physical health of the poorest citizens on the other.

Ever since the national minimum wage was introduced, successive Governments appear to have ignored that the crucial income for health is the minimum wage after housing costs have been deducted. That amount is constantly being reduced by ever-increasing rents in the chaotic British housing market, the enforcement of debt collection—to which court costs and bailiffs have now been added—and the cost of council tax. According to the Office for National Statistics, 14.5 million people are now in absolute poverty after housing costs have been deducted. That is 4.1 million more than before their deduction. In other words, 4.1 billion additional people lack the ability to buy the food, fuel, clothes and other necessities that are essential for physical and mental health and well-being. That must surely concern a Government who pride themselves on their compassion.

The national minimum wage is based on the assumption that £6.70 an hour is paid for a 37.5-hour week. My amendment would also enable the Government to assess the impact of zero-hour contracts and part-time working on the health of employees working less than 37.5 hours a week. The Chancellor has now announced that the national minimum wage is to be replaced by a national living wage of £7.20 per hour from next April, rising to £9 per hour by 2020. In the absence of any known research into the minimum income needed for healthy living, he appears to be using the word “living” without substance. By contrast, I pay tribute to Reverend Paul Nicolson. I am most grateful to him and Taxpayers Against Poverty for telling me, among other useful information, that it was robust research for the Living Wage Foundation carried out by the Joseph Rowntree Foundation that led to the London living wage of £9.40 an hour and £8.25 per hour outside London, which 724 employers, up from 429 last year, are now paying. Boris Johnson, the Mayor of London, has already announced:

“Paying the London living wage is not only morally right, but makes good business sense too”.

More than 2,200 employees working for companies with contracts from the Greater London Authority are now benefiting from the London living wage. In another report, published on 23 November, the Rowntree Foundation showed that 51% of those living below the absolute poverty line lived in households in which at least one adult was in work. My amendment is not so much about the actual amount but to point out that because the Government’s proposed national living wage is so inadequate, it will condemn too many households to absolute poverty, with the inevitable consequences for their mental and physical health.

The DWP cannot claim that this information has not been readily available or that it has not been brought to the Government’s attention. In addition to the activities of the organisations with which I am associated, the link between debt and mental illness has been highlighted in a report by the Royal College of Psychiatrists, confirmed in a peer-reviewed study by the University of Liverpool. The Institute of Brain Chemistry and Human Nutrition has highlighted the link between poor maternal nutrition, low birth weight and developmental brain disorders in children. The Centre for Mental Health, as vice-president of which I must also declare an interest, has calculated that the economic and social costs of mental health problems in England were £105 billion in 2009-10, taking into account costs of health and social care, loss of output and human costs. Many now consider this to be an underestimate.

Those of us who voted in favour of the amendment proposed by my noble friend Lady Meacher to the tax credits statutory instrument have been accused of acting unconstitutionally. My reason for doing so was to try to persuade the Chancellor to think again. I do not believe that anything in our current parliamentary process is as unsatisfactory, if not unconstitutional, as the Committee system in the other place, where Governments have a built-in majority of nine to seven, meaning that virtually no opposing amendment has a hope of being agreed. There have been numerous examples of admittedly imperfectly scrutinised legislation being sent to this House because the Committee, as composed in the other place, had neither time nor the necessary expertise to complete that process. Having read the Committee proceedings in the other place, I believe that to be true of the Bill.

In putting forward these two amendments, like my noble friend over tax credits, I ask the Minister to think again about this part of the Bill, and particularly the decision to scrap the strategic requirements in the Child Poverty Act 2010 and its proposed renaming. Life chances are being eroded by child poverty, which fact ought always to be in the forefront of government minds. In order to improve life chances, everything possible must be done to alleviate child poverty, and in order to achieve this essential, whichever Government are in power will need the information that my amendments seek to ensure is available on a regular basis.

Again, like the noble Lord, Lord Kirkwood of Kirkhope, on an earlier amendment, and remembering the Minister’s willingness to discuss contentious issues in earlier Bills, I and, I am sure, other colleagues would be very happy to meet him to discuss this. I beg to move.

21:45

[Baroness Manzoor (LD)]

My Lords, I shall speak to Amendments 22, 23, 27, 29, 30 and 34. Given that it is quite late, I will try to be as brief as I can. I support Amendment 22. It has already been said that Clauses 4 and 6 remove any income-based measures of child poverty, the duty on the Government to work towards eradicating child poverty by 2020, and the duty on local authorities to work together towards eradicating child poverty. Instead, under the new heading, “Life chances”, Clause 4 focuses on measuring children in workless families and with poor educational attainment.

As I said, I support the noble Lord, Lord Ramsbotham, in his Amendment 22 as it provides for development measures in the early years, allows for the capture of data for all children at the age of five, and puts disadvantaged children in the same group. My Amendment 23 builds on this, particularly as the latest government figures show that 62% of children in poverty now live in working homes: that is 2.5 million children, according to the End Child Poverty Coalition.

Without question, worklessness and a lack of access to employment are key drivers of child poverty. However, as I said at Second Reading, while work can be a key route out of poverty, it is by no means a guaranteed one. There is much research which shows the significant impact that growing up in poverty has on children. As was said earlier by the noble Baroness, Lady Hollis, children are much more likely to suffer from poor health, do worse at school, be jobless in the future and die earlier. The changes that the Government plan to make to the support of low-income working families are likely only to make the situation worse.

Clause 4 as it stands proposes a statutory duty to publish an annual report on children in workless households and on the educational attainment of children in England at the end of key stage 4; that is, for children of 16 years of age. That is far too late and there are no baseline comparators. Improving children’s life chances must be more than about teenage educational attainment. I agree with the organisation Action for Children that the Government’s limited measures are a missed opportunity. Educational attainment at 16 does not reflect how far development in the earlier stages of our lives affects our future, from our health to our likelihood of being employed.

Amendment 23 would mean reporting on the educational attainment of children in England, including disadvantaged children, at the end of key stage 1, at the age of five, rather than reporting on educational attainment only at the end of key stage 4, when children are 16 years old. It would also allow a baseline for the Government to measure the progress made by investing in children’s futures. I hope that it will be supported by the Minister, particularly as such data are currently available, so the financial cost would be minimal. If my amendment is not accepted, perhaps the Minister could consider including a measure towards addressing income poverty in the basket of measures in the Bill.

Amendment 27 reinforces the point that “key stage 1” means the first key stage within the meaning of Part 6 of the Education Act 2002. Amendment 29 would allow the Secretary of State to publish and lay before Parliament data which report on children who are homeless or are at risk of homelessness. This is important as the data identified can help to support strategies much more effectively in the Troubled Families programme.

Amendment 30 is concerned with children,

“in families living in problem debt”.

This provision will ensure that data are consistently collected and reported on to enable early intervention by programmes such as the Troubled Families programme. Borrowing figures released on 30 November confirm a significant and prolonged increase in household debt, and the measures in this Bill are likely only to make matters worse.

Amendment 34 is about reporting obligations for:

“Working and workless households and health”.

I have added my name to those of the noble Lord, Lord Ramsbotham, and the noble Baronesses, Lady Meacher and Lady Hollins. As has been said, there is significant evidence that children living in poorer households are much more likely to be born prematurely, have low birth weight, and as adults to die earlier. They are also more likely to be absent from school due to illness, to be hospitalised, and to have long-standing illnesses, and are three times more likely to suffer from mental health problems.

Data collection on the impact of mental health on workless and in working households with incomes below the national minimum wage is important, particularly as the Government have put an emphasis on improving mental health services. The amendment will enable the link between inadequate incomes and their impact on the mental and physical health of the poorest people compared to others, and will allow better joined-up targeting of services between the NHS and the DWP. I want the Minister to look at this very carefully in terms of data collection.

[The Earl of Listowel]

I will speak to Amendment 22, moved by my noble friend Lord Ramsbotham and to which my name is attached, simply to say I strongly support the idea of taking measurements earlier in the child’s life. I note what my noble friend said, his reference to a strategy and that the Bill removes a strategy for child poverty. I note in the Government’s general direction of travel that they are quite sceptical of strategies. My sense is that the Government prefer to work from the bottom up, and that in education policy, as in other areas, they are reticent to have overarching plans. I would briefly like to challenge that.

The academy schools seem an example of government trying to build from the bottom up. However, what we see in the education department are real difficulties around teacher recruitment. Visiting an academy school—indeed, the best performing non-selective state school in the country—I saw wonderful results but heard complaints that because of the lack of strategy regarding teacher recruitment, there were real concerns that teachers of various kinds and at various levels would not be easily available and of the excellent quality needed in the future. My sense is the Government are rather opposed to strategies in general but I think in certain areas such as this they are really important, and we will come back to that.

I speak as a Cross-Bencher here: after 15 years in your Lordships’ House, it is rather regrettable that sometimes it seems as if one Government set certain things up and then the next Government set them down. I remember the debates about the Youth Justice Board, which seemed a very effective institution but because it was a quango the Government felt strongly that it had to go. I was pleased that the noble Lord, Lord Ramsbotham, managed to persuade the Government that, in fact, it was worth keeping. Therefore, in the discussion of the old Child Poverty Act and the new Welfare Reform and Work Bill, it is worth challenging the Government a bit. I would like to challenge the Government a bit about whether, in part, their motivation might be to simply undo what others have done in the past, and whether there might be a chance to build on the best of the past as well as bring the Government’s own unique contribution to this area.

I want to be as brief as possible so I will speak now to my amendments in the grouping, the first of which is Amendment 28 on children in care and care leavers. The Bill is a real opportunity to improve the outcomes for young people in care and care leavers. It is an opportunity to gather data, for instance on their educational attainment—yes, that is gathered already—but also on their mental health. Historically, there was recognition by the ONS in 2004 of the mental health needs of looked-after children and great work was done by people such as Professor Jackson on the educational attainment of looked-after children. The educational side has been well resourced and legislated on since then, with things like virtual school heads, designated teachers in schools and priority in admissions—all really important steps forward, but the mental health needs of looked-after children have not been so successfully addressed.

The Bill is an opportunity to look at various areas of performance with regard to young people in care and care leavers. Gathering them in one place and obliging Parliament to look at them on an annual basis would really keep our focus on making the most effective difference. Of course, in the care system we have the notion of the corporate parent. In each local authority, I suppose the leader would be the corporate parent for the young people in the authority’s care. I suppose that principle extends somewhat to us as well in Parliament. What that means is sometimes difficult to explain. Obviously we do not have relationships with individual young people in care.

In Barnet in the past, when Paul Fallon was the director of children’s services, it was ensured that each senior member of the council was an advocate for a young person in care. They did not meet that young person but their job was to follow the career, as it were, of the young person in care. They would write to people, nobble them and just be a champion for the young person in care. We in Parliament cannot meet and know young people in care but we can do our very best to be champions for them in this place. They are the children of the state. If we had the data at our fingertips we would be better equipped to do that.

A couple of weeks ago I attended the presentation by Dr Mark Kerr of his doctoral thesis. Dr Kerr left care with no educational qualifications. He subsequently has successfully gone through two degrees and it was a tremendously moving experience to hear him making his presentation on young people in care. The system can work well. Young people can do extremely well and it is on us to ensure that we do even better for them.

Amendment 29 is on children and homelessness. It puts a duty on the Secretary of State to lay data before Parliament on children who are homeless and at risk of homelessness. The purpose of bringing this forward is that child homelessness increases year on year. It now stands at about 90,000, and the number of children living in bed-and-breakfast accommodation increases year on year. There is a maximum limit on the time that a local authority is allowed to place children in bed-and-breakfast accommodation with their families. That is more and more often broken. We know about the housing shortages in particular areas, especially in London and the south-east. The purpose of the amendment is to focus our minds on these young people.

We might get better data. For instance, we could have data on children at risk of becoming homeless, on how effective we are at preventing children and their families from becoming homeless, and on children who are accepted as homeless with their families, in bed-and-breakfast accommodation, and so on. There is already a statutory duty to gather data on homeless children but there are various duties. There is a different duty for 16 and 17 year-olds which local authorities are obliged to have, so it might be helpful to have in one place a more thought-through approach to this.

There is an interdepartmental group looking at homelessness, which I welcome. Perhaps this is a bit far from the Minister’s remit, but I would like to know more about how that is progressing. On this issue, particularly given the fact of ever-increasing immigration, there needs to be a senior Minister looking at this, taking forward and championing this matter of family homelessness and having a strategy to really make a difference across the Department of Health, the DWP and the Department for Communities and Local Government. Such a change as this would be helpful in taking that forward.

My final point is on children in families living in problem debt. I am not sure how much time I have taken and I want to take as little time as possible, but this is a very important matter. The Government have decided to replace the child poverty measures with new life-chances indicators, focusing on measuring the number of children in workless households and the number of children with low levels of educational attainment. When the Secretary of State announced this change, he also highlighted the importance of problem debt in understanding child poverty and children’s life chances. The absence of a measure of problem debt has always been a limitation of the current Child Poverty Act. I know, from the families that I have had experience of, that where a family faces problem debt, a large proportion of family income can go on repaying debt every month, substantially reducing the money available for meeting the basic needs of children in the household. As shown in the report The Debt Trap, families in problem debt owe, on average, £3,437, or an estimated total of £4.8 billion, in arrears to service providers, creditors and government, both national and local. The social cost of problem debt is as high as £8.3 billion.

22:00

Problem debt can have a severe effect on family relationships. Of parents currently in arrears on one or more bills, nearly six in 10 said that their financial situation had led to their current or most recent relationship being put under strain, with 7% saying that it led to their most recent relationship breaking up. Problem debt is also closely aligned to the educational attainment of children. Nearly 90% of parents said that schools should do more to teach children about debt and money management. It is coming up to Christmas. The kind of people that we have been talking about, who have often had impoverished, chaotic early family lives themselves, are often not very comfortable with relationships or feel insecure. One way of demonstrating love for one’s child is to get them an expensive present. Getting a 15 year-old a £150 pair of trainers is a way to show one’s love. The risk is that many poorer families will be borrowing a lot of money this Christmas from loan sharks or on payday loans. They will run up debt because they feel they have to buy these things for their children. This matter needs to be addressed. I know that the Government are concerned about it and I look forward to the Minister’s response.

[Baroness Massey of Darwen (Lab)]

My Lords, I crave three minutes to support the spirit of the amendments in this group, which recognise that progress and life chances for children depend on their physical, social, emotional and cognitive development and on other influences too. I support the view of the noble Lord, Lord Ramsbotham, that a government strategy for children should be drawn up, tracking development from birth to adulthood. As he said, we have the means to do that through government departments such as education, health and welfare working together, with help from the voluntary sector and local authorities. I remember that many years ago the noble Baroness, Lady Williams of Crosby—possibly when she was Secretary of State for Education—spoke about having level playing fields for children. She said that some children begin the race with both feet tied together. Sadly, this is still the case. Feet are tied together through poverty, deprivation, low expectation and lack of care and stimulation in the early years. We know that the gap in attainment between poor children and more affluent ones is large by the age of five and continues to grow. We have recently had strong evidence from research that a holistic approach is necessary and I support the noble Lord, Lord Ramsbotham, in his concerns.

[Baroness Meacher (CB)]

My Lords, I will speak very briefly to Amendment 34, tabled so comprehensively by my noble friend Lord Ramsbotham. This amendment is of particular importance in view of the enormity of the cuts to welfare spending since the passing of the Child Poverty Act 2010. The Institute for Fiscal Studies reports that this will amount to £123 billion taken from our poorest citizens by 2016-17. The second feature of government policy the effects of which need to be monitored effectively—and would be under Amendment 34—is the conditionality and sanctions regime which undoubtedly increases the stress level of claimants very considerably.

As a panel member, along with Sir Keir Starmer and others, for an inquiry by the Fawcett Society into the impact of the Government’s welfare measures upon women, and by association their children, I found quite appalling the sheer level of errors and abuse in some Jobcentre Plus offices, affecting innocent women who only wanted, if at all possible, to gain their independence from the state. Our inquiry concluded that sanctions applied through no fault of the claimant were affecting claimants’ mental and physical health and the health and well-being of their children to a considerable degree. The Government have a duty to be aware of the consequences of their policies and to respond to the adverse effects.

I am aware that the Minister believes that injustices are limited in number, and that his department is doing its best to lessen them further. However, the inquiry made it clear to us that in fact the quality of service across the country varies very considerably. In some offices the staff were helpful and professional, and claimants certainly reported that. However, in others they were inadequately trained and could be callous and careless, with the most appalling consequences for the families affected. A typical example were mothers who, contrary to the guidelines, were required to travel three hours a day in total to and from work. They could not afford this and believed—rightly, in my opinion—that it was entirely wrong for their very young children to be in childcare for 10, 11 or more hours per day. Despite this entirely unreasonable requirement, such parents were sanctioned and then could not even feed their children. This was not an isolated problem but rather a regular occurrence in offices up and down the country.

Another often repeated story was that of a mother phoning the office to say that she could not attend an interview or required activity due to the sickness of a child, and was told that this information would, indeed, be passed on to the appropriate official. Of course, nothing was done. The mother would arrive at the post office to pick up her benefit only to find that there was nothing there. A sanction had been imposed with no information given to her. I cannot imagine the shock and utter distress of a mother in that situation. I believe that the Government may have adjusted the sanctions regime to ameliorate that problem and to make sure there is a gap between the imposition of a sanction and it taking place. I would be grateful if the Minister could clarify the position this evening.

The Joseph Rowntree Foundation produced a comprehensive review of international evidence on sanctions within systems in which benefits are conditional on claimant behaviour. It confirmed that sanctions strongly reduce benefit use and increase exit from benefits. However, Rowntree also finds that sanctions are generally less favourable in terms of longer-term outcomes, the well-being of children and crime rates, for example.

Every sanction which is unfairly imposed will cause extreme stress to parents, who suddenly find that they have no food for the children and no money even for the bus fare to reach a food bank, and have more debt and so forth. It should be a matter of great concern to the Government that 28% of sanctions are overturned on appeal and a higher percentage—39%—in the case of lone parents. Successful appeals soar for high-level sanctions. Fully 64% of single parents have high-level sanctions overturned on appeal. These must be just numbers to many of us but the Government have a responsibility in my view to report on the mental and physical health effects of the extraordinary hardship behind those numbers. I look forward to the Minister’s response.

[Baroness Hollins (CB)]

My Lords, I speak in support of my noble friend’s Amendment 34 and focus on the impact of benefit sanctions on people with mental health problems. Mental health professionals are extremely worried about the impact of this, which is why this amendment asks for a report containing data to be published.

The latest statistics around the number of people with mental health problems being supported into work though the back to work scheme are astonishingly low. Just 9% have been supported into employment since the scheme began. There are two key areas where better evidence is needed. We know that more than half of people receiving ESA in the WRAG have a mental or behavioural disorder as their primary health condition, and many more people in the WRAG will have comorbid physical and mental health problems.

We also know that people with mental health problems are being disproportionately sanctioned. Recent Freedom of Information requests to the department revealed that in 2014, on average 58% of sanctions for people in the ESA WRAG were given to people with mental health problems—20,000 in all.

The mistaken assumption is that people do not want to work, and that the best incentive is to threaten benefit withdrawal. Research shows that people with mental-health problems have a high want-to-work rate. I could say a lot more about that, but in view of the time I will not. What are the barriers? We need much more information—hence the request for a report.

I would like to share an example given to me by Mind, the mental health charity. It told me the story of a man who has been out of work for most of his adult life due to his mental health problems and who is currently in the support group. Under conditionality in the work-related activity group, this man felt so fearful and anxious of the threat of sanctions that he forced himself to attend his appointment a couple of days after being hospitalised following an overdose. This is just one shocking example of the pressure claimants are under, the health conditions that people face and, crucially, the level of anxiety and stress reportedly caused by fear of sanctions.

I urge the Minister to take these concerns and this amendment very seriously.

[Lord McKenzie of Luton (Lab)]

My Lords, this group of amendments is largely focused on the non-income issues and seeks to add the matters of worklessness and educational attainment to the measures, which the Government say are focused on the causes of poverty rather than its symptoms. These matters are important because it is asserted that what is measured and reported on will drive the focus of government attention, although reliance on this approach is inherently weaker than having strategy obligation and specific targets. There will be more about that in later amendments.

In considering Clause 4 and these amendments, we should set the context by reflecting on the starting positions, and that has been done by the noble Lord, Lord Ramsbotham, and the noble Baroness, Lady Manzoor. The current Child Poverty Act 2010, as amended in 2012, contains targets to be met in 2020 that relate to: relative low income; combined low income and material deprivation; absolute low income; and persistent poverty. There are four targets, not just one. It provides for the Social Mobility and Child Poverty Commission—formerly the Child Poverty Commission, and soon to lose child poverty altogether—to give advice when requested to Ministers on how to measure socioeconomic disadvantage, social mobility and child poverty and to report on progress on improving social mobility, meeting the targets and implementing the required strategies.

The Act also requires the publication of a strategy to comply with the targets and to combat socioeconomic disadvantage. In preparing the strategy, consideration must be given to measures—we referred to them as the building blocks at the time of the legislation—including: parental employment and skills; financial support; promotion of parenting skills; physical and mental health; education, childcare and social services; and housing and social inclusion. The Act imposes a requirement for local authorities to co-operate to reduce child poverty in their areas and prepare local child-poverty needs assessments.

As well as having income measures and associated targets, this required the Government to produce a strategy which would have regard to a range of factors, including the multiplicity of matters which affect child poverty. Apart from for Northern Ireland strategies, this Bill sweeps away all those provisions—the entirety of them. We will seek to reinstate this with subsequent amendments. Instead, the Bill requires the Secretary of State to publish an annual report containing data on children in workless and long-term workless households in England and educational attainment at key stage 4 for children in England and the educational attainment of disadvantaged children. There is no obligation on the Secretary of State to define these terms until the first report is provided for, in the year 2017 and a veiled reference to developing “other measures” to recognise what is suggested are the root causes of poverty: family breakdown, problem debt and drug and alcohol dependency. There is no statutory obligation to do so.

There is a reference in the briefing notes to a “life chances strategy” in due course, but no commitment on the scope and timing of this. The commission will have a focus on social mobility and no longer on reducing child poverty. Crucially, the Bill removes any income measure and related targets. This is on the basis that income is a symptom, not a cause, of poverty and that the relative income measure can lead to spurious outcomes when medium incomes are falling.

22:15

The range of amendments to this clause indicates that poverty is multifaceted in its causes and its persistence. We certainly accept that to break out of poverty—so that children do not enter poverty and do not stay or become poor in adulthood—requires action on a number of fronts. This was the essence of the strategy which the Bill now eschews. We also accept that poverty is not just about income but, like the commission, we believe that income is a key part of child poverty and who it affects, and that,

“household income must be central to any measure of child poverty”.

We agree that poverty is essentially about,

“the inability to achieve a minimum standard of living”,

and is a relative as well as an absolute concept. It is about being able to participate in society.

We note the point that what is measured and reported on may help to focus government to action, but the reality is that worklessness and educational attainment are already capable of being addressed within the building blocks of the strategy required under existing legislation. We agree that improving educational attainment and preventing long-term worklessness in households are important in tackling poverty, but there are other issues as well, some of which are dealt with in the amendments. As well as retaining a focus on income, the commission suggested that an additional multidimensional approach which looked at the causes of poverty could be developed. We will come to these issues in the next group. However, this would be subordinate to the key issue of income. We support that proposition.

I will come to some of the specific amendments in this group shortly, but I have a question for the Minister. What changes in policy will flow from abandoning the existing child poverty measures and targets, and what changes are expected to flow from the reporting of workless households and educational attainment? Even though the Government are turning away from measuring the current reality of poverty—the here and now—what will their focus be on its ongoing alleviation? We do not yet have a definition of disadvantaged children. Perhaps the Minister will say what the current intention is. Will that be defined in any way by income measures?

Amendment 22, in the names of the noble Lord, Lord Ramsbotham, and the noble Baroness, Lady Manzoor, would require reporting on the progress of young people in a range of developmental areas. This would be relevant to considering the risks of poverty and should clearly have a place in a multidimensional analysis.

Similarly for Amendments 23 and 27, to which we have added our name, while it might be argued that attainment at key stage 4 will ultimately have to reflect progress at earlier key stages, particularly key stage 1, if this reporting is to be meaningful in concentrating policy then a start at the earlier stages of schooling must be beneficial. If the key concentration is on key stage 4, that is in danger of being too late.

We are advantaged by having the wisdom of the noble Earl, Lord Listowel, on the position of children in care and care leavers, and the existing challenges that they suffer. The noble Earl made a powerful case on his Amendment 28 as to why they, too, should feature in an assessment of those likely to be at risk of poverty. So far as homelessness and his Amendment 29 are concerned, it is suggested that this is just one aspect of poor housing which should be considered. Others proposed by the commission were decency, overcrowding and stability. These are generally seen as having a clear impact on the experience of poverty rather than its cause.

In Amendment 34, the noble Lord, Lord Ramsbotham, and others would require reporting on the health implications of benefit sanctions on households and on households with working incomes below the minimum wage. We know that the benefits system is pernicious and we have some further amendments later on in the Bill to try to flesh that out and support the comments made earlier.

Amendment 30 would require the Secretary of State to publish and lay before Parliament a report on children in families living in problem debt. As the commission pointed out,

“unmanageable debt is an important part of the experience of poverty”.

It suggested that the Government should consider ways to cover this more effectively in the “current material deprivation measure”. But given that this measure is to be abolished, how else do the Government consider that the matter should be addressed in their consideration of life chances?

[Lord Freud]

My Lords, by virtue of Clause 4 the Government are committing themselves to reporting annually on their life chances measures of children in workless households, including long-term worklessness in England and the educational attainment of children, including disadvantaged children, in England at the end of key stage 4. The collective purpose of all the amendments in this group, laid by the noble Lord, Lord Ramsbotham, the noble Baroness, Lady Manzoor, and the noble Earl, Lord Listowel, is to place additional duties on the Secretary of State to publish and lay before Parliament further reports, information or data about a range of other areas. The question for us to consider is: what is the most effective way of harnessing primary legislation to achieve these aims?

We want to make a difference by taking action in the areas that will improve the life chances of all children and I think that is the answer to the question from the noble Lord, Lord McKenzie, about the policy. It will be addressing the life chances of those children, tackling the root causes of poverty, not the symptoms. Our new approach focuses government action on the most important drivers of poverty—worklessness and poor educational attainment—and on reporting progress in those areas annually. We will prioritise action in those areas and follow up our clear commitment to publishing a life chances strategy. As part of this we will develop a wider set of non-statutory measures on the root causes of child poverty, including family stability, problem debt and addiction.

The noble Lord, Lord Ramsbotham, by virtue of Amendment 22 seeks to expand the duty placed on the Secretary of State to include a duty to report on the progress of children living in England at age five, including disadvantaged children, in their cognitive, personal, social and emotional, and physical development. It is vital that all pupils thrive and develop in their early years and I recognise the importance of understanding where pupils are at the start of their school journey. Monitoring a child’s personal development is a core function of every education setting, enabling teachers to tailor their support based on how each individual is progressing. However, there are two key issues at the heart of the life chances reforms—action on work and education. Lives can be transformed through focusing on those two key drivers of poverty.

The end of key stage 4 is a vital point in a young person’s education. It represents the culmination of primary and secondary schooling and provides a consistent point at which to measure attainment across all young people. Pupils who fail to achieve at the end of key stage 4 are at higher risk of not being in employment, education or training. That is why the Secretary of State is making a commitment through the life chances measures in this Bill to report annually to Parliament on educational attainment at key stage 4.

Noble Lords will be reassured to know that the Department for Education already publishes a great deal of data on the progress of pupils—how well they are doing in the earlier stages of their career, including key stage 1 and key stage 2—and the annual reporting at different stages of primary schooling already provides significant detail on the progress and attainment of disadvantaged pupils.

The noble Baroness, Lady Manzoor, by virtue of Amendments 23 and 27 seeks to expand the annual reporting duty placed on the Secretary of State to include data on the educational attainment of children and disadvantaged children at the key stage 1 point. I recognise the importance of understanding and tracking pupils as they make their way through the key stages. It provides a basis for teachers to look at how each child is progressing. I am pleased to reassure noble Lords that the department already publishes a statistical first release each year on the assessment of key stage 1 pupils in reading, writing, maths and the results of phonics screening. That includes disadvantaged pupils.

[Baroness Manzoor]

Just on that point, I have heard this evening that various departments do their own thing, but coming new into the House I find that maybe we need a little bit more joined-up thinking. When you look at the Bill it would be nice to have something that says very clearly that key stage 1 is very important and this is what the Government are doing to track from key stage 1 to key stage 4.

[Lord Freud]

That is a good point but, in essence, if you are not achieving the target in the earlier stages, you will know you are not going to get to the right point at key stage 4, so I think in practice this is built into the process.

Amendment 28, in the name of the noble Earl, Lord Listowel, would place a statutory duty on the Secretary of State to publish and lay before Parliament a report on children in care and care leavers. As I think we indicated earlier this evening, we share the noble Earl’s commitment to improving life chances for this particular group. We publish a wealth of information on both children in care and care leavers. There are two annual statistical publications, the first of which provides data on the numbers of children in care and the numbers entering and leaving care. It also includes data on placements, children who go missing from care and outcomes for care leavers, including their economic activity. The second publication deals with educational attainment at both key stage 2 and key stage 4, so I hope that noble Lords will be reassured that we already have the comprehensive data that the noble Earl is looking for.

We are also taking action. We recognise that children in care often need special attention at school. The Government’s own measure of educational disadvantage includes children who have been in care. Children in care also attract the highest rate of funding through the pupil premium plus and, from December, will be recognised in the education performance tables. At a local level, we have given local authorities £44 million over three years to support all young people to continue living with their foster families after the age of 18, helping to provide a stable setting at the key point of transition.

In Amendment 29, the noble Earl looks to do much the same with children who are “homeless” and “at risk of homelessness” every year—in other words to create a duty to lay an annual report. The noble Earl will be pleased to know that I have been a member of the ministerial homelessness committee now for the last five and a half years, so I am absolutely informed in this area. We agree of course that care and attention are required in the case of children who are at risk in this area, and we publish relevant data. Local authorities collect and publish data on the number of households with children who are eligible as homeless and in priority need and data on the number of children in temporary accommodation, which is published on a quarterly basis. I think that the last figures came out in September. This area is a key priority. Since 2010, we have invested over £500 million to support local authorities and voluntary sector agencies to help the most vulnerable back into society.

On Amendment 30, problem debt clearly is a key factor in trapping families in poverty and adversely impacting on their living standards, mental health, family stability, financial inclusion and well-being. This is a well-chosen issue. We intend to develop a range of non-statutory indicators, which will include that one, as well as family breakdown and drug and alcohol dependency, and set these out in our life chances strategy.

[Baroness Lister of Burtersett]

I have a couple of points, the first on problem debt. Will the Government also be assessing the impact of the Bill on debt? We have had briefings from a number of organisations that give debt advice, such as StepChange, which are very concerned that the Bill, in particular the clauses we have just been debating on the end of financial support for families with three or more children, are going to increase debt significantly.

I also wondered whether the Minister could comment on another point. He has twice referred now to addiction, which the Government talk about as a sort of root cause of poverty. A couple of years ago I put down a Written Question asking what the Government’s estimate was of the proportion of children living in poverty with at least one parent addicted to either drugs or alcohol. The Minister’s answer was that the Government do not have such an assessment. Drug or alcohol use is not recorded on the survey used for UK poverty national statistics. I wonder therefore—how do the Government know that this is a root cause of poverty, when they seem to have no relevant information?

22:30

[Lord Freud]

There have been studies showing the numbers who are addicted to one or the other. I remember producing some figures on that in the debate on the last Welfare Bill. Clearly, one of the points of developing a life chances strategy is to get a better grip both of those areas and, indeed, the figures on debt. As the noble Baroness hinted, the figures are imperfect, and that is one of the reasons we want to get a better grip on it. When we look at the levels of debt, that will tell us about impacts, and we can start to analyse what those impacts are. That would of course include any government measures and the impacts would be revealed.

[Lord McKenzie of Luton]

I am still a little unclear on one fairly key point. When responding to the consultation on the measurement of poverty, the commission recommended almost a two-pronged approach. One was that there should be a multidimensional focus on the causes of poverty, but a clear focus on recording the experience of poverty and dealing with poverty here and now with an income measure. I understand what the Minister has been saying about focusing on the causes. One can see the longer-term impact of that; but what, precisely, are the Government going to do differently in respect of the here and now of people’s actual experience of poverty—people who simply do not have enough income today, and will not tomorrow or the day after, to get by and play their part in society? That is what I find to be missing, so far at least, from the Minister’s response.

[Lord Freud]

I am not sure that the Government would do much different from what they are doing. They have a safety net and there are various measures to support people. We are building at speed now the universal support system in which we are combining with local authorities to help the most vulnerable, but in a very different way from how people have been helped in the past, which was through crisis loans that they went on and on building in a random way, without anyone looking at the root causes of their problems and trying to help them out of them. This approach accords with that. Clearly, we will be spending our money on the root causes of poverty and on life chances. But there will be income measures published, because we have said that we will go on publishing the HBAI. If people want to see what is happening, that gets a lot of publicity every year. That is the change: the money that we will be spending on life chances. Those are some of the mechanisms by which we will do it. Universal support is one of the key things, but there are a lot of other things. Getting mental health right is something that has evaded Governments for a long time, and we are now spending more money on that than any Government have before.

I urge noble Lords not to press these amendments.

[Lord McKenzie of Luton]

Could we perhaps have one more brief run-through of the issue of income? The Minister says that the Government are not doing anything specific to address income poverty other than the application of their current broad benefit regime, with all the cuts that that is now having to endure. Is that it, in terms of actually tackling current poverty? How does the Minister deal with the point that pretty much every expert out there has concluded—certainly the commission has—that we need to have consistent, robust measures of poverty? What the key driver is, and all the other stuff, is subsidiary to that. There seems to be an overwhelming view coming from the experts on that. Is that not a view that the Government share?

[Lord Freud]

No. Every year I stand here because there is a forecast that says that child poverty is going up, has gone up or will go up, but when we actually see the figures we find that child poverty has actually gone down; the Government have been impressed and shocked by that. When you transform the economy, change the culture so that work is what has been driving things, and move up the employment rates and the earning rates in the way that we have, you find that the behavioural impacts are very different from the static analysis that many of the external experts tell us about.

[The Earl of Listowel]

My Lords, it is late so I will ask just two brief questions. I thank the Minister for his response. Can he give an indication of when a homelessness strategy might be produced, or is there already one that I am not aware of? He has mentioned that there are various kinds of homelessness, such as overcrowding and unfit accommodation. The one that is of most concern, though, is housing insecurity, when families just do not know where they will be from one day to the next. What is the strategy to deal with that? Is one forthcoming? How often does the interdepartmental group meet? Perhaps he might like to write to me on that last question.

I have been talking with practitioners working around the troubled families initiative, which I warmly welcome. Their work is much undermined by the fact that they build a relationship with a family, as they must and do very effectively, but then that family is moved somewhere else because the accommodation was private and temporary, and there just is not the security of tenure that there needs to be. Perhaps the Minister could help me with those questions.

[Lord Freud]

As I said, we will be putting out the life-chances strategy in time. The interministerial meets every quarter, I think.

[The Earl of Listowel]

Sorry, but I am asking about a homelessness strategy, dealing with the particular issue of housing security for families.

[Lord Freud]

Is the noble Earl talking about the interministerial meeting, which deals with those issues? Yes, I think it meets quarterly.

[The Earl of Listowel]

That is very helpful.

[Baroness Lister of Burtersett]

The Minister talked about working with local authorities on child poverty, which obviously is welcome, and I think that he said something about not wanting to do that in a random way—excuse me, it is a bit late so I cannot remember exactly what he said. If that is the case, though, why are the Government removing the duty on local authorities to develop strategies? The letter that the Minister received from the Children’s Commissioners just the other day underlined how valuable that duty has been. I know that local authorities, within the constraints that they are having to work in, have been quite imaginative in trying to think about what they can do as partners of central government in combating child poverty, so I really do not understand why that has been taken away, given what the Minister said about wanting to work with local authorities.

[Lord Freud]

It is the same answer that I have just given: we want local authorities to focus their time on action to get at the root causes, not at the symptoms.

[Baroness Lister of Burtersett]

But surely the strategy could be a strategy to get at root causes. The Child Poverty Act does not say that local authorities have a duty to deal with symptoms. It says that they have a duty to help to eliminate child poverty, and of course that is about trying to get at root causes.

[Lord Freud]

What we are doing is working with local authorities to support them in getting at the root causes. That will be our strategy.

[The Earl of Listowel]

While I am grateful to the Minister for that information about the interdepartmental group and how often it meets, I wonder if he could give an indication of whether it is looking to develop a strategy specifically for housing security for families, or whether he might be prepared to take back to that group a request from this House—at least, from myself—that such a strategy should be developed. This seems a very important area.

[Lord Freud]

I will be pleased to do that.

[Lord McKenzie of Luton]

I will follow up on the point about local authorities that my noble friend Lady Lister raised. The Minister will be aware that we are in the era of devolution deals, particularly with combined authorities—Manchester was the first, and there are others as well. As part of that process, is the department engaged in inputting into the package with a particular focus on child poverty issues?

[Lord Freud]

As noble Lords will be aware, the Government’s emphasis is to put authority into the hands of local authorities, which is what devolution is about. Therefore they cannot have devolution on the one hand and then send a whole series of specific requirements down on the other.

[Lord Ramsbotham]

My Lords, I thank all noble Lords who have contributed to this group of amendments. I also thank the Minister for his response. However, it contained one of the most disappointing sentences that I have ever heard from a Dispatch Box, when he said that he was not sure whether the Government could do more than they are doing. The Government could do a great deal more than they are doing and more than they have indicated they are willing to do tonight.

[Lord Freud]

I thank the noble Lord very much, but I do not want to let the noble Lord leave the Chamber tonight so disappointed. When I said the word “do” I meant that our approach to what we are trying to do would not change. That does not mean that we are satisfied with our level of energy and input. I want to make that clear so that the noble Lord does not think that I was making a complacent remark when I was talking about our approach.

[Lord Ramsbotham]

I am grateful to the noble Lord for that explanation. He knows perfectly well that on previous occasions he has earned the respect of the House by the way he has responded to questions and has been willing to take part. If I have another disappointment, it is that he has not responded to my suggestion that we should meet and have a discussion about all these issues. I do not feel that I have had an answer, particularly to the problem of mental health which was raised in Amendment 34.

I have always been worried about strategy as far as its production in Whitehall is concerned. I was once berated by a senior civil servant in the Home Office, who said to me, “I wish you’d stop talking about strategy. We don’t need strategy—all we need is strategic direction”. I said to her, “What do you mean?”, to which she replied, “Top down, of course”. I said, “Well, that’s where you’re absolutely up the creek. Just because somebody says something from the top does not make it a strategy”. A strategy is something which unites everyone in the delivery of something, which includes all the ministries that have been mentioned tonight. For example, when it is mentioned that the Department of Health knows about mental health or the Department for Education knows about attainment at key stages 1, 2, 3 and 4, why not get together and have an information-gathering strategy at which each of the ministries is required to produce what is required to have an overall strategy which feeds all the government departments that need to draw on that to process legislation.

I very much hope that we will be able to talk through this. I have listened to what has been said from the Floor of the House throughout today’s proceedings and there is a great deal of expertise that could help the department to produce better legislation, which is surely what we are all about. While I am happy to withdraw the amendment at this stage, I promise the Minister that we will return to it on Report and possibly at Third Reading.

Amendment 22 withdrawn.

Amendment 23 not moved.

[The Deputy Chairman of Committees (Baroness Morris of Bolton) (Con)]

Amendment 24. I call the noble Baroness, Lady Lister.

[Baroness Sherlock]

My Lords, I understood that it had been agreed between the usual channels that this was the point at which we would finish. If that has changed then perhaps somebody might have told the Chief Whip before he left.

[Lord Taylor of Holbeach (Con)]

I do apologise, but I came into the Chamber expecting that we would be going on to the next group. We have fallen short of the target today by three groups. It is up to noble Lords to decide how they deal with this Bill but I do advise that, if we adjourn the Committee at this stage, it will put us under pressure on successive days. The matter is in the hands of the Committee. If the Opposition do not wish to continue, I will note that point and adjourn the Committee.

[Baroness Sherlock]

My Lords, I think that that is deeply unfair. I am well aware of the discussions that were held in the usual channels. I am well aware that representations were made that today was likely to be tight. Things always move slowly on the first day and there were a very large number of amendments with a very large number of Peers attached to them. I think we fully expected to be at this point. I thought that we might make the next group, but since we have not, I presumed that we would go on to the next day. I am sorry to say it, but I am disappointed. I think we should stick to the agreement that has been made.

[Lord Taylor of Holbeach]

In that case, I suggest that the Committee adjourn.

House resumed.

House adjourned at 10.46 pm.