Grand Committee
Arrangement of Business
The Deputy Chairman of Committees (Baroness Fookes) (Con)
My Lords, I must remind you that, if there is a Division in the House, we will adjourn for 10 minutes. It seems highly unlikely.
Bank Recovery and Resolution and Miscellaneous Provisions (Amendment) (EU Exit) Regulations 2018
(6 years ago)
Grand CommitteeRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Bates
That the Grand Committee do consider the Capital Requirements (Amendment) (EU Exit) Regulations 2018 and the Bank Recovery and Resolution and Miscellaneous Provisions (Amendment) (EU Exit) Regulations 2018.
The Minister of State, Department for International Development (Lord Bates) (Con)
My Lords, Her Majesty’s Treasury is in the process of laying statutory instruments under the European Union (Withdrawal) Act in order to deliver a functioning legislative and regulatory regime for financial services in the event of a no-deal scenario. The two SIs being debated in this group are part of this programme and will fix deficiencies in UK law relating to the UK’s prudential regime, which ensures that financial institutions hold sufficient capital and appropriately measure and manage their risks, and also relating to the UK’s bank resolution regime, which ensures that the UK authorities have the necessary tools to manage the failure of a bank, investment firm or building society in an orderly way. The approach taken in these SIs aligns with that of other SIs being laid and debated under the withdrawal Act by maintaining existing legislation at the point of exit to provide continuity but amending it where necessary to ensure that it works effectively in a no-deal scenario.
The first statutory instrument being considered today concerns the capital requirements framework, which aims to prevent the failure of financial institutions by setting prudential rules that apply to banks, investment firms and building societies. These rules are currently set through the EU capital requirements regulation and the EU capital requirements directive. The second statutory instrument relates to the bank recovery and resolution directive, which sets out the requirements that ensure that firms’ failures can be managed in an orderly way, avoiding the need for costly public bailouts. In a no-deal scenario, the UK would be outside the European Economic Area and outside the EU financial services framework. To ensure that the legislation continues to operate effectively in the UK once the UK has left the EU, these SIs will make amendments to retained EU law in relation to the capital requirements regulation and the bank recovery and resolution directive so that the legislation will continue to function effectively in a no-deal scenario.
I note that, in line with the general approach taken to the onshoring of EU legislation, both statutory instruments will transfer a number of functions currently within the remit of EU authorities, particularly the European Banking Authority and the European Securities and Markets Authority, to relevant UK bodies. These functions, such as the development of detailed technical rules on certain provisions of the regulations, will now be carried out by appropriate UK bodies: the Financial Conduct Authority, the Prudential Regulation Authority or the Bank of England. For example, the responsibility for binding technical standards under the bank resolution and recovery regime is being transferred to the Bank of England, given that it is the UK’s resolution authority. The PRA and FCA have extensive experience in setting firm-specific rules for international firms, and are therefore the most appropriate domestic institutions to take on these functions from the European supervisory authorities. The regulators are undertaking public consultations on the changes that they propose to make to binding technical standards.
These statutory instruments further confer regulation-making powers on the Treasury to replace delegated powers that were previously conferred on the European Commission, in line with the approach taken in other Treasury legislation.
The draft capital requirements regulations 2018 make changes primarily to the retained EU capital requirements regulation but also to certain domestic secondary legislation implementing the EU capital requirements directive. First, they introduce changes to the group consolidation regime. When the UK leaves the EU, we will also leave the EU supervisory regime. This means that we will need to limit the geographical scope of the capital and liquidity consolidation rules to the UK, rather than on an EU-wide basis as currently. This will introduce a new layer of liquidity consolidation in the UK, though it will not affect the application of consolidated capital requirements, which are currently calculated at the member state level.
Secondly, the draft regulations remove preferential capital treatment currently available for exposures to certain EU institutions and assets, including sovereign debt. The EU capital requirements regulation currently applies a zero-risk weighting to certain categories of EU assets such as sovereign debt. This means that firms do not have to hold capital for their exposure to such assets and are therefore incentivised to invest in them. In line with our general cross-government approach, it is our policy not to grant the EU unilateral preferential treatment in the absence of an assessment of equivalence after exit day. We will therefore end the preferential capital treatment for EU assets currently subject to the zero-risk weighting.
Finally, the draft regulations introduce changes meaning that UK regulators will no longer have to obtain approval from EU institutions before using macroprudential tools to address systemic risks, including in a financial crisis. This is appropriate given the UK would be a third country and will need the UK regulators to be able exercise macroprudential functions effectively in times of financial stress.
I turn now to the bank recovery and resolution statutory instrument, which amends the Banking Act 2009 and related domestic and retained EU legislation by making the following principal amendments. First, the draft regulations amend the scope of the UK’s third-country resolution recognition framework to include EEA-led resolutions. This ensures that, in a no-deal scenario, the same approach will be followed for both EEA and third countries in recognising third-country resolution actions.
Secondly, this statutory instrument removes deficient references requiring UK regulators to follow the specific operational and procedural mechanisms set out in the BRRD to co-operate with the EEA authorities. The removal of these references will not, however, prevent UK regulators from co-operating with their EEA counterparts after exit. UK regulators will remain able to share information with EEA authorities in the same way as they currently do with authorities in third countries such as the United States. Additionally, the UK will continue to participate in international crisis management groups which enhance co-operation between home and host authorities of systemically important banks.
Finally, the draft regulations address deficient cross-references to the BRRD in UK legislation and ensure that delegated regulations retained by the European Union (Withdrawal) Act continue to be in a workable form following exit.
To summarise, the Government believe that these statutory instruments are needed to ensure that the regulatory regime applying to banks, building societies and investment firms works effectively if the UK leaves the EU without a deal or an implementation period. I commend the regulations to the Committee.
The Deputy Chairman of Committees (Baroness Fookes) (Con)
My Lords, before the debate begins, it may be helpful if I explain that the rather quaint little hats sitting on the ends of some of the microphones are an indication that they are not working.
Baroness Drake (Lab)
Thank you. On the assumption that I do not have a little hat on my microphone, I should say that when I read through these two sets of draft regulations and their Explanatory Memoranda, they were a depressing reminder of the consequences of leaving the EU with no Brexit deal in place.
The regulations allow the Treasury and relevant regulators to take steps to ensure that, in the event of no deal, the UK has a functioning financial services regulatory regime, can protect consumers and ensure financial stability. At the heart of that stability are the prudential standards developed in the aftermath of the 2008 financial crisis, measuring and mitigating risk through maintaining adequate capital reserves and establishing an effective recovery and resolution framework. No one who can recall the vivid fear of a financial meltdown in 2008 can fail to understand the importance of a robust system of prudential regulation. The capital adequacy and resolution regime for banks and other financial institutions was the subject of considerable debate and scrutiny post 2008.
These SIs make amendments to certain aspects of the capital requirements regulation, to ensure that it continues to operate effectively after Brexit day, and to certain other statutory instruments that implement the capital requirements directive. Key changes for when the UK leaves the EU include: amending the geographical scope of supervisory consolidation of capital and liquidity reporting processes to restrict it to the UK; transferring functions from the European supervisory authorities to the UK regulators; transferring responsibility for all binding technical standards from those European authorities to the UK regulators; and macroprudential measures that ensure that the tools available to national regulators in the event of systemic risk, for example an asset bubble, remain available to the UK regulators.
The draft SI which addresses the onshoring of the bank recovery and resolution framework post Brexit aims to ensure that the UK special resolution regime is,
“legally and practically workable on a standalone basis”,
when the UK leaves the EU. The draft regulations also make further provisions on contractual recognition of bail-in, with new Bank of England powers to make technical standards on requirements for recognition. The Bank of England, the Prudential Regulation Authority and the FCA are expected to consult on changes to their rules affected by these regulations, and the special resolution regime code of practice will be updated. These are matters of significance that will have to be addressed with urgency.
Obviously, if the UK were to crash out of the EU with no deal, I would certainly want the Treasury and regulators to take action to protect the UK’s financial stability. Any Government faced with a no-deal exit will have to firefight and move quickly to protect the national interest. Those would be exceptional times. However, it is 12 December 2018, and we are due to leave on 29 March 2019. Ignoring Christmas, that gives us about 12 weeks to introduce measures to ensure continuing confidence in the UK financial services regulatory regime. Delivering such a challenge in such a tight timetable requires a great deal of assurance.
I therefore want to ask the Minister four questions. Will the Treasury, the PRA and the FCA have sufficient staffing resources with the necessary level of skill and expertise to deliver what is needed by 29 March? The Bank of England, the FCA and the PRA will update their rules and relevant binding technical standards to mirror the changes introduced by these SIs and consult on their proposed changes. Is there sufficient time to identify and make all the necessary changes required by 29 March, as well as fit in the promised consultation? What happens if there is not sufficient time? Finally, under these regulations, to what extent will the PRA and the FCA have the authority to weaken the binding technical standards currently required to be met by firms to a standard below those currently applied?
Baroness Bowles of Berkhamsted (LD)
My Lords, probably few if any other people would stand up and say that CRD IV is their favourite piece of legislation, but for a variety of reasons it is my favourite. I do not mean to alarm the Minister or his officials by that, because we seem to have stuck within the rules of onshoring and the transfer of powers in the way with which we are now familiar. However, inevitably that process opens the door to future changes without it having to return to Parliament, as is the case in the EU, because a lot can be done via the interpretation of binding technical standards—if not immediately then at the next stage. It is not entirely clear from the explanation and from what is set out in the Explanatory Memorandum whether the binding technical standards will essentially just replicate what we have at the moment or whether they will make additional policy changes; that is, is it going to stay entirely within the “no policy change” of the withdrawal Act, or will changes be made simultaneously or subsequently?
For now, I want to concentrate on two points of personal interest. The first is the change to what counts as zero-risk weighted sovereign debt. This has long been a pet subject of mine and now it has become mainstream—in particular, that zero-risk weighting is actually inappropriate for eurozone sovereign debt because the European Central Bank cannot print money, although it has done a pretty good approximation of that in recent years. It would be interesting to explore a little more the effect of moving the zero-risk weighting from non-UK sovereign debt, given that sovereign debt is the main tier 1 liquid asset for banks. Will that mean that there is an incentive to reduce diversification in liquid assets?
More generally, how are banks currently dealing with sovereign debt in their risk calculations? The international banks most likely to have other EU sovereign debt can, and probably should, be using internal models to calculate risk rather than rely on the standard model and therefore the zero-risk weight. However, when I looked at this a while ago, the risk allocated in that way seemed to be pretty minimal, and I wonder whether that is still the case. Will minimal risk in the internal models be affected once the near-zero justification has gone? Also in the past some large banks have availed themselves of permanent partial use as a standard model under Articles 149 and 150 of the CRR, the reasoning being that it would otherwise be rather complicated due to holding a lot of different sovereign assets. Of course, Articles 149 and 150 will now apply only to UK sovereign debt, so what will happen there? Can the Minister also advise whether any UK banks are still using Article 150?
The second point I want to raise out of interest is the country-by-country reporting which comes from Article 89 of the directive and has the distinction of being enshrined in the EU withdrawal agreement as part of the BEPS commitments. The particular matter I want to highlight is that the onshoring has replaced the reference to the EU directive 2006/43/EC on statutory audits and annual accounts with the words:
“International Standards on Auditing (United Kingdom and Ireland) issued by the Financial Reporting Council Limited or a predecessor body”.
Frankly, I wish that it had not done that. At present, we have both the Kingman inquiry into the future of the FRC and the Competition and Markets Authority inquiry into audit, which encompasses the FRC and standards matters. I would expect a certain amount of criticism of the way in which the standards as applied in the UK under the FRC have not measured up to the company law of either the UK or the EU. So is that a future-proof amendment, given that the inquiry reports possibly as soon as next week?
On bank recovery and resolution, I am very happy to see the FSB key attributes referenced as a default. I spent quite a lot of time in Brussels having to wave those around during negotiations when things were going in slightly the wrong direction from time to time. As a practical matter, does the Minister consider that there is a substantial difference caused by being in only the international crisis management groups of a bank rather than in the full EU resolution procedures? I repeat my references to what the BTS are going to be doing, given the reference in paragraphs 7.19 and 7.20 in the Explanatory Memorandum. Does that suggest two lots of consultation, or is it just the same lot?
Lord Tunnicliffe (Lab)
My Lords, I thank the Minister for presenting these two instruments. I cannot but agree with the early paragraphs of the Explanatory Memorandum—which is the same in all these Explanatory Memorandums—that, essentially, if these instruments end up being used, it will be in a no-deal scenario, which would be disastrous for the United Kingdom.
Having had an original career in aviation, I intellectually accept that it is right and proper to prepare for all credible scenarios. That is what we are doing today, and we will do it in the usual polite way about another 40 times between now and the end of March. But, today of all days, one has a feeling that the no-deal scenario has crept a little closer, and I have almost a sense of being asked to dig my own grave against the possibility that extreme Brexiteers will win the day and we will end up in a no-deal situation.
The European Union (Withdrawal) Act highly limits what we are doing here, and I hope that the constraints of that Act are being fully respected. We are not here, frankly, to debate the merits of the instrument; we are here to debate whether it stops within the agreed constraints, which are rehearsed in many places. Perhaps the strongest sentence is in paragraph 7.4 of the Explanatory Memorandum, which states:
“These SIs are not intended to make policy changes, other than to reflect the UK’s new position outside the EU, and to smooth the transition to this situation”.
The process called for by the Act, in a sense, divides into two. The first part of the process, which is true of all the things we discuss today, is to reassign responsibilities—in other words to recognise that appropriate authorities are necessary for the business of the various Acts to work and they have to be moved from EU institutions into UK institutions. The second is to make policy changes within the strict limitations of the sentence that I just read out.
Discharging our narrow duty to ensure that the Government have stuck to the rules is very difficult to achieve. In theory, we could go through each SI, line by line, regulation by regulation and Act by Act to see if that is possible. I recognise that the wisdom of the noble Baroness allows her at least in part to do that, but I am afraid that with our available resources that is not possible. A poor second to that is to skim the document and look at its structure and the language that it uses.
Let me take the bank recovery and resolution SI first. It looks as though the reassignment of responsibility has been discharged because, in page after page, one finds that it takes a responsibility from an EU institution and moves it to a UK institution. However, the area that I am particularly concerned about is where the instrument uses entirely new language, because it seems to me that, where there is entirely new language, I have no way of knowing whether policy variations have accidentally arisen. Therefore, I am very surprised to see areas of entirely new language, because I would have assumed that the object of the exercise is to take rules presently in place and translate them into English law.
The most dramatic example of that is on pages 41 and 42 of the bank recovery and resolution SI, where there are two pages of fresh language that talk about the recovery plan that institutions must put in place. Now, I assume that the requirements for that plan are already effectively enacted at this time. Why, then, is it not written over—or whatever the right term is—or why is it not referenced back into the law as it exists today, so that we can see that there is no change in policy? I ask that question to see whether there is any new thinking buried in the text, and I would value an assurance from the Minister that there is good reason why those parts of the instrument are written in fresh language, as opposed to being cross-referenced to language that already exists.
In the second SI, on capital requirements, there is a clear policy change, which is there because the situation demands it. The change, as has already been spoken about, is the recognition of EEA countries as not being of zero risk and hence requiring a capital buffer. In a no-deal scenario, after 29 March such sovereign debt will have to be assigned a risk factor. Surely this will put UK banks at a commercial disadvantage. It is no good to give as an excuse, as is done in the impact assessment—and it was great to see an impact assessment, by the way, so I must put that on record—that most institutions will use the “internal ratings based” approach. While assigning risk to EEA loans is not mandatory with the IRB banks, if they do not take account of the fact that, for other purposes, such assets will be recognised as having some degree of risk, one would hope that this would be challenged by the regulators. Does the Minister agree with that analysis? Why did the impact assessment not look at some way of maintaining the status quo? For instance, it might have contained a statement that the sovereign debt of EEA countries would be treated as zero risk, or it could have included an order-making power for the Treasury to define individual countries as having zero risk.
Lord Bates
I thank noble Lords for bringing their considerable expertise to bear on the important regulations before us. I will address some of the points raised.
First, the noble Baroness, Lady Drake, asked whether there is sufficient time for the regulators to put the consultation in place. I am confident that regulators are making adequate preparations and effectively allocating resources ahead of March 2019. They have been actively participating in a wide range of groups developing these technical and regulatory rules. They have also chaired a number of committees and task forces, and have considerable experience in implementing EU legislation. This means that the responsibilities of EU bodies can be reassigned effectively and efficiently, providing firms, funds and their customers with confidence. Since October, regulators have begun consulting, and I am confident that they will complete their consultations ahead of exit day. The noble Baroness also asked whether the regulators have adequate resourcing for a no-deal scenario. I repeat my confidence that the regulators are making adequate preparations and have the resources and expertise to ensure that this happens.
The noble Baroness, Lady Drake, also asked whether the capital requirements regulation statutory instrument will decrease the level of accountability for the Prudential Regulation Authority or the Financial Conduct Authority. Although certain functions, such as the mandate to develop binding technical standards, are being transferred to the regulators from EU authorities, such functions are currently carried out not by the Commission or the UK Government but by agencies with specific expertise in setting and calibrating firm-specific macroprudential rules. The Treasury will work closely with regulators in the development of binding technical standards; those standards will also be subject to consultation, ensuring that key stakeholders’ views are taken into account. Regulators will not be able to make significant policy changes.
The noble Baroness, Lady Bowles, asked whether there is a substantial difference in being in only the crisis management groups. Nothing in the SI will change the UK’s ability to co-operate with third countries on planning for executing the resolution of cross-border banks. The majority of the work takes place in international crisis management groups designed to facilitate international co-operation through bodies such as the G20. Of course, we are a key part of the financial stability group’s work on key priorities. There is an existing robust framework in UK law for resolution co-operation with third countries, such as the United States.
The noble Baroness, Lady Bowles, spoke a great deal about the loss of zero-risk weighting on EU debt calculation. It could seem as if that were a new policy. When we leave the EU, the EU will treat us as a third country, without any special arrangements to treat the UK differently. The UK Government have said that we will also treat the EU as a third country; we are therefore being consistent with other SIs that have been passed through your Lordships’ House. Since sovereign debt already attracts a very low risk weight, the change in capital requirements should not be significant. None the less, we have discussed the risks associated with the loss of zero-risk weighting on EU sovereign debt for the industry, and we understand that the issue will affect only a small number of firms. The exact impact cannot be estimated because firms will change their capital holdings and restructure.
We are also developing broad transitional powers for the regulators that will allow them to phase in new requirements gradually. The regulators are already consulting on a proposal to delay all changes to risk weights. This would eliminate any cliff-edge risks and give firms additional time to prepare for these changes.
The noble Baroness, Lady Bowles, asked about the reference to a predecessor body in the statutory instrument. This was inserted to ensure that we have a consistent approach across every file being onshored. The wording is drawn from existing UK statutes, such as the Payment Services Regulations 2012.
The noble Lord, Lord Tunnicliffe, asked whether the SIs make policy changes. As I said in response to the noble Baroness, Lady Drake, they are not intended to make policy changes other than to reflect the UK’s new position outside the European Union if we leave in March 2019 in a no-deal scenario.
The noble Lord also asked whether UK firms would be disadvantaged by the changes in risk weights. I made detailed reference to that in my previous answer to the noble Baroness, Lady Bowles, but since sovereign debt already attracts a very low risk weight, the change in capital requirements should not be significant. As I mentioned, regulators are consulting on a proposal to delay all changes to risk weights, which would eliminate a potential cliff edge.
The noble Lord then drew the Committee’s attention to page 41 of the BRR SI and asked whether the relevant section existed beforehand and, if so, why it was not cross-referenced. The insertion of Schedule A1, on page 41 of the SI, addresses deficiencies stemming from the UK’s departure from the EU and does not bring about any policy changes. In particular, it corrects a reference in the Bank Recovery and Resolution Order 2014 to the requirements of the directive with regard to resolution plans. This will not be appropriate after exit day as the directive will not have the force of law in the UK. To ensure that such information can still be referenced, we are bringing this content into UK law. The schedule uses text from the relevant sections of the directive but with some minor additional fixes, as is allowed under the EU withdrawal Act, to take account of the UK’s exit from the EU. For example, references to “central banks” will be replaced by references to the UK’s central bank, the Bank of England.
I will of course review the official record of our debate today to see whether there are any questions which I have not answered. I thank noble Lords again for their contributions.
Payment Accounts (Amendment) (EU Exit) Regulations 2018
(6 years ago)
Grand CommitteeRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Bates
That the Grand Committee do consider the Payment Accounts (Amendment) (EU Exit) Regulations 2018.
Relevant document: 6th Report from the Secondary Legislation Scrutiny Committee (Sub-Committee A)
The Minister of State, Department for International Development (Lord Bates) (Con)
My Lords, as in the previous debate, this statutory instrument is part of the Treasury’s legislative programme which aims to ensure that there continues to be a functioning UK legislative and regulatory regime for financial services in the unlikely event that the UK leaves with neither a deal nor an implementation period.
The statutory instrument will fix deficiencies in UK law in the Payment Accounts Regulations to ensure that they continue to operate effectively post exit. The payment accounts directive had three main objectives: first, to improve the transparency and comparability of fees related to payment accounts; secondly, to facilitate the switching of those accounts; and, thirdly, to ensure access to payment accounts with basic features. The Payment Accounts Regulations 2015 transposed the directive into UK law.
Many noble Lords will be familiar with payment accounts, as they are the day-to-day bank or building society accounts that we use to hold funds, to make and receive payments, and to withdraw and deposit cash. In the UK, the most common form of payment account is a current account.
In a no-deal scenario, the UK would be outside the European Economic Area and the EU’s legal, supervisory and financial regulatory framework. The Payment Accounts Regulations 2015 therefore need to be updated to reflect this to ensure that the provisions work appropriately in a no-deal scenario.
The draft regulations are concerned mostly with removing references to the EU. Therefore, the impact on customers and businesses will be minimal. However, I will go into more detail on three changes to which it may be helpful to draw the Committee’s attention.
The first is that this draft instrument transfers the responsibility for making technical standards for customer documents setting out fees and charges associated with a payment account from the European Banking Association to the Financial Conduct Authority.
Secondly, the draft instrument removes the requirement for payment service providers to facilitate the cross-border opening of payment accounts. This means that payment service providers will no longer be required to provide certain information relating to a customer’s payment account—for example, direct debits or closing balance—or transfer a balance to an EU payment service provider when the customer wants to switch from a UK payment account to an EU payment account. Repealing this provision does not affect the ability of UK customers to open payment accounts abroad.
Lastly, the SI makes changes to the regulations governing payment accounts with basic features, which are more commonly known as basic bank accounts in the UK. For those who may not be familiar with this financial inclusion product, a basic bank account is a fee-free bank account, with no overdraft facility but which otherwise has the same features as a standard current account. The nine largest current account providers in the UK must offer these accounts to those who are unbanked in the UK or who are ineligible for a standard current account.
As the UK will no longer be a member of the EU’s single market for financial services after exit day, the instrument removes the requirement on the nine providers to offer these products to customers resident in the EU or to offer EU currency services on any basic bank account as standard. It will therefore be at their discretion whether to continue to offer basic bank accounts to customers resident in the EU after exit day or keep existing accounts of EU residents open.
The Secondary Legislation Scrutiny Committee was concerned that, should the nine providers choose to make use of these changes and close the basic bank accounts of customers resident in the EU, customers would be placed into financial difficulty as a result. I assure the Committee that this is unlikely to be the case because the nine providers must give customers at least two months’ notice in writing if they plan to close the account, which should give customers adequate notice to open another account.
Furthermore, a customer’s right to a basic bank account is EU-wide, so these customers should be able to open a basic bank account in the member state in which they reside. The nine providers have also signed a 2014 agreement with the Treasury that makes clear that basic bank accounts are designed to help the less affluent and most vulnerable in our society. The Government therefore expect that providers will have due regard to the spirit of this agreement when making any changes to its basic bank account policy.
In summary, this Government believe that the proposed legislation is necessary to ensure that the Payment Accounts Regulations 2015 will continue to function appropriately if the UK leaves the EU without a deal or an implementation period. Most importantly, this means that fee-free basic bank accounts, which are a key financial inclusion product, remain available and robustly regulated to customers legally resident in the UK who are unbanked or ineligible for other payment accounts. I hope this introduction will have been helpful to noble Lords, and I commend the regulations to the House.
Baroness Drake (Lab)
My Lords, this SI is part of the series providing contingency planning for the no-deal Brexit scenario. The Payment Accounts Regulations 2015 established a right of access to a basic bank account with basic features for customers legally resident in the EU, which were fee-free for services in sterling, with EU currency services provided at a reasonable fee. The Explanatory Memorandum advises that this SI seeks to ensure that those regulations operate effectively in the UK in the event of no deal and continue to deliver the existing three main objectives of, first, transparency and comparability of fees on day-to-day payment transactions such as cash deposits, withdrawal and card payments; secondly, the facilitation of account-switching; and, thirdly, ensuring access to accounts with basic features for EU residents. Paragraphs 2.2 and 2.12 of the Explanatory Memorandum set out what I have just described.
Baroness Bowles of Berkhamsted (LD)
I thank the noble Lord, Lord Bates, for his introduction and the noble Baroness, Lady Drake, for drawing attention to the report of the Secondary Legislation Scrutiny Committee’s Sub-Committee A, on which I sit, so I do not have to do it. With the state of my voice, that is welcome.
The issue of note here is that an obligation to service non-UK residents is removed. Many of these will probably be UK nationals and will probably come to the UK sometimes, even though they are resident elsewhere. I am sure that this will be an inconvenience and that is greatly regretted. In the interests of saying that this is not being reciprocated, there has been a lack of generosity of spirit in this statutory instrument. Can the Minister confirm whether there would be any supervisory pressure, under “know your client” provisions, for these accounts to be closed? Will supervisors make it more awkward and put pressure on the banks so that closure is de facto the most likely event?
I also remind the Committee that one of the purposes of this legislation was to ensure that basic bank accounts could be opened in advance for people who were moving around for the purposes of work. Otherwise, you get into a Catch-22 situation where you cannot get a permanent place of residence until you have a bank account and you cannot get a bank account until you have a permanent place of residence. While I was an MEP, I got this in my postbag. Indeed, one of my own children had this problem. We were constantly having to intervene to get these things sorted. If we want to encourage talent and still allow it to come to the UK, why make it awkward? I am sure that those who come for big and well-paid jobs may find that they can open accounts, but what about the more ordinary person? I think that, actually, this is a very bad measure.
Lord Tunnicliffe (Lab)
My Lords, I thank the Minister for presenting this instrument. When I first read the Explanatory Memorandum, I thought it was good and it convinced me that, broadly speaking, the instrument was doing its job. Then my noble friend Lady Drake decided to share her speech with me and I realised that perhaps I had not fully understood it, but by this point in the proceedings, the Minister had enough questions to answer anyway without me inventing any more.
The point that has come out of the last two speeches is important. The Government often conclude that an impact is minimal because it affects quite a small number of people. The problem with that attitude is that for the people it affects, it affects them 100%. If you cannot get a basic bank account, that is pretty close to catastrophic in the modern world, so I hope that the Minister will have good answers to my noble friend’s points.
My question is one that runs through many of these SIs—the lack of formal consultation. The consultation paragraph states that there has been discussion with “relevant stakeholders”. One has an uncomfortable feeling that the relevant stakeholders are in fact the financial institutions themselves and not the key relevant stakeholders—the consumers. I would be grateful if the Minister could tell us who the relevant stakeholders were and whether they included consumer representatives, and, if not, why not?
Lord Bates
I thank noble Lords for their contributions. They rightly focused on basic bank accounts and the impact on people who are potentially vulnerable. I will try to offer some reassurance.
The noble Lord, Lord Tunnicliffe, and the noble Baroness, Lady Drake, asked about the consultation. The Treasury engaged with UK Finance, the Financial Conduct Authority and the Payment Systems Regulator to ensure awareness of these changes. The Treasury published the draft instrument and Explanatory Note on 31 October. We also notified leading consumer groups after the publication of the draft instrument to ensure awareness of these changes. We have not received any questions since publication. That may well change as a result of noble Lords’ comments today.
The noble Baronesses, Lady Drake and Lady Bowles, asked how many consumers and basic bank accounts will be affected by the changes. Customers legally resident in the UK, whether UK citizens or otherwise, who hold a basic bank account at one of the nine designated providers will not be affected, as the SI ensures that the nine providers must continue to offer these to qualifying customers.
The noble Baroness, Lady Drake, asked specifically about the impact of the SI on consumers. The impact on the majority of holders of payment accounts in the UK will be minimal. Basic bank account customers may experience a reduction in service as their providers are no longer required to give them access to, for instance, non-sterling EU transactions, although they may still choose to do so if they wish. It will be at the discretion of the providers whether they continue to offer new basic bank accounts or keep existing ones open for customers resident in the EU. We expect that that will affect very few. I accept the point made by the noble Lord, Lord Tunnicliffe, and the noble Baroness, Lady Drake, that it may have an impact on those people and I will try to give some reassurance in that respect.
The noble Baroness, Lady Drake, asked why it was necessary for the SI to remove the EU residency requirement. Maintaining that obligation on the nine basic bank account providers would be inappropriate in a no-deal scenario when the UK will no longer be part of the EU single market for financial services. She also asked what happened to UK expats who live in the EU and whether they could open new basic bank accounts. Eligibility for basic bank accounts is dependent on residency, not citizenship, so that would be a matter for the member state and the laws that apply there.
The noble Baroness, Lady Drake, requested an assurance that residents will not be in financial difficulty. The spirit of the 2014 agreement, to which I referred in the previous debate, is to provide for the most vulnerable in society. The Government expect banks to honour that agreement in making any changes. The noble Baroness also asked whether the statutory instrument prevents the cross-border opening of accounts. The changes in this statutory instrument only remove the requirement for firms to provide certain support to customers who wish to switch their payment account from the UK to the EU. They do not affect a UK customer opening an account in the EU.
Humane Trapping Standards Regulations 2019
Baroness Vere of Norbiton
That the Grand Committee do consider the Humane Trapping Standards Regulations 2019.
Baroness Vere of Norbiton (Con)
My Lords, the regulations amend the Wildlife and Countryside Act 1981 to implement trap welfare requirements contained in the Agreement on International Humane Trapping Standards—AIHTS—in Great Britain. The EU is a party to the agreement, but there is no implementing legislation at the EU level. Under EU law, the UK is therefore obliged to implement the welfare standards directly.
Council Regulation (EEC) No. 3254/91, commonly known as the Leghold Trap Regulation, prohibits the introduction into the EU of wild-sourced pelts and manufactured goods incorporating such pelts originating in countries that catch animals using leghold traps or trapping methods that do not meet international humane trapping standards. In 1997, the EU concluded two international agreements—the agreement with Canada and Russia and an agreed minute with the USA—to establish humane trapping standards and facilitate trade between the parties in wild-sourced pelts and manufactured goods incorporating such pelts.
The agreement requires that: the UK establish appropriate processes for testing and certifying traps in accordance with the humaneness standards and procedures set out in the agreement; manufacturers identify certified traps and provide instructions for their appropriate setting, safe operation and maintenance; and trappers be trained in the humane, safe and effective use of trapping methods. In the UK, the trapping standards apply to five species: badger, beaver, stoat, pine marten and otter. Of these, only the stoat is regularly and widely trapped in the UK; it is also the only species for which lethal traps are commonly used.
A UK-wide consultation on implementation of the agreement took place in March and April 2018. While stakeholders were broadly supportive of welfare improvements, most trap users opposed the implementation of the agreement because they believed that there would not be sufficient numbers of compliant stoat traps available in time. In response to these concerns, the Government agreed to delay implementation specifically in relation to stoats for a further year, until 1 April 2020. This is a pragmatic step that provides a clear signal to manufacturers and trap users that they must transition to compliant traps for stoats, while recognising that they will need time to do so.
Implementation will impact primarily on those who sell, manufacture, import or use stoat traps in the UK, as most stoat traps will need replacing. The total cost on business is calculated to be £1.2 million. We have existing legal mechanisms in place for regulating the use of traps. The agreement simply improves the standards with which traps must comply before they can be used, and extends the scope of existing trap offences to two additional species; namely, stoats and beavers.
Implementation does not require the introduction of new offences or penalties, and the existing licensing mechanism would allow compliant traps to be used. Licences are already required to trap all UK species covered by the agreement, except for stoats and beavers, and we propose that the trapping of stoats using compliant traps should be permitted under a general licence. This will result in negligible costs to the licensing authority and will provide the least burdensome approach for trappers.
The Government are committed to the highest standards of animal welfare. As the Prime Minister has set out, we will make the United Kingdom a world leader in the care and protection of animals as we leave the EU. This agreement contains minimum trap humaneness standards and rigorous trap-testing procedures, creating an internationally recognised benchmark for trap welfare. It is important that we implement these standards in Great Britain. I beg to move.
Baroness Bakewell of Hardington Mandeville (LD)
My Lords, I am grateful to the Minister for introducing this statutory instrument so comprehensively, and for her time in providing a briefing. I note that the only animals covered by this SI are stoats and that badgers, beavers, pine martens and otters are excluded.
It is reassuring that in Part 3 of the SI, under the amendment of the Pests Act 1954, leghold traps are not permitted and have been banned for some considerable time, as the Minister said. The EU prohibits the use of leghold traps and bans the introduction into the EU of pelts from countries which catch animals by means of leghold traps or trapping methods which do not meet international human—humane, sorry—trapping standards. It is essential that these standards are maintained in the UK once we have left the EU. I am encouraged that the Government consider that reliance on the spring trap approval system for the purposes of implementing Article 2 should be made more transparent, and that to improve clarity, the regulations amend Section 8 of the Pests Act 1954 and Section 50 of the Agriculture (Scotland) Act 1948 to make it clear that the Secretary of State and the devolved Minister would not approve or authorise the use of a leghold trap.
However, paragraph 6.7 of the Explanatory Notes indicates:
“In exceptional circumstances, the use of non-AIHTS compliant traps is possible under Article 10 of the Agreement … on a case by case basis”.
This case-by-case basis is allowed by means of a licence. As the Minister said, the agreement covers the EU, Canada and the Russian Federation, and a total of 19 species, only five of which occur in the wild in the UK.
Existing stoat traps do not meet the AIHTS and the Government are proposing that they will not implement the more humane traps until April 2020. This is too far away; the regulations could be implemented much sooner. Consultation has been ongoing for some considerable time, starting with several years of informal consultation with key users, followed by, as the Minister said, a UK-wide six-week public consultation, which ended on 30 April this year.
As has been said, stakeholders were broadly supportive of welfare improvements but opposed the agreement because gamekeepers and trappers did not believe that the compliant traps would be sufficiently available in time. There was also general disagreement with welfare groups over the perception that the agreement facilitated the wider use of traps and the international trade in fur.
Had the Government begun the implementation as soon as the consultation in April this year closed, with a view to starting in January 2019, there would have been time for the industry to ensure that it had a sufficient supply of compliant traps for gamekeepers and trappers. It is simply not acceptable to allow non-compliant traps to be used for a further 15 months, causing unnecessary suffering to stoats. I am not in any way defending the stoat, which is a pest and eats both eggs and young birds that have been bred for shooting, but it is important that they are dispatched in a way that causes minimum suffering. While there is a cost to gamekeepers of changing their traps to comply with the legislation, it should be borne by those engaged in the shoots.
Paragraph 14.1 of the Explanatory Notes indicates that monitoring and compliance will be done by the police and the Crown Prosecution Service. I fear this is extremely unlikely. Police budgets, much like those of local government, have been systematically slashed over several years to the point where the police prioritise crimes against the person and property. It is simply not feasible to expect our overstretched police forces to monitor and ensure gamekeepers’ compliance with the legislation.
Defra has indicated that a list of traps certified as meeting the new standards will be publicly available on GOV.UK. When is this likely to happen? Given that monitoring of the new agreement is likely to be minimal at best, the sooner the standards are publicly available, the sooner gamekeepers and trappers can begin the process of changing over.
There is no mention in the Explanatory Memorandum of who the licensing authority will be, which it states will incur negligible costs. Who issues such licences? Do they cover a specified area of land? Are they limited to a certain number of stoats or are they unlimited?
I also note that new Section 16 (3ZD)(e) of the Act indicates that an authority in another country or territory designated for the purposes of the international trapping standards agreement could be a certifying authority. Can the Minister throw some light on exactly what this means? I look forward to her response to my questions.
Baroness Jones of Whitchurch (Lab)
My Lords, I thank the Minister for her explanation. Of course, anything which improves animal welfare and protects animals from inhumane and cruel trapping is to be welcomed. However, I have some concerns about the Government’s implementation of the EU agreement on human—humane—trapping standards. When I first read the SI, I thought that it said “human trapping standards”, which I thought was the badgers’ revenge, but that is beside the point. There are some points of detail that I would like clarified.
First, all EU member states were obliged to implement the requirements of the AIHTS. The deadline for implementation was 22 July 2016. Can the Minister explain why the UK missed that original deadline? She will be aware that, a month before that deadline passed, the people of the United Kingdom voted to leave the EU. However, until exit negotiations are concluded, the UK will remain a full member of the EU and all the rights and obligations of EU membership remain in force. Why are the Government only now implementing the regulations, over two years after the deadline and just months before the UK’s departure from the EU?
Secondly, the Minister will be aware that many animal welfare organisations opposed the implementation of the agreement because they thought it would facilitate the wider use of traps and the international trade in fur. What steps are being taken to ensure that all fur imported from other countries in the EU—as well as Canada, Russia and the USA, which signed up to the new agreement—will meet these supposedly more humane trapping standards to which they have signed up? Have all the other EU countries bound by this agreement introduced the ban into their domestic legislation? If any have not done so, should we be refusing to allow fur imports from those countries?
Baroness Vere of Norbiton
My Lords, I thank the noble Baronesses, Lady Bakewell and Lady Jones, for their contributions. It was my pleasure to meet both of them beforehand so I had some sight of some of the questions that would arise, but not all of them. I can cover some of the issues now, but I know that I will have to write on at least one of them. I will probably write to both noble Baronesses but I am afraid that particularly the last point made by the noble Baroness, Lady Bakewell, went over my head.
The species included in the standards are the ones most commonly trapped for their pelts. There are numerous regulations around trapping and snaring and so forth, but we are focused solely today on those species that are predominantly trapped for their pelts, which is why this agreement was reached in the first place. That is where the 19 species come from. Foxes are not included because they are not commonly trapped for their pelts. Foxes are usually controlled for other reasons, such as pest control. Only a small number of those 19 species exist in this country, which is why the regulations we are talking about today cover those species.
I was asked about the two different types of badger, which may have to go into my letter. Actually, I have a response. The European badger is the same as the UK badger. They are protected. It is very rare that a licence would be granted for those badgers.
The noble Baroness, Lady Bakewell, mentioned leghold traps. They are banned—they have been banned since 1950—so we will obviously make sure that we do not have those sorts of traps in this country.
The non-compliant element—Article 10 of the agreement—is an issue that both noble Baronesses raised and deserves more focus. In exceptional circumstances the use of non-AIHTS-compliant traps is possible. It permits derogations to be granted only on a case-by-case basis. We do not expect that to happen often, and only if they are not applied in a manner that would undermine the objectives of the agreement. Indeed, if we were to agree a derogation, we would have to notify the agreement’s joint management committee, so it is quite a serious issue. An example of where we might grant a derogation would be where no certified live-capture trap design was available and one needed to be tested, or someone wanted a trap design to be considered for certification for a particular species.
Related to that, the noble Baronesses mentioned home-made traps. Again, that is not something that we expect will be particularly common, but it might occur. However, those home-made traps will have to meet the same standards as other traps. They will need to be certified by the relevant competent authority.
I will partly take the point about timing on the chin. There has been a delay in implementing this. When these standards first came into play, it was not clear whether or not the EU would make legislation around this area. When we realised that the EU was not going to do that, a number of legislative options were available to us, and we considered them all. Then there were various breaks in Parliament, as noble Lords will know. Also, within that time there has been research into compliant stoat traps and an evaluation of how the stoat is finally dispatched. We certainly wanted to examine all the research and evidence. We needed to speak to the stakeholders, but it is not our intention to overregulate the countryside and to force people into changes that they simply cannot make because the traps are not available. Therefore, we felt that the year’s grace was appropriate.
The spring trap regulations come into force in January so obviously they will be available. We aim to get a list of the traps, which will be updated as new traps are certified, on to the GOV.UK website as soon as possible thereafter.
On the licensing authority, there are two types of licences for trapping. The general licence is for people involved in low-risk activities such as conservation and the welfare of protected species. Those people need nothing more than a general licence, but if they have that licence obviously they must meet the conditions and comply with the terms of the relevant licence and therefore the law. The class licence is for activities that require a specific skill or experience to avoid any risk to the environment or the welfare of the protected species. A number of concerns were raised today around that area.
Again, you do not have to apply for a class licence. However, to act under the authority of a class licence, you must first register with the licensing authority to show that you have the required skill. Of course, that can be enforced—people can check that you have the required skill to operate a class licence. In England, the licensing authority is Natural England; in Scotland, it is Scottish Natural Heritage; and in Wales, it is Natural Resources Wales. They already issue these licences in other regards and we do not expect there to be a significant increase when it comes to extending these to stoats.
Moving on to fur, this SI is not about all fur; it is about trapped fur. The regulations within the EU extend to all different types of imported fur. It is expected that importers comply with those regulations but that is beyond the regulations we are talking about today. The noble Baroness also mentioned fur farms, which we have banned in this country. Certainly, as we leave the EU, an opportunity will arise for us to consider any further action that we may wish to take. Obviously, I would not dream of making a commitment at the Dispatch Box today.
Baroness Jones of Whitchurch
I asked whether all the other countries in the EU have implemented this domestic legislation, as obviously that will affect whether we accept imports from them.
Baroness Vere of Norbiton
Yes, I believe they have, as have Canada, Russia and the US. I think we are slightly behind the curve on this one.
I would like to cover the issue raised by the noble Baroness about how stoats die. I knew that she was going to bring that up so I had a little look. These traps are more humane because the time to death is shorter and the force of the death action is stronger. These lethal traps most commonly use the power of a coiled spring, which asserts a striking force on the trapped animals, usually on their heads. It is usually administered by a strike bar that crushes the head. Prior to that, the animal has stepped on a plate in order for that action to happen. Some other modern traps use new technology, such as carbon dioxide or electricity, to dispatch the animal; furthermore, they might use captive bolts or impalers. I would like to get across to noble Lords today that modern lethal traps are effective within seconds. The animals will not be left languishing for many minutes while death occurs—that is one of the reasons why we feel that these regulations are so important. While stoats may not always be our friends, the traps dispatch them in a friendly fashion.
Finally, the noble Baroness discussed training. I do not want to overregulate the countryside on this one. The people who will be subject to these regulations are already gamekeepers and trappers—they know how traps work. All we are asking is that the manufacturers provide instructions that allow a gamekeeper to understand what the trap does and how it works. Many of the traps are species-specific and there will be different requirements for where you put the trap, such as in a tunnel, and all sorts of different things. In our view, it is sufficient for the manufacturers to provide instructions. They will be available at the time of purchase, as well as online. The instructions must be available for the life of the trap, and these traps last quite a long time. We have spoken to the manufacturers and the retailers and they are happy to provide this information. Of course, we will make sure that they do when we certify their traps for inclusion in the list.
I think that brings us to the end of this statutory instrument. It is an important one in terms of improving our animal welfare and I beg to move.
Anti-social Behaviour, Crime and Policing Act 2014 (Amendment) Order 2018
Baroness Manzoor
That the Grand Committee do consider the Anti-social Behaviour, Crime and Policing Act 2014 (Amendment) Order 2018.
Baroness Manzoor (Con)
My Lords, this order was laid before both Houses on 5 November 2018. It adds Transport for Greater Manchester to the list of bodies that can apply to the courts for a civil injunction to address anti-social behaviour. It may assist the Committee if I give some background and context to the order.
The Government introduced the Anti-social Behaviour, Crime and Policing Act 2014 to provide the police, local authorities and other local agencies with a range of powers to enable them to effectively tackle and prevent anti-social and nuisance behaviour. These powers include a civil injunction which can be issued by the courts against any person aged 10 years or over whose behaviour has caused or is likely to cause harassment, alarm or distress to others. An injunction can include prohibitions to stop the perpetrator behaving anti-socially and positive requirements to get them to address the underlying causes of their behaviour. At present, the bodies which are able to apply to the court for an injunction are as follows: the police, including British Transport Police; local councils and housing providers; Transport for London; the Environment Agency and Natural Resources Wales; NHS Protect and the West Midlands Combined Authority.
The draft order before us today amends the 2014 Act to add Transport for Greater Manchester to the list of bodies which can apply to the courts for an injunction under Section 5 of the Act. This change follows a request from the Mayor of Greater Manchester, Andy Burnham, and will help ensure that Transport for Greater Manchester can take swift action to address anti-social behaviour taking place on Manchester’s transport network.
Transport for Greater Manchester is the passenger transport executive body responsible for the co-ordination and management of public transport across the 10 districts that make up the county of Greater Manchester. Transport for Greater Manchester owns the Metrolink tram system that runs through seven of the 10 districts that make up the county of Greater Manchester. It also owns and operates a total of 22 bus stations and provides a range of other bus services. The number of passenger journeys made using the Metrolink network in 2017 was 40 million. On its bus services in 2017, there were a total of 196 million passenger journeys.
Transport for Greater Manchester reports challenges with anti-social behaviour across its transport network. In April 2015, to address concerns about anti-social behaviour, it established the TravelSafe Partnership with Greater Manchester Police and with support from transport operators. The TravelSafe Partnership provides a dedicated team of police officers, special constables and security staff who regularly patrol the region’s transport network to reduce anti-social behaviour and provide high visibility reassurance to passengers and staff. Despite taking steps to reduce anti-social behaviour on the transport network across Greater Manchester, it remains a challenge. The most recent statistics show that in 2017-18 there were a total of 1,692 incidents of anti-social behaviour, which included incidents of intimidating, threatening and abusive behaviour towards passengers and staff.
Transport for Greater Manchester would now like to go a step further in keeping its passengers and staff safe by applying for civil injunctions direct from the courts, which currently it cannot do. The Government believe that the Mayor of Greater Manchester and Transport for Greater Manchester have put forward a strong case for this change, which will also bring their powers in this area into line with those of comparable bodies such as Transport for London. The Government recognise that anti-social behaviour can have a negative and debilitating impact on victims. It is right that the Government therefore do all they can to assist organisations such as Transport for Greater Manchester to take direct action against anti-social individuals on their transport systems, so that they can protect the public. I beg to move.
Lord Paddick (LD)
My Lords, I do not think I will be able to speak for very long. I thank the Minister for explaining the order. As she has explained, a civil injunction can be taken out against those causing others harassment, alarm or distress, and the order adds Transport for Greater Manchester to those able to apply directly to the courts for these injunctions, as Transport for London can. Clearly, if the West Midlands and London have this ability, there is no reason that Greater Manchester should not have it as well.
However, perhaps the Minister can explain to the Committee how the injunctions are used in practice. How are they enforced once they are granted? How effective have they been in London, where they have been available to Transport for London for some time? How many times have they been used, and to what effect? I have tried to find out. I consulted the chair of the Transport Committee of the London Assembly and she did not know of any issues around the granting of these injunctions, but it would be useful to know whether this is an effective measure, based on experience in other areas that have had these injunctions for some time.
Lord Kennedy of Southwark (Lab Co-op)
I am happy to support the order. The noble Lord, Lord Paddick, asked a pertinent question, which we would like to hear the answer to, about the experience of using these orders elsewhere. But giving the transport authority in Manchester the powers that they have in the West Midlands and here in London is certainly a good thing. As the Minister said, the Mayor of Greater Manchester has applied for these and made a strong case, and the Government have listened to that. I am happy to support the order and I have no questions for the Minister.
Baroness Manzoor
I thank both noble Lords for their support of this important SI. I am sorry to hear that the voice of the noble Lord, Lord Paddick, is going, but perhaps not as sorry as I should be, since it means that he did not have the opportunity to ask too many detailed questions.
The noble Lord asked about the evidence base in relation to London. I do not have the information to hand but I do know that the order allows the organisations to go to court to get a civil injunction against an individual for anti-social behaviour. If they are an adult, they could be put in prison. For children over the age of 10 who misbehave, the order can put in place various deterrents to further reduce misbehaviour on trains. But I will see if we have anything specifically on London. I am not getting a nod from the Box. I do not have that detail, so I will have to write to the noble Lord in relation to London. I do not think that we collate that data centrally. We meet various agencies on a regular basis and the reports are that the injunctions are being used to good effect. That is all I can say at the moment.
If I can get more detail—there is no inspiration behind me either—then at least the fact that the London mayor has applied for these orders says that they can be used to try to reduce the detriment being caused by anti-social behaviour on the transport system. With that, and with the Committee’s support, I ask noble Lords to agree the Motion.
Blood Safety and Quality (Amendment) (EU Exit) Regulations 2019
(6 years ago)
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Lord O’Shaughnessy
That the Grand Committee do consider the Blood Safety and Quality (Amendment) (EU Exit) Regulations 2019.
The Parliamentary Under-Secretary of State, Department of Health and Social Care (Lord O’Shaughnessy) (Con)
My Lords, in proposing these regulations, I want to explain that they are made under powers in the European Union (Withdrawal) Act 2018 to make necessary arrangements for the UK Blood Safety and Quality Regulations. This statutory instrument will correct deficiencies in those regulations so that the UK is prepared if we leave the EU without a deal on 29 March 2019.
Current regulations set out the safety and quality requirements that cover all the steps in the blood transfusion process, from donation, collection, testing, processing and storage to distribution. The short shelf life of these products means that an uninterrupted process of donation and processing is needed to ensure that the UK has a safe and continuous supply of blood and blood components. As a responsible Government, we have been preparing for all scenarios, including the unwanted but potential outcome that we leave the EU without a deal in March 2019. This instrument will ensure that the regulatory regime in relation to blood safety and quality continues to function effectively after exit day in that scenario. It is vital to make these legislative changes to provide a functioning statute book that allows for the continued donation and processing of blood and blood components such as plasma and platelets to facilitate a wide range of essential and often life-saving treatments.
In moving these regulations, I want to be clear that they are limited to the necessary technical amendments to ensure that the legislation is operative on EU exit day. No policy changes are made through these regulations and we do not have any intention of making any at this point.
The main changes that the instrument will introduce are as follows. It transfers relevant Commission powers contained in the EU blood directives to the Secretary of State in relation to England and to the devolved Ministers in relation to the devolved areas. In addition, the Secretary of State may, with the consent of the relevant devolved Ministers, make regulations on their behalf. This will enable future updates to the blood safety and quality legislation to respond to emerging threats, changing safety and quality standards and technological advances. It contains modifications to how the annex to the blood directive should be read post Brexit. This is necessary to ensure that the requirements set out in the annex, which are referred to in our domestic legislation, continue to apply and function properly post exit. It also makes minor changes to amend EU-related references or EU obligations that will no longer be appropriate or will be redundant once the UK has left the EU.
Blood is a devolved policy area, so I am pleased to say that we have obtained the devolved legislatures’ consent to the provisions contained in this draft instrument. I beg to move.
Baroness Thornton (Lab)
My Lords, I thank the Minister for introducing these regulations. Given the state of the Brexit negotiations, deals and other matters that are going on in Parliament at the moment, it is probably just as well that we have this before us. However, I have to say, as I said to the Minister about the previous instrument we discussed, that it was there in case we crash out of the EU. This is really quite a waste of all our time and Parliament should not have to do this.
The regulations seem to be very straightforward. They will: amend or omit references to EU/EEA member states and third countries; omit provisions relating to EU obligations that will no longer be relevant to the UK; transfer relevant Commission powers under the EU blood directive to the Secretary of State in relation to England and the devolved Ministers in relation to the devolved areas, as detailed in paragraphs 7.12 to 7.15; and, as the noble Lord said, modify how the annex to Commission Directive 2005/62/EC is to be read after exit.
Baroness Walmsley (LD)
My Lords, I agree with the noble Baroness, Lady Thornton, that we should not be having to do this. If Parliament was clear that it would not sanction a no-deal Brexit, we would not need to do so. My concern is that if we leave the EU, no longer will there be an obligation on the Secretary of State to communicate with the blood regulatory authorities in EU member states. Obviously, I welcome the fact that blood establishments and blood banks will need to ensure that blood and blood components from the UK continue to conform to the current EU testing requirements, as well as meet the equivalent quality and safety standards implemented by the UK Blood Safety and Quality Regulations 2005. However, I noticed that the Minister said, “for the moment, anyway”, when he mentioned that fact. It concerns me a bit that future Governments could change those standards. I hope that they would not want to change them for the worse in an attempt to sell a lot of blood products to countries with lower standards than us.
As a resident of Wales, I was pleased to hear that the devolved Administrations were engaged in consultation on the changes included in this instrument, which has been adapted to incorporate the changes and comments that they have proposed. That is fine, but I am concerned that in extremis, if there were to be difficulty in getting supplies in a timely way, the devolved Administrations would have to use products chosen by Westminster. I bring that up because this morning I heard about a parallel situation from some clinicians in Wales. They told me that they import quite a lot of hip joints, but the hip joints chosen for use in Wales are different from the hip joints chosen for use in England. They said that the NHS in Wales understands that if there was a problem of supply, it would have to use the hip joints chosen by England because they would be the only ones that it could get. I wonder whether the Minister can tell me whether the same situation would apply to blood products.
I know that the UK is largely self-sufficient in the supply of blood and blood components. Occasionally, we export rare frozen red blood cells in small quantities and import about 6.5% of our plasma units from the EU every year. In this context, I am concerned that regulation 16A of the 2005 regulations is being omitted from this SI. The regulation requires the maintenance of the communication of serious adverse events or reactions between the Secretary of State and the other blood regulatory authorities in EU member states. However, once the UK leaves the EU, obviously it will not be an EU member state and therefore no longer will there be an obligation on the Secretary of State to communicate with the blood regulatory authorities in the EU member states, nor them with us.
In the light of problems that we have had with blood products in the past—for example, blood contaminated with HIV and hepatitis C—what arrangements will be put in place to ensure that in the future we will communicate with the remaining 27 EU countries and that we will hear from them in relation to our work over here if any adverse situations arise with blood and blood products? We are still dealing with the fallout from blood products that were contaminated with HIV and hepatitis C. People have suffered for many years and I know that they are still trying to get the compensation that they feel they deserve. I hope the Minister is able to reassure me about both of those two elements.
Lord O'Shaughnessy
I thank both noble Baronesses for their questions. I do not quite agree that this is a waste of time; after all Parliament voted both for a referendum and for a withdrawal Act, so we have to prepare for every eventuality even when we hope that they will not happen. This SI is particularly important for the continuity of this important medical product.
To deal with the questions posed by the noble Baronesses, communication with agencies is absolutely happening. It is being co-coordinated by NHS blood and transport—sorry, I always say “blood and transport” because it transports the blood; I mean NHS Blood and Transplant—as well as the relevant agencies in the devolved Administrations. We know that sometimes relationships between the DAs and Westminster can be strained, but I think it is fair to characterise them as being positive and co-operative on this and other health-related issues. We are making sure that all agencies are involved in that process, with central co-ordination and collaboration and consent from the DAs.
Regarding reassurance for people with rare diseases in respect of imports, the whole point here is that we would be operating to the same standards as the EU. In a no-deal scenario, we would also be accepting, as it were, the regulatory standards and approvals of the EU to ensure that such products were not impeded on their way into our country. As the Committee will know, a range of activities are going on to ensure continuity of supply through the borders.
On the point made by the noble Baroness, Lady Walmsley, there is nothing untoward about my comment that there is no policy change at this moment. The critical point here is that under the Bill we are limited to technical changes to address flaws in the legislation that emerge as a result of technical flaws moving from one situation to another. Of course any future Government can change policy; I cannot bind the hands of any Government of any kind in future years. However, I can tell noble Lords that we have no intention of watering down the standards, so please be reassured on that point.
On the question from the noble Baroness, Lady Thornton, about when this would happen, in a no-deal scenario it would happen from 30 March 2019, so it would be from day one onwards.
I turn to the remaining issues raised by the noble Baroness, Lady Walmsley. In Wales we effectively have a single market in blood products—that is one way of putting it—all working to agreed standards. From that point of view, there is no difference in the products that are used in different domains. I understand her point about hip replacements but I am not sure that it is an exact analogy. Of course the beauty of devolution is that we have choice and experimentation.
Lastly, on the important point about communications with the EU, the reason why that has been removed is that it is a reciprocal obligation. Obviously it is illogical to have a reciprocal obligation that can be fulfilled only by one side.
Baroness Walmsley
I accept that, of course, but what I want to know is what is going to be put in its place.
Lord O’Shaughnessy
Indeed. In a no-deal situation, if we picked up the kinds of concerns she has described, we have very good pharmacovigilance and other monitoring systems in this country. We would communicate that information with our European neighbours and we would hope and expect them to do that in return. However, of course we have no way of obliging them to do so in a no-deal scenario. We are absolutely committed to communicating with them not only about blood products but about all medicinal products and devices; that is our moral obligation. In a deal scenario, we would share that information anyway by dint of being part of a common regulatory authority. That is also true of the implementation period and it is our stated ambition in the White Paper for the period afterwards. I can reassure the noble Baroness that it is our intention to continue with the communication. Although, in part because of the phase we have reached in the negotiations, it is not possible to confirm that in a no-deal scenario there would be a bilateral or multilateral arrangement around communications, I am confident that all sides would want that because it is to no one’s benefit not to share the information. I am sure that that would happen.
I hope that I have provided answers to the pertinent questions put to me by the noble Baronesses and commend the regulations.
Human Fertilisation and Embryology (Parental Orders) Regulations 2018
(6 years ago)
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Lord O’Shaughnessy
That the Grand Committee do consider the Human Fertilisation and Embryology (Parental Orders) Regulations 2018 and the Human Fertilisation and Embryology Act 2008 (Remedial) Order 2018.
Relevant document: 14th Report from the Joint Committee on Human Rights
The Parliamentary Under-Secretary of State, Department of Health and Social Care (Lord O’Shaughnessy) (Con)
My Lords, by way of background, parental orders are an important mechanism that transfer the legal parenthood of a child born through a surrogacy arrangement from the surrogate and her partner, if she has one, to the intended parents. The effect of such an order is that the child born to the surrogate is treated in law as the child of the applicants for the parental order and that any parental rights of the surrogate and her partner are extinguished. This confers legal certainty of parenthood, parental responsibility and decision-making on behalf of the child to the intended parents. As noble Lords will be well aware, parental orders were introduced for married heterosexual couples only as part of the Human Fertilisation and Embryology Act 1990. This was extended by the 2008 Act to same-sex couples, civil partners and couples in long-term relationships where the relevant criteria were satisfied.
I am sure we all agree that surrogacy has an important role to play in our society, helping to create much-wanted families where that might otherwise not be possible. It enables the provision of an altruistic gift to people who are not able to have a child themselves and can help people to have their own genetically related children. The UK Government recognise the value of this in the 21st century, where family structures, attitudes and lifestyles are increasingly diverse. We have also recognised that the existing legislative framework has not kept pace with this social change and have therefore asked the Law Commission to review all surrogacy-related law and make proposals for improvement as part of a three-year project.
In the meantime, a more immediate piece of legal reform needs to be addressed. As noble Lords know, in 2015 there was a legal challenge by a father who had a child through a surrogacy arrangement in the USA who could not apply for a parental order because he was single. The High Court found that the Act was in breach of Article 14 of the European Convention on Human Rights combined with Article 8. In May 2016, the court made a declaration of incompatibility. The declaration related to the lack of any provision enabling a person in the position of the applicant, who was not in a long-term relationship, to apply for a parental order. The Government of the day made a commitment to rectify the incompatibility by means of a remedial order made under the power in Section 10 of the Human Rights Act 1998. The order inserts a new Section 54A into the Human Fertilisation and Embryology Act 2008 to provide for and set out the criteria for parental order applications from one applicant. The new section largely mirrors Section 54 of the 2008 Act, which provides for applications from couples.
Lord Winston (Lab)
My Lords, forgive me for a brief intervention. I do not have any problems at all with the basic notion of what is in front of us. It is possible that I was the first person to do a surrogacy agreement using IVF, so I have a certain amount of background in this rather murky subject.
One thing that slightly concerns me is the issue of paternity or maternity genetically, because we now have a situation where children can normally trace their genetic parent. That is on the birth certificate. Here we have a slightly odd situation. For example, particularly with a gay or lesbian couple, or where someone has not only had their uterus but their ovaries removed, someone may end up receiving a donor egg which is then implanted into the surrogate mother after fertilisation. So an embryo could be put into a surrogate mother who is happy with that, but it is not genetically her embryo.
I am just trying to raise the issue of clarity. Given that Parliament in its wisdom decided that people should be able to trace their genetic mothers, someone who had given an egg in that situation could suddenly be presented with a child they did not know they had, even though their own treatment had failed 20 years or earlier. When the Minister wraps this up, can he provide some clarity on what would happen, because there is human rights issue both ways here?
Baroness Barker (LD)
My Lords, I thank the Minister for introducing this debate in the way that he did and giving the background to the instruments before us today. I should declare that I am a member of the All-Party Parliamentary Group on Surrogacy. I have a long-standing interest, fuelled by many a night sitting listening to the noble Lord, Lord Winston, as we went through various bits of legislation but principally by the work done by Surrogacy UK in 2016 when it produced a report. There was a debate in December of that year. Baroness Warnock was no longer a Member of your Lordships’ House, but the noble and learned Lord, Lord Mackay of Clashfern, was. Those of us who had been involved in legislation on this matter from the beginning in the 1980s accepted that the overall legislative framework we now have is not really fit for purpose, not least because of the many scientific advances that have happened in the intervening years. As the noble and learned Lord, Lord Mackay, observed in that debate in 2016, there are now many more ways in which families, as well as children, are created.
The Minister was right that the original stimulus for the legislation was the case of a man who in 2015 had a child by surrogacy abroad, brought the child back and found that the child’s status was incompatible with our law at the time, which stated that parental orders could be made only in respect of a couple. That was two and a half years ago. In the meantime, others have found themselves in similar limbo. The courts have had to make what are essentially temporary orders. Those orders are above all for the welfare of a child: a child is being cared for by somebody who is not their legal parent and has no legal responsibility for them. We should not lose sight of that.
This measure is a welcome step forward which offers a degree of certainty not only to individual parents or intended parents who find themselves in this position but to the children. I am pleased that the Law Commission is now undertaking an extensive review of the legislation. The All-Party Parliamentary Group on Surrogacy is conducting its own hearings on the matter. For just a small all-party group, the hearings have been extremely interesting. We have had a huge number of people give evidence, some with very conflicting views. I think that we will end up with an interesting report that feeds into that work. My guess is that the Law Commission will take about two years to produce a report.
My reason for mentioning all that is that time ticks by for individuals as we debate these matters. I do not suggest for a moment that we should do anything in a rush, but, at the same time, it is incumbent on us to deal with some matters urgently, because to do so is in the interest of individuals.
There are some ways in which a single person applying for a parental order will be still be left outside these remedial orders. I understand that a case is before the courts at the moment of a woman whose relationship with the biological father of a child has broken down. She is now in the position of being a single person who has no biological relationship with the child but nevertheless wishes to have parental responsibility. Another tragic case is before the courts in which one member of a couple has died subsequent to the fertilisation process having taken place.
However long the Law Commission takes to do its work, which it should do extensively and thoroughly, I think that we will continue over the years to have a small number of cases that are intensely important both for intended parents and for children. It is therefore likely that we will find ourselves back in this House making more revisions of regulations of this kind before we get the comprehensive review of surrogacy law that we need so that practitioners, medics, intended parents and children all have a better understanding of where we should be legally in this day and age.
Viscount Craigavon (CB)
My Lords, I will say a few words, partly reflecting what the noble Baroness, Lady Barker, said. I spoke on this subject in her debate some time ago.
We should be extremely grateful to the Law Commission for taking on this, in my opinion, very difficult and rather controversial work. Only an organisation like that is going to bring this to some sort of conclusion, but as the noble Baroness, Lady Barker, said, it will take considerable time, and understandably so—we do not want to hurry it. However, one or two problems are going to slip through the net before it reaches its conclusion. The noble Baroness, Lady Barker, mentioned particular problems and some of them might be resolved, as she said, by further orders but some will still be in difficulties because some women simply do not have the time to spare in their reproductive cycles to wait for these problems to be solved.
There is another example, similar to what the noble Lord, Lord Winston, was saying. In rather rare cases of cancer, the treatment disallows women from being able to be genetically connected to the child who is being born. That is another example where we might be in difficulties over the long time period we have. I very much welcome these regulations, and I hope the department will keep an eye on difficult cases that come up. We will be looking after them as well.
Baroness Thornton (Lab)
My Lords, on this occasion I thought I would let the experts go first—it is called delegation. Like all other noble Lords, I welcome these regulations. I think it is my first experience of a remedial order. As a bit of an anorak in these matters, with 20 years in your Lordships’ House, it is very exciting when you find yourself with a parliamentary procedure that you have not come across before. It is also interesting that the remedial order has then led to the statutory instrument that flows from it. We have also made all the right authorities happy.
I welcome the fact that the Law Commission is reviewing surrogacy. It is a three-year project, so the noble Baroness, Lady Barker, is right in what she said. In the time that I have been involved in doing health work in your Lordships’ House, every year or so we come back to some or other tweak, which is either down to medical science having advanced or, as my noble friend Lord Winston has said, technology having advanced. When my noble friend was speaking, I was reflecting on the fact that you can use the myheritage.com website to track down your genetic relatives from all over the world. If they are there, they will pop up. I suspect that will happen—not that we can legislate for that—and I suspect that the noble Baroness, Lady Barker, is right when she says that we will probably be back before the Law Commission has finished its work and certainly before the results of its work have been considered by the Government—whichever Government it is by then—brought forward and put into legislation.
Lord O’Shaughnessy
I am very grateful to all noble Lords who have spoken. One of the great joys of working in this House is that we are privileged to have access to such expertise, be it scientific, policy or legislative. We have had a very good, if short, debate in which there were some interesting questions which I shall try to answer. The noble Lord, Lord Winston, made a point about tracing the genetic parents in the case of a donated gamete. I shall read out what it says in my pack to make sure that I get the wording right and then I am going to make an addendum which I think is also correct.
If a child is conceived via an HFEA-licensed clinic with donor gametes, it may be able to access information about the donor in line with the responsibility of the clinic to provide information under the HFE Act, but this would depend on the parents informing the child of the circumstances of their birth. Of course, that would be so that the child was aware that they could ask, but at the point at which they became aware, via their parents or anyone else, they would then have a right to that information. I think the point the noble Lord made was that however the line goes to the genetic forebear, the child would have the right to pursue it. Of course, it would rely on the child being aware of the circumstances of their birth and so on, and we cannot force that on somebody, but they would be able to trace it.
Lord Winston
Does that mean that the birth certificate would be like a normal birth certificate under those circumstances?
Lord O’Shaughnessy
Yes, because the court retains a copy of the original birth certificate. I am going to need to clarify this because it is tricky and there is a danger if I try to describe it now. I do not want to do that. I think the noble Lord is asking for clarification, but I am going to need to write to him, if he will accept that, to clarify the situation.
Baroness Barker
I hope I am going to be helpful. If I am right, I think that at the point at which a parental order is given, a new birth certificate is issued. That rather mirrors the procedure under adoption, which is the same. The point is that a child always has the right to find out their genetic history but they may not know the means of their birth. From all the things that I have listened to in this House, that makes them probably like a good 40% of people who were not adopted or the result of fertilisation but who have a different father from the one they thought they had; I do listen.
Lord Winston
I do not want to delay things, but surrogacy is a special situation because the child is developed in another uterus, so there are epigenetic factors which may act on that child’s development. We are now beginning to understand—for example, from the study that I am involved with in Singapore—that things which happen when the baby is in utero can affect cognitive development and other sorts of development later in life. It is therefore slightly different from a normal donated gamete in a usual IVF setting or simple artificial insemination. That is why I wondered whether there will be clarity about the exact nature of the bearing mother as opposed to the genetic mother, because that seems to be important. Is that recorded on the certificate?
Baroness Barker
I am glad that over the years I have had to do my homework because I am now going to be in debates with the noble Lord, Lord Winston. I think that the issue is covered by the licensing of the clinics which are under an obligation to maintain a record if they are HFEA-licensed in this country. I believe that in certain jurisdictions abroad to which people go for surrogacy, notably California and Canada, clinics are similarly required to meet certain standards of record-keeping.
Lord O’Shaughnessy
That is absolutely right. It is fantastic to be able to bow to the wisdom of noble Lords. In effect, although this is a rather inadequate way of describing it, there is a paper trail of whether it is the surrogate parent—the original genetic donor, if there is one, that is different from the parent who subsequently gets the parental order—when that is done through licensed clinics. The child has a pre-existing right to pursue that information and they are able to do so, if they want to, when they become aware of the circumstances of their birth. I think I have got that right. The noble Baroness, Lady Barker, is nodding, which means I can be confident.
I congratulate the noble Baroness on her tenacity in pursuing this issue and I congratulate other noble Lords as well. It has taken longer than it should have done to make this remedial order; I can only reflect on how much has happened in the last two and half years, which may be some of the reason behind that. The department is very aware of the need to watch this space. There are court cases going on. Clearly it would be inappropriate for me to comment specifically on them but, as the noble Viscount, Lord Craigavon, pointed out, thorny and difficult cases will continue to emerge and we need to deal with them as they arise if they have policy implications. We also need to ensure that we keep up the impetus through the Law Commission review, which I understand will be two years of inquiry and then a year of drafting legislation. That is why it will take three years; these things have a natural pace to them. The critical point is that at the end of the process, the Government—as the noble Baroness, Lady Thornton, pointed out, whoever is in government at that point—should then be in a position to take that legislation forward. One would hope that if the Law Commission has done its work, that is something on which there is a pre-existing consensus and we can all move forward.
I am incredibly grateful to noble Lords for their wisdom and sagacity. This has been a very high-quality debate. I will provide the specific clarification to the noble Lord, Lord Winston, and circulate it to other noble Lords who have taken part in the debate. I thank them once again for their contributions.
House of Lords
Retirement of a Member: Lord Lester of Herne Hill
The Lord Speaker (Lord Fowler)
My Lords, I should like to notify the House of the retirement with effect from today of the noble Lord, Lord Lester of Herne Hill, pursuant to Section 1 of the House of Lords Reform Act 2014. On behalf of the House, I acknowledge the noble Lord’s service to the House. I should add that, pursuant to the decision of the House on 15 November, the Privileges and Conduct Committee has further considered the conduct of the noble Lord and has today published a further report on that subject. Noble Lords will have the opportunity to consider the report on the afternoon of Monday 17 December.
Housing: Serviced Plots
(6 years ago)
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Lord Naseby
To ask Her Majesty’s Government with what organisations they have been working to ensure provision of serviced plots for self- and custom-built homes in order to meet social and other housing needs.
The Parliamentary Under-Secretary of State, Ministry of Housing, Communities and Local Government and Wales Office (Lord Bourne of Aberystwyth) (Con)
My Lords, self and custom build can play a crucial role, as part of wider measures, in securing greater housing market diversity and delivering the homes people want. We are working with local authorities in meeting their legislative obligations and with industry, including the National Custom & Self Build Association and the Right to Build Task Force, to ensure provision of serviced plots. The home building fund and the community housing fund support SME builders and community groups including those promoting self and custom build.
Lord Naseby (Con)
Is my noble friend aware that his Answer is enormously encouraging? Nevertheless, it is the situation, is it not, that across most of Europe self-build constitutes a huge proportion of the housing market? Now that we have the opportunity, with the progress that has been made by Her Majesty’s Government on moving towards the target of 300,000 homes, can we really make sure this time, on the basis of the policies my noble friend has just mentioned, that it actually happens and that the thousands of couples who want to build their own home will have the opportunity to do so?
Lord Bourne of Aberystwyth
My Lords, I thank my noble friend very much for that support. It is true that this is an important and growing sector. We were perhaps a little late coming to this: the Self-build and Custom Housebuilding Act 2015 gave an injection to this area, but there are more than 30,000 people on the register to which I referred and there is growing interest in this area.
Lord Kennedy of Southwark (Lab Co-op)
My Lords, I declare an interest as a vice-president of the Local Government Association. Can the noble Lord tell the House what work the Government are doing to ensure greater access to mortgage finance for those individuals who want to build their own home? Can he also tell the House what role he sees for the co-operative sector in developing self and custom build housing?
Lord Bourne of Aberystwyth
My Lords, the noble Lord has put his finger on a difficulty, which is access to the mortgage market. We are well aware of the difficulty and we are working with building societies and with a couple of banks—Virgin Money does good work in this area and the Co-operative is also interested. We are certainly very open to encouraging access to finance via the co-operative movement and the Co-operative Bank. The noble Lord is right that it is an important area and one where we need to focus our attention.
Lord Best (CB)
My Lords, we need this alternative stream of new homes because otherwise we are totally reliant on a handful of very large volume housebuilders which consistently let us down in terms of quantity, quality, affordability and design. This is a really important new stream of extra housing, but we are awaiting guidance from the Government for local authorities on their planning obligations. This is a little overdue. Will the Minister tell us when we might expect to see it published?
Lord Bourne of Aberystwyth
My Lords, I first thank the noble Lord. He was the noble Lord, as so often, who piloted the very important legislation I referred to through this House. We expect the guidance he is referring to early in the new year.
Lord Alton of Liverpool (CB)
Will the Minister take the opportunity to visit the “sweat equity” project in Toxteth, Liverpool, an interfaith initiative which was set up originally by Habitat for Humanity? More than 30 properties were built on that site where the sweat, the labour of the people involved in helping to build the properties, included single parents and people who would never have had the opportunity to become homeowners otherwise. They have now got homes in inner-city Liverpool. It is a wonderful initiative and I hope the Minister will take the opportunity to see it.
Lord Bourne of Aberystwyth
My Lords, I thank the noble Lord very much indeed for the invitation. I am very keen to visit. I am due to go to the north-west for some faith visits, and I will see if I can visit on that occasion.
Lord Bassam of Brighton (Lab)
My Lords, picking up the point made by the noble Lord, Lord Kennedy, will the Minister give consideration to the Government encouraging local authorities to enter the mortgage market again? Back in the 1980s, some 15% of all mortgages nationally were given out through local authorities. That proved a viable and sensible way of encouraging low-income home ownership.
Lord Bourne of Aberystwyth
My Lords, we are very keen and willing to look at any area that opens up finance for this sector, so I certainly do not rule that out. We are, as I say, actively pursuing this matter with building societies and with banks, and they are responding, but I will take the noble Lord’s suggestion back, if I may.
Lord Foulkes of Cumnock (Lab)
My Lords, what advice would the Minister give to someone threatened with eviction from their home just off Whitehall?
Animal Welfare Standards
Lord Trees
To ask Her Majesty’s Government whether their recent trade deal to supply 50,000 lambs killed without stunning to Saudi Arabia is consistent with their commitment to maintain animal welfare standards after Brexit.
Baroness Vere of Norbiton (Con)
My Lords, the Government encourage the highest standards of welfare at slaughter, and have been clear that they will not water down their high animal welfare standards in the furtherance of trade. The agreement with Saudi Arabia was on the terms of the health certification for animal products and lifts a 20-year ban on lamb exports. It is not a trade deal per se. All slaughter of animals for export—whether stun or non-stun—must strictly comply with EU and UK rules on animal welfare.
Lord Trees (CB)
My Lords, I am grateful to the noble Baroness for her Answer. As she knows, for many years New Zealand has exported millions of sheep carcasses to the Middle East, including Saudi Arabia, from animals that have all been stunned before slaughter, and that have all been halal certified. Will the Government undertake to halt further halal exports until our welfare and farming organisations, our regulatory authorities and, most importantly, the appropriate UK halal authorities have reached agreement to follow procedures similar to the New Zealand model? Given that, our farmers could then export with confidence, and the international halal community could be reassured that it is getting meat that meets its requirements.
Baroness Vere of Norbiton
My Lords, New Zealand has very different procedures from those of the UK. New Zealand allows non-stunned slaughter only for poultry and, in that case, for just 5,000 birds a year. The issues around this are very complex. The Government would prefer all animals to be stunned before slaughter, but derogations have existed for Muslim and Jewish communities since the 1930s. However, the Government are well aware of research into stunning techniques, in particular for cattle and sheep, which may be helpful in reducing the amount of non-stunned slaughter. We will continue to work with all stakeholders to ensure that we have the highest standards of animal welfare, while ensuring freedom of religious expression.
Baroness Fookes (Con)
My Lords, I have protested about the killing of any animal without pre-stunning for more years now than I care to remember, and I am not going to stop protesting now. May I ask my noble friend not to allow the departure of animals from this country without pre-stunning?
Baroness Vere of Norbiton
I hope that my noble friend will continue protesting, and I am sure that many other noble Lords will continue to do so, but we are governed by the regulations of both the EU—
Baroness Vere of Norbiton
My noble friends should wait. European Council Regulation 1099/2009 protects the animals at the time of killing. However, the UK has stricter national rules through WATOK, the welfare of animals at time of killing regulations. These provide for the types of stunning that can be carried out, but also set out precisely what must happen if an animal is to be slaughtered without stunning. It is part of the slaughter process, but we slaughter 13.3 million sheep a year, and the vast majority are stunned before slaughter.
Baroness Bakewell of Hardington Mandeville (LD)
My Lords, the UK has moved a long way forward in ensuring that animals are stunned prior to slaughter, as has been indicated. Animal welfare is, rightly, an essential ingredient of our culture, both pre and post Brexit. It is therefore incomprehensible that the contract to supply 50,000 lamb carcasses to Saudi Arabia allows for their slaughter without pre-stunning. Other EU countries that allow non-stunned slaughter have measures in place to ensure that that meat is for the domestic market only. I cannot see what possible justification there can be for allowing non-stunned slaughter for export to Saudi Arabia, and I hope that the Minister will work to reverse that.
Baroness Vere of Norbiton
My Lords, I would like to be clear that there is no contract for 50,000 sheep to go to Saudi Arabia. I am not entirely sure where that comes from. An export health certificate has been issued in the case of Saudi Arabia, but it has not been used, so not a single lamb has left the country, whether stunned or non-stunned. On the point the noble Baroness raised, we have our regulations within our nation, which allow both stunning and non-stunning within very strict parameters. It is for the benefit of our sheep farmers, mostly in the north of England, Wales and Scotland, that they are able to sell their sheep where they like, within the regulations.
Lord Rooker (Lab)
Does the Minister not appreciate that there is no international body for certifying halal? That is why, in New Zealand, the halal authority agrees to pre-stunning. She cannot hide behind the EU, because the EU allows into Europe all the New Zealand lamb—and all of it that comes to the UK is halal, without exception. If the EU allows that in, we cannot then use the EU rules to stop our own people here deciding that we will have a halal authority which still gives the certification but allows for pre-stunning. That is the root cause of the problem: Defra should make sure that there is a halal body prepared to do that in this country, otherwise we simply would not allow the exports.
Baroness Vere of Norbiton
The noble Lord is right. There is no one national authority that certifies halal meat, and to a certain extent that is part of the problem. We have one halal authority which will certify only stunned meat, one that does only non-stunned meat and one that does both. The crux of this issue is that the Government, stakeholders and religious authorities need to start working together more closely to look at the research around stunning, which has come on in leaps and bounds in terms of recoverability from stunning and therefore whether it falls within religious guidelines. We have committed to do that and we will continue to do so.
Lord Singh of Wimbledon (CB)
My Lords, for many years Sikhs and other communities have been concerned about the provision of a halal-only option in many schools. We are advised that it is the prerogative of the local authority. It is impossible for individuals to keep complaining. Does the Minister agree that the default position must be the provision of non-halal food, and that it is up to other religious communities if they want something different?
Baroness Vere of Norbiton
The noble Lord makes a very strong point. It is the case that it is up to schools whether they provide halal meat. Many schools that have a significant proportion of pupils who are Muslims will supply halal meat, but they might be able to accommodate pupils of other faiths within their food provision. I reassure noble Lords that major retailers have supplier requirements that all meat on supermarket shelves is stunned before slaughter.
Baroness McIntosh of Pickering (Con)
My Lords, I am a fellow of the British Veterinary Association and a regular visitor to auction marts in the north of England. Does the Minister agree that the general problem is that there is meat being sold in this country as normal meat which is actually halal meat being passed off as normal meat? This is an urgent issue that has to be addressed by the Government. Will my noble friend explain to the House how the Government propose to address it?
Baroness Vere of Norbiton
I thank my noble friend for that question. I have just mentioned the actions that have already been taken by the major retailers, but the Government are well aware of public concern around meat slaughtered in accordance with religious beliefs and we believe that we need to look at labelling and improve it where we can. We believe that if we can give consumers the information they require, they can make an informed choice. The Government have committed to a review of food labelling once our future partnership with the EU is clear.
Lord Winston (Lab)
My Lords, I declare an interest as an Orthodox Jew. I think the Government are to be congratulated on their sensitivity to the various religious minorities that carry out their practices in this country. The Minister mentioned the problem that stunning is not by any means absolute. We see clear evidence that some animals are wounded with current levels of stunning, and more research is needed. At a time when there is very great distrust between different communities, I hope that the Minister will agree that we need to reflect on the need to have harmony in those communities at the present moment.
Baroness Vere of Norbiton
I completely appreciate the comments made by the noble Lord. That is why this is such a very complex issue. We must understand that there are religious sensitivities around this, but I am also pleased to know that research is moving on in leaps and bounds and that in certain circumstances it will be the case that some stunned meat will be certified as halal in future.
Brexit: People’s Vote
(6 years ago)
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Lord Dykes
To ask Her Majesty’s Government what representations they have received on a People’s Vote on Brexit.
The Minister of State, Department for Exiting the European Union (Lord Callanan) (Con)
My Lords, the Government have been clear that we will not hold a second referendum. A clear majority of the electorate voted to leave the European Union in the people’s vote held in 2016. We must respect both the will of the British people and the democratic process which delivered that result.
Lord Dykes (CB)
My Lords, a people’s vote would have no direct connection to the previous referendum—it is a separate matter entirely. Will the Minister undertake to make sure that the Government, led by either the present incumbent or whoever succeeds her over the next short period, concentrate on examining the incredible number of messages that are coming in to all government departments, including the Minister’s, from people who were leave voters saying that they are now minded to consider changing their minds, bearing in mind the changed circumstances?
Lord Callanan
The short answer to the noble Lord’s question is no. I do not know where he gets his figures from about the incredible number of messages, because I certainly have not seen any.
Baroness Hayter of Kentish Town (Lab)
My Lords, 48 messages were sent about Mrs May and were able to lead straightaway to an election, so other votes are now awaited. We need votes in the other House on the withdrawal deal and a vote on this Government for their mishandling of Brexit, the NHS waiting lists, the universal credit shambles and much else besides. Will the Minister perhaps undertake to this House to advise Mrs May that the correct way forward for a Prime Minister who has lost control of the Cabinet, the Commons and the country is to call a general election?
Lord Callanan
I am sure that the Prime Minister will be very grateful for the noble Baroness’s advice. If I get the opportunity, I will, of course, pass on her fond regards.
Lord Higgins (Con)
My Lords, referendums are often described as democratic, but they are not what we usually mean by democratic in this country, where we have a system of representative parliamentary democracy. The effect of having a referendum is to undermine that system because it changes Members of Parliament from being representatives to delegates. Will the Minister look at the situation in the Netherlands, where the Government are considering banning referendums altogether?
Lord Callanan
I understand the point that my noble friend is making and I realise that this view is widely shared. I must point out, however, that the referendum was agreed to, authorised and voted for by this Parliament. We agreed to ask the people what their verdict was on the European Union.
Baroness Smith of Newnham (LD)
My Lords, the Prime Minister was very clear that there would not be a general election in 2017. The Prime Minister and the members of her Cabinet who were dispatched last Friday and even on Monday morning were very clear that there was going to be a vote on the withdrawal agreement on Tuesday evening in the House of Commons. There was not such a vote. Therefore, how certain is the Minister that the Prime Minister will not change her mind and allow a people’s vote, assuming that she survives this evening?
Lord Callanan
Very certain, is the answer to the noble Baroness’s question. As she well knows, to hold a referendum—as with the previous referendum—the Government would need to introduce legislation, and we are not going to do that.
Baroness McIntosh of Hudnall (Lab)
My Lords, in his Answer to the noble Lord, Lord Dykes, the Minister said that he had seen no representations from anybody on the subject of this Question. On the face of it, it feels a little unlikely that neither he nor any of his colleagues in government have seen any such representations. Can he confirm that and, if it is not strictly true, will he research just how many representations have been received and then write to me?
Lord Callanan
I was answering the noble Lord truthfully on what representations I had seen, which is what he asked me. I will certainly go back and check with the department, but I receive a lot of correspondence both publicly and privately and I do not recall seeing any such representations. This is not to say that there have not been any letters in the department—there may have been one or two, but I certainly have not seen any on my private email.
The Archbishop of York
My Lords, would the Minister agree with the African sentiment that when two elephants fight, the grass gets hurt? Is it now time to look for reconciliation as a nation and move forward? Is it now time to stop point-scoring and actually listen to one another with a sense of humility, humbleness and kindness and to have more civil discourse? Otherwise, elephants are fighting and the grass is getting hurt.
Lord Callanan
As on so many things, the most reverend Primate makes important points that we should all take careful heed of.
Lord Cormack (Con)
Does my noble friend accept that the referendum of June 2016 divided this country more bitterly than anything else in living memory? What is the point of exacerbating that division by having another referendum for which there is clearly no groundswell of public opinion? As someone who deeply regrets the result of the referendum of 2016, I endorse, as I hope will my noble friend, the most reverend Primate’s plea for reconciliation.
Lord Callanan
My noble friend is absolutely correct. There are many arguments against a second referendum, but I think the most powerful one is that it would not necessarily solve anything.
Baroness Walmsley (LD)
My Lords, the Minister said that a majority of the electorate had voted to leave the European Union. If I recall correctly, 37% voted to leave, 33% voted to remain and 30% did not vote at all. Ministers go around saying that 52% of the British people voted to leave the European Union—I heard Jeremy Hunt say that on TV the other day. Last time I looked, the population of the UK was about 65 million, and we keep getting told that 17.4 million people voted to leave the European Union. That is about one in four. Does the Minister not agree that Ministers should be a little more precise in their language?
Lord Callanan
I am happy to agree with the noble Baroness that in the referendum, of the people who voted, the majority voted to leave.
Interserve: Provision of Public Services
(6 years ago)
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Lord Haskel
To ask Her Majesty’s Government what assessment they have made of Interserve’s financial situation and the impact this may have on the provision of public services.
Lord Young of Cookham (Con)
My Lords, the funding arrangements of Interserve are the responsibility of the company and its directors. The Cabinet Office has regular discussions with the company’s management and monitors the financial health of all government strategic suppliers. The company successfully raised new debt facilities earlier this year and plans further restructuring to strengthen its balance sheet and financial robustness.
Lord Haskel (Lab)
I thank the Minister for his reply, but the monitoring does not seem to work, because this is happening too many times. As well as infrastructure, Interserve does welfare to work, probation, home care and hospital work—all important services—yet because of its financial structure, like many other public service companies, it has become a speculative vehicle for hedge funds and private equity. How will the Government rectify that? Will they give it more work to keep it afloat or sink it by taking the work away? How will they ensure that these essential services continue?
Lord Young of Cookham
As I said, the Government are in regular contact with Interserve to monitor its performance. Not only does the Cabinet Office have overall responsibility for monitoring the health of the company, but individual government departments that have contracts with Interserve have a dialogue with it about those specific contracts. The noble Lord may have seen the statement which the Cabinet Office issued a few days ago:
“The Cabinet Office has expressed full support for the work the company is doing to implement”,
its “long-term recovery plan”. It is worth making the point that Interserve is very different from Carillion. Interserve is now taking the action that Carillion ought to have taken—to restructure its balance sheet and improve its robustness—and, unlike Carillion, it does not need new money. It needs to turn debt into equity. It is not accurate to make a direct comparison between the two companies.
Lord Fox (LD)
My Lords, in a meeting in the Cabinet Office in the spring, I specifically asked David Lidington about Interserve. Since then, there have been a number of warning signals. Ministers may be talking to Interserve, but are they talking to the companies that support Interserve by delivering its services to people? If they did, they would hear from Rudi Klein, the chief executive of the Specialist Engineering Contractors’ Group, who is advising its members not to work for Interserve. The Minister’s response seems very relaxed in the light of what is actually going on. What contingencies are the Government taking in the event that Interserve is unable to deliver services?
Lord Young of Cookham
On the first point, I made inquiries to Interserve about the suppliers: 90% are paid within 60 days or less. The Government have now insisted that, where they place new contracts with suppliers, there is a contingency plan to take effect if and when that contract runs into difficulties. Interserve, along with four other companies, is piloting this new arrangement, which was introduced post the problems with Carillion.
Lord Stevenson of Balmacara (Lab)
Does the Minister agree that one of the real problems is that more than 20% of government procurement now goes to a small number of strategic suppliers, a figure that has doubled since 2013? The top three suppliers are all having financial problems. After Carillion, a new system was introduced, which I think the Minister was referring to; rather surreally, it is called “living wills”. Has this been completed for Interserve—he mentioned a pilot—and can he reassure the House that no new contracts will be offered to Interserve until such time as the miracle of the new company emerges, and that public services delivered by Interserve will be continued without the cost penalty of £148 million which occurred after Carillion?
Lord Young of Cookham
The noble Lord is quite right. On 19 November, the Chancellor of the Duchy of Lancaster made a speech to the BSA outlining new arrangements. The noble Lord referred to some of them; we prefer to call them resolution plans rather than living wills. We have recently announced plans for all suppliers to draw up resolution plans in the unlikely event of a business failure, to ensure continuity of services and, where necessary, to enable another provider or the Government themselves to step in. Interserve has volunteered to lead the way as one of the first suppliers to design one of these resolution plans.
Lord Wallace of Saltaire (LD)
My Lords, in view of the substantial difficulties that major outsourcers are now going through, do the Government have a view on the minimum number of major outsourcing companies they need to maintain a competitive market for government outsourcing of public services?
Lord Young of Cookham
The noble Lord raises a good point. We want to promote a healthy and diverse marketplace for public services so that not only the Government but local authorities and, indeed, the private sector can access these companies. For that to happen, we need to ensure that the existing ones have a robust financial regime. We are also trying to break down some of the very large contracts into smaller items so that smaller suppliers, who cannot bid for the major contracts, can bid for contracts that have been disaggregated. I hope this in turn will help to build up the marketplace that both he and I want.
Health and Social Care (National Data Guardian) Bill
Wednesday 12th December 2018
(6 years ago)
Lords ChamberRead Full debate Health and Social Care (National Data Guardian) Act 2018 View all Health and Social Care (National Data Guardian) Act 2018 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 6 June 2018 - (6 Jun 2018)
Baroness Chisholm of Owlpen (Con)
My Lords, in moving that the Bill do now pass, I express my gratitude to all noble Lords for their interest in the Bill. I want particularly to thank the noble Baronesses, Lady Thornton, Lady Walmsley and Lady Kidron, and the noble Lords, Lord Patel and Lord Knight of Weymouth. Extended thanks must also go to my honourable friends in the other place, Jo Churchill, who introduced this Bill, and Peter Bone, its recent sponsor. My life was made a great deal easier during the passage of the Bill by the excellent work of the Bill team, and the continual assistance of the Minister, my noble friend Lord O’Shaughnessy, along with that of the Department of Health and Social Care. Before I sit down, I must also mention and thank the current National Data Guardian, Dame Fiona Caldicott, who has contributed so much to work in this area. I beg to move.
The Parliamentary Under-Secretary of State, Department of Health and Social Care (Lord O’Shaughnessy) (Con)
My Lords, I join my noble friend briefly in congratulating all those involved in the passage of the Bill. I also extend my thanks to her for her sterling work in raising this issue. The Government strongly support the passage of this Bill and we hope it will achieve Royal Assent swiftly. With the permission of the House, I need to clarify an important point raised at Second Reading on demographic data. I have laid a letter on this subject before the House as a more extended account.
The role of the National Data Guardian is, first and foremost, about good practice in supporting organisations and individuals who process health and adult social care data. The Bill is drafted widely to allow the NDG to issue guidance about the processing of health and adult social care data. This should be interpreted broadly and would allow for the NDG to produce guidance on issues that impact on the processing of health and adult social care data. This would include, for example, good practice in security standards for storing health and adult social care data. This is an example of where guidance is not strictly focussed on health and social data itself, but about the processes and issues that could impact it. Almost anything that should be taken into account when processing health and adult social care data—or which broadly has the potential to impact, affect or influence that processing—would fall within the scope of that definition. With that clarification, I hope we will be able to move forward and that noble Lords will support this Bill. I once again thank my noble friend and congratulate her on her sterling effort.
Prisons (Interference with Wireless Telegraphy) Bill
Wednesday 12th December 2018
(6 years ago)
Lords ChamberRead Full debate Prisons (Interference with Wireless Telegraphy) Act 2018 View all Prisons (Interference with Wireless Telegraphy) Act 2018 Debates Read Hansard Text
Homes (Fitness for Human Habitation) Bill
Wednesday 12th December 2018
(6 years ago)
Lords ChamberRead Full debate Homes (Fitness for Human Habitation) Act 2018 View all Homes (Fitness for Human Habitation) Act 2018 Debates Read Hansard Text Amendment Paper: Public Bill Committee Amendments as at 20 June 2018 - (20 Jun 2018)
Lord Best (CB)
My Lords, I understand that no amendments have been set down to this Bill, and that no noble Lord has indicated a wish to move a manuscript amendment or to speak in Committee. Unless, therefore, any noble Lord objects, I beg to move that the order of commitment be discharged.
Off-site Manufacture for Construction (Science and Technology Committee Report)
(6 years ago)
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Lord Patel
That this House takes note of the Report from the Science and Technology Committee Off-site manufacture for construction: Building for change (2nd Report, HL Paper 169).
Lord Patel (CB)
My Lords, it is a pleasure to open this debate on the Science and Technology Committee inquiry, Off-site Manufacture for Construction: Building for Change. I should begin with some important thank yous: to our committee clerk, Donna Davidson; to our policy analyst, Dr Daniel Rathbone; and to our committee assistant Cerise Burnett-Stuart. All of them, as always, worked hard throughout the inquiry. I should also like to thank, most sincerely, our specialist adviser, Mike Putnam. His experience and expertise were much appreciated. On behalf of the committee, I also thank Laing O’Rourke for arranging for some members of the committee to visit its facilities to view aspects of digital construction.
I thank all the committee members, not hesitatingly at all, for their diligence and support. I mention particularly the noble Lord, Lord Mair, who persuaded us to conduct this inquiry. I know he will speak at some length about several of the issues involved and on the key aspects of our inquiry, which allows me to make my contribution shorter. I will do so by summarising the key findings of the report, allowing others to speak in more detail. I thank all the noble Lords taking part in this debate today, and I am delighted to see that some non-members of the committee have put their names down to speak, including the noble Lord, Lord Stunell, who has vast experience in construction in this area.
I also thank the Minister, for personally attending to give oral evidence to the committee, and the subsequent government response. It is not a frequent occurrence that the Government find inquiry reports agreeable. I am pleased that the Government agreed with much that we recommended. My colleagues and I will therefore no doubt focus in the debate on those aspects where the Government were less in agreement. I hope the Minister will find appropriate and agreeable answers today.
The findings of our inquiry are covered in six chapters. We make 10 key recommendations and reach several conclusions. I will attempt to summarise some of these. In their response, the Government recognised the construction sector’s contribution to the economy and to employment. It contributes over £138 billion of gross value to the economy and employs over 3.1 million workers. However, despite its importance, the sector fails to match the productivity improvements seen in other sectors of the economy. Labour productivity, for instance, is nearly a fifth lower in the construction industry than in other sectors. We believe that, if implemented, our inquiry findings and recommendations will go some way to improving the performance of the construction sector.
The combined effects of the problems characterising the construction sector mean that it cannot meet the needs of housing and will struggle to meet the needs of infrastructure. Off-site manufacture for construction can help it meet those needs. Off-site manufacture has several tangible benefits, including better-quality buildings, fewer labourers, increased productivity, the opportunity to create more regional jobs and better building safety, to list but a few. Those all make a compelling case for the wider use of off-site manufacture for construction.
Despite those obvious benefits, the uptake of off-site manufacture is limited, and that will need to change. For change to occur, the regulatory, financial and commercial environments that currently operate in the sector need to be addressed, and action is needed not only from the sector but from the Government. I acknowledge that the Government have made a start, particularly in their publication of the construction sector deal, and this is a very important step forward. I hope that the Minister will agree that, for it to succeed, the Government and the Construction Leadership Council will need to work together, and a key component of that should be the development of a clear forward plan, including timelines and indicators of performance management. Can the Minister say when this might happen and who will lead on it?
I very much welcome the Government’s announcement of presumption in favour of off-site manufacture and their investment in digital design for building and manufacture. We look forward to plans for its implementation. Again, perhaps the Minister can say more about when this might be implemented.
To meet the current housing shortage, the Government have set ambitious targets for housebuilding and have announced investment in the construction sector deal. Can the Minister specify what conditions they will attach to this investment to drive the use of off-site manufacture for construction? The Government have several levers they can use to optimise this. Although we recognise that they are taking some action, in Chapter 6 we outline further steps that they can take, including developing and publishing a series of key performance indicators against which the success of “presumption in favour”, which the Government have now said they will commit to, can be assessed. What plans do they have to do this?
Much of the evidence we received suggested a construction sector that is fragmented and lacking in trust. This a reflection of current business models and traditional ways of managing finance and cash flow. The Construction Leadership Council has an important role in providing resources and leadership to overcome this. We welcome the Government’s commitment to changing the public sector procurement model to procure for whole-life value rather than up-front costs. This, together with presumption in favour of off-site manufacture, is an important signal to the industry. The Science and Technology Committee will follow future developments with interest and may well revisit the situation with a follow-up inquiry to track the Government’s record in fulfilling their commitments. In the meantime, I beg to move.
Lord Borwick (Con)
My Lords, I first declare an interest, as noted in the register: I am a property developer with several ongoing housebuilding projects.
I welcome the report from the Science and Technology Committee. Off-site manufacturing is likely to be more economic, efficient, safe and automatable than traditional ways of building houses. Indeed, it ought to be the obvious thing to do. So I compliment the noble Lord, Lord Patel, the chairman of the committee, and the noble Lord, Lord Mair, for guiding us to choose this as a subject for our committee.
I used to manufacture London black taxis and was once told that each taxi off the production line was different from the last. That was not a compliment. It is important to communicate clearly that factory-made construction does not mean identical houses. On a car production line, you can change the colour of the paint and a whole lot more. Cars built to thousands of different specifications can come off the same production line. It is the same with houses. The major differences are often in the finishes rather than the underlying structure.
Noble Lords may remember the 1962 song “Little Boxes” by Malvina Reynolds and may be extremely grateful that I choose not to sing it for them—unlike David Templeman, a Member of the Western Australia Parliament, who can be seen on YouTube singing a Christmas song to his colleagues in Parliament. I remind them that the song satirises the growth of suburbia, with houses, or little boxes, of different colours,
“all made out of ticky tacky”,
which all looked the same. Noble Lords remember it.
There is a similar perception—only exacerbated by the move to off-site construction—of new-build housing in the UK now. We know this to be false and must make a more positive case for the wide range of products, styles, finishes, colours and results of modern housebuilding. Many Japanese houses are now built in this way. In fact, they are built on the foundations of the houses they replace. The buyers can pick a house from a catalogue, to the specification they want, and the whole process does not take too long to complete.
While it is important to stress that off-site does not mean uniform, we should also recognise that buyers of new houses are often different from buyers of houses generally. Those buying new houses are usually younger, often couples, and a lot of the time are buying because they are starting a family. They are often moving from a rented flat to a new house—a typical and lovely story. The demand of different buyers is similar: they are looking for their first home, something affordable, suitable for starting a family and a little more pleasing than the flat from which they are moving. If the demand is similar, it is unsurprising that the supply is similar.
Some of the concerns and worries about this, as mentioned by my right honourable friend in the other place, Oliver Letwin, are a little confusing. It is like grumbling about all the products across Marks & Spencer shops being similar. Of course they are: they are directed at a target market. It is the same at Lidl or Aldi. Their product ranges are similar because they are trying to sell products to similar markets.
The government response to this report maps out how they are already working to achieve many of the recommendations in it. But while a lot of it is welcome, there are also some areas that I would no doubt find laudable were I able to fully understand them. The trouble with the Government’s response is that, while the English may be elegant, hidden in the language is the possibility that they will achieve absolutely nothing. No doubt we should be pleased that this form of construction is included in the industrial strategy and the sector deal, but if we come back in future and nothing has happened, my noble friend and his department can still claim that as a triumph.
In the meantime, some practical steps can be taken to help drive the use of and improvement in off-site manufacturing. Specifically, the Government themselves could actually start buying these materials for their own projects. For instance, we were given evidence that prison building projects, though they may be the leader here, could make even more use of off-site manufacturing, as could nurses’ accommodation. The Department for International Development could use the methods for building projects overseas, ensuring that the manufacturing process is done here, with a “Made in the UK” stamp. Committing to that would certainly mean we could benchmark success. Does the Minister agree that the Government themselves using off-site manufacturing much more widely by the end of this Parliament would mean we could judge his department as a success or a failure?
Financing is an important issue that the committee examined in some detail. Of course, cash-flow patterns for a factory are different from those for a housing site. Off-site construction parts from a factory are paid for when they leave the factory, just like a car— except that in the car industry, stocking finance is a well-established financial services product.
Such finance is not so easy to obtain in the housebuilding industry. No doubt it will be available in 20 years’ time, when off-site manufacturing is more routine. That point was made in the report. The issue at present with this process is that we are probably in the dip of the so-called valley of death of innovation, and we are waiting to move back up the curve to the point where it works as a successful business model. Other countries, such as Japan and Germany, have already come up past that dip. While we negotiate helpful sector deals, we should also caution against too much intervention, too much bureaucracy and too many complex funding streams and quangos to administer it all. We should instead keep government action as practical as possible, and look to examples overseas of how best to let the industry thrive.
As I have said throughout, I welcome the developments in and potential uses of off-site manufacturing, the committee’s report mapping out a path to adopting it, and the Government’s willingness to adopt the proposals of that report. But there is something that we have not addressed, which unfortunately renders a lot of the good intentions, and even the good actions, somewhat futile. That is our restrictive planning system—one of the main reasons why we do not build enough houses. That is the reason why off-site manufacturing is not allowed to take off as we would like.
The planning system at the moment discourages any building from happening. It also discourages the use of building techniques that would make off-site manufacturing the game-changer it could be. One of the great advantages of off-site manufacturing is its flexibility. For instance, it would theoretically be easy to alter plans in order to change from a 3-bedroom building to a 4-bedroom building in the pre-construction phase. But our planning system would never allow that flexibility. Even on a planning-approved site, that kind of change would require a whole host of negotiations—on education, road traffic and more.
We have to build 300,000 homes a year. We must meet that challenge, and one of the best ways to do that is through the roaring success of off-site manufacturing. Again, I welcome the committee’s hard work in mapping out how this can happen.
Baroness Young of Old Scone (Lab)
My Lords, I should declare an interest as chancellor of Cranfield University, which is involved in off-site construction, and as chairman of the Woodland Trust, of which you will hear more anon. The construction sector in the UK is a big thing, and will see an investment of £600 billion over the next decade, including £44 billion for housing. The sector has low productivity, and lags behind other major industrial sectors in this country in productivity improvement. It faces some major challenges: the dash for housing and a lack of skills, which will only get worse with Brexit—as, indeed, everything appears to do.
The construction sector is at a crossroads. As a member of the Science and Technology Committee, which worked on this report, I welcome the opportunity of this important debate. I thank my noble friend Lord Patel for his chairmanship, and the noble Lord, Lord Mair, for his impressive expertise, charmingly and modestly offered.
Off-site construction offers a major contribution to thinking about and delivering a revolution in the construction sector. Our report defines what we mean by off-site construction: I am sure all readers of it are now fully conversant with the difference between volumetric and panelised construction. Indeed, off-site construction is not a new phenomenon. Prefabricated buildings of many sorts have been around since the time of the original prefabs, and many self-build and individual-build houses have depended substantially on prefabricated elements.
We now have an opportunity not only for the UK to maintain its position at the forefront of off-site manufacturing globally, in the commercial and high-rise residential sectors, but to gain major benefits in the low-rise residential sector, where the UK currently lags behind. Our report outlined the benefits of off-site construction. A recent National House-Building Council report showed that the construction industry companies currently involved in off-site construction were most motivated by a number of factors: first, improved quality in what they could offer; secondly, efficiency and productivity; and, thirdly, accelerated delivery, with shorter end-to-end construction times and considerably shorter times on-site.
Labour and skill shortages were another driver. There is an aging workforce and the impending risks to the labour market of Brexit—and it appears that the Brexit labour market applies to Prime Ministers at the moment as well. Thirty-five per cent of construction workers in London currently come from outside the UK, with the majority of them being EU workers.
Let me highlight another two benefits that the companies involved did not particularly draw to our attention. The first is the reduction in construction waste. When I was chief executive of the Environment Agency, I was appalled that 30% of construction materials delivered on to conventional sites left as waste without ever being used. That was not a great contribution to productivity or the circular economy. The second benefit concerns health and safety. It is estimated that off-site construction could reduce work-related health and safety impacts by 80%.
The Government’s response to our report was pretty positive. It is encouraging to see how a range of investment and other measures are being put in place to help bring about this construction revolution. That seems to be envisaged in the construction sector deal and I urge the Construction Leadership Council, in leading that deal, to see this as a medium to long-term effort, not a quick fix.
The then co-chair of the Construction Leadership Council, Andrew Wolstenholme, gave evidence and was exceptionally visionary in this respect. He described the fundamental change in culture and approach that needs to be achieved in the sector and outlined a comprehensive road map for doing that. I have rarely been so impressed by the clarity of thought in how to achieve sustained change in a major sector and it bears re-reading by everyone involved in change programmes of any kind. I commend it to the Minister.
There have been previous spurts in the off-site construction market, the last of which stalled with the recession in 2008. Governments are not particularly good at keeping a consistent course over a number of years longer than the electoral cycle—though one can ponder at the moment on how long the electoral cycle is—so the role of the Construction Leadership Council is fundamental in keeping the implementation and change effort going until the job is done. Will the Minister comment on the need for sustained long-term leadership and ongoing support for the Construction Leadership Council?
The Government have some key roles, and I welcome the scale and range of initiatives and investments that they have outlined in their response to our report and subsequently. The Government have a unique opportunity in driving this through the presumption in favour of off-site construction, but they need, as the noble Lord, Lord Patel, said, to monitor that presumption, and compliance with it, and not to take no for an answer. Ultimately, I would like the scope of the presumption in favour of off-site construction to be expanded to all government departments and public authorities. Will the Minister comment on that too? The Government also need, through Homes England, to influence the procurement of off-site construction by housing associations and local authorities.
Of great importance are measures to ensure the pipeline of projects so that the security of supply can be assured and confidence promoted in the investment market and among planners. Management of the development of the market is important. The risk of success is that the market might overheat and outrun manufacturing capacity, resulting in disruption in delivery and extension of lead times. This would significantly adversely influence clients, architects, design engineers and contractors just at the time when we need them all to be enthusiastic adopters of off-site construction thinking.
On the labour and skills market challenge, I commend the work on apprenticeships and T-levels. Of particular importance will be the retraining of the existing workforce. The skills required are significantly different from those currently deployed, with scarce digital skills particularly important and, potentially, in the future, in short supply and great demand. I have discussed the construction workforce position with my 80 year-old brickie, who told me firmly that there will always be a requirement for his skills as long as brick-built houses still stand up. He is not thinking of retiring yet. However, the transition is not a simple one and a mix of new and traditional skills will be required for as long as our existing building stock endures.
Let me end with one last opportunity that off-site construction can offer. This was the point at which my interest declaration as chairman of the Woodland Trust becomes material. Part of the construction industry already recognises the value of wood in off-site construction. For example, Legal & General and Swan Housing Association have both invested in factories for off-site construction using cross-laminated timber. CLT can be used for a variety of housing projects, from terraced homes to apartment blocks. Wood as a building material has many virtues, including fine aesthetic qualities and its sustainable nature, but by far the biggest driver needs to be its role as a carbon store in combatting climate change.
In its most recent report, the International Panel on Climate Change has sombrely shown that we have only 12 years, if we are to keep the global average temperature rise to under 1.5 degrees. Society must move away from fossil fuels completely, but must also undo some of the damage already done. One of the ways of doing this on a large scale is to plant more trees. Planting a tree locks in carbon and reduces CO2 in the atmosphere. If that tree is then felled and processed 40, 60 or 70 years later and embodied in a building for a further 100 years, its carbon reduction impact is extended mightily.
The UK Committee on Climate Change called for a 9% increase in tree cover in this country. The Government gave a manifesto commitment to plant 11 million trees in the lifetime of this Parliament—though who knows what that will be. The climate change committee has clearly laid out that meeting that commitment would require planting 74 million trees a year, not 11 million trees over five years. I look forward to debating this with the Government as part of the forthcoming consultation on the England tree strategy. I commend the virtues of wood to the off-site construction market, both intrinsically as a material and for its undoubted contribution to climate change reduction. I hope our architects, designers, construction companies and housebuilders will “embrace their inner tree”, benefit from using more wood in off-site construction and help drive the planting of more trees. I hope the Minister will support my call.
Lord Stunell (LD)
My Lords, it is a great pleasure to take part in this debate and to follow the excellent speeches so far. I thank the noble Lord, Lord Patel, and the committee for producing an excellent report: it is wide-ranging, has a set of very balanced and sound recommendations and is founded on sound, solid analysis of the situation. We need to reflect on the fact that the construction industry is the most important and strategic of all the industries in this country. We sometimes talk about aerospace or the car industry being strategic, but the fact of the matter is you can buy cars or aeroplanes from somewhere else. You cannot buy new factories from somewhere else—or new houses or hospitals, for that matter. If the Government want to see a booming economy and solid, well-supported social services, it always comes back to something that has to be provided by the construction industry. That is reflected, to some extent at least, in the Government’s response to the report and their action in establishing the construction sector deal and strategy. I will come to that in a moment.
However, it is not just a question of maintaining an industry and improving it marginally; it is being given a much bigger job. Getting housing up to 300,000 units a year by 2020 is a formidable task, when we are struggling to reach 200,000. That involves a huge expansion of capacity. One could say the same about the health service, major infrastructure projects and a whole range of things. The report went to the Select Committee in the other place, which received details saying the industry would need to expand its capacity by 35% over the next 10 years. That is a huge challenge and, no doubt, the Government will want to engage with the industry in delivering it.
At the same time, there are 70,000 retirements each year from the workforce, and only about 30,000 to 40,000 people are being recruited into the industry from within the United Kingdom. Until now, that gap has been filled at all levels of the industry by the recruitment of workers from overseas—from architects, engineers and other professional workers to the skilled workers on-site. At the time the referendum was held, there were 200,000 EU 27 workers in the construction industry. It is a signal of the direction of travel that there are now, according to the ONS, only 156,000—in other words, a drop of 40,000 in that migrant pool of workers in the construction industry.
With the workload increasing and the labour force availability decreasing, there are clearly some major pressures and challenges. It could well be that off-site building, modern methods of construction—there are about five different ways of expressing it—can certainly contribute a great deal towards filling that gap.
However, there are other problems. It has already been mentioned that the report identifies a skills gap as well as a personpower or manpower gap. The problem is that, in a fragmented industry with a very large number of single-person or two- or three-person small-scale subcontractors, their capacity to provide training is somewhat limited. I think the report has let the Minister off quite gently on the ineffectiveness of the levy and on the current way in which apprenticeships are supported in the construction industry. I hope we can return to it in a more considered way on another occasion.
The Government’s response says that they have now approved 50 apprenticeship modules. That is intended to deliver 25,000 new apprentices into the construction industry by 2020. So 25,000 new apprentices are going in when the workforce is shrinking at 20,000 a year from retirements and another 20,000 a year from the reduction in EU migrants. It is not nearly enough. The Minister has approved 50 modules. How many more are stuck in the in tray, with the levy unspent, because it is just not possible for firms to get apprenticeships started?
Reference has been made to the T-levels, but I notice that the figures are pretty meagre. Courses in the construction sector are planned to start in 2020, and the response boasts—I think I can use that word—that there will be 1,000 people taking them up. Well, that is an extra 1,000 apprentices added to the workforce in 2022. It is a drop in the ocean. The Select Committee report also mentions that the type of skills needed is expanding in the construction industry; the noble Baroness, Lady Young, made the point about digital skills.
There is no doubt at all that taking manufacture off-site and putting it under cover provides opportunities and possibilities which are difficult to provide in the traditional industrial model that we have in the construction industry. That is good. But the report says that, to do that, it is essential to have a consistent pipeline of investment and of building. The problem is that, although we have a National Infrastructure Commission and an infrastructure development authority, the reality is that, rather than a pipeline, we have some sort of tangled-up hosepipe. Every time somebody is ready to spray the water on the flowerbeds, someone else steps on the pipe and no water comes out. You look down the pipe to see what has happened to the water, then someone turns it back on again and you get sprayed. That is what the industry feels like as far as consistent investment goes. I hope the Government will be prepared to say something about how they will do some countercyclical investment, particularly in housing, to make sure that that consistent pipeline is there.
The report also mentions research and development. The figures are awful because the Government think the industry spends £370 billion a year. They have obviously captured more than the report, which refers to £138 billion a year. Whatever the number is, the figure the Government have produced for the amount of R&D tax credits given by HMRC is £45 million. For the smaller figure that represents 0.04% of turnover going into research and development. The Government’s comment in their response to the Select Committee is that this,
“is low compared to some other sectors”.
I have no idea which other sector could manage to get less than 0.04%, but maybe the Minister has some information. Quite clearly it should be 2% to 3%—it should be a significant number. That really will be important if we are to move to a new model off-site.
What is the machinery for delivering this and to knock down the barriers? The construction sector deal is a very good step forward. We have certainly welcomed it. We believe it is an essential way for the Government to interpose in this. The way to deliver it is through the Construction Leadership Council. That is how things are mediated between the Government and the industry. I think it is something of a phantom body. There is a lot of “will do” this and “will do” that, rather than “have done” this and “have done” that. What actual spend has there been to date on the strategy? We are a quarter of the way through the time period. How far are we through the spending period? The noble Baroness, Lady Young, talked about cycles and election cycles. The current election cycle could do with having a stabiliser fitted to it, but leaving that point aside we need to know and understand what the Government intend to be the rate at which the strategy will develop. When will that first annual report be published? As the Select Committee asked, when and what is the timeline for that?
Many other vital points appear in the report, but in my last couple of minutes I will raise important issues that could do with more emphasis. Only 9% of the construction industry workforce are women. Off-site provides a chance to reset the image of construction and the environment in which construction is carried out to be far more appealing to those who are not attracted to the industry. I hope the Government and the Construction Leadership Council will work together to change the perception and the reality.
I have to agree with the noble Baroness, Lady Young—it is not just about getting the quantity right; we have to get the quality right. Some 93% of new homes handed over to their new owners last year were reported as having defects. The fact is that existing standards are not complied with and they are too low. Sustainability and durability are not taken seriously by the current construction industry—put it up, walk away. We have to have a model that understands that it is a whole-life process, with whole-life costing and sustainability. I was pleased to see that there will be some evaluation projects for sustainable homes, paid for out of the strategy, but we should immediately move to put zero-carbon homes standards in place. I do not think that there is any excuse for putting it into the long grass any longer—just do it.
Overall, this is an excellent report. It highlights that a huge amount of work has to be done if we are to create a fit-for-purpose industry with the capacity and skills to build a long-term, sustainable environment and infrastructure to serve the whole country. I look forward to hearing that the Minister recognises that, without that, practically all the other policy aspirations the Government have, whether housing, health, education or economic growth, will not happen without a viable, strong construction industry.
Lord Mair (CB)
My Lords, it has been a privilege to be a member of the Select Committee undertaking this inquiry under the expert chairmanship of my noble friend Lord Patel. I declare the following interests: I am head of the Centre for Smart Infrastructure and Construction—CSIC—at Cambridge University, and until a few weeks ago I was president of the Institution of Civil Engineers. I am also an adviser to the construction company Laing O’Rourke.
I draw attention to key words in the title of our Committee’s report Off-site manufacture for construction: Building for change. Building for change is so important and so badly needed. I shall first provide some background. The UK construction industry contributes more than £100 billion annually to the economy. It is vital to solving some of the pressing problems facing us. There is a lack of affordable housing. We have ageing infrastructure that needs replacing or increasing in capacity. However, the construction industry suffers from poor productivity. New technologies, such as off-site manufacture, could considerably improve the productivity of the construction industry. In November 2017 the Government announced the construction sector deal as part of their Industrial Strategy White Paper. This aims to transform the productivity of the sector, focusing on the building of houses, schools, hospitals and major transport projects.
A key innovation contained in the sector deal is the development and commercialisation of off-site manufacturing technologies, which have the potential to transform the construction industry. This is particularly significant for housing: to address the housing crisis at least 300,000 new homes are needed annually for the foreseeable future. Off-site manufacture can lead to lower costs and faster delivery, as well as increased quality. There are preconceptions about what has in the past been referred to as pre-fab construction; these need to be dispelled. As the noble Lord, Lord Borwick, said, off-site does not mean uniform, nor does it in any way mean shoddy—at least nowadays. Bringing a manufacturing mindset to the design and construction of infrastructure, especially buildings, offers huge opportunities for harnessing the benefits of standardisation and factory manufacture without hampering architectural ambition. There is a need for new thinking at all levels: from clients, through to architects and engineering design consultants, contractors and the supply chain.
Our inquiry explored whether off-site manufacturing of buildings and infrastructure, or the components thereof, could improve productivity in the construction sector. We examined the potential benefits and drawbacks of the wider uptake of off-site manufacture, as well as how government policy, particularly around public procurement, might need to change to facilitate it. We also considered what actions the construction sector could take to drive the further use of off-site techniques. We explored not only the unrealised opportunities for off-site manufacture in construction but, more importantly, the barriers to its uptake. At the outset of our inquiry we found it useful to clarify what is meant by off-site manufacture for construction. Broadly there are two main groups. In the first, components of a building are manufactured off site then brought together on site—such as columns, floor slabs and beams. This includes pre-cast concrete, which is applicable to high-rise buildings and other infrastructure. In the second, buildings can be manufactured volumetrically, or in modules: whole segments of the buildings are manufactured and assembled off site, then the completed modules are fitted together on site. This is especially relevant to housing.
Our inquiry concluded that there are clear and tangible benefits for construction from off-site manufacture which make a compelling case for its widespread use. These include: better quality buildings and infrastructure; enhanced client experience; fewer labourers and hence increased productivity; the creation of more regional jobs; improved health and safety for workers; improved sustainability of buildings and infrastructure; and reduced disruption to the local community during construction.
In July of this year, as we were finalising our report, the Government published the details of the construction sector deal. Our committee was pleased to see that off-site manufacturing was one of the deal’s three strategic areas of focus: digital, manufacture and performance. I shall refer to the importance of digital and performance later.
The evidence we received in our inquiry revealed a strong case for the use of off-site manufacture for construction, but its use today is by no means widespread. What are the barriers? Why has off-site manufacture not been more widely adopted? The principal barrier has been the fragmentation and lack of collaboration in the construction industry. This fragmentation makes it difficult for all parties—clients, designers and contractors—to be involved from the beginning of a project. Lack of trust, and therefore a lack of collaboration, and attitudes to risk are cultural within the whole sector. This often leads to disputes which are all too often part and parcel of the construction industry.
It was clear to our committee that the construction sector needs to build trust and partnerships so that companies can work together to improve the uptake of off-site manufacture. We welcomed initiatives such as the Construction Leadership Council and the Infrastructure Client Group’s Project 13.
Project 13, published by the Institution of Civil Engineers in May 2018, is an extremely important industry-led initiative. It will improve the way high-performing infrastructure is delivered and managed. It seeks to establish a new approach within the construction sector, based on enterprise, not on traditional transactional arrangements. The most significant changes in an enterprise structure, as opposed to a transactional structure, are that the owner is central and leads the enterprise, defining long-term value; contractors, suppliers and advisers have direct relationships with the owner; and an integrator actively engages and integrates all tiers of the market. Most importantly, in an enterprise model the key contractors, suppliers, owner, adviser and integrator all work as one team to optimise value. All parties—client, architect, engineering designer and contractors—must be involved from the beginning of a project, rather than, as so often at present, the contractors only being involved at a late stage when the project has already been pre-determined, fixed and designed, with all the risk being transferred to the contractors. A key element of a successful enterprise model is risk sharing as opposed to risk transfer.
Following these principles, our report recommends that designers, contractors and suppliers must all have early involvement in a project if off-site manufacture is to be successful. This requires a change in business models in the whole sector and among clients—both private and public sector—as well as far greater collaboration. There is a need for a client’s professional team or advisers to adopt a different approach, as outlined by the Infrastructure Client Group’s Project 13, to enable off-site manufacture. Our report welcomed moves in the construction sector deal to improve the sustainability of new business models such as this.
The Government and the wider public sector are by far the biggest clients of the construction sector. The Government therefore have a key role in encouraging and facilitating the uptake of off-site manufacture.
I welcome the Government’s response to our committee’s recommendation regarding new business models for the construction sector. It is encouraging that the Government are very supportive of the initiative taken by the Infrastructure Client Group in developing Project 13: a new approach to commissioning and delivering infrastructure and construction projects.
The Government have also recognised the importance of funding research and development. The construction sector typically spends very little on R&D—the spend is much too low, as the noble Lord, Lord Stunell, has already noted, and lower than in any other sector. One of the welcome aims of the construction sector deal is to increase spending on R&D. Alongside the initial sector deal announcement, the Government announced a £170 million investment in the transforming construction programme, as part of the Industrial Strategy Challenge Fund. Innovate UK estimates that this government investment will leverage around £250 million of match funding from the industry through its contribution to funding R&D projects. We all welcome this important initiative.
Our committee recommended that a portion of Government funding for R&D in the construction sector should focus on detailed performance data for the lifetime of buildings and infrastructure. This will provide an important evidence base for improving future designs, thereby achieving significant economies. By measuring the performance we can establish the degree of overdesign of much of our infrastructure; only by doing so will real advances be made. The Government’s positive response to this recommendation confirmed their support for optimising whole-life performance of buildings and infrastructure, which is part of the transforming construction programme. This approach will also combine the rapid advances in the digital revolution with major developments in innovative sensor technologies, many of them made recently by the engineering department of the Cambridge Centre for Smart Infrastructure and Construction. These have already been deployed successfully on over 100 construction sites. Industry should aim to routinely equip new components manufactured in the factory with fibre-optic and wireless sensors. These will deliver vital digital data on the performance of infrastructure, during construction and throughout its life.
In summary, our inquiry found that there is a compelling case for off-site manufacture in construction. The Government’s overall response to our report and recommendations has been very positive, as stated by the noble Lord, Lord Patel. We highlighted that in the Autumn Budget of 2017, the Government announced the very welcome “presumption in favour” of off-site manufacture by 2019 across five departments responsible for the construction of buildings and infrastructure: the departments for transport, health, education, defence and the Ministry of Justice. Our committee strongly supported this direction of travel.
As stated by the noble Lord, Lord Patel, we recommended that the Government develop and publish a series of key performance indicators against which the success of the presumption in favour can be assessed. We also recommended that where the presumption in favour is set aside and a project goes ahead that does not use off-site manufacture, the Government should publish a statement explaining why it has not been used and justifying that decision. The Government’s response to these two recommendations appears to be somewhat lukewarm, although they did state their intention to review the position on an ongoing basis. In the light of the Government’s otherwise enthusiastic response to our report, will the Minister clarify how the presumption in favour will be given more teeth? This could have a very important influence on the uptake of off-site manufacture, a well-proven innovation that has enormous potential to transform the construction industry.
Lord Renfrew of Kaimsthorn (Con)
My Lords, as a member of your Lordships Select Committee on Science and Technology, I must begin by thanking the noble Lord, Lord Patel, for his skilful chairmanship. I also thank the committee’s officials and special adviser for their thorough and efficient work. I should also mention that it was the noble Lord, Lord Mair, who encouraged us to pursue this theme and write our report, so it is a pleasure to follow him this afternoon.
Certainly it is clear that the construction sector has not delivered the same level of productivity as other sectors of the economy in recent years. On average since 1997, labour productivity in the construction industry has consistently been around 21% lower than in the wider economy, and there are certainly indications that the Government may find it difficult to achieve their target of building 300,000 houses per year by 2020.
The focus of the committee’s report is on off-site manufacture for construction, which implies factory production for the components produced and offers the hope of a smaller on-site workforce for their installation and much less on-site wastage and disruption. It is fair to say that the committee was greatly impressed by the benefits off-site manufacture and felt that the claims of its advocates were in most cases well justified, but we had a much harder time trying to work out why the model is not more widely adopted.
The benefits accrue largely from economies of scale, where the factory-made components can be delivered to a range of sites. Skilful planning can introduce variety and avoid the impression of sameness and monotony that many of your Lordships will remember in the prefabs of the immediate post-war period. In general the Government have been alert to the merits of off-site manufacture and ambitious in their construction sector deal, whose objectives were announced in November 2017 in the Government’s Industrial Strategy White Paper. They included a 33% reduction in the costs of construction, a 50% reduction in the time taken from beginning to end of new build and a 50% reduction in greenhouse gas emissions in the environment. These same targets had been set out four years earlier in the Government’s Construction 2025 strategy. The Government indeed published their construction deal in July 2018 setting out three strategy areas to meet these objectives. They were digital techniques to be used in all phases of design, off-site manufacturing technologies and whole-life asset performance.
Our report was published on 19 July this year, and the Government’s response, which was in general welcoming, was promptly published on 14 September. There is no doubt that the Government are well aware of the merits of off-site manufacture and well disposed towards it, but there is a very real question as to whether that is enough. At present, as the report makes clear in paragraph 107, the up-front finance required to set up off-site manufacture appears greater than the finance required for conventional construction. The Government’s response is positive:
“Where gaps are identified, the Government will work with stakeholders to address these, to ensure that the industry has access to the finance that it needs to expand its off-site manufacture capacity”,
but is that enough? It is perhaps a shade vague.
It is clear that constructors and housebuilders which fall into the category of small and medium-sized enterprises—that is, they employ fewer than 250 persons —are not in a good position to employ off-site manufacture, usually being too small to do so on their own. It will take a considerable disruption in the low-rise residential construction sector in the United Kingdom to bring it to adopt off-site manufacture. Currently, we were told that in that respect the UK is,
“substantially behind Scandinavia, North America and Japan”.
However, we were told that such a disruption in the construction sector is,
“most likely to come from overseas, and perhaps from China”.
Those observations are covered in paragraphs 58 and 59. That is perhaps a shade disquieting.
As we have heard, in his November 2017 Budget, the Chancellor announced a presumption in favour of off-site construction across suitable capital programmes where it certainly represents value for money. The committee’s report lays considerable weight on that presumption and emphasises the need to ensure a consistent pipeline of projects. Without this, the industry will not have the confidence to invest substantially in off-site manufacture.
There is, of course, very much more that could be said. It is fair to say that the committee was unanimous about the merits of off-site manufacture for construction. The Government have been consistently forward-thinking in their construction sector deal, but they will need a consistent policy in procurement where public projects are concerned if the promised benefits are to be secured.
The Earl of Lytton (CB)
My Lords, I too congratulate my noble friend Lord Patel and his committee on a very thorough benchmarking report. The House will know of my interest as a practising chartered surveyor, which also involves the construction sector. I have also had the privilege of serving on an ad hoc parliamentary committee on government policy for the built environment, chaired by the noble Baroness, Lady O’Cathain. The House will also know of some of my activities in the All-Party Parliamentary Group for Excellence in the Built Environment, which, as the noble Lord, Lord Stunell, will know, have considerably informed my views on many of the things that have already been raised.
I draw on some 40 years’ involvement in various parts of the construction cycle but remain, I am afraid, very much at the muddy-boot level, although I begin to feel my age as I weekly shin up and down scaffolding on construction sites. I distinguish straightaway the existing bulk of traditional construction that forms our existing building stock and concentrate, as the committee does, on new build and where we go from here. I have witnessed, over my professional life, the growing use of component standardisation and off-site assembly, as the noble Lord, Lord Mair, so eloquently put it. I have also visited manufacturing facilities where entire floors of houses, which could be stacked on top of each other, were produced. I do not know how they moved them down the road, but that was another story.
Among the physical limitations of prefabrication is the size of components that can be conveniently transported to sites. However, in the realms of moving to robotics and 3D printing, who knows where we might be in a relatively short time in respect of distributed fabrication of components? The committee rightly referred to the limitations in current construction practices and the different approaches that would be needed, from design to completion, for procuring buildings with substantial off-site content. While many of them—hotels, some municipal buildings, schools, student accommodation and so on—are becoming, as we speak, early candidates for this type of work, the low-rise residential housing sector has been flagged up as a potential sticking point. This is mainly because changes in style, layout and space might place standardisation in the way of customisation, particularly, post-occupation adaption. I shall say more about that in a minute, although I believe that many of these points are perceptions rather than reality, and that, fundamentally, we are on to a good thing here and we should go with it.
There will always be a market for the one-off self-build of conventional construction. Needless to say, we have plenty of conventional construction already in place, but we will progressively get to a degree of standardisation of components, which can be arranged in multiple different ways to achieve a wide range of different designs and styles. I do not absolve current traditional methods of constructing dwellings from some significant criticisms of monotony and sameness. So let us not compare the bad bits too much. If we can get innovative design and exterior appearance into off-site construction, we will start to overcome some of the prejudices that sit against this particular form of creating buildings.
We must not forget that many of our best-loved residential street scenes are partly the result of standardisation of design and the way in which things have been put together. That has not prevented a degree of customisation by successive owners, who, as we know, love to tinker with their houses. We have retail superstores devoted to catering for their every need in that respect.
However, there are some key considerations to all this. First, a dwelling is not just a commodity; it is also a home on which occupiers may rightly wish to stamp their own mark as an expression of character and aspiration. Exhaustive design risks denying that, which has consequences for value and personal commitment to a very important investment asset—someone’s own home. We should not forget that. Where changes by owners take place, they can cause significant damage to the building’s performance. I think of the many cases I have come across over many years of puncturing of vapour barriers or cutting away structural elements to accommodate alterations.
Longevity of what we produce must be part of the deal. The fact that a new building might have a constructional life of 50 years instead of 200 is a criticism I have heard levied against modern construction. I think the noble Baroness, Lady Young, referred to that. We should regard that very critically, because savings made today on cost-cutting merely bring forward costs for tomorrow. I wonder whether there might not be a different way of making a cost comparison—for instance, by using something that was not money-based but an energy accounting method. Along the line, with our discounts and jam today versus jam tomorrow, we have led ourselves astray. Durability is vital, and buildings need to be constructed with future maintenance costs in mind. That to some extent governs the choice of components and materials.
The All-Party Parliamentary Group for Excellence in the Built Environment, in its 2016 report, More Homes, Fewer Complaints, made a number of recommendations, of which better supervision of on-site works was one. Off-site construction might deal with some of these issues, but by no means all. I have a particular bugbear, which is premature component obsolescence, with its obvious implication for future downstream costs simply because the production run of whatever it was has ceased a long time since. I think of the recessed low-energy light syndrome, where the starter unit and the electronics do not outlast the first set of bulbs. That is a fundamental failure and we should not allow it.
Hypothecation of components to a particular manufacturer or product line also brings its own risk. What do you do later when you need to repair something or replace an element? Composite elements manufactured off site and then put together need to be repairable. That means having some system with capacity to create them. The more elaborate and all-encompassing the off-site component in terms of its engineering content, the more that matters. I shall give a particular example, if I may.
A couple of years ago, I was called to inspect a zero-energy home constructed of composite panels made of insulation material between a sandwich of some sort of particleboard. It had an external cement render in what appeared to be a single coat with no joins and looked very smart. You could not fault the design but, somewhere along the line, the outlet for the roof drainage leaked. Lo and behold, the leakage was directly above some of the composite panels; these proceeded to rot as part of their component—namely timber—was biodegradable. To get them out, special panels had to be ordered. This was done under a building warranty; had it been a few years later, there would have been no such warranty. This sort of thing brings our construction industry into a degree of disrepute.
I recall that, many years ago, something related to timber-framing caught the wrong side of the television press. Noble Lords will remember: it was a celebrated case in which timber-frame panels were stacked on site but not protected or prevented from getting damp or maltreated. This nearly brought down the company in question; it caused mortgage lenders to refuse to lend against modern timber-framed structures for several years thereafter and caused significant disruption to a perfectly good and legitimate method of construction. We need to make sure that we have future-proofed as many of these things as we can. On-site techniques will have to change, not least in handling. As I said, bad news affects perception in a much more potent way than the actual defect probably warrants. That is information for you, and it is getting worse.
I see the process of off-site construction as part of a journey. It will become an increasingly significant component of everything we do. I welcome the Government’s response to this. I should like to reinforce what has been said about fragmentation, contract and payment arrangements—all the other things raised by the Farmer report.
I make a plea: construction and engineering is not seen by young people as a career they might like to go for; we ought to reverse that situation—construction and engineering is a fabulous career path. I draw attention also to the fact that very few young women are attracted to this sector; that is another waste of resources.
I finish by repeating my congratulations to the noble Lord, Lord Patel, and his committee on an excellent job of work, and express my appreciation to the Government for their very positive response.
Baroness Neville-Jones (Con)
My Lords, some clear themes have already emerged from the discussion of this report in the remarks of noble Lords who have spoken, so I can be brief. Before adding a few thoughts, I will say how good it is to have Members of the House with personal experience of the construction industry participating in this debate. I thank our chairman, the noble Lord, Lord Patel, for the way in which he guided our deliberations. We also had excellent support from our clerks.
In our discussions, members of the committee had the sense that we were tackling something very immediate in its nature and in the issues that it presented, but also something with very long-range consequences. We are pleased that the response of the Government, who have a key role to play, has been gratifyingly positive. But, as with so many things in life, it is the implementation of the proposed strategy—in this case for a construction centre—that counts. Perhaps the Minister, in his reply, will tell us just how far things have got to date. We need to know that a beginning has been made on the sector deal.
One of the striking things about the construction industry, as other noble Lords have remarked, is that it is very big. It represents 8% of GDP and 10% of employment, and these are big figures. It is twice the size of the car industry, but its image, of course, is very different. I think noble Lords have commented on image, which is on the whole rather negative. Sometimes you can get an undeserved image, but I fear that in this case it has to be regarded as related at least to a large part of reality. The construction industry does have a reputation for late delivery, variable quality and low margins. That, on the other hand, hides some of its outstanding attributes. The quality of British architecture and engineering, and the much more positive record in the construction of large projects and high-rise buildings, tends to get obscured by this more general negative reputation.
Low-rise construction, on the other hand, and general building, is a different story. It is badly capitalised and characterised by lack of leadership, the workforce is in decline—as other noble Lords have mentioned—and there are more leaving the industry than entering it. That problem is undoubtedly already, I fear, being deepened by Brexit. It is an industry with an inadequate skills base, insufficient opportunities for training, a fragmented structure, slow and unreliable supply chains and a cyclical work pattern. All these things add up to that conclusion. In short, it is old-fashioned and underperforming. As other noble Lords remarked, it lacks appeal for young people to make a career in it. That is something we need, obviously, to change.
In such a situation, it is not surprising that the construction industry is not in a position to respond to the challenges of the housing crisis. This is not the place to discuss the housing crisis, which is a very big topic and which has built up over many decades and has several roots, including planning delays and other factors that certainly go well beyond the scope of the construction industry to deal with and remedy by itself. This has to be a national effort, involving the Government in a central role. The lagging rate of build that we are experiencing, which aggravates that crisis, is part of a fundamental problem. We are not going to achieve, or the Government are not going to achieve, the aim of 300,000 houses a year in the absence of major improvement. Without change in the profitability of the industry, its outlook will remain very mediocre. This dim outlook for both industry and customer need not be the case. We have the opportunity to make a major change, and that was what the committee focused on.
We paid an interesting visit to Laing O’Rourke’s manufacturing site. It gave us an idea of the industrial changes that could transform the industry and its prospects, including energy-efficient modules produced off site which could be assembled on site in different formations. The point has been made, and I think it is an important one, that off-site manufacture does not mean boring buildings. It can actually mean rather more attractive buildings, because the modules can be assembled in different ways and you can produce something that is less uniform than a lot of the construction that is done on site. It also provides the potential for significantly higher quality and build for the same price, more reliable delivery, less risk to the health and safety of the workforce, and much higher productivity overall. So it is a very good prospect.
However, the outcome can be achieved, as other noble Lords have remarked, only by a changed relationship between the client and the builder—in other words, a different business model. To operate fast on site, detailed planning has to take place at a much earlier stage of the contract. Much of the expenditure which would take place in the traditional model only at later stages, when you come to the fix, have to occur much earlier. Thus, significant flows of cash also need to take place at an earlier stage, with obvious implications for both client finance as well as the builders. That applies whether it is public or private sector activity. Certainly we need to move to a way in which, when we look at the whole question of costs, we are looking at value and whole-life costs as an important part of the cost implications.
The challenge lies in how we get from where we are now to where we need to be to achieve the goals that the Government have in mind. They want to see a 30% increase in the speed of construction, a 25% reduction in costs and an increase in energy efficiency. I am sure that we all endorse those goals, but they are very ambitious and imply a revolution in construction. It is a question not only of how we build but of important ancillary issues such as the provision of adequate finance to underpin the structural changes and a much more highly trained and productive workforce. That in turn implies the provision of training and apprenticeships, which is currently lacking. The point has been made by other noble Lords and it is of fundamental importance. We also need to see greater innovation both in the construction process and in design. Standardisation has also been mentioned as an important factor. Those are the kinds of things that bring talent into the industry, encourage women to participate, and change the face and the perceptions of the construction industry over time.
Much hangs on the ability of the joint government/industry Construction Leadership Council network to work successfully towards the reforms that we want to see, including the ancillary things that I have mentioned, as well as the availability of capital and mortgage finance, and the releasing of land from stifling planning procedures. This is a very broad canvas that one has to operate on to get the results that we would all like to see. Therefore, I hope that when my noble friend the Minister replies, he will say something about these contextual factors, which have the potential to enable the industry to move forward and whose absence will constitute blockages.
As has been said by other noble Lords, a number of central government departments that have significant building programmes have committed themselves to a presumption in favour of modern construction methods. It would be helpful if the Minister could tell us what this commitment is intended to mean in practice—how much weight “presumption” will bear, what tangible changes we can expect as a result of it and how its attainment will be monitored. Another noble Lord mentioned monitoring. That is how we can really assess whether anything is happening, and it would be very helpful if the Minister would commit to reporting to Parliament on progress.
If government departments act on the leverage that they have at their disposal, not only will that be in the immediate public interest but it will also, frankly, be in the long-term interests of the industry. When I talk about government, it is not just central government that has to be involved; local government is a big sponsor and purchaser of construction generally, and in particular of housing, and they have to be on the same wavelength. This needs to be an all-government effort.
Bringing the construction industry into the 21st century, if I can put it in that way, is a big, although not impossible, joint task. It requires us to get down to the last. It also requires—this is the sense of our recommendations and has been endorsed by what has been said in the House already—a partnership of trust and determination between government and industry across a wide range of issues, and, as other noble Lords have also said, that partnership needs to be able to survive changes of administration and personalities.
Lord Broers (CB)
My Lords, I too compliment the noble Lord, Lord Patel, and the Science and Technology Select Committee on their report. It clearly describes the benefits of off-site manufacture and the degree to which it has been adopted by our construction industry. It goes on to make comprehensive and sensible recommendations about how we might make greater use of off-site manufacturing, all of which I strongly support.
I was pleased and not surprised to find from the report that we are internationally competitive in the high-rise sector of construction and I was disappointed, but again not surprised, that we lag behind in the low-rise residential sector, although there are signs of improvement. Paragraph 58 quotes Ann Bentley of Rider Levett Bucknall as saying that in the low-rise residential sector we were,
“substantially behind Scandinavia, North America and Japan”.
That is my experience. This field of engineering is far from my own as I am a microelectronics engineer, but I have followed it with interest because of its potential for improving the quality, speed and cost of construction. I was not surprised that we were leaders in the high-rise sector, as in general we have a high reputation internationally for large construction projects. In the low-rise residential sector, our building techniques have seemed slow and old-fashioned compared with what I experienced in the USA many years ago.
I lived in the USA from 1965 until 1984. In 1974, I designed a weekend home in Jamestown, Rhode Island, using templates provided by a company specialising in what were called modular homes. I did not carry out a detailed architectural design, of course, but I was able to determine the size, shape and layout of the rooms, provided they were rectangular, and the height of the ceilings and whether they were sloping or horizontal, and could determine where the appliances and bathroom fittings were. A few weeks later, a large truck with a team of four or five construction workers arrived, and within two days the house appeared, complete with its roof. Within another couple of days, the windows, doors and roof shingles were in place. All the wall units, doors, windows, roof trusses and flooring had been precisely manufactured in a factory. Of course, the foundation had to be completed beforehand and the finishing of the house inside took a local builder several months. This was 44 years ago, and the house remains in good order and has required almost no maintenance. I was not a pioneer in doing this, as my friends in the US had told me even back then that this was the way to proceed if I did not want a fully custom-designed house. Modular homes had a reputation for being lower cost, stronger and of higher quality. So it appears we have been behind for quite a long time.
The lack of adoption of off-site manufacturing seems to be the result of the fragmentation of the UK construction industry, as mentioned by many speakers, and the separation of design and engineering. This separation has damaged all branches of engineering but is especially serious in the construction industry. It appears that oversight of the construction industry is spread over a number of government departments, including BEIS, the Department for Transport and the Treasury. The Building Research Establishment has reportedly characterised the number of public sector bodies with an interest in construction as “a completely fragmented mess”.
As outlined so clearly by the noble Lord, Lord Mair, there is hope that the new sector deal for manufacturing may help sort out this mess. Let us hope so. It may also ensure that the skills we need to innovate in the application of off-site manufacturing are available—this was also mentioned by many other speakers.
I emphasise that there are many other areas where off-site manufacturing is important and the safest and most environmentally friendly way to proceed. I am thinking in particular about small modular nuclear reactors—a pet subject of mine—which we have discussed a great deal over the last few years but on which the Government have regrettably been unable to make up their mind. It should be possible to build these reactors off-site, thereby ensuring quality and reducing cost. The Minister, answering an Oral Question on nuclear power from the noble Viscount, Lord Hanworth, mentioned on Monday that the nuclear sector deal outlines a new framework designed to encourage industry to bring viable small-reactor propositions to the marketplace. I ask the Minister whether there is a timetable for evaluating these propositions. The Government’s procrastination on this matter has already seriously eroded any lead we might have had with these reactors through Rolls-Royce’s experience with them in Trident submarines. It is important that we proceed as soon as we can to actually build an SMR and realise the benefit that they may be manufactured off-site.
Lord Fox (LD)
My Lords, this has been an extensive debate and for that we should thank the support team that helped draw up the report, and the characteristic leadership of the noble Lord, Lord Mair, but I think we missed a trick. Clearly we should have co-opted the noble Earl, Lord Lytton, and my noble friend Lord Stunell on to the committee before we wrote the report. As their contributions have shown, they have a lot to add to the debate.
It may come as a surprise to your Lordships but I was trusted with the task of talking to the media when we launched this report. I had low expectations of interest, which was completely wrong—there was huge interest among the building media and trade. While I was giving those briefings, the noble Lord, Lord Mair, was hosting a reception at the Institution of Civil Engineers, and there was a fantastic turnout from across the industry. It is clear that there is a strong energy around this issue. And no wonder.
The sector deal says that we have to double capacity to meet the infrastructure and housing needs for the country and, as others have said, that we are already lagging behind in productivity. At the same time, we face a labour shortage, with an ageing population and people leaving the industry due to the Brexit drain. Clearly, energy is focused on this area because off-site manufacturing holds the prospect of increasing productivity, reducing or changing labour demands, improving the quality and efficiency of buildings, and removing some of the environmental impacts. So, all other things being equal, why are we not doing it? That is the question we are debating today.
There are barriers. As the chairman and the noble Lord, Lord Mair, said, the take-up is limited. At the heart of this are the commercial relationships within the industry itself. With architects, clients, designers, contractors, subcontractors, and subcontractors to the subcontractors, it is an extraordinarily fragmented industry, and one that has survived with that fragmented nature for a very long time. To change the way we build we have to change the culture of the industry. But this is an industry that has resisted cultural change better than most, and so it is no mean challenge. The noble Baroness, Lady Neville-Jones, pointed to one way that this might happen: money. If the prospect of profitability is dangled, perhaps it will encourage change.
As a number of noble Lords mentioned, there is a huge skills deficit, and it is only going to get worse. At the same time, the image of the industry remains one of dirt, muck, difficulty and very male. Through off-site manufacturing there is a great opportunity to create another, digital world for the future employees in this industry. That will attract people from different areas of the community, with different sorts of brains, and of course women and those from underrepresented communities. That will itself change the culture, because currently, its people are monocultural.
At the heart of this is the Government’s commitment to the presumption of off-site manufacturing through the sector deal, which we welcome. However, as was asked by the noble Lord, Lord Mair, and the noble Baroness, Lady Neville-Jones, what does that mean? We need to understand what it will mean in practice. Will the Government go along with the report and publish key performance indicators and score performance against those? What will happen if the presumption of using OSM is not met? How will the reasons for not manufacturing off site be reported? We recommended that the Government, through Homes England, should put pressure on housing associations and local authorities to also have that presumption. It would be helpful if the Minister could tell us a little more about that. There is an answer in the response but it seems relatively lukewarm.
There are a couple of other minor matters relating to the report. I will not comment on the small modular reactors, but the noble Lord, Lord Borwick, introduced the issue of planning, which was not covered. I beg to disagree with his wisdom. There are, of course, planning issues, but his argument would hold much more water if the main developers were not sitting on such huge land banks. That discredits that argument. If they were not more interested in building higher-priced houses close to green belts rather than on brownfield land, it might be more convincing. There is a perception, rightly or wrongly, that they control supply in order to control the price. So planning is an issue, but that argument does not work when we look at what the major housebuilders are actually doing.
That is why the Government—or at least, the public sector—as a housebuilder will be the driving force to deliver the 300,000 houses that the Government have set themselves as a target. That will not be achieved through private sector builders alone. The Government have a role but, as the noble Baroness, Lady Neville-Jones, rightly said, local authorities and housing associations will become extremely important. I hope that more local authorities will be driving the public sector housing agenda, and we need to know that the Government will be working with those organisations to promote that agenda. If the Minister would let us know what conversations Her Majesty’s Government are having with housing associations and local authorities on this issue, that would be enormously helpful.
I agree with the noble Lord, Lord Borwick, on the issue of cash and cash flow. The Government do, in part, respond to our point on that. They mention the British Business Bank, and say that they will work with it. Well, I work with my noble friend Lord Stunell, but he does not necessarily do what I want him to do. What does “work with” mean? What will the Government instruct, or ask, the British Business Bank to do, and how will they help to make sure that it does it?
Several speakers, not least the noble Lord, Lord Mair, and my noble friend Lord Stunell, talked about the quality of build and the through-life of buildings—the whole life approach. The noble Earl, Lord Lytton, also spoke about that. The whole life approach is central to the benefit that can be derived from off-site manufacture.
One issue that has not been raised is the response to the Hackitt review. As well as the environmental performance, the safety performance of multioccupied housing is central to the Hackitt recommendations. Part of the idea is to treat a multioccupancy building as a system, which can happen when it is handed over to the tenants and the owners only if it is built as a system in the first place. Building a building as a system is much easier using the sort of techniques that we talk about in the report. Not only can environmental performance be enhanced, but the safety performance of buildings can be assured through this approach. The delivery of what I think we all agree is a beneficial way of doing things is at the heart of this, and it involves many different actors. It involves government, and it is important for government not just to say the words but to demonstrate, through how it measures and how it enforces some of its measurement, what is going on.
It is important for the industry to work together, and the role of the leadership council has been mentioned several times. It would be helpful to hear from the Minister how the Government, who are part of the leadership council, will support that council. It has a big job to do here, and this is not its only job; it has a number of other things to do. I have worked in leadership councils for other industries, and it is a tough job to bring any industry together—but to bring this one together is even tougher. What are the Government going to do to help the leadership council deliver what it needs to deliver? Relationships will have to change, and they will do that only if people want to change. How are the Government going to help people to want to change?
Lord Stevenson of Balmacara (Lab)
My Lords, I declare an interest: my wife is a senior lawyer whose specialism is in construction. We have been so busy in the past few weeks that I have not had a chance to discuss with her anything in this report, so anything I say is entirely my fault and she must not be blamed for it.
I thank the noble Lord, Lord Patel, for introducing the report, which he did in his usual style and picked up the key points. The committee has obviously worked extremely hard. It has been a harmonious and interesting group and its members have been able to turn that enthusiasm and interest into good-quality speeches today. A number of them have been able to add to and embellish their contributions by bringing in their specialist subjects. I had forgotten about the local interest of the noble Lord, Lord Broers, in nuclear power and I cannot wait for the forthcoming Question. I shall have to follow my noble friend Lady Young and look harder for my inner tree the next time I am under stress in relation to these issues.
Joking apart, this is an interesting report of which the House can be proud. It is an example of the kind of activity that goes on—day in, day out—in your Lordships’ House but rarely sees the light of day in the way we all want it to do. The report is obviously based on substantial evidence collection. Anybody who is anybody in the construction world seems to have appeared—either in person or in writing—in front of the committee. It is clear that it has hit a particular moment in the thinking, debate and discussion in the public sphere around this area, which has encouraged the Government to give their support. I have done a number of committee reports over the years but I do not think I have read a government response that has been as broadly supportive of what the committee has reported, even though, as the noble Lord said, it does not go quite as far as you think it is going. The words are warm but the actions do not quite match up to where the committee would want.
Construction is an interesting area because, as a number of noble Lords have said, it is a key sector of the economy. It is often used by Chancellors of the Exchequer as a way of signalling whether the economy is going forward or is in a contracting phase. It has a direct relationship to employment so it is important in its own right. As others have said, it has a long value chain right across the country so, in a sense, by looking at construction you are also looking at the way in which Britain operates.
It is good that construction has been selected to be a key part of the industrial strategy. It has all the right hallmarks in volume, size and how it operates. However, it suffers in many ways, although that is not its own fault because it is at the cusp of what might happen to many sectors of our economy during the fourth industrial revolution. Will it benefit from the digital revolution or is it going to suffer? Is it going to use the digital revolution to create innovations in productivity and change the way it works? Is it going to rethink its approach to investment cycles? Other noble Lords have mentioned these points.
Construction is also interesting because it reflects much of what we call the British disease in what we do—appalling productivity despite hard work and long hours; short-term investment cycles; no big strong companies being built out of family companies and developing into publicly quoted companies; terrible R&D; and underskilling throughout. As has been mentioned, it is not a diverse environment; it is not investing in itself; and profit-taking is far too obvious and far too often. The relative number of SMEs, particularly at the bottom of the chain, is too great for the overall system and that leads to problems in innovation. It is a problem area at a macro level. I have mentioned diversity but we must not forget the recent blacklisting saga. It is not carbon neutral and it does not have an effective way of communicating to government about what it does—or, at least, until recently, there were no authoritative voices.
However, there are pluses. Despite considerable efforts by the department and by the Government more generally, the Construction Industry Training Board is a model of the kind of things that can go on in British industry and it should be praised for having survived and doing good work. Interestingly, the department for the construction industry—I hope the Minister will confirm this when he comes to respond—was one of the few to have a tsar for a number of years. This started the department thinking about what was necessary to create the particular recommendations we have seen today.
There are some good things, but there are quite a lot of bad things. The good news is that the report deals very clearly with a lot of issues that needed to be addressed and in a way that should provide a template for future results. I only have a few points on the main report, as people have talked so well about the individual recommendations. For reasons relating to my general argument, I would like to pause for a second on the safety issue, which was raised by a number of people.
This industry cannot be proud of its work on safety in the past, but it has improved and what has been proposed here—this change of culture and operations—may bring a better safety record. That is interesting because, as we have learned in recent weeks and months, health and safety is a British example of approaching problems of public interest that have not been susceptible to a top-down approach. The precautionary principle which infuses all our health and safety work—with the regulator placing more emphasis on analysing the harms and working with the industry to build a sustainable, resilient solution—is the way forward on many of our regulatory issues. This has been done well here and I hope it does not lose out as a result of the change in culture and practice we have been talking about. We should never forget the dangers omnipresent in construction activity.
On the supply side, the report does a good job by raising the issue of how the new technologies, approach and arrangements will work in terms of consumer satisfaction, and wants the Government to move further in what they are doing here. Mortgages are the obvious part of that, but insurance is also an issue. The report generated a response from the Government about the Farmer group, which reports to the Housing Minister in another department, but which is also part of the workstreams affected by the Minister’s response. I hope he will be able to say more about that. The whole question about developing housing will not work unless there is finance to support those who wish to move. The group started in December 2017, so it has had a year. Perhaps the Minister can give us an update on where that is going when he comes to respond, because it seems absolutely crucial.
In the same vein, the housing shortage issue—which the report picks up well in paragraph 55—can be resolved only if the Government think about the finance required for development more generally. The £3 billion homebuilding fund is obviously a way forward, but it is a sort of elephant in the room, because the number is so extraordinarily large and the methods by which it will be achieved are so difficult to understand. I hope the department will not give up on this. Again, the Minister cannot speak to this departmental responsibility, but I hope he will take the message from the report back to his colleagues in government. The presumption in favour and the idea that all this will pull together to create the right road will not work unless financing is provided at the appropriate time to feed the machine when it gets going.
There are several good recommendations in paragraphs 80 and 81 onwards, and later in the report, about the skills revolution required, how the leadership of the Construction Leadership Council should be approached, the good work done in apprenticeship standards and the move towards T-levels, and the hope this will also read across to digital skills. As others have said, this is fine, but we have been here before. Good advice and ideas from industries often do not see the light of day because they flow into the different departments providing support, such as the Department for Education, and then never seem to happen. I hope the Minister can say more about where we are with that, and how we will get some purchase with it.
Relating to the apprenticeship scheme, a number of people mentioned the problem of the particularity of the industry. This is not unique to construction; the same problem appears in other industries which have lots of small companies and very few big companies, because the money taken from the larger companies does not naturally flow within the sector. The Government will need to think quite hard about this when they respond. The history of the Construction Industry Training Board, as I understand it, has been one of trying to work with the industry as it found it to create the sort of skills and training courses that worked for that industry. Simply bolting on a pan-industry apprenticeship scheme may not be the right solution here. As in the audio-visual industry—where there are very few apprentices because they are not the particular need of that industry—the Government need to be smarter on their feet and better able to respond to the way in which the industry is signalling it wants the money that has been taken out to be paid back in training. The same issue is raised here.
There is much in the report about the need for better industry co-ordination, and the response from industry has already been quite good. The need for measurable targets, for a systematic approach to looking at that and for the publication of results is crucial. I hope there will be more on that. There are good, soft words, but no real direction as to where it is going, and how the Government might use the measurement of these important indicators.
On the second side of that same coin of industry co-ordination, how on earth are we going to educate clients to be better users of the industry in its new formulation? I am sure that everyone in this House has been a client at some stage in a large project in a business capacity, and has realised how difficult it is to try and get the communication, dialogue and debate that will result in a good product. Part of that is because we, as ordinary individuals, come into this so rarely. Because we are not trained for it, we do not have the skills and exercise. This has particular bite in relation to the Government, who are a huge procurer of buildings and spend enormous sums of money every year. Up until recently, the skill set required to run and manage a big project was never present, and rarely bought in. Of course, any learning that did take place was lost because people move quickly on to other jobs and practices. I am glad to hear from senior colleagues in the Civil Service that there have been some very substantial changes in the quality of skills in people brought into the Civil Service to do this work properly. I would be grateful if the Minister could reflect on that when he responds, because it is a necessary condition.
The last thing I want to cover concerns productivity. The issues here have again been well analysed in the report, and—in terms of what it is—the government response is good. But it does not yet provide the answer to the productivity puzzle that we are trying to solve. As the noble Lord, Lord Mair, said, it may be a question of trying to ensure that waste is reduced; that better value-for-money measures are put in place; and that skills and training are raised. But there needs to be another piece of work done by the Government to try and indicate how they see the productivity puzzle being resolved, and to make sure that all concerned buy into it in a way which will be effective.
My concluding feeling about this report, although it is not an area in which I am in any sense an expert, is that there is enough here to give real hope that we have within our grasp a solution to some of the problems we have been confronting in the construction industry. The Government’s adoption of a presumption in favour of off-site building is a terrific step forward, but it needs to be really pushed and supported. The Government have a role here; they have to look very seriously at the issues that have been raised, and I hope we will get some words from the Minister on that when he comes to respond.
Finally, as the noble Lord, Lord Fox, said, that is most of the story but not all of it. There are other issues that we need to think about if this will be successful—perhaps another committee, perhaps the Government need to go back to this when doing their return. The planning constraints issue is not resolved by the exchange between the noble Lord, Lord Fox, and others. There is an issue about import substitution; why do we have to import so many of the materials used in construction? Why can we not provide better skill sets, better investment and a better approach to try and make things here? The materials which we are using are part of that whole narrative. If they all need to be brought in from outside—even before Brexit—this would be a terrific chance to do more ourselves.
The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)
My Lords, I join with other speakers, particularly those who were not on the committee, in congratulating the committee on its work. I think this is the second report in two months I have had to respond to from the committee run by the noble Lord, Lord Patel—it sometimes feels like the second report in two weeks, but there it is.
As always, I also congratulate the committee on the extraordinary expertise it brings to its work. Those who serve on it are engineers, or from the medical profession or business, but it also has, in my noble friend Lord Renfrew of Kaimsthorn, an archaeologist. Given that some people have suggested to me that some of the practices in the construction industry have not changed much since the pyramids, it is possibly appropriate that he is there. Those who are not on the committee brought yet further expertise, but for the two generalists who spoke in the debate—me and the noble Lord, Lord Stevenson, if I may speak for the noble Lord—listening to the contributions and hearing about what is on offer for this industry and what it should be able to achieve in due course has been very educative.
We welcome the committee’s focus on off-site manufacture for construction and the support it has given to these technologies. The report has come out more or less at the same time as the construction sector deal, soon after the publication of our industrial strategy. I will say a little more about that. When I joined the department I briefly had responsibility for construction. I had the opportunity to see for myself the impact of some of these technologies. For example, I heard about what they could do for Crossrail in building some of the underground at Liverpool Street and other sites, off site, and how these technologies can cut delivery time by half, from 67,000 to 27,000 man hours, delivering time, cost and productivity benefits. Also, major construction projects such as that in London deliver benefits to the regions. My understanding was that some of those stations were being built not in London but in the Midlands. Therefore, whenever people talk about infrastructure gains for London and all that cost going to London, they should remember that such construction techniques benefit other parts of the country.
We believe that technologies such as this should be rapidly commercialised and adopted by the sector. That is an objective the Government are fully committed to. It is at the heart of our strategy for the sector, as set out in the construction sector deal, and I will take this opportunity to set out the Government’s approach.
The construction sector is a vital part of the United Kingdom’s economy. It includes product manufacturing and associated professions, and had a turnover of some £370 billion in 2016. The noble Lord, Lord Stunell, had some doubts about our figures, but as I say, we are including product manufacturing and associated professions. I will certainly look at his figures, see how they compare with ours and whether we are comparing eggs with eggs. The sector accounts for around 9% of United Kingdom GDP. It also employs 3.1 million people—9% of the UK workforce.
The sector’s outputs underpin the UK economy through providing the buildings and infrastructure that firms use, as well as providing the homes, schools and hospitals that deliver a high quality of life for our people. It is a sector that can and should make a major contribution to economic growth and prosperity, but it obviously faces a number of challenges that are particularly pronounced. These include demographic change. The whole of society is changing, but it is even more marked in this industry: a third of the construction workforce is aged over 50, and those workers will not be replaced by those entering the workforce. As a great many noble Lords have underlined, as has the report, it also has to improve its productivity: McKinsey estimates its rate of improvement as being less than 50% of the whole economy’s. It is even further behind sectors such as manufacturing. We also have to look at training, but I will say a little more about that later.
To deliver the Government’s infrastructure investment plans and achieve that homebuilding aspiration of 300,000 new homes a year will require the construction sector to modernise and become more productive. We believe that the adoption of techniques such as off-site manufacturing is a key to this, as does the Construction Leadership Council and other industry leaders. In passing, let me say how much I welcome remarks such as those by the noble Baroness, Lady Young, and others about the Construction Leadership Council. We will continue to work closely with the council to deliver the sector deal. I note that the noble Lord, Lord Fox, said that he works closely with the noble Lord, Lord Stunell, but it did mean that the noble Lord, Lord Stunell, did exactly what he said. I repeat: we will continue to work closely with the council because we do not want to tell it what to do—we want to work closely with and collaborate with it. It is possible that the noble Lord, Lord Fox, wants to take a more Stalinist approach to these things, but I leave that to his discussions with his noble friend.
The advantages of off-site construction are many and have been rehearsed by several noble Lords. They include digital design processes that enable designs to be refined and new materials and products to be incorporated, and improving energy efficiency and building safety performance, as the noble Baroness, Lady Young, made clear. Health and safety is a problem on the average construction site and here is an opportunity to improve it. There is the chance to improve quality and have fewer defects through building components being produced in a controlled environment, rather than on site. Off-site construction is less labour-intensive and produces less waste, thereby improving productivity, as was made clear. There are benefits for training, as the noble Baroness, Lady Young, again made clear, as well as advantages for tree planting, which she emphasised. As for import substitution, I remind the noble Lord, Lord Stevenson, that tree planting is great, and we want to see more wood used, but it takes quite a long time before those trees come on stream. Still, there are many trees that we can make use of in this country.
The noble Lord, Lord Fox, brought up the safety of the buildings themselves. There are benefits that could be addressed, and we want to work towards that. I believe that the Government have already taken action to support that transition by working in partnership with industry through the flagship construction sector deal that we published in July 2018. As always with such a deal, as with the industrial strategy as a whole, it is all very well publishing it—it is all about how you deliver it. Noble Lords were right to stress that we want to be kept informed about progress. I can give an assurance to the noble Lord, Lord Stunell, that we will be publishing an annual report on progress. I presume that the next report will be published in July 2019: I give that assurance now and I hope we can stick to that target.
The noble Lord, Lord Stunell, wanted to know how much we are spending. There is joint investment of £420 million in the transforming construction programme, of which £170 million comes from government and the rest from industry, to drive the development and commercialisation of digital and manufacturing technologies in construction. A key investment from that programme will be £72 million in the core innovation hub, a consortium of the Centre for Digital Built Britain—which the noble Lord, Lord Mair, will know of—the Manufacturing Technology Centre and the Building Research Establishment. That £72 million has already gone out and a further £60 million will be available. I think the noble Lord, Lord Mair, welcomed that expenditure on research. A further £60 million will be available for R&D projects in business and research institutions. The first grants in that field will be announced in January next year.
The sector deal also sets out plans to ensure that those working in the industry are trained in the skills that they will need to support the transition to off-site manufacturing. On training, I can give an assurance that we will work closely with the sector to drive an increased investment in skills development, to adopt a more strategic and co-ordinated approach to recruitment and to equip workers with the skills they will need in the future. That will be achieved through a joint commitment to implement the reforms to the Construction Industry Training Board to make it more strategic and industry led and to enable the sector to make the best use of funding from the apprenticeship levy. The sector deal sets out an industry-led target of increasing the number of apprenticeship starts in the sector to 25,000 by 2020. It is currently at 21,000.
I move on to the question of presumption, particularly the presumption in favour, which was raised by many noble Lords. My noble friend Lord Borwick started off with a certain number of strictures about what the Government were going to do. I will certainly take note of that and pass on those comments, particularly in relation to planning, to colleagues in other departments. He was the first noble Lord to talk about procurement, the work of Government in procurement and the presumption that they would be in favour of using off-site construction. We are taking steps to improve cost effectiveness. As the noble Lord, Lord Mair, made clear, in the 2017 Budget the Government agreed that presumption in favour of off-site manufacturing with five departments: the departments for transport, health, education, justice and defence. I would hope, since I think they were mentioned by another noble Lord, that departments such as the Department for International Development will also take that on board, but that will be a matter for them. The important matter is that we have that presumption in favour.
The noble Lord, Lord Mair, asked what teeth there were in that presumption. My noble friend Lady Neville-Jones asked what this presumption meant and how we would ensure it could develop. The presumption means that the five departments will, at every business-case level, test whether the use of these techniques is an option. It also means that, by including off-site in the early stages of planning, the right environment will be created for off-site techniques to succeed. By doing this we will challenge the cultural bias towards traditional construction and send a strong signal to the supply chain that they need to build their capacity and capability.
The presumption is only one part of a wider range of long-term initiatives to increase innovation and productivity in the sector. To help deliver the presumption, the Infrastructure and Projects Authority has set up a cross-departmental working group which has started developing a library of standardised components, building the capability of procuring departments and leveraging the Government’s purchasing power by aggregating demand from multiple departments. I hope that that will make a difference but I can add that the Government have issued a call for evidence on the implementation of the presumption to use off-site manufacturing, which will enable all stakeholders to contribute to the development of the presumption. Other issues will be considered in the light of the responses that we receive.
Baroness Neville-Jones
In the example that my noble friend has just given, in any competition where there is more than one potential supplier and one of them offers a much higher degree of commitment to off-site manufacturing, will the Government choose that contract even if it is more expensive—not outrageously more expensive, but potentially more expensive than something more traditional?
Lord Henley
I am not going to give any guarantee, if that example was in a competition, but I will certainly pass it on to colleagues as a matter to consider in such an eventuality. I was trying to stress what the presumption was, what it meant and how we will make use of it.
I also give an assurance to the noble Lord, Lord Fox, that we will continue to work with local authorities and housing associations to ensure that they take these matters on board. I hope that he will be content with the words I use about “working with” and consider that that is the right way to go about it.
I thank all noble Lords who have taken part in this debate. If I may make a pun, it has been genuinely constructive. I think I am the first one to make that pun, which rather surprises me given the 12 speakers, but there it was. It has been constructive, but I hope that the Government have also given sufficient assurances that we wish to be constructive in this. We believe that our commitment to the technologies in this field is one that we can be proud of.
Lord Patel
My Lords, I thank the Minister for his response, as I thank the noble Lords who spoke from the Front Benches opposite. I know that the noble Lord, Lord Fox, took both sides: as a committee member and as a Front-Bench speaker. I thank all noble Lords who took part, particularly those who are not on the committee. Their expertise was obvious. Science and Technology Committee reports often end up being debated by just the committee so it is nice to see that, on this report and the report hitherto, the debate has been joined by other Members of the House.
I come to the response from the Minister. Yes, he gave us a lot of reassurances. That is good. He also indicated one or two other developments that are occurring. That is also good to know. Some of us might have felt that we were probably looking for real and tangible commitments from the Government, rather than reassurances. However, I am encouraged that the report to be published in a year’s time will address all the issues that were highlighted, and I am glad that the Minister at least felt that the debate and the report were constructive in taking forward the issues of off-site construction and the presumption in favour, which was one of our key recommendations. It is good to know that the five government departments will now have to take this forward but I hope we will hear from the Government more commitment to driving this agenda forward if that does not happen, and how that will be done. I thank the Minister, but if he could give further reassurance on a more real commitment in a letter we would welcome it. Again, I thank the Minister and all noble Lords for the debate.
Royal Academy of Arts: 250th Anniversary
Lord Cormack
To ask Her Majesty’s Government what plans they have to celebrate the 250th anniversary of the founding of the Royal Academy of Arts, and the contribution made by the Academy to the artistic and cultural life of the country.
Lord Cormack (Con)
My Lords, I suppose the noble Lord, Lord Patel, and I have one thing in common: we can both go to bed tonight secure in the knowledge that we will between us have commanded the headlines tomorrow.
It has been a very frustrating period for me recently because I have had to follow what has been going on in your Lordships’ House and in another place from a hospital room. I am delighted to be back and able to introduce a debate, the keynote of which I think can be complete and enthusiastic unanimity. What I seek to do this evening is to draw attention to one of our truly great national institutions as it comes towards the end of a very special year in its history.
The Royal Academy is celebrating 250 years of remarkable contribution to our national life. There is not a Member in your Lordships’ House, nor indeed in the other place, who does not have some cause to be thankful for what the Royal Academy has done in upholding standards, giving opportunities, providing education and providing real continuity through a period from the reign of George III to the reign of Elizabeth II. There are many in your Lordships’ House—I think my noble friend Lord Crathorne will touch on this in more detail later—who have cause to be thankful because when I, together with the late Andrew Faulds, founded the all-party arts and heritage group way back in 1974, one of the very first institutions we visited was the Royal Academy, and we have been welcome ever since. I do not think a single year has gone by without at least a couple of visits to remarkable exhibitions.
The Royal Academy is unique—I use the word properly—in that it is an institution that is run by artists, sculptors and architects for artists, sculptors and architects, and is an institution that has provided stimulus, training and education of the highest order. Its first president was, of course, the great Sir Joshua Reynolds. It all came about because just over 250 years ago the architect William Chambers took a deputation to wait upon the king with a petition signed by some 40-odd artists asking for this institution to be established, and it was. During the 19th century, some of our greatest artists were trained in its schools, including Constable, Turner, Soane and Lawrence. The list is endless and illustrious and it has brought enormous benefit to our nation as a result.
The Royal Academy began not in Burlington House, where it is now, but in Somerset House, which was designed for it. It has provided a series of exhibitions which have stimulated the intellectual life of the nation in a very remarkable way. Of course we all know the summer exhibitions, and this year not only was there an extra large summer exhibition, but there was also an exhibition which displayed some of the treasures that had appeared in exhibitions from 1768 onwards. We know the Royal Academy not just for the summer exhibitions but for the other wonderful exhibitions. It has been a showcase for art of the highest international calibre. I could spend the whole evening, not just the few minutes allocated to me, talking about these things, but I shall just highlight perhaps the first of the great international exhibitions, the Italian exhibition of 1930, which was not without controversy because its most notable visitor was Mussolini. It was, however, an extraordinary exhibition, bringing together works by Donatello, Raphael and all the great Italian artists of the Renaissance. Just five years later, there was a truly remarkable Chinese exhibition.
One could go on and on, but I just want to talk about this year, because at the beginning of this year, we had something quite amazing: the recreation of much of the greatest of the royal collections, the collection of Charles I. Many of those great pictures were dispersed during that period of philistinism, which we know as the Commonwealth and Protectorate. Because of the generosity of loaners and the ingenuity of scholars, however, earlier this year the Charles I exhibition brought together so many of the things that that great connoisseur had collected. It is interesting that Charles I and George IV, who had varying reputations, nevertheless were among the greatest collectors that this country has ever known.
One of the stars of the exhibition earlier this year was that wonderful triple portrait of Charles I by van Dyck, done by the artist for Bernini to create a sculpture, which sadly perished in the fire at Whitehall Palace at the end of the 17th century. I have a particular interest in the triple portrait because I was able to borrow it last year for an exhibition that I arranged in Lincoln. This year we had it in the Royal Academy and it was a link between the two royal collectors, because although it was, of course, painted for Charles I, it was George IV as Prince Regent who rescued it when he went on a buying expedition to Rome in the early years of the 19th century. At the moment there is a very different but spectacular exhibition “Oceania”. Any of your Lordships who have not seen it should certainly go before it closes.
This year, we have seen a fantastic expansion of the Royal Academy to include the Burlington Gardens buildings. They have been visited since May by a million people. That is really quite a remarkable statistic. Again, if your Lordships have not been there, I hope you will go because they have made use of these new galleries and exhibition spaces to display such things as the very best possible and near-contemporary copy of Leonardo da Vinci’s “Last Supper”. Hie thee there if you have not been already.
Of course, all this has been done during the presidency of Christopher Le Brun, a painter—it is very apposite that it should be a painter who is the president this year—and the tenure of Sir Charles Saumarez Smith, who still rejoices in the name of “secretary”. They have added on the words “chief executive”, but I like organisations that still have, as their chief officer, a secretary. He has been a brilliant one and is retiring at the end of this year, justifiably having been knighted, with the thanks of all of those who have regard for the centrality of the Royal Academy as a marvellous institution.
All this has been achieved without government funding. No Governments of any persuasion have provided funding for the Royal Academy. It has been fortunate in receiving legacies and great donations, but it has been industrious in raising money itself. It does, however, benefit from two government contributions. First, no exhibition of great note can be held anywhere these days without government indemnity, and the academy has been a great beneficiary there. Secondly, it has the security of a 999-year lease on a peppercorn rent.
That is wonderful but draws a sharp contrast. As a fellow of one of the learned societies in the courtyard of Burlington House—I am an antiquary, but there are the astronomers, geologists, chemists and Linnaeans —we all have our premises on 10-year renewable leases. It would be a wonderful way to put the crown on the year of celebration if we could be given a degree of parity with the Royal Academy. I just sow the seed and hope that my noble friend will pass it to those who may be in a position to nurture it.
What of the future? I fear I must utter the awful word “Brexit”, because the secretary has indicated to me that there is real concern about the future of the schools and European participation in them after 29 March—or after the transition period. It is important that we take this on board because, as we leave the European Union, we must recognise that some of our greatest national jewels are our great educational and artistic institutions, of which the Royal Academy is one and the courtyard societies are others. It would also help the academy very much if the catalyst scheme of the Heritage Lottery Fund, whereby grants were given to match individual donation, could be reintroduced.
I end as I began—I am told that because of the small number of speakers, to all of whom I am extremely grateful, I can have a couple of minutes of injury time, which is very appropriate having just come out of hospital. The academy is worthy of celebration and applause by all of us and I very much hope that as it moves into its 251st year, it can look forward to a 300th anniversary of equal splendour.
Lord Jones (Lab)
My Lords, in another place, in 1970, I listened to the fine maiden speech of the noble Lord, Lord Cormack. He has kept up that standard over these 48 years. I thank him for obtaining the debate and leading it persuasively tonight. He has been an exemplary stalwart for the arts, culture and heritage in our two Houses.
It is a great privilege to be here at the heart of the British state. Our great sovereign is just down the Mall, the Commons Speaker and the Lord Chancellor are just down the Corridor. Across the road is the Lord Chief Justice in the Supreme Court and the abbey, with its mighty national history and attendant Prelates. The Prime Minister is in Downing Street and the Chief of the Defence Staff is in his Whitehall bunker.
I should like to think that the academy is also part of the warp and woof of our British state. It has earned such a place and, if they were here, notwithstanding their rivalries and disputatious natures, I guess that PRAs Joshua Reynolds, Mr Constable and the great JMW Turner would agree. I think they would like that. The RA can be inspirational and is a great institution.
I have held my Royal Academy friends card for 35 years or more, and have my Tate—Britain, Modern and Liverpool—pass and my National Art pass as well. I greatly appreciated the landmark exhibition of the RA entitled “British Art in the 20th Century”. That was a 1987 exhibition but I found it stimulating and startling. It was highly controversial as far as the art critics were concerned. I recollect the names of Shepherd, Graham-Dixon and Spurling; and Feaver crashed in heavily with his reporting on what had been selected and where it was hung.
This year, we have been greatly connected with the First World War and, four years ago, with its beginnings. From an exhibition that year, I remember to this day Mark Gertler’s terrifying “Merry-Go-Round”, which depicts soldiers and civilians screaming in a kind of pain. It was an instant success; a hit. I recollect CRW Nevinson’s depiction in black, white and grey of a company of soldiers resting; he portrayed the sheer exhaustion of the company of men and, understandably, their no little apprehension. I also recollect Sickert, who depicted Pierrot on Brighton promenade. Interestingly, many of the deckchairs in that painting are empty; the artist is making a point about casualties, and given the wind conditions, you could hear the great guns across the Channel.
In the same exhibition, Paul Nash’s depiction of a sea made up of broken aircraft fuselages is a powerful Second World War image. Another, which I found particularly interesting and rather sad, was Rodrigo Moynihan’s 1943 painting, “Medical Inspection”. A doctor is seated at a table with a group of men with naked torsos who are—I would not say starving, but of poor physique. They are the common man put into uniform, now having taken much of it off and waiting to be inspected. It is a powerful image and in some respects still relates to British society. I also mention Gwen John—is she better than her bombastic brother? In contrast to the images of war, I point out her painting “The Convalescent”, a sad depiction in a gentle, rather weak, palette.
Another great exhibition, bringing great credit to the Royal Academy, was that of Frans Hals. He might have liked Henry Ford, who told us, “You can have any colour you want so long as it is black”. Hals had his black as well: “Regentesses of the Old Men’s Alms House” is a depiction of five elderly ladies—distinguished, prosperous ladies—waiting for death. The catalogue, which I still have, depicts an enlarged hand; we in your Lordships’ House may recognise what is not a youthful hand. Hals was a remarkable man who threw the paint around, but in this instance he was very specific.
I am an enthusiast, not an expert, but I recommend consideration of Poussin. In a great exhibition of his work, there were enormous canvasses from the Louvre. The one that caught my eye, in the biggest gallery, was “The Holy Family on the Steps”. It demonstrates his remarkable palette and how he masters geometry and perspective with no little subtlety; he was a classical painter. He had a truly memorable self-portrait: very powerful, very vain and very assured.
One of the great exhibitions in terms of popularity was very recent—the Hockney. I have never known an exhibition so crowded, and going down the steps into the reception area, what did you hear? It was pleasure. People were thrilled to be there. I remember, however, one very sniffy Daily Telegraph critic who said that Hockney had been a theatre painter. I think that was his way of dismissing Hockney. But surely his Lincolnshire wolds—his depictions of the farmed landscape and those beautiful green trees—have to be admired greatly.
There has been no little controversy at the Royal Academy. One of the great controversies involved a reference to the Moors murders: a large portrait made by the hands of children created a great deal of controversy. But, that is art. I dare say some remember the dinner the Academy gave for the great Sir Winston Churchill, at which the then-president Sir Alfred Munnings laid into modern art. It was not well received at all, but you cannot take from Munnings the credit for his equine portraits. I try to assess as a humble enthusiast.
The Academy places artistic genius before us. It celebrates and encourages British art and culture. Perhaps we are somewhat elitist when we are thronging the galleries of the RA, but one does see parties of children, and there is the trickle-down effect. However, it is expensive. I went to the NPG to see those lovely Gainsborough portraits, and it cost £16. You are not going to travel from Bolton to spend that—and how do you get from Bolton to the NPG? My point is that there is the trickle-down effect, but travel is very costly. In many ways the RA is metropolitan par excellence. I do not see how it could be otherwise. But when you go to such exhibitions now, you hear the voices of people from Europe. Whether that is the consequence of the Channel Tunnel, I am not sure, but it is cosmopolitan, international and successful, and I very much support the approach of the noble Lord, Lord Cormack.
Lord Luce (CB)
My Lords, it is really most refreshing to take part in a debate where it is almost impossible to disagree with any of the other speakers. I am very glad to follow the noble Lord, Lord Jones, and listen to him talk about his love of the arts and all the exhibitions he has witnessed. I agree entirely with him that we are talking about a national centre of excellence. In particular I must thank my noble friend Lord Cormack, for that is what he is, for leading this debate of celebration. We are not celebrating a great deal nowadays, but it is a celebration of a remarkable 250 years of history of a great art centre.
I ought to declare an interest as an emeritus trustee. The merits of being an emeritus trustee, of course, is that I have the privilege of being associated with the Royal Academy but with no responsibility whatever. That is a very enjoyable thing to have, and a great luxury. For a moment I want to join my noble friend Lord Cormack, and others, in standing back and just looking at this extraordinary achievement in this national gallery. It is something to celebrate at a time when we as a country are very divided and introspective. This is a really positive achievement to celebrate. As I said, it is a truly national centre of excellence—one that can be enjoyed by all 100,000 friends from all over the country. Throughout those 250 years, it has had the support of monarchs from King George III to Queen Elizabeth II, with the founding principle of promoting the creation, enjoyment and appreciation of visual arts and architecture. It is a national focus for those things. As my noble friend Lord Cormack said, it is in a unique position in the arts world as a centre for artists, sculptors, architects and printmakers.
As we have heard, the last year has seen the most impressive redevelopment that I think the Piccadilly building has ever had, remembering the move from Somerset House to, eventually, Piccadilly in the 19th century. The linking of Burlington House with Burlington Gardens has been quite remarkable. I walked around it again yesterday morning to get myself up to date. To have created 70% extra space in that joint building under the leadership of the architect Sir David Chipperfield has been miraculous, and the range of facilities is also very special. For example, yesterday I saw the remarkable Renzo Piano architecture exhibition in one of the new rooms. There is also the new Benjamin West Lecture Theatre, where I recently heard Sir David Cannadine give a brilliant lecture on Sir Winston Churchill’s qualities as a painter. The variety of learning to be had at the Royal Academy is quite remarkable.
I want to reinforce the remarks that have been made about funding. For five years I had the privilege of being Arts Minister, and here I ought to say that I owe a great deal to my noble friend Lord Cormack for the advice and support that he gave me at that time. During that period I paid my first visit as a Minister to the Royal Academy. Having, for my first several months, been besieged by everyone all over the country for taxpayer support, it was quite extraordinary to arrive at the Royal Academy and to be told that the whole institution was being run without a single penny of taxpayer support, bar of course the indirect support that my noble friend Lord Cormack mentioned of the peppercorn rent and the indemnity for exhibitions. You would expect a Rolls-Royce arts centre to find it easier to raise money from the private sector; nevertheless, to me, it was a remarkable story.
There is a lesson to be learned too from the Royal Academy’s recent achievement of getting nearly £13 million from the Heritage Lottery Fund. As my noble friend Lord Cormack said, there was challenge funding in the past, and I am a great believer in that. In my time as Minister, I was able to prove to the Chancellor of the Exchequer that for every £1 of taxpayers’ money, you could get £5 from the private sector in various ways. That led him to give more taxpayer support to the arts. However, it is the variety of funding that matters. There is the commercial aspect and there are the donations of course—it is a charitable institution—but it was Sir Hugh Casson who, in the 1970s, started Friends of the Royal Academy. There are 100,000 friends from all over the country, which makes it a national institution. All of us take part in it and are interested in it, and we join in the activities.
We have heard all about the significant loan exhibitions of Italian and Chinese art, David Hockney’s art and the exhibition of Charles I’s paintings this year. Unfortunately, “Oceania” has just closed but I agree with my noble friend Lord Cormack that it was the most remarkable and highly imaginative exhibition. Very few of us know much about the history of the Pacific Ocean, such as that it has 20,000 islands, but the portrayal of its arts was quite special.
The art school is singularly important. Of course, the Royal Academy provided the first art school 250 years ago—we have heard of all the distinguished artists who have learned there. It is the only three-year postgraduate art course in Europe that is free—for the student, not for the Royal Academy, which supports the school.
I like the story in which the president at the time, Benjamin West, gives Constable encouragement. His painting had just been rejected for display in the academy, and Benjamin West said:
“Don’t be disheartened young man, we shall hear more of you again; you must have loved nature before you could have painted this”.
So there is encouragement for us all—not that I claim to be a Constable. I think that is a wonderful story.
The final thing I will touch on is the uniqueness of the governance system in this institution and its outstanding leadership. The 13-strong Council of Academicians, under the leadership of the president, sets the direction and strategy. I join the noble Lord, Lord Cormack, in praising Christopher Le Brun, who has been an outstanding president. Then there is the chief executive or secretary—a good historical description of Sir Charles Saumarez Smith’s job, which has been to direct the work and the implementation of that strategy. He is retiring, of course, and we all wish him well. The chairman of the Royal Academy Development Trust, the noble Lord, Lord Davies of Abersoch, is retiring at the same time. He has done an exceptional job of helping to raise funds. Finally, I mention the Burlington appeal board, chaired by Sir Richard Carew Pole, who has worked tirelessly to raise money for the Royal Academy. They have all been outstanding leaders, but without its dedicated staff the place would not have managed such a great achievement. We have a great deal to celebrate on this 250th anniversary. It is an institution that can give great encouragement to the rest of the arts world.
Lord Crathorne (Con)
It is so nice to take part in such a happy occasion. I thank the noble Lord, Lord Cormack, for winning this debate and making it possible. We are congratulating the Royal Academy, a remarkable institution, on its first 250 years. I would love to talk a little about the Arts and Heritage Group, which was founded by the noble Lord, Lord Cormack, in 1974. As he said, one of its first visits was to the Royal Academy, and we have visited every year since. The wonderful secretary, Charles Saumarez Smith, always welcomes us in the morning, and the curator of each show kindly introduces the exhibition, which greatly adds to our knowledge and pleasure. The group has visited the RA on average twice a year over the last 10 years, and has enjoyed some amazing exhibitions.
It was a triumph to get back all the items that Charles I originally purchased and which were then dispersed. It has just won the Apollo Exhibition of the Year award. There were two wonderful Hockney exhibitions in 2012 and 2016; the one in 2012 was the most visited show that year.
In the past 10 years, we have also been to some of the other exhibitions that the Academy has organised, including Van Gogh, Monet and Rubens, and lovely shows such as the modern garden exhibition, which was full of beautiful pictures. We went to an amazing exhibition called “Bronze”. I was so impressed by the enormous bronzes, and I remember thinking of the difficulties involved in bringing it all together—it was quite extraordinary.
Mention has been made of the annual summer exhibition, which has been held every year for the past 250 years. Alongside the 80 academicians—it is worth mentioning that one-third of them are women—who are allowed to put in six pictures, anyone else in the country, or indeed anywhere else, can enter pictures if they wish to. Every year, there are literally thousands of entries from professional and amateur artists. It is a great show, which I always thoroughly enjoy. The selection panel has quite a difficult job. This year, 300,000 people came, which is more than had visited any of the exhibitions since 1907.
My mother exhibited several times in the summer exhibition. With so many pictures to fit in, some have to be hung quite high up, and people like to be hung “on the line”—in other words, at eye level. One of my mother’s paintings was of a model called Zelda. My father received a telegram from my mother which simply said, “Zelda hung on the line”. It was delivered by a policeman, who demanded an explanation.
Another great contribution by the Royal Academy has been its school, mentioned by the noble Lord, Lord Luce, which now offers a degree course. I always enjoyed visiting the degree shows, trying to spot new talent. In 1971, I was greatly impressed by a student’s work, and I have kept in touch with her ever since. She works very slowly and so has a small output of lovely works. I am glad to say that two of her best works are now in the House of Lords collection, and one is reproduced in the guide to the Palace of Westminster. Her name is Diane Ibbotson. A few years ago, I and the academician Anthony Green, who admired her work, persuaded her to enter a picture to the summer exhibition. It was voted the people’s choice, which was very satisfactory.
The Academy collections are themselves superb. The first gift was from the president, Sir Joshua Reynolds, of his fine and famous self-portrait. The pride of the collection is Michelangelo’s Tondo of 1504, “The Virgin and Child with the Infant St John”—the only marble by Michelangelo in England. It is now on fine display in the new collections gallery, which opened in May this year. As has been mentioned, this gallery has been a major development that has added massively to what the Royal Academy can do and show. Visitors can now walk from Burlington House through these newly opened spaces to Burlington Gardens. It has been a brilliantly successful project, masterminded by Charles Saumarez Smith. It is his lasting legacy, as he leaves the Royal Academy at the end of the month for pastures new.
I end with a big thank you to Charles—now Sir Charles, happily—and the Royal Academy for what, over 250 years, it has given this country for the great benefit of all of us.
Lord Tyler (LD)
My Lords, I express my warmest congratulations to the noble Lord, Lord Cormack, not just on the superb timing of this debate but on the way in which he introduced this interesting discussion this evening. To avoid repetition of much more erudite and artistically skilled contributors, as an amateur historian I will concentrate on the history—not least because my great-great-great-grandfather was Sir William Chambers. So I want to look at how the Royal Academy came into being. As Members of your Lordships’ House may like to be reminded, Chambers was appointed architectural tutor to the then Prince of Wales in August 1757. The prince became an accomplished architectural draughtsman himself—but, more significantly for this debate, he also became a lifelong admirer and sponsor of his erstwhile tutor.
After 1760, when George ascended to the throne, Chambers enjoyed increasing royal patronage, and the commissions of many of those he encountered at court. As a result his work was wide-ranging, from the design of the state coach for the coronation to the pagoda in Kew Gardens—and of course Somerset House itself. Despite some previous controversy over the abortive “Incorporated Society”, which left the King very dubious about any connection with a new society of artists, Chambers used his special access and influence with him to good effect in November 1768.
The part that Chambers played in those speedy events was acknowledged in the minutes of the general assembly of the Royal Academy that December, as follows:
“That some time towards the latter End of November 1768, Mr Chambers waited upon the King and informed him that many artists of reputation together with himself were very desirous of establishing a Society that should more effectually promote the Arts of Design than any yet established, but that they were sensible their Designs could not be carried into Execution without his majesty’s Patronage, for which they had prevailed upon him to solicit”.
A later minute thanked Chambers,
“for his Active and able Conduct in planning and forming the Royal Academy”.
By 7 December 1768 Chambers was able to take the Instrument of Foundation to the King for his signature and, as we have heard, on 14 December, in Dalton’s Warehouse in Pall Mall, the new Royal Academy held its first meeting and Joshua Reynolds was elected president. Significantly, Chambers was insistent that a painter should be president—although the King had entertained a prejudice against Reynolds—and himself opted to accept the post of treasurer.
Indeed, Chambers drafted the Instrument of Foundation to give the King the prerogative to appoint the treasurer, so that,
“he may have a person in whom he places full confidence, in an office where his interests is concerned”.
A contemporary noted that Reynolds had told him,
“that though he was President, Sir Wm was Viceroy over him”.
In short, it can safely be suggested that Chambers ensured that the new Academy was able to boast the title “Royal” from the very outset. That would also seem to be the conclusion of John Harris, the prime authority on Chambers, with whom I had the great pleasure of working during my time at the RIBA. I am hugely indebted to his scholarship for much of what I know of Chambers and his role in this saga.
As one of the founding fathers of the RA, Chambers can share credit for its initial open attitude to new members. As the excellent Library briefing that we have received for this debate reminds us, of the 36 founding members, four were Italian, one French, one Swiss and one American.
Even more significantly, there were two women founder members. I was especially interested in an item on “Woman’s Hour” last week about those two—Angelica Kauffman and Mary Moser. The programme gave a fascinating description of some of the work of Kauffman, but the contributors admitted that Moser had not had enough attention—so I am going to remedy that just a little.
When we can escape from more contemporary absurdities, my daughter and I are currently examining some of our distinguished ancestor’s personal correspondence in the wonderful archives of the Royal Academy. Some of it we donated ourselves, but the archivist, Mark Pomeroy, and his magnificent team have also made available a great deal more.
Among the former is a delightful letter from Chambers to his favourite daughter Charlotte—our ancestor—written when Mary Moser was staying with the family in the summer of August 1784, in which he reported that Mary had been,
“swimming about ever since you left us til within these four days that she has taken with a strong fit of painting, of which the symptoms set all the family in an uproar; Lindgren flew into long Acre for oils and paints; Thomas to St Giles for pallets and brushes; T to Twickenham for straining frame; Miss Moser, George and the buggy, to Richmond in quest of an ivory knife; My Lady & Lavinia in the Coach to Brentford, in search of blew black; but alas no blew black to be found, and soot supplyd its place. The next difficulty was to find a proper painting room, when fortunately for the furniture of the house, the dark garret which holds the smoked bacon was declared to be the finest light in the world for painting. Miss Moser instantly took possession, converted an Old bed-stead into an easle to paint on, and has remained there ever since hard at work in the midst of Poppys, roses, Carnations, myrtle etc. She does not even come down to dinner, but abstains from everything but stewed pruens all the while she paints”.
Mary Moser was clearly a talented artist but also quite a character and I hope that someone will write something more about her contribution to the early days of the Royal Academy.
I do not know whether Chambers was responsible for nominating her, and perhaps Kauffman as well. However, both came from famous artistic families. What I find most fascinating about their founding membership was that there were no other women members, according to the brief from the Library, for 168 years. So Chambers and his colleagues in the age of enlightenment were a great deal more open minded than their Victorian successors. One up to Chambers and his colleagues.
As a footnote to the question of his connection with the King and the Royal Household, I offer one other scrap of evidence from some of the correspondence that I and my family could not quite bring ourselves to leave with the RA. Sir William wrote to his son-in-law, Captain Charles Haward of the 3rd Foot Guards, as follows:
“Dear Capt
Having had occasion to use the Water Closet after you had been there I found that you spoilt it by throwing down such large pieces of paper as will not pass by and by not knowing how to manage it”—
I shall discreetly omit the full details and the elaborate instructions that follow, but the bit at the end is important. It states that,
“if you should find any difficulty in performing the above manoeuvre, I will send for the King’s Sergeant Plumber to be present at two or three operations”.
If any doubts remain in the minds of your Lordships, surely this is abundant evidence of Sir William’s influence in royal circles and his key role in establishing the Royal Academy in such a prestigious position in our national life from its very birth.
I am sad that the noble Lord, Lord Ashton of Hyde, is not able to be with us—I am sure we all send our best wishes to him and his daughter—but it is a happy accident that the noble Earl is with us, because he has been a member of the Royal Household in his official technical title since 2015. I think that he will be able to confirm that being in that particular connection is important, as it clearly was in 1768.
Finally, as perhaps befits this particular evening, I turn to the issue of leadership—of the Royal Academy, of course: nothing else. The Library briefing illustrates so well the effective leadership, partnership, between Chambers and Reynolds at the outset of the foundation of this remarkable institution. Whether they were already close friends, I do not know; it is not terribly apparent. Reynolds painted Chambers’ portrait—it is there in the Library brief—and a very good portrait it is; I wish I owned it. In addition to that, Chambers designed a home for Reynolds. The important point is that they worked so well together.
As has already been said, there are two remarkable individuals at the moment, working in a real partnership, who have carried the Royal Academy through its 250th year with huge success—not by any means sitting back on its laurels but looking firmly to the future. The president and the secretary should be congratulated on the positive path they are charting for the immediate future. This, again, is brilliantly set out in the documents from the Library.
As a regular visitor to Burlington House and now to Burlington Gardens—I agree with the noble Lord, Lord Luce, about the success of that architectural combination—I am enormously appreciative of what that amazing organisation has provided for the nation. The Royal Academy is not satisfied by what has happened before—it is not resting on its laurels, even for this anniversary—and is obviously determined to detain its leadership role in the culture of our country. I am sure that all your Lordships wish the Academy a very happy birthday and very best wishes for the future.
Lord Griffiths of Burry Port (Lab)
My Lords, I rise to add my voice—a rather different one from those which preceded me—to this debate. I am grateful to the noble Lord, Lord Cormack, who is assiduous in the way he keeps matters of this kind before us and demands our attention on them. I will certainly end my remarks by wishing the Royal Academy many happy returns, but having heard that the noble Lord, Lord Cormack, has just come out of hospital, I want to wish him happy returns as well. It is very nice to see him here today.
I do not consider myself a philistine—I have visited galleries in Paris, Haiti, St Petersburg, Washington and I do not know where else—but I have never set foot in the Royal Academy so, as I say, I will express a different point of view. To say something constructive, I glory in the fact that an institution of this kind not only exhibits art—we have heard about the summer exhibition—but works as a true academy to promote the appreciation of art and the practice of creating it. It seems important to note that, as well as painters, it includes sculptors, architects and printmakers among its membership, since art is not just painterly skills.
I wanted to be a little better prepared than the fact I have never been to the Royal Academy would suggest, so I did what modern people do: I went on to the website, and found some one, two or three-minute YouTube pieces. I could give a long list, but I particularly enjoyed the little presentation of the “Oceania” exhibition. I have been to Fiji and the South Pacific and saw a lot of native art in situ there. Those pictures were extraordinary in bringing concepts, shapes, colours, contours and experiences into quite a different configuration, challenging us western people and our rather predictable cultural inclinations. Then there was Klimt and Vienna at the end of the 19th century. What a time in Vienna that was; Klimt in particular captured something of its decadence and aesthetics. That video was just one and a half minutes; I could quite easily dilate for more than 10 minutes on it, but I am sure the Minister would not appreciate me doing so.
Then there was Millais and the Pre-Raphaelites—I am very fond of their work—and a very insightful description of what Pre-Raphaelitism sought to achieve. “America after the Fall”—including the painting of those rather po-faced people with a pitchfork, looking the way many people must have felt in the 1930s—indicated how the rural parts of the United States of America are as primitive now as they were when they came into existence in the 18th century, just a few years after the Royal Academy itself. Then there was the video showing Reynolds and Gainsborough in contradistinction. I will make my debut at the Royal Academy when I go to see Bill Viola and Michelangelo’s “Life Death Rebirth”, which seems to capture something I am interested in.
The noble Lord, Lord Tyler, mentioned the composition of the first academicians in 1768. At a time when we are thinking of leaving Europe, it is not a bad thing to be reminded of Italy, Switzerland, Ireland, France and Germany, which all contributed to the original membership. How can art be insular? How can art exist in a vacuum? It cannot. The Royal Academy, which is quintessentially British, was set up to show that not only could France have institutions of this kind, but we could. However, by recognising the riches that came from a wider creative body, this was never done in an insular or inward-looking way. Creative activity knows no borders.
Once upon a time, not long before I took on these duties, I had what in a card game would be called a royal flush. Nobody else has ever done it. I preached, week by week, from John Wesley’s pulpit; I had a canon’s stall at St Paul’s Cathedral; and I sat on these red Benches in your Lordships’ House. If the Royal Academy is unique, as the noble Lord, Lord Cormack, says, then so am I.
Let me indicate for a moment how these three locales in my own personal history threw up an awareness of the Royal Academy, which I admit I have never visited. The architect who built Wesley’s Chapel was George Dance the Younger. He was one of the original 40 members in 1768. Is that not something? From my bedroom window on City Road, when the leaves—as now—were off the trees, I could just see the grave of William Blake. I am a poetry man—words are my metier—but Blake was an artist too, and a considerable number of his pieces are in the possession of the Royal Academy. He did all of his training—1779 to 1785—at the Royal Academy. I take great delight in that, as well as in his riposte to Joshua Reynolds, who has been highly spoken of by others but who did not command that degree of respect from William Blake. Reynolds wrote:
“The disposition to abstractions, to generalizing and classification, is the great glory of the human mind”,
to which Blake responded:
“To generalize is to be an idiot; to particularize is the alone distinction of merit”.
I go with Blake on that one.
Also at Wesley’s Chapel we have all the stained-glass windows and the finest collection of paintings by Frank Salisbury. He is now out of fashion, but he painted 25 portraits of the House of Windsor, more portraits of Winston Churchill than any other artist, the first portrait of Queen Elizabeth II, and endless numbers of American presidents vying to get into the same kind of frame as our royal family. Frank Salisbury was a student at the Royal Academy. I have had occasion to know and deal with his family. That is Wesley’s Chapel and the Royal Academy.
As for St Paul’s Cathedral, when sitting there listening to Anglican sermons—which I can tell you are not usually as vigorous as Methodist ones—I have had occasion to look around to be inspired by what I see around me. For example, the spandrels of the four evangelists painted by royal academician George Frederic Watts were quite splendid up there, reminding me that, whatever the sermon is doing with the scriptures, the artist has probably got it more accurately and inspiringly. Watts said:
“I paint ideas, not things”.
Then there are those three bowls in the eastern end of St Paul’s Cathedral; the vaults over the quire by William Blake Richmond, again of the Royal Academy; and Byzantine-style mosaics, pieces of glass set not flat on each other but rigorously against each other to catch the light, rough and sparkling—they are truly remarkable, 12 tonnes of cement and 6,750,000 little tesserae of glass. Think of that—we could rather do with that when refurbishing this place. Then there are the red Benches. Sir Charles Barry had shown his paintings in the summer exhibition while still a teenager, and had a great affection for the place for ever after.
The Royal Academy is undoubtedly a place of great distinction, and a great national monument. It is something of which we should all be proud, and anyone who has never set foot in it should be thoroughly ashamed of himself, as indeed I am right now. But, having wished the noble Lord, Lord Cormack, a happy return—it is good to see him back—I want to ask the Government one searching question, which is in the Motion we are supposed be debating: what plans do the Government have to celebrate the 250th anniversary? I am waiting for it. To the Royal Academy I say: ad multos annos. Enjoy yourselves for another quarter of a millennium.
The Earl of Courtown (Con)
My Lords, I thank all noble Lords for their contributions. I too thank my noble friend Lord Cormack for securing this debate. It has been fascinating, with a journey through various Royal Academy exhibitions given by the noble Lord, Lord Jones, and my noble friend Lord Crathorne. We have been given a fascinating history of the early days of the Royal Academy from the noble Lord, Lord Tyler, who mentioned the connections with the Royal Household and beyond. I add that my ancestor was also Captain of the Queen’s Bodyguard of the Yeomen of the Guard just 60 years after the formation of the Royal Academy.
To answer the question from the noble Lord, Lord Griffiths of Burry Port, while the Government do not directly have any plans to celebrate the 250th anniversary of the Royal Academy of Arts, I believe that it is right, as noble Lords have said, to recognise the academy’s outstanding work and the continuous contribution it has made to our national cultural landscape. Moreover, organisations that we at the Department for Digital, Culture, Media and Sport sponsor as arm’s-length bodies have made some impressive contributions to the celebrations. This year, the National Gallery, the National Portrait Gallery and the V&A have exhibited work alongside the Royal Academy.
The opportunity to celebrate 250 years of a cultural institution, as mentioned by all noble Lords, is a special one, and there are few that are older. It is unique, too, given the significant impact the Royal Academy has had on society, within both the artistic world and our wider culture. It is a feat for an institution such as the Royal Academy to endure two and a half centuries of change, to weather significant cultural shifts, and to retain and continue to build an engaged audience of art lovers.
Many noble Lords may be familiar with the original intentions of the Royal Academy—to form a society that promoted the art of design. In doing so, it is fair to say that the academicians became arbiters of artistic quality at the time. This is most recognisable through the inimitable summer exhibitions mentioned by many noble Lords, which continue to this day. It cannot be overstated how the Royal Academy influenced the academic practice of art through its school, but also pioneered the notion of public access to culture. But the Royal Academy’s role in the cultural canon has shifted considerably since 1768.
Artists and cultural innovators have always been at the forefront of significant societal change. Arts can offer comfort and bring people together at times of hardship, as noble Lords have said. The Royal Academy remained open throughout both World Wars, proving that art can continue to hold society up through times of adversity.
If we were able to ask the hundreds of thousands of artists who have submitted work for the open competition for the summer exhibition, I have no doubt that they would share with your Lordships a time in their childhood where their creativity was stoked. The Royal Academy’s families programme is a shining example of cultural education, with free events that bring children of all ages into the institution directly. It is vital to communicate that young people are not just welcome but belong in a building with such a rich but at times exclusive history. Now the Royal Academy opens its doors and urges children to explore the possibilities within. I cannot imagine the same approach in 1768, but our understanding of what public access means has transformed completely over 250 years, and so has the Royal Academy.
We must ensure that arts and culture are open to everybody. There are barriers, not just for young people but for a cross-section of society that may not recognise the arts as a place where they belong. This has to change. The Royal Academy’s work to address challenges to access and participation should be applauded. Its families programme also has workshops catering for children with special needs. This shows us that the arts can transform lives and bring new, challenging and exciting voices to society. The Royal Academy has done much in recent years to ensure that its buildings are accessible. Workshops and staff training to support audiences living with dementia are now common, as well as a fantastic arts programme that engages dementia suffers with visual art.
Importantly, as my noble friend Lord Cormack said, the Royal Academy is an independent, privately funded institution. As such, it has displayed financial resilience against challenges not untypical of those facing arts organisations, and this makes its longevity all the more inspiring. As the noble Lord, Lord Luce, said, we note the work of Sir Hugh Casson PRA, who founded the Friends of the Royal Academy membership scheme in 1977, an innovation that continues to this day with great success. The Government are committed to arts and culture and work with Arts Council England and our sponsored museums. Between 2015 and 2018 the Arts Council invested almost £1.1 billion of public money in the arts, alongside an estimated £700 million of lottery funding, while museums receive £800 million annually from public sources. By investing in arts and culture, we are supporting our communities, our creativity and also our economy.
To turn noble Lords’ attention away from London for a moment, the Government announced £8.5 million for Coventry’s plans to showcase the city as UK City of Culture in 2021. It aims to close the gap in access to high-quality arts and culture by reaching into areas with the lowest levels of opportunity.
While, as I have said, the Government do not directly fund the Royal Academy, we should not, as noble Lords have all said, overlook that its momentous redevelopment project was supported with £12.7 million from the Heritage Lottery Fund. My noble friend Lord Ashton had the privilege of attending the opening, along with my honourable friend in the other place, the Minister for Arts, Heritage and Tourism. Indeed, Michael Ellis has a continuing interest in the Royal Academy and in particular enjoyed the Oceania exhibition mentioned by many noble Lords. Ministers have seen for themselves the increase in public space that will continue to provide free exhibitions for all to enjoy. It is my hope, and I am sure one that is shared by the Royal Academy, that this commitment to civic access continues for the next 250 years and beyond.
My noble friend raised a couple of points I want to cover. He brought up the subject of European students coming to Royal Academy schools post Brexit. I can reassure him that the Government will continue to encourage European students to apply for courses at UK postgraduate institutions because we want the best artists in the world to study in the United Kingdom. I look forward to the publication of the Government’s immigration White Paper in the near future. He also referred to the Heritage Lottery Fund catalyst scheme. I was pleased to see his reference to the £12.7 million that the Royal Academy received. Specific funding decisions made by the Heritage Lottery Fund are ultimately for its trustees not the Government, but I am sure we all agree that this was a wise funding decision. A number of noble Lords mentioned the Royal Academy schools. The Royal Academy schools have been at the heart of the Academy since its foundation. As noble Lords have said, today the schools offer the only free three-year postgraduate fine art course in the United Kingdom. It is the oldest art school in Britain and is regarded throughout the world as a centre of excellence. Past students, as mentioned by the noble Lord, Lord Griffiths of Burry Port, include William Blake, JMW Turner and, of course, John Constable.
This has been an excellent debate. I am afraid I have something to admit to—as the noble Lord, Lord Griffiths of Burry Port, had to as well—I have never been to the Royal Academy. Perhaps we can go together. In closing, I would like to thank the Royal Academy for its contribution to life in this country, and I wish it much success in the future.