Grand Committee
Procurement Bill [HL]
Monday 24th October 2022
(2 years ago)
Grand CommitteeRead Full debate Procurement Act 2023 View all Procurement Act 2023 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: HL Bill 4-VII Seventh marshalled list for Grand Committee - (24 Oct 2022)
The Deputy Chairman of Committees (Baroness Watkins of Tavistock)
If there is a Division in the Chamber while we are sitting, the Committee will adjourn as soon as the Division Bells are rung and resume after 10 minutes.
Clause 30: Excluding suppliers for improper behaviour
Amendment 177
Lord Hunt of Kings Heath
“(aa) failing, in the case of a supplier with two or more enterprises that are resident for tax purposes in two different jurisdictions with a group turnover of more than €750m, to provide a copy of a tax report which meets the requirements of the Global Reporting Initiative Tax Standard;(ab) failing, in the case of a supplier that is currently under investigation for tax offences in the United Kingdom or abroad, or where the company has reached a settlement with a tax authority following an investigation for a tax offence, to disclose details of the investigation;(ac) failing, in the case of a supplier which has a group turnover of less than €750m, to disclose that the supplier—(i) is based in a tax haven, or(ii) is a subsidiary of a person based in a tax haven, or(iii) has a subsidiary based in a tax haven.”Member’s explanatory statement
This amendment seeks to ensure that a supplier must be treated as an excluded supplier if it does not: report its economic activities in each country where they operate and the taxes paid in each country; report details of any tax investigations; and report where it is based in a tax haven or is a subsidiary of a person based in a tax haven.
Lord Hunt of Kings Heath (Lab)
My Lords, I shall speak also to Amendment 180. It seems a long time since we were in Grand Committee debating the Bill: quite a lot of things have happened since. I am sure the Committee would wish me to welcome the noble Baroness, Lady Neville-Rolfe, to her position. I wish her a degree of permanence—at least until the next election. Of course, she still has some amendments in her name to come. I know we may have debated them, but it is her opportunity to re-educate her department and come back with rather more robust responses than she received from the noble Lord, Lord True, although I express my thanks to the noble Lord for his stewardship of the Bill and his willingness to engage in debate with your Lordships on this important legislation.
I move on to my amendment. A few months ago, the Centre for International Corporate Tax Responsibility and Research and TaxWatch published a report on Amazon’s most profitable segment, its cloud computing business, which they argue is increasingly indirectly supported by taxpayers through hundreds of billions of dollars and pounds in government contracts around the world. In the UK, it said that Amazon’s cloud computing business won almost £600 million in government contracts between 2018 and 2021. It also highlighted that in 2020 Amazon signed a master agreement which allows it to treat all UK central government agencies as one client, which will further increase the volume of its UK contracts.
Despite Amazon collecting public money through large and rapidly growing government IT contracts, the tax payments of this company remain opaque. Indeed, a 2021 research report into Amazon’s tax practice shows that only a fraction of the company’s UK sales are accounted for in its UK accounts. Sales in the UK and elsewhere appear to be channelled through subsidiaries in Luxembourg and, although Amazon says that UK revenues recognised in Luxembourg are reported to HMRC, there is no public accountability as Luxembourg accounts do not disclose how much tax, if any, the company is paying in the UK. Amazon’s practices are replicated by many multinational companies, and the aim of my amendment is to press the Government to use the Bill to start to take some action. The Bill offers a chance to ensure an increase in transparency around the tax affairs of potential suppliers of government contracts. It also offers the opportunity to ensure the exclusion of companies that have engaged or are engaging in egregious tax abuse.
Tax non-compliance has been a potential ground for exclusion from government contracts for some time. In 2013, the Cabinet Office issued Action Note 06/13, which sought to ensure that companies bidding for government contracts declared any tax non-compliance in the procurement process, but this has had no effect whatever. Following FOIs to more than 40 government departments by the think tank TaxWatch, not a single incidence of the supplier being excluded was reported. It was also clear that very little compliance monitoring was occurring. The majority of departments responded saying that there were no incidents reported, but not every department even provided that response; some said they were unable to answer as it would take too long to respond. Will the Minister tell me why departments are so weak in holding these companies to account?
The Bill currently includes misconduct in relation to tax as a mandatory exclusion ground in Schedule 6, Part 2, but mandatory exclusion grounds do not mean that the supplier must be excluded from a procurement competition. A supplier becomes an excluded supplier only if it qualifies for a mandatory exclusion ground and
“the circumstances giving rise to the application of the exclusion ground are likely to occur again”.
The legislation also covers participation in defeated avoidance schemes. The mandatory exclusion ground covering defeated tax avoidance schemes includes instances where a tax return has been amended due to the participation of the taxpayer in a tax avoidance scheme and where the taxpayer has reached a settlement with HMRC, in which case there is no need for the person to receive an adverse judgment in a tax tribunal. When it comes to individuals and companies that have engaged in tax avoidance, the provisions of the Bill are wide-ranging but mandatory exclusion grounds apply only where there has been an assessment by HMRC. That assessment is final, meaning that any appeal rights have been exhausted.
We know that tax litigation is often complex and sometimes takes an exceptionally long time to wind its way through the justice system. When it comes to large companies, including the multinationals, it is common practice for the tax authority to settle tax disputes without penalties being charged.
We know that major companies—Amazon, Google and General Electric—have been investigated in recent years by authorities around the world for committing serious tax offences, but in each instance they have settled rather than admitting guilt and receiving full penalties. As such, none of these companies is barred from procuring government contracts and, with that, taxpayer money. The exact terms of these settlements are not always available to the public. Often settlements between major corporations and tax authorities involve an adjustment to tax liability without an admission by the company engaged in any wrongdoing; the dispute is simply characterised as a difference of opinion over a tax treatment. One way to strengthen the Bill would be to require a company to disclose whether it was currently under investigation for tax offences in the UK or abroad, or where the company had reached a settlement with a tax authority following an investigation for a tax offence.
The Global Reporting Initiative tax standard is a finance reporting standard that provides enhanced public transparency for companies and their tax payments. In particular, it provides for companies to report their economic activities in each country where they operate and the taxes paid in each country—country-by-country reporting. This is a transparency mechanism for revealing corporate tax avoidance. This often involves a company moving profits from higher-tax countries into tax havens. If a company is engaged in profit shifting, that will appear in country-by-country reporting by a company showing very high profits in low-tax countries where the company has little economic activity, and low profits in higher-tax countries where much more activity takes place. For example, Amazon does not provide a breakdown in its accounts of revenues, profits and tax payments in non-US markets by jurisdiction, making it difficult for investors, the public and tax authorities around the world to evaluate whether Amazon is engaged in responsible tax practices.
The implementation of the GRI would allow for some necessary scrutiny. A group of Amazon investors put forward a shareholder resolution at the Amazon AGM in May 2022 calling for greater transparency in the company’s tax affairs and to make disclosures in line with the GRI. That resolution was defeated but was backed by 21% of independent shareholders. Country-by-country reporting is mandatory for multinationals engaged in the extractive and logging industries under rules implemented by several legislatures around the world. Country-by-country reporting is mandatory in the banking sector under EU legislation. Numerous multinational organisations now voluntarily report using the GRI tax standard. My amendment would require all large companies bidding for government contracts to produce a copy of reporting under the GRI tax standard. In addition, the supplier should report details of any tax investigations and report where it is based in a tax haven or is a subsidiary of a person based in a tax haven.
My second amendment would provide for a Minister to lay regulations listing those jurisdictions that are considered to be providing a tax haven to suppliers. Clearly my amendments are not the whole answer to the issue of tax shifting by multinational companies, but using the Bill would be one of the stepping stones that we could take to a much fairer tax situation in this country. I hope the Government will be sympathetic. I beg to move.
Lord Fox (LD)
My Lords, I rise as a cipher for my noble friend Lord Wallace, who has tabled a number of amendments in this group. He is unable to attend this and the next day in Committee, so I will be deputising for him.
I too welcome the noble Baroness, Lady Neville-Rolfe, to her new role, and congratulate her on getting to complete this Bill, which must be regarded as the plum legislative job available—so I say “well done” to her. During a debate on the economy a couple of weeks ago, she said from the Dispatch Box that she was very keen on “simplification” and cited simplifying procurement as being in her sights—now, here she is. However, before her well-deserved promotion, on the third day in Committee on 11 July, “Back-Bench Lucy” was more strident. She said:
“The more I listen, the more I feel that this Bill in many respects strikes the wrong note. It is overregulatory and calls for a rethink, which I hope the Government will be thinking about.”—[Official Report, 11/7/22; col. GC 359.]
On those grounds, I suggest that she should exercise her new power, withdraw this poorly drafted Bill and come back with one more in keeping with simplification and with her aversion to overregulation.
In the absence of any enthusiasm from the Minister for doing that, I speak to Amendments 306, 307, 308, 320 and 328, tabled by my noble friend Lord Wallace, some of which I have signed; I do not support all of the others. I thank the noble Baroness, Lady Hayman of Ullock, and the noble Lord, Lord Hain, for their support for Amendment 320.
An effective debarment and exclusion regime protects the public purse from rogue actors and drives up corporate government standards. Exclusion and debarment from procurement are potent anti-fraud and anti-corruption tools. The issue of companies with long records of corruption winning public contracts in this country is appalling. Nearly a quarter of local councils experienced fraud or corruption in 2017-18. Fraud costs the public purse up to 5% of government spending overall. I thank Spotlight on Corruption for these numbers.
The UK’s record on excluding these types of companies from participating in public procurement is not good, at best. The list of companies either from the UK or operating here that have been shown to have engaged in serious corporate misconduct is unfortunately lengthy and well publicised; yet, under the existing debarment regime, it has been, in practice, all but impossible to apply a discretionary exclusion in the absence of a conviction. There has been very little use of exclusion in the UK to date under current EU-based rules, and the Procurement Bill is an opportunity to address the weaknesses in those rules that have prevented exclusion from being used effectively to protect the integrity of the public purse. I am sure that the Minister would approve of replacing an EU law with a better UK law—these are suggestions for how to make it better.
This Bill as formulated contains some significant issues and crucial gaps that could seriously undermine the effectiveness of the debarment register and exclusion regime. There is a risk that the register will stand empty for many years, which would undermine the reputation of the register and the UK’s anti-corruption efforts in general. It is therefore crucial to get this right at this critical stage of the Bill’s development.
Amendment 306 seeks to make criminal offences for sanctions evasion grounds for exclusion from public procurement. The Bill currently contains no references to criminal offences for sanctions evasion. Given the Government’s current policy of imposing sanctions to ensure its foreign policy goals in relation to Russia’s invasion of Ukraine, and their ambition to use sanctions to achieve important foreign policy goals to be a force for good globally, this is a major omission. Incorporating criminal offences for sanctions evasions in the Bill would make companies across the UK take their obligations to comply more seriously. This amendment redresses this omission.
Baroness Noakes (Con)
My Lords, I, too, welcome my noble friend Lady Neville-Rolfe to her new position. As she knows, she and I share many views on the Bill; indeed, we supported each other’s amendments. I fully endorse the quotation read out earlier by the noble Lord, Lord Fox; I hope that my noble friend will stick to it.
Amendment 534 is in my name; my noble friend had added her name to it, and it was debated during an earlier sitting of the Committee. It asked for a report on procurement rules, specifically around simplification and SMEs. My noble friend will be aware that, obviously, it has not yet been moved because it is low down on the list. While she has now removed her name, about which I am distraught, I hope that, when we get to that part of the Marshalled List, we might have a more favourable response from the Government Benches.
I have three amendments in this group: Amendments 323, 326 and 327. They are probing amendments relating to some of the discretionary grounds for exclusion in Schedule 7. The mandatory exclusion grounds in Schedule 6 are all based on objective facts—mainly whether various offences have been committed. The discretionary grounds in Schedule 7 are a mix of subjective and objective tests. My amendments are designed to probe this. I could have tabled more amendments to the schedule, because other paragraphs in it also use subjective tests, but I chose paragraphs 8, 9 and 11 as examples of the issue that I wished to debate.
In each of these paragraphs, the test is whether a decision-maker considers that a supplier has done something. To take the example of paragraph 8, the ground is that the decision-maker considers that the supplier or a connected person has infringed a bit of UK competition law, or an overseas equivalent. I do not understand why all these matters covered by the paragraphs cannot be dealt with by objective tests, as are used in Schedule 6. Surely an infringement of competition law can be objectively determined and ought not to be left to the opinion of a procurement official. Can the Minister explain why the Bill uses subjective tests rather than objective ones for these paragraphs?
My amendments are rather more modest than replacing these provisions with objective tests but they seek to strengthen the nature of the subjective test from “considers” to “is confident”. I chose that wording to align with what is in the Explanatory Notes, which explain the paragraphs in Schedule 7. I suggest that, if a subjective test is to be used in Schedule 7, the hurdle should be set at a fairly high level. My amendment might not be the right one but it is there to probe the language of the Bill. I am aware that Clause 55 gives some opportunity for suppliers to push back on decisions by contracting authorities but, at the end of the day, judicial review is the only real remedy available to a supplier who feels that they have been badly treated by the terms of this Bill. As we know, judicial review is a very unwieldy remedy and, frankly, is not available at all for SMEs in practical terms.
I also note that, in paragraph 15, which deals with national security, the decision-maker has to determine whether there is a threat to national security. When my noble friend winds up, would she please explain the difference between “determines”, which is used in paragraph 15, and “considers”, which is used throughout the rest of the schedule?
Baroness Bennett of Manor Castle (GP)
My Lords, I rise with great pleasure, following the noble Lords, Lord Hunt of Kings Heath and Lord Fox, and the noble Baroness, Lady Noakes, to agree with everything that all of them said. I am going to be quite brief but I have three points to make. I will speak chiefly to Amendment 177, to which I have attached my name—as have the noble Lords, Lord Hain and Lord Hendy—but I also want to comment on a couple of other amendments in this group.
I join others in welcoming the Minister to her new post. Is it not good to have some certainty in politics? At least we have the certainty that the Procurement Bill will come round again, whatever else we might be doing or facing in other parts of the Westminster system.
There is a phrase about the certainty of death and taxes, except of course we know that taxes are not a certainty for many of the companies now operating in the UK or collecting many government contracts. The noble Lord, Lord Hunt of Kings Heath, referred to one of those companies in particular—a company that I describe as the great parasite. It does not pay its workers very well, which relates to another amendment from the noble Lord, Lord Hendy—we will get to that later—and it pays little or no tax in the UK.
There is a specific point to be made here. I am sure the Government would say that they want to see government and official money being spent well. However, the Tax Justice Network has noted, in looking at definitions of tax havens, that another term for them is secrecy jurisdictions. When companies operate out of tax havens, it is extremely difficult to see what is happening with their money and how they are operating; of course, they are not paying for the facilities and services they need to run their business and make their profits. In thinking about the great parasite, the example I often give when talking to schools, colleges and community groups is this: “Imagine the road outside. Think of all the lorries that have been carrying Amazon parcels up and down it today. Who is paying for that road? All of us in this room are, but Amazon is not”. If the Government are concerned about value for money and transparency in government procurement, Amendment 177 and the associated Amendment 180 are absolutely essential additions to this Bill.
Baroness Hayman of Ullock (Lab)
My Lords, I also start by welcoming the Minister to her new role. I thank her and her officials for having a useful meeting with us ahead of today. Let me say how pleased we are to have a Minister who is genuinely interested in this Bill. The noble Lord, Lord Fox, talked about the Minister’s previous involvement; I am sure that her knowledge and interest will lead us into a better place.
I will start with the two amendments in the name of my noble friend Lord Hunt of Kings Heath, Amendments 177 and 180, to which we offer our strong support. Clearly, all of us should embrace anything we can do to tackle tax abuse and tax avoidance. I hope the new Government—we are looking forward to hearing what they have to say—will prioritise this area.
My noble friend talked about Amazon, the lack of accountability and the kind of poor practice that is replicated by many companies, and gave a thorough explanation of why the legislation in front of us could be used to make a difference to cases of tax avoidance and abuse. I hope the Minister listened to those concerns seriously and considers whether this Bill is an appropriate vehicle to address them.
The noble Lord, Lord Fox, introduced a number of amendments in the name of the noble Lord, Lord Wallace, to which I have added my name. I will not go into them in detail, only to say that we support incorporating evasion of criminal sanctions into the Bill. The failure to prevent bribery offences has been incredibly disappointing, and the Bill could be used to tighten that up and make more progress. Also clearly disappointing are the very few convictions there have been under the Proceeds of Crime Act. How can we use this Bill to make a difference in these areas where there is still concern? I am sure all noble Lords agree that we need to ensure proper and effective enforcement to curb any serious wrongdoings in these areas.
Briefly on Amendments 323, 326 and 327, in the name of the noble Baroness, Lady Noakes, she clearly introduced something that I had not really considered until I read these amendments. Again, “considered” is the important word here. She is absolutely right that you need to think about the strength of a subjective test and how it would be interpreted. I completely agree with her; we need to understand this better. I would be interested to hear from the Minister on this, because the noble Baroness, Lady Noakes, is correct that judicial review is simply not a practical option for SMEs; it just is not. How will this be interpreted and managed through the Bill? I look forward to the Minister’s responses.
The Minister of State, Cabinet Office (Baroness Neville-Rolfe) (Con)
My Lords, I thank all noble Lords for their kind welcome on my appointment as Minister of State at the Cabinet Office. I echo the words of the noble Lord, Lord Hunt, about my predecessor, my noble friend Lord True, and his willingness to engage—a model I will try to follow. I am very much in listening mode today, as we are still in Committee, working on the Bill.
I am poacher turned gamekeeper, and that can be a good qualification. As noble Lords know, I have consistently taken a keen interest in the Bill, although from a slightly different perspective. I will not delay you with a long introduction, but I am pleased that the Bill consolidates 350 EU regulations. That is simplification at a stroke: it streamlines public procurement and reduces burdens on business, and it turns EU-based law into UK law, which is why we can be confident of its progress.
In particular, it will benefit SMEs, for which we must do our best to offer a level playing field, so that they can increase their share of the £300 billion spent by public authorities each year. I think the noble Baroness, Lady Bennett, will agree with that. I am also looking forward, if I get the chance, to rolling out training on the Bill—simple, clear, comprehensive training in central and local government, and elsewhere. That will answer some of the concerns that I and others across the House have had on the Bill.
I thank noble Lords for their contributions on the grounds for financial exclusion and will try to respond constructively. I begin with Amendments 177 and 180 tabled by the noble Lords, Lord Hunt and Lord Hain. These seek to ensure that the suppliers who fail to provide contracting authorities with various details in relation to their tax affairs when bidding for contracts must be excluded from procurements. I should start by making it quite clear that the Government expect businesses to take all necessary steps to comply with their tax obligations.
However, noble Lords will know that the basis on which contracts must be awarded under the Bill is by reference to award criteria that relate to the contract being tendered, not to other matters such as where a supplier pays tax. This is the right principle to deliver value for money for the taxpayer and ensures that suppliers are not required to provide swathes of information that is irrelevant to the contract. This principle is also a feature of the UK’s international obligations, notably under the WTO government procurement agreement. It is for His Majesty’s Revenue and Customs to enforce the law on tax and, indeed, UK-based multinational enterprises are required to make an annual country-by-country report to HMRC. I note what was said by the noble Lord, Lord Hunt, about Amazon.
The grounds for exclusion in the Bill focus on criminal convictions and other serious misconduct that raises a risk to public contracts, including, importantly, in relation to tax. But investigation does not mean guilt in this country. Exclusion is not a substitute for a judicial process. It is important to let due process run its course before subjecting suppliers to mandatory exclusions.
However, we have broadened the scope of the current regime with the mandatory exclusion grounds related to tax in Schedule 6, which cover all tax evasion offences and involvement in abusive tax arrangements. This is a significant broadening from the current regime, which is limited to where there has been a breach of tax obligations and lets suppliers off where they have repaid or committed to repay unpaid tax. I am confident that these grounds are sufficient to protect contracting authorities and taxpayers.
Lord Fox (LD)
During that spirited defence of the need to keep things open for international companies to be able to bid, the Minister used the phrase “value for money”. Can she define the Government’s view of how they calculate value for money?
Baroness Neville-Rolfe (Con)
If I may, I will think about the answer, make some progress, and come back to that on a future occasion.
Baroness Neville-Rolfe (Con)
Well, I think that “value for money” is a clear term, but I am listening seriously to the point that the noble Lord is making in this context. Value for money is about quality and quantity; indeed, it is about many things, as I know, having been on the buyer side in real life as well as on the selling side. As for what the definitions are in the Bill, I am not sure.
I come back to the important points from the noble Lord, Lord Hunt, on the subject of tax. It was clear from feedback on the Green Paper that the existing tax exclusion ground is one that many authorities are struggling to apply. By reframing the ground in terms of UK offences and regulatory decisions, we believe that it should be easier for UK contracting authorities to apply this. I also add—because I remember it well from the time that I served in David Cameron’s Government—that the UK has tried to lead the way internationally in making sure that multinational companies pay their share. Strong HMRC compliance action has secured and protected over £250 billion for public services since 2010 that would otherwise have gone unpaid, including £3 billion from those trying to hide money abroad. This is work that goes on—and work to which HMRC is devoted, as I remember well.
The noble Lord also raised tax havens. The Bill will deliver unprecedented levels of transparency in procurement, including—this point needs to be made—with respect to the beneficial ownership of suppliers. All suppliers will be expected to declare their beneficial owners when bidding for contracts. Failure to provide accurate details of beneficial ownership when asked will now be a mandatory ground for exclusion.
Baroness Neville-Rolfe (Con)
I try to wake up early, as noble Lords know. Value for money is not defined in Clause 11(1)(a), to leave a degree of flexibility for future refinement. In practice, we will use the HMT definition, which is currently,
“the optimal whole-life blend of economy, efficiency and effectiveness that achieves the intended outcome of the business case.”
It is quite a nice mixture—economy, efficiency and effectiveness.
Lord Fox (LD)
I thank the Minister, but the question I was rather clumsily trying to ask was whether we extract from the cost the amount of money we expect to take in tax or merely use the cost as a flat sum. In other words, with a British company paying full British tax versus one of the companies described by the noble Lord, Lord Hunt, which pays no tax, does the overall cost of that service become less for the one paying tax? It seems the Minister’s answer is that the tax take is not included in the calculation of value for money.
Baroness Neville-Rolfe (Con)
I think we have made a bit of progress; I will not go down that rabbit hole or we will not make enough progress.
If I might, I turn to Amendments 306, 307, 308 and 320 tabled by the noble Lords, Lord Wallace, Lord Fox and Lord Hain. They would introduce new mandatory exclusion grounds in relation to offences of sanctions evasion, money laundering and failure to prevent bribery, and new discretionary exclusion grounds in relation to various financial and economic misconduct when the contracting authority has sufficient evidence in the absence of a conviction.
The mandatory grounds for exclusion cover the types of misconduct which raise only the most serious risks for contracting authorities. We have already strengthened the mandatory grounds significantly in comparison to the EU regime, but they cannot and should not cover every offence. On sanctions, the types of freezing orders referred to in the amendment are unlikely to be relevant to public contracts. On bribery and money laundering, we have included a range of mandatory exclusion grounds covering the most serious offences. This expands the scope of the offences covered in the EU regime to cover blackmail as well as bribery. However, I reassure noble Lords that the offences in question which are not listed as mandatory exclusion grounds are likely to be subject to discretionary exclusion, under the ground of professional misconduct. This will depend on the circumstances, but if the ground is met, contracting authorities could exclude the supplier.
As to the amendment to include financial and economic misconduct as a new discretionary exclusion ground, we have already explained to this Committee that the exclusion regime is not a substitute for a judicial process. I am not prepared to require contracting authorities to weigh up complex evidence of financial and economic misconduct in which they have no relevant experience. That is a key issue with the ambitious proposals described by the noble Lord, Lord Fox.
Amendments 323, 326 and 327, tabled by my noble friend Lady Noakes, concern the discretionary exclusion grounds for potential competition infringements and the test for when these apply. These exclusion grounds recognise that there may sometimes be evidence of competition infringements in the absence of a regulatory decision or ruling. It is critical that suppliers known to have been involved in collusion, bid-rigging and anti-competitive behaviour are held to account, given the fundamental importance of fair and open competition to procurement.
However, I reassure the Committee that these grounds should not be used to exclude suppliers merely because they are under investigation by the CMA or another regulator; there must be sufficient evidence that a breach of competition rules has occurred. I think my noble friend pointed out that the language used in the Explanatory Notes differs from that in the Bill. I am advised that this does not reflect a difference of policy or meaning. Authorities must “consider” that the conduct specified has occurred before determining that the exclusion ground applies. She went on to ask about why there were subjective tests in the discretionary grounds. I have to say that I had some difficulty in exactly following her logic in all this, and we may need to discuss these points further after Committee. The answer is because exclusion is a risk-based measure and a last resort, and suppliers are protected by a right to challenge the exclusion decisions because of the nature of those decisions.
Baroness Noakes (Con)
A moment ago my noble friend said, in respect of the amendment by the noble Lord, Lord Fox, that she did not want decision- makers trying to weigh up complex financial matters, but she somehow seems quite happy to have decision-makers weighing up equally complex matters scattered throughout Schedule 7 and in the discretionary exclusion grounds. I struggle to see the intellectual cohesion in the Government’s position.
Baroness Neville-Rolfe (Con)
I thank my noble friend for her further comments, which I will consider carefully. I myself feel strongly, as someone who has witnessed small construction companies being investigated by a competition authority that at the end of the day have been found completely innocent, that it would be difficult if they were not able to continue to engage in procurement during a long period of investigation. However, as she explained, we need to get right how we deal with the discretionary grounds and ensure that there is enough certainty so that authorities do not spend too much time going round in circles. We need to reflect further on the points that she has made. I think I slightly misunderstood the purport of her original amendment, so I look forward to discussing that with her. I thank the noble Lord, Lord Fox, for his intervention.
Lord Fox (LD)
I thank the Minister for her response. The notion of, in a sense, using professional misconduct as the catch-all for everything else is something that we could pursue after Committee. It may be something that requires some definition or clarification, either within the legislation or from the Dispatch Box on Report. If that is going to be the way that the Bill operates, some clearer idea as to how it would work would help to ameliorate some of the fears that have been expressed around the Bill.
Baroness Neville-Rolfe (Con)
We have to get the right result but we also have to avoid a chilling effect. That is my basic approach to this.
Baroness Neville-Rolfe (Con)
A chilling effect on corruption is obviously positive but a chilling effect on people being prepared to engage in government procurement is not, particularly smaller suppliers, which might be put off by some of these rules. That is why we brought in Schedule 6, which will bring a certain clarity. There may be some further discussions to be had on Schedule 7 and exactly how it works.
Lord Purvis of Tweed (LD)
I too welcome the Minister to her position. My question relates to a later group in which I have an amendment. Given that the Bill will allow for there to be no discrimination against any treaty-state supplier, how will a contracting body or procurement body operate under Schedule 7 for any of the suppliers from any of the countries with which we have a trade agreement? This comes back to the point made by the noble Baroness, Lady Noakes. It is not simply the case that businesses are going to have to work through Schedule 7 to satisfy all the grounds for this; they are going to have to do it with every single country with which we have an FTA for the suppliers coming from them. How is that making the job easier?
Baroness Neville-Rolfe (Con)
As the noble Lord said, we will come on to discuss those aspects, and I will try to answer that question when we get there. I have probably said enough on that.
Amendment 328 in the names of the noble Lords, Lord Wallace and Lord Fox, provides for a new discretionary exclusion ground in relation to deferred prosecution agreements. This issue was explored in the Green Paper. Due consideration was given to feedback from the public consultation, as well as discussions with the Serious Fraud Office and the Crown Prosecution Service. The Government’s response to the Green Paper set out the rationale for their decision not to include a separate exclusion ground on deferred prosecution agreements. In brief, the actions taken and commitments made by suppliers as part of the DPA typically constitute good evidence of self-cleaning. Reaching a DPA requires a supplier to accept culpability for the offence, co-operate with the relevant authorities and make reparations. Prosecuting authorities typically will not consider a DPA appropriate unless the supplier has already made reforms, such as proactive changes to corporate structures or the replacement of personnel.
DPAs will involve judicially approved terms that the supplier must commit to—for example, on actions to improve compliance and audit functions within the company, and external reviews to test those improvements to ensure that further misconduct does not occur. Non-compliance with a DPA is unlikely to be something that contracting authorities are equipped to assess. I hope that the noble Lord, Lord Fox, will understand and accept that.
Compliance is for either the Serious Fraud Office or the Crown Prosecution Service to assess, depending on which is the owner of the DPA in question. If a supplier fails to comply with a DPA, there are a number of options open to the enforcing body, including the prosecution of the supplier for the original criminal misconduct, but that cannot be part of procurement law, or for enforcement by the many differently sized authorities engaged in buying goods or services in the public sector.
Finally, Amendment 443 tabled by the noble Lord, Lord Wallace, seeks to remove
“a British Overseas Territory or a Crown Dependency”
from the definition of a UK supplier. The Bill confers rights on UK suppliers in a number of places, including, in Clauses 18 and 19, an entitlement to be considered as part of a competitive tender, or, in Clause 89, to access remedies. They are also used as the basis for an assessment of no less favourable treatment in the non-discrimination provisions, in Clause 82(2). This amendment would remove this guaranteed access to the UK’s procurement markets from suppliers from Gibraltar, which is the only overseas territory or Crown dependency whose suppliers currently enjoy access under the existing procurement regime.
Although overseas territories and Crown dependencies are not part of the UK constitutionally, they do not become party to treaties in their own right. The UK must extend the territorial scope of its ratification of treaties to include them. As such, overseas territories and Crown dependencies are unable to secure rights to markets in the United Kingdom in the same way as other states. That is a long way of saying that in view of the special nature of the trading relationship between the UK and overseas territories and Crown dependencies, it is right to include them in the definition of a UK supplier.
This discussion has been useful and illuminating to me. I respectfully request that the amendment be withdrawn.
Lord Hunt of Kings Heath (Lab)
My Lords, I am very grateful to the Minister. I particularly welcomed her comments on SMEs and training rollout. I really agree about the importance of investment in training as the Bill is enacted. However, I remain concerned about the Government’s approach, which seems supine in many respects when dealing with these multinational companies.
Only this afternoon at Oral Questions, we had a fascinating exchange about the remarkable decision to award Fujitsu a £48 million contract to upgrade the police national computer, given the role of that company in developing Horizon software for the Post Office. We were told by a Minister that in effect, there was no alternative because of the continuing arrangements with that company. Listening to the comments made by the noble Lord, Lord Fox, and the noble Baroness, Lady Bennett, about performance issues, corruption, competition infringements, which were added to by my noble friend, and the issues on tax, essentially the Minister has an ideological objection to the use of contracts to further government policy outside the narrow procurement interest. This is where I fundamentally disagree with her.
It is not good enough simply to say that it is down to HMRC. Procurement can be used to enhance policy in a number of areas. Many of these multinational companies are taking this country for a ride. We need to see tougher action. Having said that, I hope that we can continue to debate this important issue. I beg leave to withdraw my amendment.
Baroness Neville-Rolfe
Baroness Neville-Rolfe
(a) treat the supplier as an excluded supplier for the purpose of assessing tenders under section 18, and(b) exclude the supplier from participating in, or progressing as part of, any competitive tendering procedure.”
Lord Hunt of Kings Heath
“Excluding supplier for involvement in forced organ harvesting
(1) Subsection (2) applies if a contracting authority determines that a supplier is located in a country categorised by a Minister of the Crown as at high risk of forced organ harvesting.(2) The contracting authority must treat the supplier as an excluded supplier in relation to the award of a public contract involving— (a) any device or equipment intended for use in organ transplant medicine or activities relating to human tissue, or(b) any service or goods relating to organ transplant medicine or activities involving human tissue.(3) A Minister of the Crown must by regulations made by statutory instrument make provision for the listing of countries considered to be at high risk of forced organ harvesting.(4) A country is at high risk where—(a) the country has high levels, or is suspected of having high levels, of forced organ harvesting or trafficking in persons for purposes of the removal of organs; or(b) the government of the country is directly or indirectly seen as supporting or indirectly supporting forced organ harvesting or trafficking in persons for purposes of the removal of organs.”Member’s explanatory statement
The amendment is designed to exclude suppliers located in a country at high risk of forced organ harvesting from being awarded a public contract involving any device or equipment intended for use in organ transplant medicine or activities relating to human tissue or any service or goods relating to organ transplant medicine or activities involving human tissue.
Lord Hunt of Kings Heath (Lab)
My Lords, in a sense, this amendment is very different from my first two. None the less, we are seeking here to use procurement legislation to advance government policy in relation to the awful practice of forced organ harvesting from prisoners of conscience in China. The practice was found by the China Tribunal—as advised by Edward Fitzgerald KC, who provided expert legal opinion to it—to be a crime against humanity and part of a possible genocide against Falun Gong.
Forced organ harvesting in China involves the removal of organs from a living prisoner of conscience for the purpose of transportation, killing the victim in the process. It is state sanctioned and widespread throughout China, with the Chinese Communist Party targeting individuals because of their religious and spiritual beliefs or ethnicity. The victims are known primarily to be Falun Gong practitioners, but more recent evidence indicates that Uighur Muslims are also targeted on a massive scale. Further to that, there are several lines of evidence showing that Tibetan and house Christians are likely victims of forced organ harvesting.
Regarding Uighurs and other minorities, the Office of the UN High Commissioner for Human Rights published its report on Xinjiang in August, stating:
“Allegations of patterns of torture or ill-treatment, including forced medical treatment and adverse conditions of detention, are credible, as are allegations of individual incidents of sexual and gender-based violence.”
It also stated that the treatment of Uighurs and others in Xinjiang by the Chinese Communist Party
“may constitute international crimes, in particular crimes against humanity.”
That is a most important and profound statement, made only three months ago.
Both Uighur and Falun Gong practitioners are arbitrarily arrested, detained in camps and tortured. They face sexual violence, disappear while in detention and are murdered for their organs, on a vast scale. A study published in April this year in the American Journal of Transplantation investigated whether Chinese transplant surgeons established first that the prisoners are dead, before procuring their hearts and lungs, or whether the cause of death was the organ procurement itself. The study was based on the dead donor rule—the most fundamental ethical rule in organ transplantation. It states that organ procurement must not commence until the donor is formally pronounced dead; the procurement of organs must not cause the donor’s death.
The paper, entitled Execution by Organ Procurement: Breaching the Dead Donor Rule in China, was written by Matthew Robertson and Dr Jacob Lavee. Dr Lavee is a transplant surgeon and the founder and a former director of the heart surgery unit at the Sheba Medical Center in Israel. In 2005, a patient told him that his insurance company had scheduled a heart transplant operation for him that would take place in two weeks. The patient flew to China and received the heart as arranged. That would be impossible unless the time of death of the donor was known in advance. Following this incident, Dr Lavee spearheaded the organ transplantation law in Israel, the first of its kind in the world, which prevented insurance companies from reimbursing expenses associated with illicitly obtained organs. Along with a range of reforms encouraging domestic donation, this stopped the China-to-Israel organ-trafficking pipeline in its tracks.
During this recent research, Robertson and Lavee found, in 71 different Chinese medical studies published between 1980 and 2015, sourced from 56 hospitals in 33 cities, that brain death could not properly have been declared. Therefore, the removal of the heart during organ procurement must have been the cause of the donor’s death. The authors state in a recent article in the Tablet,
“the act of execution was joined with the act of heart removal, and was carried out by surgeons on the operating table.”
Just think of that.
My amendment is designed to exclude suppliers located in a country at high risk of forced organ harvesting from being awarded a public contract involving any device or equipment intended for use in organ transplant medicine or activities relating to human tissue or any service or goods relating to organ transplant medicine or activities involving human tissue. Essentially, it would prevent any service or goods that may have been involved in or developed off the back of the forced organ harvesting trade from entering the UK. This includes organ transplant training, such as the training of Chinese organ transplant services, related education and research, as well as organ transplantation equipment.
I have been very encouraged by the Government’s recent willingness to legislate on this issue, such as through my amendment to the Medicines and Medical Devices Bill last year, which included consent provisions for imported human tissue for use in medicines; and the amendments to the Health and Care Bill in April this year, prohibiting the commercialisation of organ tourism. The noble Lord, Lord Alton, and the noble Baroness, Lady Northover, have been huge supporters of this approach and I am glad to see them here today.
These legislative steps have set a good precedent, both in our country and as a signal globally. I emphasise to the Minister that passing amendments such as this into British law is significant internationally. Other countries observe what is happening, and we are part of a global movement to try to get action to stop this reprehensible behaviour.
I am grateful to the Government for their sympathy for our approach, but I want to go further. In April this year, it was stated in a ground-breaking business and human rights legal advisory, written by international law firm Global Rights Compliance, entitled Do No Harm: Mitigating Human Rights Risks when Interacting with International Medical Institutions & Professionals in Transplantation Medicine, that
“medical professionals and institutions who have collaborations with Chinese medical institutions involved in forced organ harvesting face a risk of being charged with complicity in international crimes, including crimes against humanity.”
It goes on to explain that
“aiding and abetting ‘consists of practical assistance, encouragement, or moral support which has a substantial effect on the perpetration of the crime’.”
Prestigious medical institutions, such as the International Society for Heart and Lung Transplantation, are now taking action. In April this year, the society issued a policy that it would no longer accept submissions to its journal or for presentations at its conference related to transplantation and involving either organs or tissue from human donors in the People’s Republic of China. My forced organ harvesting amendment to the Procurement Bill is critical to protect our UK medical professionals and institutions from complicity. I beg to move.
Lord Alton of Liverpool (CB)
My Lords, it is a great privilege to follow the noble Lord, Lord Hunt of Kings Heath, in what was a powerful, disturbing and very thoughtful speech. I think all of us who are privileged to be in the Committee today are indebted to him for that and the way he introduced this group of amendments, to which I am a signatory, along with the noble Baroness, Lady Northover, and my noble friend Lady Finlay of Llandaff. She sends her apologies for not being able to be physically present today, but she strongly supports the amendment, as does the noble Lord, Lord Ribeiro. It is worth bearing in mind that both of those noble Lords have held very high office in the medical institutions in this country and it is good that their names are attached either to the amendment or to the arguments that go with it.
I declare interests as vice-chairman of the All-Party Parliamentary Group on Uyghurs, who the noble Lord referred to, and on Hong Kong, as patron of Hong Kong Watch and as a member of the Inter-Parliamentary Alliance on China. This amendment deals with a gruesome and barbaric lethal practice that has been prevalent in China. Last Thursday, here in the Moses Room, a debate was held on the International Relations and Defence Select Committee report on China, trade and security. The noble Viscount, Lord Younger of Leckie, was present throughout proceedings and the noble Lord, Lord Purvis, was present and contributed to those proceedings, during the course of which a number of us referred to the levels of trade and, inter alia, the level of procurement that is carried out with China by the United Kingdom.
The noble Lord, Lord Purvis, pointed out that we have a £40 billion deficit in trade with the People’s Republic of China. That would be reason enough for considering, in the context of resilience and dependency, why procurement policies with a country designated by the Government as recently as last month as “a threat” to the United Kingdom should be radically readdressed. During the debate last Thursday in the Moses Room, I referred to earlier debates in this Committee on the Bill specifically about Hikvision. It is worth recalling that the noble Lord, Lord True, was gracious enough to have several meetings in his office to discuss this, as well as dealing with it at that stage. I know the noble Baroness, Lady Neville-Rolfe, well enough—I congratulate her, as others have done, on her appointment as Minister—to know that she will take this as seriously as he did.
The company Hikvision is responsible for the surveillance cameras in Xinjiang referred to by the noble Lord, Lord Hunt. But these cameras were purchased through our procurement policies by great departments of state and are used in local government and by public authorities up and down the length and breadth of this country. These cameras are used to impose the surveillance state on the Uighur Muslims referred to by the noble Lord, Lord Hunt.
At the conclusion of our debate last Thursday, the noble Lord, Lord Goldsmith of Richmond Park, promised he would write to me in response to my question specifically about whether, during the next set of proceedings on the Bill—therefore, on Report—the amendments that many of us argued for at earlier stages will be agreed by the Government. I hope that the noble Baroness’s officials will talk to his officials before he writes that letter, so that we genuinely get joined-up government on this.
I hope they will also look at the Biden Administration’s legislation on goods made by slave labour, something that the noble Lord, Lord Coaker, and I have raised in other legislation and that we both, as well as other members of the Committee, feel very strongly about. They should also look at legislation the Biden Administration introduced called the CHIPS Act and the Inflation Reduction Act, which draw together the prioritisations of investing in domestic industry, tackling climate change and reducing dependency on authoritarian regimes. All those things should be done in the context of this Bill.
In parentheses, I remind the Committee that we bought 1 billion—not 1 million, but 1 billion—lateral flow tests from the People’s Republic of China and 24 billion items of personal protective equipment where China was recorded as the country of origin. The cost to the United Kingdom was a staggering £10.9 billion—about the equivalent of our now reduced overseas aid and development budget. This is British taxpayers’ money pouring through our procurements into the pockets of a country that stands accused of the appalling barbarism identified in Amendment 185, and indeed of genocide.
Baroness Northover (LD)
My Lords, I am a co-signatory on this amendment and, from the Lib Dem Benches, we strongly support the noble Lord, Lord Hunt, in his endeavours to combat the appalling issue of forced organ transplantation. He has made a strong and comprehensive case, as did the noble Lord, Lord Alton—as ever. Like them, I am glad that Ministers have been responsive over the past few years in relation to these appalling practices. I hope that this continues. As the noble Lord, Lord Hunt, said, the amendment is designed to exclude suppliers located in a country
“at high risk of forced organ harvesting”
from being awarded a public contract involving
“any device or equipment intended for use in organ transplant medicine”
or in related regard—for example, research.
As the Minister will know, this House has a very well-informed and cross-party approach to combating forced organ transplantation. She will be aware of the significance of such obvious and lengthy cross-party working. I assume that this might rightly be in red on the risk register for the Bill. I have noticed that that might be the case.
I recall a few years ago that a Peer, who is a current government Minister, was praising the Chinese for the speed and apparent efficiency of their transplant programme. I am certain that they would not have expressed that view had they known what we know now. That is surely thanks to the assiduous work of the noble Lords, Lord Hunt and Lord Alton, and others. They, in turn, have been supported by the meticulous examination of the evidence by the China and the Uighur tribunals, both headed by Sir Geoffrey Nice, former prosecutor in the Balkans war-crimes tribunals. They shone a light on the terrible practice of forced organ harvesting. I noted that they found—as others have noted—that victims in China were targeted because of their religion, beliefs or ethnicity.
As the noble Lord, Lord Alton, has just said, the China tribunal concluded that forced organ harvesting has been committed for years throughout China on a significant scale; and that commission of crimes against humanity against the Falun Gong and the Uighurs have been proved beyond reasonable doubt. Noble Lords have also heard the view from the United Nations; securing that was very difficult to achieve. The noble Lord, Lord Alton, as ever, calls some of the individuals concerned into our view, so we cannot say that we did not know.
The medical profession has been accused in the past of turning a blind eye to such practices. The BMJ criticised the transplant community for failing to implement high ethical standards. I note, however, that, in the BMA’s briefing for the Bill, it states that,
“upholding ethical procurement standards is essential.”
It refers to the procurement of medical equipment, including PPE, from the regions in which labour abuses have been alleged. It states that it would support
“any amendments to strengthen the legislation to help ensure ethical procurement and transparency throughout the supply chains of health-related goods.”
That would certainly apply to this amendment. In addition, as we have heard, the UK enjoys a global reputation for high-quality medical research. It is something that the Government emphasise as being key to the United Kingdom’s future. As the noble Lord, Lord Hunt, has indicated, it is thus vital that we protect medical researchers from inadvertent involvement.
During the summer, in the then Conservative leadership debates, Rishi Sunak was asked about dealings with China. It is good that he acknowledged the potential human rights challenge. However, he also said that he sought to have a constructive engagement. This amendment would close a loophole, given that he has now been chosen by the Conservatives to be the country’s newest Prime Minister. It will help to ensure that the Government do indeed properly pay attention to human rights, which the new Prime Minister said was an aim of his.
In regard to the issue raised by the noble Lord, Lord Alton, in relation to the hospital in China, will the Minister say whether UK Export Finance funds were given in this case? If she cannot tell me now, can she write to me? In summary, I commend this amendment to the Committee, and I hope that we will see progress and engagement with the Government.
Lord Coaker (Lab)
My Lords, I apologise; I will see how long my voice lasts—not long, I imagine some people hope, but we will see how it goes.
I too congratulate the Minister on her promotion. She has already learned some of the tricks of the ministerial trade: she has gone through what she has previously said and asked her civil servants to have a look and see what she could say back if anyone raised it, which relates to what she opened with about simplification.
The serious point is that the fact that she has questioned the Bill will make her a very good Minister. That does not mean undermining the Bill, but you have to have a Minister who challenges it and listens to what people say, otherwise the whole process is pointless. From that point of view, we are all reassured by her appointment.
Baroness Neville-Rolfe (Con)
My Lords, Amendment 185 would require the Minister to publish in regulations a list of countries considered to be at high risk of performing forced organ harvesting. It would also require contracting authorities to exclude suppliers from those countries from certain procurements.
Clearly, I appreciate the seriousness of the issue of organ harvesting; I agree that it is a difficult matter for the Government. This is an abhorrent practice, as we heard from the noble Lord, Lord Hunt, which is all the more egregious when sponsored by the state. It is an issue that has been frequently debated in recent years; I recognise the dedication with which it has been pursued by the noble Lords, Lord Hunt and Lord Alton, and the noble Baroness, Lady Northover, with the support today of the noble Baroness, Lady Finlay, and the noble Lord, Lord Ribeiro. It is understandable that they take opportunities such as today to draw attention to the awful things that are happening and the scale of the issue.
The noble Lord, Lord Hunt, is right to record that the Government are taking action to address this issue on a number of fronts. The Health and Care Bill was amended during its passage through Parliament to prohibit commercial organ tourism and send an unambiguous signal that complicity in the abuses associated with the overseas organ trade will not be tolerated. Equally importantly, the Government continue to monitor and review evidence relating to reports of forced organ harvesting in China, and they maintain a dialogue with leading NGOs and international partners on the issue. This includes Foreign, Commonwealth and Development Office Ministers writing to the World Health Organization in Geneva to encourage it to give careful consideration to the findings of the China Tribunal on organ harvesting, published in March 2020.
Baroness Neville-Rolfe (Con)
My Lords, I was talking about the international angle and the importance of doing things internationally. I am particularly grateful for the reminder of the need to discuss these issues with my noble friend Lord Goldsmith of Richmond Park. I will also talk to the FCDO, DHSC and DIT about the UK-China hospital partnership and whether there has been any use of UK Export Finance. I have not been briefed on the issue, but I will write to the noble Lord, Lord Alton, who is not in his place, and the noble Baroness, Lady Northover, if they are content.
Turning to the main issue, I must resist this amendment on a number of counts, which I will explain. First, it treats suppliers as excluded simply for being located in a country at high risk of organ harvesting. This is guilt by association. It would undermine the principle, which runs throughout the exclusions regime, that suppliers can be excluded only where the supplier or a connected person has committed relevant misconduct. This is really important to ensure fairness and proportionality in exclusion decisions. The amendment could also have perverse effects—for example, preventing the NHS procuring life-saving devices in a country, even though they have nothing to do with organ harvesting or people trafficking.
Finally, there is already a provision in the Bill which would allow for the exclusion of suppliers who participate in forced organ harvesting. The Bill is clear that any serious breach of ethical or professional standards applicable to the supplier would meet the discretionary exclusion ground for professional misconduct. It is almost certain that involvement in these practices by suppliers of goods or services related to transplant medicine or human tissue would constitute a breach under the detailed standards set by health sector institutions.
The exclusion ground of professional misconduct is intended precisely to cover all the particular ethical issues that arise in different industries and sectors. That is of course an exclusion we agreed earlier, which merited further discussion. The grounds for exclusion cannot and should not list every issue within a particular industry. I should repeat that the exclusion and debarment regime in the Bill represents a significant overhaul and enhancement of the EU system; we should not forget that.
Finally, to respond to the noble Lord, Lord Alton, I have already promised, in his absence, to write on the subject of the hospital, but I am also of course aware of the concerns regarding Hikvision.
Lord Alton of Liverpool (CB)
I apologise to the noble Baroness; I got trapped in the Chamber when the doors were locked at the end of the Division—it serves me right. Some people may wish it had been permanent. I am grateful to the noble Baroness and look forward to reading her reply in Hansard.
Baroness Neville-Rolfe (Con)
I look forward to getting delayed in the Lobby in the next Division.
I am aware of the concerns regarding Hikvision and other Chinese technology companies; we take these concerns extremely seriously, as the noble Lord knows. We are taking action in the Bill to introduce a new ground for exclusion, specifically to address situations where a supplier poses a threat to national security. The new exclusion ground allows a contracting authority to reject bids from suppliers that the authority considers pose a threat to the national security of the United Kingdom.
It is the long-standing policy of successive British Governments that judgment as to whether genocide has occurred is for a competent national or international court. It is not for the contracting authorities. Genocide is a crime and, like other crimes, whether it has occurred should be decided after consideration of all the evidence available in the context of a credible judicial process.
This has been an important debate. I have learned a lot but, for today, I respectfully request that this amendment be withdrawn.
Lord Purvis of Tweed (LD)
I would be grateful if the Minister could clarify a little her argument as to why organ trafficking—which is prohibited under the UK’s statute book—cannot be mentioned in Schedule 6 under the mandatory exclusion grounds. Under labour market, slavery and human trafficking offences, there is a fairly comprehensive list of UK domestic offences that are mandatory grounds. I do not see why that list cannot be added to, as I cannot see where the ethical grounds are included within Schedule 6 on the mandatory grounds.
Can the Minister also clarify why, in Schedule 7, on discretionary grounds, those offences are included for prevention orders? The Government seem to be suggesting that for a company that is subject to prevention orders for these heinous crimes—or could be subject to them, if it were a foreign supplier—this is simply discretionary. A contracting body would have to make a judgment itself as to what it considers would be the likelihood of a supplier meeting the threshold for a prevention order, rather than an offence. That does make any sense to me. I would be grateful if the Minister could address those two points.
Baroness Neville-Rolfe (Con)
I will need to take the noble Lord’s first point away and look at it. His explicit point is that there is a bit of legislation, so why do we not refer to it? His second point is tied up with how this discretionary schedule works and how we define “professional misconduct”, which, in our interpretation, includes ethical issues. I thank him for raising these issues again.
Lord Purvis of Tweed (LD)
I would be grateful if the Minister were willing to consider this. It is not about the ethical point. It comes under paragraph 1 of Schedule 7, which is headed “Labour market misconduct”. Sub-paragraphs (a) to (d) specifically refer to slavery and trafficking prevention orders and trafficking and exploitation prevention orders. If a supplier is considered to be acting in a way that would satisfy a prevention order in the UK, it would be a discretionary exclusion ground rather than what I consider it should be: a mandatory exclusion ground. I am happy for the Minister to reflect on it and write if she cannot answer today.
Baroness Neville-Rolfe (Con)
Clearly, I have learned during this debate. I will obviously have to learn a little more about how we have tackled this issue. As was said right at the beginning of the debate, there is clearly some difficulty around the principle of how much detail to include and how many things to cross-reference in the Bill but, in the light of the noble Lord’s helpful clarification, I will go away, look at the various areas and come back to him.
Lord Hunt of Kings Heath (Lab)
My Lords, this has been a very interesting debate. I am grateful to the noble Lord, Lord Alton, the noble Baroness, Lady Northover, and my noble friend Lord Coaker for their profound speeches. Of course, I also thank the noble Baroness, Lady Finlay, and the noble Lord, Lord Ribeiro, who cannot be here today.
The noble Lord, Lord Alton, put a number of pertinent questions to the Minister, not just about the UK-China hospital partnership but more generally about the principles behind our trade with China. I must say that I find government policy inconsistent and incomprehensible. The new Administration, if I can call them that, need to get a grip on what exactly our relationship with China ought to be in terms of diplomacy, trade and strategic investment. Over the past few years, it has seemed completely all over the place.
There is an argument—my noble friend Lord Coaker referred to it—about the principle of how much we should use procurement legislation for wider, desirable policy aims. I believe passionately that it is right to use a Procurement Bill to try to influence this abhorrent practice. I am grateful to the Minister because she gave a careful response and appreciated the seriousness of this abhorrent practice, which we are doing our best to help eradicate. She also acknowledged the changes made in legislation in the past few years. However, she was critical of the amendment’s wording; she has quickly taken on the mantle of ministerial office again, by finding all amendments that do not emanate from her own department technically deficient.
The Minister’s key point around what is wrong with the amendment is that it is guilt by exclusion. I understand that but I believe that the amendment is tightly drawn. It is not just about excluding suppliers
“located in a country categorised … as at high risk of forced organ harvesting.”
It would exclude only in the event of
“a public contract involving … any device or equipment intended for use in organ transplant medicine or activities relating to”
that. That is tightly drawn and entirely justifiable.
The Minister also said that these practices would be covered by the exclusion grounds in the Bill. We have now had a debate on that; I thought that the noble Lord, Lord Purvis, raised some important questions. I accept that one can look to general provisions in a Bill and say, “Well, those cover it”, but I believe that there is sometimes a strong place for explicit provision on a practice that we find abhorrent. I hope that the Minister will be prepared to discuss this with us between Committee and Report because I am convinced; I am grateful to my noble friend Lord Coaker for his pertinent comment that we will come back to this on Report. Having said that, I beg leave to withdraw the amendment.
Viscount Younger of Leckie (Con)
My Lords, we have a change of horse. By way of a health warning, my remarks do include mention of a considerable number of amendments. However, as a reassurance, and in the interests of brevity and the current buzzword—simplification—my speech is somewhat shorter now than it was at the beginning of the day.
A number of amendments are needed in Committee to ensure that the Bill functions appropriately. Clauses 34 to 39 introduce the new concept of dynamic markets and the new utilities dynamic markets. Existing dynamic purchasing systems are limited to providing commonly used goods and services that are generally available on the market, and therefore their scope is constrained. Examples of existing dynamic purchasing systems include Crown Commercial Services artificial intelligence, which enables public sector bodies to access services including machine learning and augmented decision-making. The new dynamic markets can be used for all procurements rather than just commonly used purchases. Dynamic markets will always remain open for new suppliers to join. This provides a great opportunity for all types of suppliers, including SMEs, to pre-qualify for work.
Amendments 210 to 212 and 217 to 219 would clarify that references to membership of a dynamic market in this context relate to membership of an appropriate dynamic market, or an appropriate part of such a dynamic market. This is defined in Amendment 222 as a dynamic market, or part thereof, that permits the award of the contract by the contracting authority.
Amendment 220 clarifies that a contracting authority must consider applications for membership of the dynamic market from suppliers that have asked to participate in a competition reserved for members of the dynamic market before excluding such suppliers from the competition. This is in addition to considering applications from suppliers that have submitted a tender as part of the competition.
Amendment 222 contains various definitions relevant to these amendments, including a new explanation of when a dynamic market is appropriate, as mentioned previously. It also contains the exemption from Clause 34 for concession contracts other than those that are also utilities contracts, which was previously in Clause 35.
Amendments 223 to 227, 229 to 231 and 233 are tidying-up amendments. Amendments 223, 230 and 233 would delete provisions that are now set out elsewhere.
Viscount Younger of Leckie (Con)
My Lords, as I was saying, Amendments 223 to 227, 229 to 231 and 233 are tidying-up amendments. Amendments 223, 230 and 233 delete provisions that are now set out elsewhere. Amendment 224 clarifies that only contracting authorities may award public contracts using dynamic markets, while Amendment 225 reflects the terminology of “participation in”, rather than “membership of”, a dynamic market. Amendment 226 includes a new definition of “utilities dynamic market” to make it clear that this is a subcategory of dynamic markets rather than a distinct concept. Amendment 227 deletes the previous definition of a utilities dynamic market and deletes Clause 35(3), which will not be needed if proposed new Clause 1, which was discussed on the first day of Committee, is agreed on Report. Amendment 229 is a grammatical change, and Amendment 231 ensures that the definition of “utility” applies across the whole Bill, not just to this clause.
Amendment 234 includes proposed new subsections (1A), (1B) and (1C) in Clause 36, relating to conditions for membership of a dynamic market. These provisions apply the same restrictions to these conditions as apply to conditions of participation in a competitive tendering procedure, as set out in Clause 21.
Amendment 235 clarifies that the contracting authority that established a particular dynamic market, as opposed to any other contracting authority, must publish a notice when the dynamic market ceases or changes—for example, when new suppliers are added.
Amendment 288 allows for a minimum 10-day tendering period for the submission of tenders in competitive tendering procedures for the award of contracts under dynamic markets. This shorter period is a significant efficiency offered by dynamic markets. It compares to the usual tender return of 35 days, which applies in a normal procedure unless tender documents are provided at the outset and/or tenders are accepted electronically, both of which reduce the return by five days.
Amendment 345 extends the requirement on contracting authorities to notify the relevant appropriate authority where a supplier is excluded from a dynamic market because it has fallen foul of a mandatory or discretionary exclusion ground. Amendments 346 to 348 are consequential on this amendment.
In respect of the last two amendments, Amendment 541 corrects the clause reference in the list of defined terms to align with the amendments proposed to Clause 35, while Amendment 545 includes in this list a cross-reference to the newly defined term “utilities dynamic market”.
With that, I beg to move the first of these government amendments in the name of my noble friend Lady Neville-Rolfe.
Lord Fox (LD)
My Lords, as the noble Viscount set out so speedily, this new concept of dynamic markets is so new that a lot of it did not even make it into the original Bill; it had to be brought in as amendments. Thereby hangs a concern—not with the concept of a dynamic market, which I will come to shortly, but with how this is being put together, the sum of the parts and how it will work. It is difficult to see exactly how this will work in practice from the noble Viscount’s presentation that we just heard, the Bill itself and the original White Paper. That is my concern.
It would be helpful if the noble Viscount came back to us in writing with a simple message as to how this will work. How, for example, does it welcome innovation rather than shut it out? I will give an example. Whether a dynamic is based around process rather than outcome makes a difference, so how will these rules manage dynamic markets that actually deliver constant innovation? How will they be refreshed? How will the system work so that, rather than having the power of incumbency, if you like, which is often what happens with procurement, power will be pushed around to allow innovation, new entrants and new people to work within this dynamic?
We can call something dynamic but how is it dynamic on an ongoing basis if I use this market to buy things or services on a daily basis? Essentially, that is my concern: all these amendments are tinkering around technically with process but, because of the way this has been put together in pieces, will it actually work? Can the Minister come back with some assurance as to how this is supposed to work? How will it be constantly renewed? How will he ensure that it is open to new entrants throughout the life of that dynamic? How will individuals know that they are able to keep entering that market? Tenders will not be going out, so what is the process? If I have a small or medium-sized business, how do I find out about dynamic markets that might suit my product or service set? I am concerned about those kinds of mechanisms and processes.
Lord Lansley (Con)
I had not intended to intervene but I am getting a bit confused here. In the Public Contracts Regulations 2015, Regulation 34 describes a dynamic purchasing system. First, I am trying to understand the difference between the dynamic purchasing system that existed in the regulations we are replacing and this apparently entirely new dynamic market; I am not quite clear what it is. Secondly, the dynamic purchasing system in the regulations is an entirely electronic system. This one is not necessarily so.
Lord Lansley (Con)
I hope it is but it does not say so, whereas the 2015 regulations make it clear that it is. I wonder whether this will be an entirely electronic system.
Baroness Hayman of Ullock (Lab)
I shall be extremely brief as the noble Lord, Lord Fox, has already covered a lot of the concerns that your Lordships feel. Following on from that, we need some clarification around the issue, as the noble Lord, Lord Lansley, just said, of whether it is or is not entirely electronic. How is that going to operate? What are the conditions of membership? We need some clarification on the detail of how the dynamic markets are going to work. Perhaps the Ministers opposite could write to the Committee with some clarification about the operation of the system ahead of Report. That would be very helpful.
Viscount Younger of Leckie (Con)
My Lords, I appreciate the comments made by the three Peers who have spoken. It might be appropriate for me to write a letter to clarify the detail, which I appreciate came across as rather technical—though not too rushed, I hope. I appreciate the questions asked by the noble Lord, Lord Fox, my noble friend Lord Lansley and the noble Baroness, Lady Hayman; I will attempt to answer some of them.
Let me start by saying that the expression “dynamic market” is not just a name change. The dynamic market will have a wider remit than the current dynamic purchasing systems. Importantly, dynamic markets can be used for all procurements rather than just commonly used goods and services. That is the first change. The Bill also provides much greater clarity on how dynamic markets can be established and contracts awarded to suppliers—this is on-the-ground information—and on how contracts can be awarded to suppliers that are members of the dynamic market, as well as increased transparency over their operation. I hope that helps to some extent.
I shall go further in answer to the questions asked by the noble Lord, Lord Fox. The benefit of frameworks is that, once set up, they can be a fast, efficient, compliant and easy-to-use procurement route for both the contracting authority and the suppliers. Again, once the framework is set up, there is a significant reduction in the procurement timescale from six to nine months to as little as four to six weeks, leading to reduced procurement costs. Obviously, that is beneficial for both the public sector and the suppliers.
With this, there are pre-agreed terms and conditions, meaning that contracting authorities can simply call off the framework to meet their requirements. They are usually set up with ceiling prices that can be further reduced by competition at the call-off stage. So the benefit of the dynamic market is that it remains open to all suppliers, which benefits SMEs in particular as they will not be locked out for long periods of time.
On how dynamic markets actually help companies—let us say SMEs, which I think was the gist of the noble Lord’s question—it may be that I need to provide more information, but here we are. The new dynamic markets will be open to new suppliers joining throughout their life, ensuring that no one is locked out from the market for long stretches of time. That will be beneficial to SMEs in particular, which can decide to apply to a dynamic market at any time via a process that will be much simpler and quicker than tendering for a framework.
I believe it will be best if I set out all this information and more in a letter. With that, I hope that the noble Lord will be prepared to withdraw his amendment. Actually, these are government amendments, are they not?
“(6) A dynamic market or part of a dynamic market is “appropriate” for the purposes of this section if its terms permit the award of the contract by the contracting authority.(7) This section does not apply in relation to the award of a concession contract, unless the concession contract is also a utilities contract.(8) In this Act—“dynamic market” means arrangements established under section 35(1);references to a contract being awarded by reference to suppliers’ membership of a dynamic market are references to a contract being awarded in reliance on this section;references to suppliers’ membership of a dynamic market are references to suppliers’ participation in arrangements established under section 35(1).”
“(1A) In this Act a “utilities dynamic market” means a dynamic market established only for the purpose of the award of utilities contracts by utilities.”
“(1A) A condition set under subsection (1)(b) may relate to suppliers’ qualifications, experience or technical ability, but may not—(a) require suppliers to have been awarded a contract by a particular contracting authority,(b) break the rules on technical specifications in section 24, or(c) require particular qualifications without allowing for their equivalents.(1B) When considering whether a condition is proportionate for the purposes of subsection (1) a contracting authority must have regard to the nature, complexity and cost of contracts to be awarded by reference to suppliers’ membership of the market.(1C) A condition of membership may require the provision of evidence that is verifiable by a person other than the supplier.”
Lord Clement-Jones
“(c) if the contract is not included in a framework agreement.”
Lord Clement-Jones (LD)
My Lords, I would be very happy if the Minister introduced my amendment, but in moving it I will also speak to Amendment 243A and Clause 40 stand part. My noble friend Lord Fox will speak to other Liberal Democrat amendments in this group that are in the names of my noble friends Lord Wallace and Lady Brinton. I know that my noble friend Lord Fox has congratulated the Minister already but it is the first time that I have spoken since I saw her on the Back Benches in our previous proceedings. I must congratulate her on her seamless move to the Front Bench—again.
Given the controversy surrounding these direct contracts, the removal of Clause 40 on direct awards would, pending greater transparency and equity for SMEs, be the preferable course. But these are specific amendments to Clauses 40 and 42, which would prevent direct awards being used within framework agreements and instead open all such awards to competition. This issue is seen all the time within the G-cloud framework; it prevents proper competition from British SMEs and simply reinforces the dominance of certain key foreign players in the market. These amendments would provide the opportunity to redress the balance and help support UK SMEs.
We will debate the role of frameworks later, but these amendments seek to highlight the blurring of direct award rules by smuggling in large, uncontested contracts within framework agreements. The notion that there is a ceiling above which such awards must be competed for, and below which they can be awarded directly, is theoretically sound if it is rigorously adhered to. We on these Benches would argue that the threshold of £250,000 is too high and that a figure of £100,000 would be more appropriate. I seek the Minister’s view on thresholds and how they are arrived at. However, thresholds are pointless if they are ignored or bypassed, which is what seems to be happening.
One very good example of where this system has completely gone off the rails is cloud computing. This important service is central to the Government’s digital plans. It seems that rarely is the ongoing cloud service bid seen as a separate service; rather, it is wrapped in a package being competed for through a framework agreement by the consulting giants. These consultants always seem to partner with one or other of the dominant, non-UK cloud services companies.
This has gradually led to a disproportionate level of awards to these companies. For example, in 2012-17, one company, Amazon Web Services, was awarded £25.5 million-worth of contracts from a total market worth £381.7 million—a market share of 7%. By 2018-22, its market share had ballooned to just a shade under 40%. In the current financial year alone, 2022-23, AWS has seen £87.7 million-worth of contracts from a total market of £137.6 million—a market share of 64%. The US federal Government estimate that the UK public cloud market was worth $12 billion in 2020 and growing, so AWS can expect a healthy $5 billion-plus, with Microsoft Azure not far behind. Almost none of this would have been opened up to competition.
Of course, in the UK, a company is deemed to have monopoly power if it holds more than 25% of the market. At the same time, the SME share of the market has fallen from more than 50% to just 20% in the last five years, and barely 10% this year. It simply reinforces the dominance of certain key foreign “hyperscalers” in this market. To be clear, it seems that these services are available from UK-based suppliers. We are not asking for preferential access for these UK suppliers, just that they are not locked out by the use of framework agreements in this way and the awards of direct contracts under them.
The Government talk about building a UK digital future, yet they systematically underwrite the development of non-UK businesses by ignoring their own rules. The Procurement Bill is supposedly designed, according to the Queen’s Speech, so that
“Public sector procurement will be simplified to provide new opportunities for small businesses.”
On top of this, the Crown Commercial Service’s own guidance on direct awards suggests that the procedure is suitable only for low-value, low-volume commodity products. In the case of AWS, some of the contracts, such as the Home Office contract, top £100 million in value, so they cannot be considered low-volume or low-value, nor can cloud hosting be considered a commodity, given the proprietary nature of the service and the consequences of that.
If the Government are true to their word, they will accept these amendments to ensure that the balance is redressed and UK SMEs are given a chance to compete on a level playing field. I beg to move.
Baroness Noakes (Con)
My Lords, I have Amendment 236 in this group. It probes the relationship between direct contract awards and framework contracts.
Direct awards are allowed under Clause 40 if they satisfy one of the justifications in Schedule 5, paragraph 8 of which allows them if they are similar to existing contracts for goods and services that have been entered into in the previous five years and in which the initial tender set out the intention to use the direct award justification. My amendment would change those five years to four years, specifically to probe the differences between a repeat direct award under Clause 40 and an award under a framework contract, as covered in Chapter 4 of Part 3.
Clause 45 says that a framework contract has a maximum duration of four years other than for defence and utilities contracts. Doubtless this is my ignorance speaking but I hope that my noble friend the Minister can explain to me the rationale for allowing five years for direct awards under Chapter 3 as opposed to four years for framework contracts under Chapter 4. My question is pretty simple: is there a substantive distinction between direct awards and awards under framework contracts, where the justification for the direct award is in paragraph 8 of Schedule 5?
It seems to me that this is another example of how the designers of this new procurement system have lost sight of simplicity and underlying principles in designing the system. However, there may be a good reason for that, of course; I look forward to my noble friend the Minister explaining it.
Baroness Bennett of Manor Castle (GP)
My Lords, I rise to speak briefly on Amendment 240 in particular, to which I would have attached my name had I noticed it in time. It is a pleasure to follow the noble Lord, Lord Clement-Jones. What he set out in terms of the problems of framework agreements are the kind of things we often encounter in the pages of Private Eye; it really is time that we saw some action on this issue.
Amendment 240
“is intended to prevent the future use of ‘VIP lanes’ for public contracts.”
I rather suspect that the nation out there, which is exhausted by politics, is probably not glued to your Lordships’ Grand Committee on the Procurement Bill this evening. I looked up the schedule: people are probably watching either “The Simpsons” or “Britain’s Parking Hell”. However, I know from what I get in my mailbag and what I see on social media that what happened during Covid with VIP lanes is a huge, continuing concern among large numbers of the British public. It was only last month that the Government were forced to admit that 50 firms had been put into the priority lane for test and trace contracts, worth billions. They included Immensa, a firm that was subsequently at the heart of more than 43,000 false negative results and had been incorporated only in May 2020. This came after the Good Law Project successfully challenged the Government’s VIP lane for personal protective equipment contracts.
So we have a situation where people are now looking at politics and saying, “We want to see things done differently”. This small, modest amendment would set a marker for achieving that; I feel that it deserves more attention both in this Room and outside it.
Baroness Hayman of Ullock (Lab)
My Lords, I have a few amendments in this group. The first is Amendment 235A, which was brought forward as a probing amendment so that we could consider the direct award of contracts in special circumstances. It is important that the Government both put on the record why there is a need for direct awards and explain properly the limited circumstances in which they can be used, so that things are completely clear. I also point out that, in certain scenarios, a contracting authority might be able to make a modification to an existing contract without following a competitive tendering procedure; in reality, that would have the effect of making a direct award. We need a bit of clarification around some of these issues.
The Bill introduces some changes that we would support in this area, including, for example, that the contracting authority would be obliged to publish a transparency notice in advance of making a direct award. We would very much support that. It is also interesting that Ministers will be empowered to designate specific contracts or categories of contracts that can be awarded directly in certain identified areas, such as in protecting life and for public security. It is good that we have a bit more meat on the bone in this area and on the issue around transparency.
Lord Fox (LD)
My Lords, as we have heard, Clause 41 covers the very important issue of direct awards that may be awarded to protect life.
The Covid pandemic tested our current systems but, in one particular area, the Government have now admitted that they created a VIP lane, under which at least 50 contracts for test and trace were expedited. Many other contracts for PPE and other core Covid contracts also circumvented the usual public procurement routes in the VIP lane, as the noble Baronesses, Lady Bennett and Lady Hayman, mentioned. That is why my noble friends Lord Wallace and Lady Brinton have tabled Amendments 238 to 241. I have already explained that my noble friend Lord Wallace cannot be here, and my noble friend Lady Brinton is participating in the Chamber.
These amendments say that regardless of the emergency, the principles of transparency, integrity, fairness and non-discrimination must be at the heart of any contract process. These are the diagnostics of a good, well-managed company. If these are not pursued, it is very unlikely that quality and delivery will be good; and that is what we have found—delivery was poor. The VIP lane was a particularly egregious mechanism that the Government used to encourage contractors to come forward to supply goods at short notice, irrespective of those qualities that I have just listed. Billions of pounds of taxpayers’ money was used to provide contracts, including, as we have heard, to firms that had no experience of test and trace or the provision of PPE. This is not just a waste of money: one test and trace firm’s testing kits gave many thousands of erroneous false-negative results, which meant that people believed that they did not have Covid and went around the country infecting people accidentally, causing illness and possibly death. We do not know how many or how much.
PPE kit worth billions has already been and is being incinerated by the NHS, because it did not meet the required safety standards. It could not meet the quality standard, because it did not have the management controls and processes, nor the integrity, to meet it; it was not checked, because of the fast-track process. One common element is that it was parliamentarians—virtually all Conservatives—who introduced the companies that received this preferential treatment over and above existing, experienced suppliers and experts. There are many examples of this. Worse, the BMA reports that thousands of doctors ended up buying their own PPE, because they knew that the stuff that the Government were providing them with was substandard.
From our Front Benches and in private meetings with Ministers, despite repeated questioning, it was almost impossible to get answers about these appalling processes. Two years later, the truth is really beginning to emerge. Friends of Conservative parliamentarians were given unfair advantage in obtaining contracts, as we just heard from the noble Baroness, Lady Hayman. That is bad enough, but the waste from those contracts is a stain on this Government’s procurement activities. It must never happen again.
Amendment 240 makes it plain that provision must not confer any preferential treatment on suppliers connected to or recommended by Members of the House of Commons or House of Lords. If the Minister resists this amendment, these Benches will also oppose that Clause 41 stands part of the Bill. As currently written, it does not prevent the procurement processes from this debacle happening again.
Can the Minister answer the following questions? Does she believe that Clause 41, in its current form, protects against abuse of a future emergency process similar to the VIP lane that this Government used, which has proven to be untransparent and to favour colleagues of parliamentarians? In other words, does Clause 41 stop this happening again? Does she recognise that now is the time to say that this must never happen again? And does she recognise that these amendments are a mechanism to ensure that we do not get a repeat of this?
Baroness Neville-Rolfe (Con)
My Lords, this is a rather confusing group, so I will start by speaking to the two government amendments. Amendment 237 removes duplication of the direct award ground, which is adequately covered in Clause 41; and Amendment 245 requires appropriate assessment prior to the direct award of whether a supplier previously submitted an unsuitable tender.
Looking at the group in the round, the noble Baroness, Lady Hayman, and the noble Lord, Lord Coaker, raised Amendment 235A, so that we could rightly debate the direct award of contracts; and the noble Lord, Lord Wallace, in his absence, gave notice of his intention to object to Clauses 40 and 41—I think because he wants to understand what is happening and wants answers to some of the questions that have been put by the noble Lord, Lord Fox.
Clause 40 permits a direct award to a supplier, other than an excluded supplier, if a justification in Schedule 5 is met. This is based on the World Trade Organization’s Agreement on Government Procurement grounds for limited tendering and is similar to the current law. We have been commended by external stakeholders for bringing clarity to the justifications and reducing the risk of unintended use of these provisions. As the noble Baroness said, publication of transparency notices is an extremely important development.
Just to let noble Lords know, I will deal with standstill provisions in the next group so, in the interests of time, will not cover them in this group. But I will deal here, a little later, with sunset clauses, which the noble Baroness also raised.
I was very interested to hear the explanation for Amendments 235ZA and 243A from the noble Lord, Lord Clement-Jones. He made a lot of points that I was not aware of, which I will study, in relation to the important areas of cloud computing and UK businesses. But I make clear that existing frameworks allow contracting authorities to buy cloud-based services separately, rather than in a package. In this way, SMEs are encouraged to provide services directly to the public sector, which is something that we are keen that they do.
Frameworks are of course created following a competition and they create a period of uncertainty on contractual terms, albeit they allow a closed list for contracts to be awarded, so it makes sense that they are for a limited duration—I think that is what the noble Lord was asking about. This should not lock out competitors for too long. Directly awarded contracts have a shorter duration for a different rationale: they allow contracting authorities to put alternative arrangements in place. That is the rationale, and we worry that the amendments put forward by the noble Lord, Lord Clement-Jones, would add more time as an unnecessary burden on contracting authorities by mandating them to check for and use available framework agreements, even where these might not be appropriate. Requiring them to keep within existing arrangements can actually stifle innovation and new entrants, particularly where the prototype in development ground is being used. The framework formalities, which may include a requirement for competitive process, may be impractical in cases such as those of extreme urgency.
Lord Fox (LD)
My Lords, before the Minister finishes, I have two points. On the big question, I asked whether she thought that Clause 41 would prevent the VIP lane problems resurfacing or coming back. It would be good to get an answer to that, either now or later. In the Minister’s response on Amendment 239, I thought I heard her say that provisions in other parts of the Bill around operating ethically are, in spirit, reflected in Clause 41. “In spirit” is a very difficult concept to understand in law. I hope we can find a way of perhaps stiffening the spirit and making it actual. If there is a read-across, we need to find a way—either at the Dispatch Box, in some Pepper v Hart way, or within the words—to ensure that what the Minister says, which I take to be in good faith, is usable in the outside world once the Bill becomes an Act.
Baroness Hayman of Ullock (Lab)
Perhaps I might add that what the Minister said makes a lot of sense and is helpful, but one of the problems we have is that we do not know how effective it is going to be and whether it would work until we get into that situation again. Is there any ability to build in a review once the system has been tested, perhaps against a major public problem like we had with Covid-19?
Baroness Neville-Rolfe (Con)
I think our intention is to try to get rid of the VIP lanes. I will take the point away but there is a committee sitting—it will unfortunately sit for a long time, no doubt—that is looking at a lot of these important issues, and at some of these lessons. It is doing things in phases, so hopefully we will begin to get some output soon. We have had the Boardman review and, as the Committee can hear, we have tried in this Bill to learn from that and not to have a preferential system. The point about non-discrimination and such things is in the same spirit. I will take away the point about spirit and what we are doing here, but we have some good things in the Bill. I have listened to what the Committee has said but also tried to convince your Lordships about what we are trying to do.
I am advised that Clause 41 would prevent VIP lanes, as regulators will set out in advance what direct awards are permitted and Parliament would not approve anything too wide-ranging—I am sure that is true. The other point is that the Bill’s provisions on conflicts, which I am sure we will come on to debate further, also help against VIP lanes. We have quite a lot of things going on here; obviously, I am worried about piling it on. Everybody is concerned, so they all come in with different suggestions for trying to improve things. But if you pile those one on the other, you end up with rules that are too burdensome and do not work too well.
On the issue of a review, I think my noble friend Lady Noakes referred to some sort of review clause at an earlier juncture. “Review” is something that one tends to write into Bills where you have a problem. Perhaps we can discuss this further before Report to see whether a review is the right thing or whether enough is going on to try to ensure that we are in a good place on the Covid front. I respectfully request that the various amendments are withdrawn, and I would like to move the government amendments in my name.
The Deputy Chairman of Committees (Baroness Fookes) (Con)
My Lords, I remind the Committee that, where amendments are grouped, only the first amendment is moved. The others must be moved or not moved as they are reached on the Marshalled List.
Lord Clement-Jones (LD)
My Lords, it falls to me as the mover of the lead amendment to respond to the Minister. Clearly, there was quite a lot in what she said and we will need to brood over Hansard when the time comes because there are a large number of issues here. I recognise the Minister’s track record on SMEs but I am somewhat amazed that the Government have been commended on bringing greater clarity, as she put it, because our intention was to provide much greater clarity—and, indeed, equity—in all of this for SMEs. In terms of the addition of more time, burden and so on, I believe the Minister would normally think that we should go the extra mile for SMEs in these circumstances.
Baroness Neville-Rolfe (Con)
Certainly. We have discussed SMEs before; we have gone away to have a look at that issue. I recently held a round table with SMEs. Basically, they were positive about the Bill. Clearly, we have to see through and teach them about the new proposals. The basic point is that there are fewer different ways forward. I was quite surprised that that was the case but clearly there is complexity, and we have got to make sure that the Bill is in the right form.
Lord Clement-Jones (LD)
My Lords, I think it partly depends on the market that is covered by particular SMEs. I could probably produce a range of SMEs that are not quite as pleased with their lot. Of course, that is partly the theme that the noble Baroness, Lady Hayman, and I have been talking about in terms of the UK cloud market.
I appreciate the fact that—stop press—it appears that the intention of Clause 41 is to prevent VIP lanes, because, let us face it, that is lesson number one from Covid. I hope that that is correct, but no doubt we will read carefully how and in what respect it gets rid of VIP lanes.
More broadly, virtually everyone who contributed to this debate wants to see a much clearer set of underlying principles—the noble Baroness, Lady Noakes, was clear on this—around how direct awards relate to framework agreements. I do not believe that we have seen that yet. Assurance from a Minister is one thing but seeing it in black and white in the legislation is another. I thought that the phrase “safe from challenge”, used by the noble Baroness, Lady Hayman, was exactly right. We have seen only too clearly what happens when there is no clarity; the Randox contract was an absolutely classic example of that. All of us hope that that will not happen again and hope to see a competitive market for our SMEs. However, I think we will probably have to return to this issue on Report.
In the meantime, I beg leave to withdraw the amendment.
Baroness Neville-Rolfe
Baroness Neville-Rolfe
(b) submitted an unsuitable tender or request in response to the invitation referred to in subsection (1)(a).”
Lord Aberdare
“(2) A “framework” is a contract between one or more contracting authorities and one or more suppliers that provides for the future award of contracts by a contracting authority to the supplier or suppliers, including through a multi-party framework alliance.”Member’s explanatory statement
This amendment clarifies that sections 44, 45, 46 and 47 governing ‘Award under Frameworks’ include the practices of leading public sector framework providers such as Crown Commercial Service whose framework contracts for goods, services and works include multi-party instruments known as ‘framework alliances’ that are entered into by multiple contracting authorities.
Lord Aberdare (CB)
My Lords, I start by joining the chorus of welcome to the noble Baroness, Lady Neville-Rolfe, in her new ministerial post. It brings back happy memories since it was almost exactly seven years ago in this Room that I proposed an amendment to the then Enterprise Bill concerning the pernicious practice of cash retentions, to which the noble Baroness gave a positive commitment in response. I am delighted to be trying my luck again today.
Amendment 245A would simply extend the scope of Clauses 44 to 47 to cater for framework alliances. These are multiparty framework contracts entered into by multiple contracting authorities, which are increasingly being used by leading framework providers such as the Crown Commercial Service. Framework alliances are recognised and supported by the Construction Playbook, as well as by Constructing the Gold Standard: An Independent Review of Public Sector Construction Frameworks by Professor David Mosey, published by the Cabinet Office last December, whose recommendations are strongly endorsed in the 2022 version of the Construction Playbook.
The use of UK public sector framework alliances has been shown to deliver greater value, reduce risks and other improved outcomes as well as enhanced opportunities for small businesses. They have been adopted for UK public sector procurements of goods, services and works worth a total of more than £90 billion. They include important joint systems of supply chain collaboration and joint risk management that are well in advance of those adopted in jurisdictions outside the UK.
Amendment 245A would merely adjust the wording of Clause 44(2) to ensure that the definition of frameworks includes such multiparty framework alliances. I hope that the Minister will be able to assure us that these alliances will be covered by the provisions of this chapter of the Bill, even if not in the exact form of my amendment. I beg to move.
Lord Lansley (Con)
My Lords, I will speak to my Amendments 247, 248 and 249 in this group. This is my first chance to make what I regard as a substantive contribution and to welcome my noble friend to her Front-Bench responsibilities. Speaking as a poacher these several years, our loss is the Government’s gain—and hopefully the Committee’s gain, too; as the noble Baroness, Lady Hayman, quite rightly said, the fact that my noble friend has already evidenced interest in the Bill is a positive signal to start off with.
I will not go on at great length. I declare an interest in that my wife’s company, with which I work, has been involved in a number of framework contracts. They are all in Brussels and nothing to do with the UK Government. They relate to the European Commission, to NATO and so on.
Without going on at length about framework contracts, everybody can see why they might be a useful thing for contracting authorities to use. They enable them to establish a group of suppliers who have the necessary credentials, capacity and so on, and they are then able to call them off at relatively short notice for these purposes. Everybody can understand that. The problem is that this is not always how they are used. What often happens is that you end up with something that is a speculative framework; we have experienced a number of occasions where no subsequent work has been offered under that framework, so all the original work in relation to that framework was nugatory. Sometimes, the frameworks need subsequent further competitions and a range of suppliers that have all been included in the framework. The subsequent competitions are, frankly, no less onerous than the original competition would have been, the only difference often being that they are done at much shorter notice than the original tenders were required to be. That can impose all kinds of difficulties, especially on SMEs. I declare an interest: our company is an SME in the European procurement context.
So why these amendments? My amendments—particularly, for this purpose, Amendments 247 and 248 —are about at least trying to intrude the idea that the original framework competition ought to rank suppliers. Then, the suppliers who are ranked have some idea of how this is going to work. I have seen the positive benefit of that since, from time to time, we have engaged in this and it has become clear that the contracting authority is going to have what it describes as a cascade. A cascade outcome for a framework competition leaves suppliers in a much clearer position as to their future potential work because you learn that, if a requirement is likely to come forward, it is going to be offered to the number one supplier first. If they do not want to take it, it will cascade down, so you do not have to engage in a lot of additional activity.
I saw no evidence that this description of frameworks entertains cascade-style framework competitions. I thought it should so I tried to write something that did not mandate a cascade, but at least allowed for that possibility. Happily, one of the things that I also thought that cascade help you to do is focus more on the original framework competition as a basis for the subsequent selection of suppliers. That is why, when my noble friend comes to introduce Amendment 246, I will be particularly glad to see proposed new subsection (3G), which says that the competitive selection process that might be undertaken subsequent to the framework for the selection of suppliers should be
“only be by reference to one or more of the award criteria against which tenders were assessed in awarding the framework.”
It therefore entrenches the original framework competition in terms of the way in which subsequent contracts are to be offered.
The point of my Amendment 247 is to introduce that concept of the ranking of suppliers for the cascade. It would therefore move the reference to an objective mechanism for supplier selection under Amendment 248 into the subsequent subsection. Amendment 248 would also address another concern I had: when a contracting authority is making an award of a contract using a framework, it often has a wider range of potential suppliers with different capacities and so on. If there is going to be a supplier selection, it should always give suppliers an opportunity at least to tell the contracting authority what their credentials, capacity, quality and potential value may be. It may exclude value if they say they can only use the price that has already been supplied, for example for staff and so on, but none the less, credentials and capacity to meet a specific requirement should always be something that suppliers are given an opportunity to show. I am not sure that, without this measure, an objective mechanism for supplier selection actually means that. I do not know what “objective mechanism” means in this context. I am hoping that Amendment 246 gets us to a much better place. If it entails any kind of competition, that has to be done by reference to the original award criteria.
Lord Scriven (LD)
I apologise to the Committee for being late; I have literally just got off an aeroplane. Like others, I welcome the Minister to her place. I will welcome some of the acrobatics she may have to do on Report now that she is sitting there rather than next to the noble Baroness, Lady Noakes, as she was earlier in these Committee proceedings.
The noble Lord, Lord Lansley, has just spoken a lot of sense. I declare my interest as someone who advises a company that works with frameworks. I have seen some games played with frameworks, though not by the company I advise, with frameworks used for a number of purposes completely alien to why the original contract framework was set. It debars competition and innovation, particularly when the public body decides that it wants something completely tangential to the original framework contract and the original purpose, and allows a company to continue building its commercial relationship with that public sector body without necessarily having the core competences required. It then goes into a lot of partnerships with adjunct companies that have no relationship back to the original company when the framework was initially set.
I support the noble Lord, Lord Lansley, in trying to work out, in his Amendment 249, what the fee purpose is in terms of companies going around the framework. I particularly agree with him on the issue of small and medium-sized enterprises. I think this would be a block in that field for SMEs in particular. Could the Minister explain a little more about the reason for the fee, how it will allow competition and how it will not debar SMEs in particular from this type of framework agreement if it is to continue?
Lord Coaker (Lab)
My Lords, we are getting into some detail now. That is the purpose of Committee and it is very constructive and informative. I very much agreed with the points made by the noble Lord, Lord Aberdare, about framework alliances and whether Clauses 44 to 47 include such alliances. If they do not, why not? The noble Lord’s point requires a simple answer: yes, they do, or no, they do not. He has asked an important question about the inclusion of framework alliances.
Similarly, I thought the points of the noble Lord, Lord Lansley, were really well made. Amendments 247, 248 and 249 have been put down specifically to ask the Minister whether the Government’s new subsection (3G) answers some of those points. That is the sort of detail we need to get into, as the cascade principle is really important. I think the noble Lord, Lord Scriven, also supported that.
I have a couple of specific points on the importance of transparency and openness, which we are all striving for. The noble Lord, Lord Fox, asked the Minister about what “value for money” means; that could almost be taken as a trick remark but it is crucial, as these sorts of definitions are really important. Therefore, can the Minister say what “proportionate” means in government Amendment 246? One person’s “proportionate” would be to allow people to get through without proper checks. However, without “proportionate”, the burden on some businesses and suppliers would be completely unacceptable—just too much and unrealistic. It would be helpful for the Committee to understand the use of “proportionate” in new subsections (3A) and (3D) and “may not” in new subsection (3C).
Government Amendment 246 talks about proportionate means of ensuring that suppliers have the relevant
“qualifications, experience or technical ability”
to perform a contract. It would be helpful if the Minister said a bit more about what that means.
More generally, since we are discussing Clauses 44 to 47, can the Minister explain why so many respondents to the Government’s consultation opposed open frameworks? Some 27% of the respondents did so. Is that a high negative response? I am not sure whether it is high or low, but it struck me as quite a lot. The Government did not agree with that view and ploughed on with Clause 47.
On Clause 45(3), can the Minister explain what sort of reasons there could be for a framework to exceed the normal eight years for a defence and security contract and four years for other frameworks? The Government seem to believe there might be a necessity to clarify that through their own Amendment 251, which seeks to clarify some of that but also reflects a concern about the number of years that could apply to a contract. That would be helpful.
Our limited discussion on the use of frameworks has been very important; it has sought to get into some of the details, which are what mean they do or do not work well—sometimes on the basis of what a particular word means. Like many noble Lords, I read the assessment in preparing for this Committee; you can see the point the noble Lord, Lord Fox, made in our earlier debate about a cry for clarity on what the Government are seeking to achieve. What different words mean is crucial. Building on the noble Lord’s plea to know what “value for money” means, a little more about what “proportionate”, et cetera, means in the context of government Amendment 246 would be helpful. The Minister may need a little more time to reflect on that but, if you are seeking a contract under a framework, the word “proportionate” will mean everything—or nothing. It would be very helpful if the Minister could clarify that.
With that, I think the Government have taken some very important steps forward under these clauses.
Baroness Neville-Rolfe (Con)
My Lords, I thank the noble Lords, Lord Aberdare and Lord Scriven, and my noble friend Lord Lansley, for their kind words.
I will start with the government amendments, because even though this will not be in strict order, it will help to answer the other points that have been raised. Frameworks are a well-established commercial purchasing tool, used widely across the public sector. Having looked at some of the public responses, that percentage figure that was quoted is not worrying. Key is whether this is a sensible provision and whether we are reforming them in the correct way. The Bill makes a number of improvements to the effectiveness of frameworks, to increase flexibility, provide value for money, et cetera.
I am glad that the noble Lord referred to government Amendment 246 because it is quite a substantial and important amendment among the hundreds that I apologise for having tabled in Committee. It allows contracting authorities to set conditions of participation in a competitive selection process for the award of a contract under a framework. New subsections (3A) to (3F) impose restrictions on the use of such conditions to those which apply to conditions of participation in a competitive tendering procedure under Clause 21. These include limiting the conditions in various ways, for example, to those which are a proportionate means of ensuring that suppliers have the relevant qualifications, experience and technical ability to perform the contract, of ensuring that the conditions do not break the rules on technical specifications, and of requiring that equivalents must be allowed where particular qualifications are required. The question on proportionality is a good one. I do not have as good an answer for the noble Lord as I would like, so I will write to him on that point.
My noble friend Lord Lansley commended new subsection (3G). This restricts the basis on which proposals received as part of a competitive selection process under a framework can be assessed to all or some of the award criteria against which tenders the frameworks were assessed. This is to ensure that suppliers that have already been admitted to a framework do not have to meet entirely different criteria later. New subsection (3H) allows for the award criteria to be refined.
Government Amendments 251 to 255, and 258 to 260, relate to rules for frameworks for the future award of contracts. The remaining government amendments in this group deal variously with light-touch contracts, ensuring open frameworks work as intended, and with minor tidying-up changes.
Turning to the noble Lord, Lord Aberdare, the thing that we worked on together when I was last a Minister is still unresolved, so I feel a sense of guilt.
Baroness Neville-Rolfe (Con)
I agree with the objective behind the noble Lord’s Amendment 245A. There is a need for this Bill to ensure that multiple contracting authorities may join to award a framework. Frameworks can result in significant savings, financially and in time, and they say that time is money. This is particularly the case where they are put in place for the benefit of more than one contracting authority, for example by centralised procurement authorities.
To that end, Clause 10 provides for contracting authorities to carry out procurements jointly and for centralised procurement authorities to put in place arrangements for the benefit of other contracting authorities. This enables them to delegate their obligations to run lawful procurements to centralised procurement authorities, in their capacity as specialists, or to jointly procure with them and remain responsible, together with their procurement partners, for the award of any resulting contract. The noble Lord will wish to look carefully at that, but I do not think that his amendment is necessary.
Amendments 247 and 248, tabled by my noble friend Lord Lansley, seek to add additional requirements for the award of contracts under frameworks, without a further competitive process. The first of these, a system based on the suppliers’ ranking in the competition for the award of the framework—the noble Lord talked of a cascade; we have talked of ranking—is certainly one mechanism by which contracts can be awarded under a framework without a competition. However, this is only one selection mechanism, and there are others. They might include a “taxi rank” system, where the next supplier on the list gets the work, or the supplier chosen could simply be the cheapest for that good or service, which contracting authorities might consider to be more appropriate for their requirements on that occasion. There is nothing in the Bill preventing contracting authorities from including rankings in a framework, but there is no need to require this for all frameworks.
The second requirement is to allow for the provision of additional information by suppliers in order to make an award without a competition. In this connection, I draw noble Lords’ attention to Clause 44(6), which allows contracting authorities to ask for additional information to ensure that call off competitions are effective. Sorry, that is a bit repetitive. This seems preferable to receiving large amounts of potentially unnecessary or irrelevant information and adding burdens to the award process, which we are all keen to avoid.
Lord Aberdare (CB)
My Lords, I thank the noble Baroness for her response. I am encouraged that she agrees with the objective that framework allowances will be covered by the Bill. I will look at what she said and how she says that they will be covered, but my main objective with this rather simple amendment was to ensure that allowances were covered.
The noble Lords, Lord Lansley, Lord Scriven and Lord Coaker, raised a number of much more substantive amendments. I do not really feel able to respond on their behalf, but I was glad that the Minister said she would come back on the issue of proportionality, which is particularly important. I am sure the other noble Lords will look carefully at the issues of fees, cascading and so forth. I am happy to withdraw my amendment.
Baroness Neville-Rolfe
“(3A) A competitive selection process may provide for conditions of participation only if the contracting authority is satisfied that the conditions are a proportionate means of ensuring that suppliers party to the framework have—(a) the legal and financial capacity to perform the contract, or(b) the technical ability to perform the contract. (3B) In this section, a “condition of participation” means a condition that a supplier must satisfy in order to be awarded a public contract in accordance with the framework.(3C) A condition set under subsection (3A)(b) may relate to suppliers’ qualifications, experience or technical ability, but may not—(a) require suppliers to have been awarded a contract under the framework or by a particular contracting authority,(b) break the rules on technical specifications in section 24, or(c) require particular qualifications without allowing for their equivalents.(3D) When considering whether a condition is proportionate for the purposes of subsection (3A), a contracting authority must have regard to the nature, complexity and cost of the public contract.(3E) A condition of participation may require the provision of evidence that is verifiable by a person other than the supplier.(3F) If a supplier does not satisfy a condition of participation, the contracting authority may exclude the supplier from participating in, or progressing as part of, the competitive selection process.(3G) A competitive selection process may provide for the assessment of proposals, but only by reference to one or more of the award criteria against which tenders were assessed in awarding the framework.(3H) The award criteria may be refined for the purposes of subsection (3G).”
Baroness Neville-Rolfe
“(9) Subsections (3) to (5) do not apply to a framework that is a light touch contract (see section 8(5)).”
Baroness Neville-Rolfe
“(c) a framework that is a light touch contract (see section 8(5)).”
Baroness Neville-Rolfe
Baroness Neville-Rolfe
“(2A) An open framework may provide that, if a framework expires in accordance with subsection (2)(b) while a process for the award of a contract in accordance with the framework is ongoing, the contracting authority may continue the process and award the contract as though the framework had not expired.”
Baroness Neville-Rolfe
Baroness Neville-Rolfe
Baroness Neville-Rolfe
My Lords, this group deals with Parts 9 and 10 of the Bill. Providing suppliers with an effective remedy is not only required by the World Trade Organization’s Agreement on Government Procurement, the GPA—a very important international agreement—but a critical aspect to any well-functioning and accountable procurement regime. It gives the market confidence to invest resources participating in government procurement, knowing that public contracts will be awarded fairly and transparently.
As such, in most cases, suppliers have 30 days from the point at which a breach should have been discovered to raise a claim, and in the majority of procurements a standstill period will apply. The standstill period of eight working days is a short pause between the point when the contract award decision is notified to bidders and the final contract conclusion. It allows bidders to consider the assessment summary, which includes evaluation feedback.
If a claim is filed at court during the standstill period, an automatic suspension will apply, preventing signature of the contract until the legal claim is resolved or the suspension is lifted on application of the contracting authority. If the standstill passes without challenge, it protects against the contract being set aside after it goes live. Clearly, we do not want court proceedings to be the only way to motivate contracting authorities’ compliance with the new Act, which is why we have introduced the procurement oversight regime in Part 10, which will enable an appropriate authority to investigate non-compliance, make recommendations and issue guidance across all contracting authorities, as a result of the investigations. This will encourage the consistency and continuous improvement we all want to see.
Government Amendments 263 and 266 correct the reference to the contract award notice in Clause 49(1)(b) and (4) respectively.
Amendments 265, 267, 393 and 394 make it clear that any time a contracting authority chooses to enter into a standstill period, which is known as a voluntary standstill period in circumstances where the Bill does not mandate a standstill period, it must match the mandatory standstill period and be for a minimum of eight working days.
Amendment 461 clarifies that failure to have regard to the national or Welsh procurement policy statements is not enforceable via Part 9.
Amendments 464 to 469 make some textual amendments and make it clear that the automatic suspension applies only when a claim has been notified during the standstill period.
The structure and drafting of Clause 95 will be amended by Amendments 470 to 476 to make the intent of the clause easier to interpret.
There are various amendments related to oversight functions. Amendment 481 to Clause 96 makes a straightforward clarification to the meaning of “section 97 recommendation”. Amendments 483 and 484 reflect the principle that an appropriate authority may issue guidance to contracting authorities only in line with restrictions on relevant authorities in Clauses 99 to 101. Amendments 501 and 502 amend Clause 101 to reflect agreements with devolved authorities that, where appropriate, UK government Ministers can issue guidance under Clause 98 to all contracting authorities, including devolved and transferred authorities, to maximise joint working and efficiency.
I pause at this point so that my noble friend Lady Noakes and others can speak to their amendments.
Baroness Noakes (Con)
My Lords, I have several amendments in this group. The first is Amendment 264, a probing amendment to find out why standstill periods, which are generally required by Clause 49, are not required for light-touch contracts or those awarded in dynamic markets. My amendment would achieve this by deleting paragraphs (d) and (e) from Clause 49(3).
As my noble friend just explained, the standstill period is a short pause after the publication of the contract award notice in order to allow an agreed bidder the opportunity to complain about a contract before the contract is finalised. This is a sensible part of the framework because challenging a contract after it has commenced is much less effective and is best avoided. The purpose of my amendment is to ask my noble friend to say what public policy grounds would deprive unsuccessful bidders of the opportunity to challenge contract awards under the light-touch or dynamic market regimes. What specifically are the features of those regimes that are suitable to override the rights of unsuccessful bidders, compared with other contracts?
My next amendments, Amendments 477 to 480, would have the effect of ensuring that procurement oversight extends to all procurement covered by the Bill. Clause 96 allows for investigations into compliance with the Bill, but excludes government departments, Welsh Ministers, Northern Ireland departments and utilities from its scope. My simple question to my noble friend is: why? She cannot possibly tell me that these contracting authorities are such paragons of virtue when it comes to procurement that they would always comply with the Bill. Government departments do not have a perfect track record on procurement and, in my view, ought to be capable of being investigated.
My final amendment in this group, Amendment 482, concerns the recommendations that can be made following a Clause 96 investigation. Clause 97(3) says that these recommendations “must not relate to” how to comply with the procurement objectives set out in Clause 11; must not recommend how the contracting authority should have regard to the Section 12 national procurement policy statement; and must not say how the authority should
“exercise a discretion in relation to a particular procurement.”
I can just about understand the last one, because recommendations should not interfere with
“discretion in relation to a particular procurement”,
but I do not understand why recommendations have to steer clear of procurement objectives or the NPPS. What is the point of making recommendations if the heart of the procurement rules, to be found in Clauses 11 and 12, are off limits? For example, is value for money off limits in an investigation because it is an objective within Clause 11? I cannot understand why that should be excluded. My amendment is to delete subsection (3) on a probing basis, to give my noble friend the opportunity to explain what all this is about.
Lord Fox (LD)
My Lords, I speak in place of my noble friend Lord Wallace on Amendments 349A, 349B and 353A, all of which refer to and reflect on the procurement review unit. On page 13 of Transforming Public Procurement: Government Response to Consultation, at points 46 to 49, the Government say:
“We have revised the proposals for this new unit. It will be known as the Procurement Review Unit (PRU), sitting within the Cabinet Office and will be made up of a small team of civil servants.”
They go on to detail quite fully what the PRU is—I will come back to its role and autonomy in a minute—but where is it in the Bill? Amendment 349A seeks to replace “An appropriate authority” with the promised “Procurement Review Unit”. Amendment 349B would give a role for the procurement review unit to advise. More specifically, in Amendment 353A we seek the insertion of the nature of the procurement review unit.
All these amendments are trying to probe where the Government got to between the consultation and the drafting of this legislation, and why in effect there is no PRU in the Bill. What happened to it and who has got it? When the Minister no doubt notices and reinserts it on our behalf, what will its role and its level of autonomy be? How many teeth are the Government prepared to give this PRU, and will it essentially have those teeth drawn? Essentially, where is it?
Baroness Thornton (Lab)
My Lords, I shall speak to Amendments 477A and 486A in my name. I thank my noble friend Lady Hayman, the noble Baroness, Lady Bennett, and the noble Earl, Lord Devon, who is not able to be with us today, for their support.
The amendment addresses procurement investigations. It would add, at the end of line 28 on page 60,
“and the implementation of social value”.
It would require the new procurement investigations authority to be able to investigate the implementation of social value. There are regular reports of public bodies that have secured promised social-value outcomes from contractors—apprenticeships, jobs created, investment in local infrastructure and so on—but these are not delivered. As social value is weighted in tenders, organisations can win tenders to deliver social value but may not always deliver the social value that they have promised.
The amendment would give the new procurement investigations authority the ability to investigate whether public bodies were securing social-value commitments that had been promised and to be able to report on that to Parliament. Currently there is no part of government that is bound to collect information on the implementation of social value. Indeed, the Cabinet Office had started to do this for central government through the social value model, but that is not comprehensive. Social value is just as much value as financial value, and the new procurement investigations authority should take social value seriously. This would have the added benefit of increasing awareness of the importance of social value in the public sector.
Amendment 486A would add a new clause. Because social enterprises and small and medium-sized enterprises often complain about barriers to accessing contracts in the public sector, which this Committee has discussed at some length, the proposed new clause would seek to ensure that the new procurement investigations authority would have expertise from the social enterprise sector and the SME sector so that they could ensure that contracting authorities were carrying out procurement exercises in a way that was fair to the sector.
Despite the Government’s commitment to expanding the role of social enterprises, voluntary organisations and SMEs in winning public sector contracts, that has not taken place. Research by DCMS estimates that only 5% of contracts are being won by voluntary sector or social enterprise organisations. Only one in five pounds of public procurement, 21%, is going to SMEs despite a 33% target. The amendment would give the new procurement investigations authority the expertise to be able to investigate whether contracting authorities were doing what they could to help SMEs and social enterprises to win contracts fairly.
Lord Scriven (LD)
My Lords, I am glad to follow the noble Baroness, Lady Thornton, on the issues that she raises. When the Government and Whitehall look through the prism of public sector procurement, that tends to lead to a very centralist approach that is about value for money, not for the taxpayer but for government departments. Sometimes things are not exactly in line with each other. There are many areas up and down this country where social value could really be added to if the Government, through primary legislation, understood what social value was and therefore ensured that in the Bill, when every single public sector procurement body in the land was awarding and using criteria to judge a contract and a supplier’s tender, that became vital.
The second issue on that refers back to something I think my noble friend Lord Fox said earlier, although I was not in the Committee at the time. The definition of such issues regarding social value are vital, because social value means many things to many different people. It is not to put contractors into a straitjacket. They can still innovate as long as there is a definition and a framework of what social value means. It is vital that the Government understand that it needs to be there as a guide for contractors, not as a straitjacket.
Also based on what the noble Baroness, Lady Thornton, said, the voices of the third sector, or the charity sector, and small to medium-sized enterprises need to be central to how procurement and social value are aligned within the Bill and public sector procurement. I remember being leader of Sheffield City Council. The thing that amazed me was the innovation and what happened if we brought the voice of the charity sector and small to medium-sized enterprises into how we were working. We did not call it social value then; it was to improve our place. It was place-based procurement at the time. They could change the dial completely about how procurement was done. We therefore had a view across the authority about how it was done based on some of the words, concepts and ideas that charities and small to medium-sized enterprises had. Those became a policy driver for procurement. It is therefore vital that the Government think carefully about the concept of social value, and what it means in the framework in the Bill, rather than just being loose words which many people define differently, or this will end up not having the maximum value in communities up and down the land.
Lord Coaker (Lab)
My Lords, this has been another interesting debate. This group is on oversight and remedies. If you are going to have something worth legislating for, it has to have some sort of oversight and remedy. In other words, you have to see whether you are achieving what you wanted to and, if not, know what you going to do about it. It is therefore an important section, but to do that you have to have the right fundamentals in the Bill to have oversight and remedy.
I agree with my noble friend Lady Thornton’s amendment. She has been consistent throughout this Committee in trying to ensure that the Bill reflects the importance of social value. The noble Lord, Lord Scriven, supported that in his remarks. I know my noble friend will continue to argue for it, and we will support her should she wish to take it further on Report. It is really important, and I thank her for that.
As we are coming to the end of our remarks, I shall say that I agree with the point made by the noble Lord, Lord Fox, on Amendment 353A, tabled by the noble Lord, Lord Wallace, on what has happened to the procurement review unit. It was in a Green Paper and it seemed to be universally applauded—except, obviously, somewhere in government, so it was struck out. It would be interesting to know why it was struck out. Everybody supported it, except the Government, so why were they wrong and the Government right? Sometimes I find it baffling to understand why something is done. A procurement review unit seems essential to review what you are seeking to achieve. It is not a weakness but a strength. Those are my remarks about that.
I have to say this openly to the Committee: I am devastated that I did not notice the amendment from the noble Baroness, Lady Noakes: Amendment 477. Honestly, it is absolutely brilliant. The noble Lord, Lord True, has been promoted for being a socialist in charge of the Bill; the noble Baroness, Lady Neville-Rolfe, is on her way; and now we have this from the noble Baroness, Lady Noakes. Clause 96 is quite astonishing. I reread it to make sure; when I read it before, it completely passed me by. I will read it out, because people will not understand if they read Hansard without also reading this. Clause 96(1) says:
“An appropriate authority may investigate a relevant contracting authority’s compliance with requirements of this Act.”
So, we have a really important government Bill that will become law, and then, in subsection (5):
“In this section—‘procurement investigation’ means an investigation under subsection (1)”—
which I have just read out—
“‘relevant contracting authority’ means a contracting authority”,
as the noble Baroness, Lady Noakes, points out,
“other than … a Minister of the Crown or a government department”
and various others. Why would the Government set up something that is desperately important—in other words, a procurement unit—which makes purchases of hundreds of billions of pounds, but their own Bill says they will not investigate them?
Amendment 477 is brilliant and, as I say, I am devastated that I did not think of it or notice it. Fair play—I am very fair. More seriously, the amendment points out something that fundamentally seems to be a flaw in the way the Bill is drafted. Otherwise, there must be some incredible explanation or reason that I cannot think of—I do not know if anyone else on the Committee can think of any.
To finish, oversight and remedies are an extremely important part of any Bill, because that is how you ensure that what you seek to achieve is achieved and that you are held accountable. The amendments seek to answer those questions. Unless the Minister is able to respond in a way that persuades us, I think there are certainly one or two issues that we must come back to. With that I will sit down. It is a brilliant amendment, honestly.
Baroness Neville-Rolfe (Con)
I thank noble Lords for an interesting debate on these non-government amendments. I do not think that I have a perfect reply to my noble friend Lady Noakes’s three questions. We are due to meet to discuss various aspects of the Bill and I would like to explore her questions further, and then perhaps I can write to the Committee when it is clear to me what the right replies to those questions are.
I will attempt to comment on the amendment that the noble Lord, Lord Coaker, has just talked about, on why government departments do not have the same obligation to have regard to recommendations under Clause 97. It is a simple question, and our response is that it is not necessary to include government departments in Clause 96 and 97, because the appropriate authorities have sufficient influence over contracting authorities to ensure that any recommendations that result from an investigation are duly taken into consideration. To confirm, investigations, findings and progress reports may be published by the relevant authority acting as a further incentive. It is simply unnecessary to provide statutory powers in respect of government departments, whereas due to the different relationship with non-central contracting authorities, statutory powers were required to ensure appropriate engagements for these purposes. As noble Lords will know, we have quite a well-developed procurement operation now, right at the heart of Government, sitting in the Cabinet Office, which I think is an improvement. That is why it is not provided for in the Bill.
Just before I leave voluntary standstills, let me say that I will make sure we come back properly on the exchange we had earlier. We want to maintain voluntary standstills for dynamic markets—they are intended to be quick to use, agile and efficient, as we heard from my noble friend Lord Lansley—and for light-touch contracts, which are often for time-sensitive services such as the provision of health and social care. We do not want to make the light-touch contract rules stricter in this regard than current legislation, as we think that could lead to some problems.
Amendments 349A, 349B and 353A were tabled by the noble Lord, Lord Wallace of Saltaire, and others. They seek to legislate for the procurement review unit with a new clause. The procurement review unit, which is very important, is not specifically referenced in the Bill as it will be exercising statutory and non-statutory powers on behalf of Ministers. The proposed new clauses would therefore conflict with existing provisions. Furthermore, considering the importance and potential implications of the decisions the PRU will support the Minister of the day in making—the proper statutory process—we believe it would be inappropriate to delegate that ultimate responsibility to unelected officials below ministerial level.
The PRU will work on behalf of the Minister of the day in two key areas. The first area is debarments. Clauses 56 to 61 set out the process for the establishment of a debarment list of excluded and excludable suppliers; this has already been debated. Under these clauses, it is envisaged that the PRU will investigate whether a supplier is subject to an exclusion ground and whether the issues in question are likely to arise again. The PRU will issue advice to the relevant Minister, usually the Minister for the Cabinet Office, who will take the final decision whether to add the supplier to the debarment list.
The second area is improving compliance with the Bill. Clauses 96 to 98 provide the framework and statutory powers required for carrying out procurement oversight. The PRU will exercise these oversight functions on behalf of the Minister and make proposals regarding any investigations, recommendations and statutory guidance it considers appropriate for the Minister’s ultimate approval.
Baroness Neville-Rolfe (Con)
I will have a little more to say about this later on, so why not let me finish? If I do not answer the noble Lord’s questions, we will try to get at what is needed.
Amendments 477 to 480 seek to examine why government departments have been excluded from the appropriate authority’s investigatory powers. The definition of “relevant contracting authority” in Clause 96 is in recognition of existing governance. Ministers already have the authority to investigate government departments without the need for statutory powers; I think I have said that already. There are also established routes for co-operation with investigations.
Amendment 477A was tabled by the noble Baronesses, Lady Thornton—it is good to see her in the Committee—Lady Hayman of Ullock and Lady Bennett of Manor Castle, and the noble Earl, Lord Devon. Amendment 482 was tabled by the noble Baroness, Lady Noakes. These amendments would expand the scope of the statutory oversight powers beyond compliance with the Bill, straying into areas of policy. The scope of the statutory powers provided by these clauses has been carefully drafted to maintain the boundary between law, which must be adhered to, and policy, where some leeway is allowed in terms of its implementation.
Expanding Clause 96 and/or the Section 97 recommendations to include social value, as well as considering how contracting authorities have chosen to meet obligations to have regard to policy and principles, would blur that boundary and start to erode the autonomy of contracting authorities, which we recognise are best placed to make policy implementation decisions that are appropriate for their business. It would also move the statutory regime away from objective and measurable concerns into more subjective areas of debate, which could impact the effectiveness of the oversight system. We believe that the scope of Clauses 96 to 98 creates a proportionate, effective and compelling incentive for improvement. It is worth noting, however, that the drafting of Clauses 96 and 97 does not prevent the Minister from making observations regarding a contracting authority’s policy implementation. Policy guidance can indeed continue to be provided to contracting authorities.
Non-statutory procurement policy notes, which we have discussed before, are currently released to guide contracting authorities. In the new regime, under Clause 98, statutory guidance, which may be published as a result of investigations, can also address matters of policy. Contracting authorities will be required to have regard to any guidance released under Clause 98; I think this helps to deal with the social value issue. The removal of Clause 97(3) would result in the appropriate authority having the power to intervene in specific procurements.
The restriction in Clause 97(3)(c) ensures probity of the procurement by, for example, preventing a Minister of the Crown from using Section 97 to exert influence over which supplier is awarded the contract. That is an important point. To remove this restriction would be concerning to contracting authorities and suppliers alike.
Finally in this group, the noble Baronesses, Lady Thornton and Lady Hayman, and the noble Lord, Lord Coaker, tabled Amendment 486A. This seeks to stipulate that the expertise of SMEs, voluntary organisations and social enterprises is accessible to an appropriate authority that is conducting investigations under Clause 96. The PRU will be managed and delivered by a small, experienced team of civil servants based in the Cabinet Office, supported by a panel of experts, which can be consulted regarding investigations and any resultant Section 97 recommendations and guidance under Section 98. The Cabinet Office aspires to provide perspectives from procurement experts from across the Civil Service, local authorities and various types of private organisations, including SMEs and VCSEs, to benefit the oversight regime.
However, it should be recognised that having a panel which includes external procurement professionals is dependent on the availability of suitably qualified individuals and the ability to manage any potential conflicts of interest. I am therefore unwilling to make a legislative commitment of the kind proposed. However, the establishment of the panel will be transparent, and appropriate documentation will be published in due course, including on the process for appointing members. It seems to me that this is an important error, which is why I make that point.
Lord Purvis of Tweed (LD)
Can the Minister clarify whether it is the Government’s intention that the PRU will be an appropriate authority, so that panel members themselves will have legal powers under Section 96? If not, I am really confused as to what legal powers the panel will have when it comes to calling for documents, and what duty will be on other contracting authorities to provide the panel with any information at all. At the moment, it does not look as if the panel is considered to be an appropriate authority, so it will not have any other legal powers under Part 10.
Lord Fox (LD)
Following on from that, if the Secretary of State can give and the Secretary of State can take away, and we have no sense that this panel will endure past the next government reshuffle—which could be any time now—without having it in either primary or secondary legislation, what status does this have at all other than the good will of the then Secretary of State?
I refer again to the Government’s response to the consultation: the role of the PRU was very specific. It was aimed to deliver the same service as the public procurement review service—and perhaps the Minister could tell us whether that is being disbanded and folded into the PRU; will it still exist or what? The response stated that
“the PRU’s main focus will be on addressing systemic or institutional breaches of the procurement regulations”.
The Minister has narrowed that down to debarments and compliance. It seems there really has been a declawing and a removing of this body from any statutory basis. As my noble friend points out, it is not very clear which the appropriate authority would be in those circumstances.
Baroness Thornton (Lab)
I might as well intervene now too, because the question I would really like to ask the Minister—and it is very nice to see her back in her place, as she was the Minister responsible for putting equal pay on the statute book, and I hope her progressive instincts there might be followed through in this piece of legislation—is about social value. How do we deliver social value if there is absolutely no way of examining it, monitoring it and enforcing where it is not being delivered?
Lord Scriven (LD)
Following on from what the noble Baroness, Lady Thornton, has said, and from what the Minister said about how this could not be in the Bill because it is a policy initiative, the procurement objective in Clause 11(1)(b) is “maximising public benefit”, which is a policy issue. All the noble Baroness is trying to do is ensure that social value is looked at by the appropriate authorities. Actually, it is more defined and specific in law, because there is a social value Act but no public benefit Act. The Minister’s answer that it is just a policy issue really does not stack up.
Baroness Neville-Rolfe (Con)
We do have a social value Act; I think the answer is—subject to correction—that social value features in the NPPS, the policy guidance note, and that failure to have regard to the NPPS is challengeable via judicial review rather than by suppliers for breach of statutory duty under Part 9 of the Bill. That is more appropriate as the NPPS will inform procurement strategy, and failure to comply should not result in suppliers being able to seek compensation from the public purse in respect of an individual procurement. There is quite a lot of complication in that area, but that is the approach. There is a social value Act, but obviously I will listen to what has been said today.
To return to the PRU, the unit will exercise powers on behalf of an appropriate authority. The panel will consult the PRU when appropriate and, if the Government set up a panel, as Governments often do—we have various panels in different departments that I have been involved with, and in my experience they tend to endure; certainly this one will be useful—the PRU will make recommendations to the Minister, who is the appropriate authority and will make the final decisions. That seems to be the right approach constitutionally.
Lord Purvis of Tweed (LD)
I am grateful for that response. To be clear, will the panel be the investigating body?
Baroness Neville-Rolfe (Con)
No. The PRU, a Civil Service unit, will be the investigating body, which will consist of experienced people of the right kind. The panel will advise that body.
Lord Purvis of Tweed (LD)
I am grateful, but Clause 96 says the “appropriate authority may investigate”. The Minister has been referring in this short debate to “investigations” with regard to the panel. I am grateful that she has clarified that it will simply be an advisory group, not an investigatory group, and will not itself have the legal powers to seek documents. I am therefore not entirely sure what the PRU will do other than what existing civil servants do, which is to advise Ministers.
Baroness Neville-Rolfe (Con)
We have put together this whole new system of procurement, which includes various checks and balances. Panel members will be available for the procurement review unit to help regarding investigations and the unit’s work. Their reports and recommendations will help with moving forward on procurement and the complexities of this change of the law. Their advice can be published, and we will be able to reference the assistance that the panel has provided. That is the approach that we are proposing following a process of consultation. The PRU is central. I am sure we will revert to this issue.
Lord Fox (LD)
The Minister will have got the message that there is deep disquiet about how this will be structured and will operate. If the Minister has time, can she reflect on Hansard and write a letter before Report setting out how this unit will be set up and what its roles, on a statutory or non-statutory basis, will be? That would be very helpful.
Baroness Neville-Rolfe (Con)
Of course, I will write setting out how this will work. I ask the Committee to look at it constructively in the light of what we are trying to achieve across a very wide area of procurement. I go back to where we started in Committee, as this is probably the final amendment this evening, and say that there is also a process of cultural change, training and so on that will be going on, which is an important complement to the investigatory powers that we are looking at in this amendment.
I respectfully ask noble Lords not to move their amendments.
Baroness Neville-Rolfe
“(5) A voluntary standstill period may not be less than a period of eight working days beginning with the day on which the contract award notice is published.”
House of Lords
Introduction: Lord Murray of Blidworth
Introduction: Lord Johnson of Lainston
Oaths and Affirmations
Death of a Member: Baroness Blood
The Lord Speaker (Lord McFall of Alcluith)
My Lords, I regret to inform the House of the death of the retired Member, the noble Baroness, Lady Blood, on 21 October. On behalf of the House, I extend our condolences to the noble Baroness’s family and friends.
Food: Imports and Security
(2 years ago)
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Baroness McIntosh of Pickering
To ask His Majesty’s Government what assessment they have made of the impact of the current level of the pound on food imports and food security.
Baroness McIntosh of Pickering (Con)
My Lords, I beg leave to ask the Question in my name on the Order Paper and refer to my interests as set out in the register.
The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord Benyon) (Con)
My Lords, I declare my farming interests as set out in the register. The depreciation of the pound should not have a direct impact on household food security; however, it may have an indirect effect if increased import costs cause the price of food to rise. It is not for His Majesty’s Government to set retail food prices. Through regular engagement, Defra will continue to work with food retailers to explore the range of measures they can take to ensure the availability of affordable food.
Baroness McIntosh of Pickering (Con)
Given the unprecedented food inflation we have seen—the highest level for 40 years—and the fact that farmers and consumers are facing unprecedented challenges, will my noble friend the Minister take this opportunity to boost farm productivity at home to stabilise food security and to boost self-sufficiency in food, which for fruit and vegetables is a woeful 16%? This is a one-off opportunity to help farmers and consumers with both their budgets and food productivity and growth.
Lord Benyon (Con)
My Lords, we enjoy a high degree of domestic food security and self-sufficiency but we are not complacent about it. We have responded to recent events, as in the food strategy, putting food security at the heart of the Government’s vision for the food sector. It is absolutely our intention to help farmers become much more productive in the two sectors that the noble Baroness mentioned, particularly in horticulture but also in areas such as seafood. Our farming reforms are designed to support farmers to produce food sustainably and productively alongside delivering environmental improvements, which of course we all benefit from.
Lord Cunningham of Felling (Lab)
My Lords, will the Minister focus for a moment on the inexorable increase in the number of food banks being used by people who simply cannot afford to shop elsewhere? This is a real problem. Fortunately for the United Kingdom, people have so far been generous in supplying food banks, but even now we are reading and learning that some food banks are simply running out of food. This is a pretty serious state of affairs and I hope the Minister will assure the House that it is being looked at.
Lord Benyon (Con)
The people who run food banks are some of the best people in our society, and any of us who have had anything to do with them are in awe of the work they do. Household income is a complex issue across many different sectors, and the Government’s job is to support households, as we are through our £37 billion investment. This includes £500 million to help with the cost of household essentials, including food, and brings the total funding and support to £1.5 billion. We certainly work with the food bank sector to make sure that for any problems it faces, if the Government can influence it, we ease those problems and help it do the work that it does.
Lord Curry of Kirkharle (CB)
One of the constraints on the production of home-produced fruit and vegetables has been the availability of labour. We have been receiving mixed messages from the Government on their attitude to seasonal workers. Can the Minister confirm what the current government policy is please?
Lord Benyon (Con)
We are firmly supportive of the Institute for Agriculture and Horticulture that the noble Lord has been so instrumental in setting up and running. We want to make sure that we are improving the skills available and that those skills reflect how young people want to go into an industry now. They want portable qualifications that they can take into different areas of farming, agricultural production or the food industry. Improving skills is an absolute priority. We will not get the improvements in areas such as horticulture unless we improve the skills base. That is why we are determined to see organisations such as TIAH succeed.
Baroness Bakewell of Hardington Mandeville (LD)
My Lords, the poorest 20% of the population spend a higher proportion of their income on food. This makes them vulnerable to the effects of changing food prices. They are the very people who need to eat a good-quality, balanced diet to maintain their health. Will the Minister undertake to lobby his colleagues in other departments to ensure that they are aware of the health effects of insufficient food and nutrition and to ensure that both benefits and free school meals are extended to cover the gap in rising food prices?
Lord Benyon (Con)
The noble Baroness is absolutely right that food inflation adversely affects those on the lowest incomes and she is right to raise the issue of healthy food for children. We have increased the value of our Healthy Start vouchers to £4.25 a week and spent around £600 million a year ensuring an additional 1.25 million infants enjoy a free, healthy and nutritious meal at lunchtime following the introduction of the universal infant free school meal policy of 2014. I am very happy to keep her and other noble Lords abreast of other conversations we have in the context of food and the work happening across government to help families deal with the cost of living crisis.
The Earl of Caithness
My Lords, could my noble friend assure us that, when he is helping to increase the productivity of farming in all its spheres, it will be done with the best science available, so that it will improve not only farming but nature at the same time?
Lord Benyon (Con)
We operate on the basis of the best scientific evidence. Sometimes the evidence presented to Ministers can be conflicting, and we have to make a value judgment. Scientific advice underpins our new farming systems, and there is a determination to produce food sustainably and reverse the catastrophic declines in species that we have experienced in recent decades—which, as the Dasgupta review pointed out, has an economic cost as well as a cost to our environment.
The Lord Bishop of Exeter
I thank the Minister for his responses here, but, given the current value of the pound, which is making our exports so attractive, what are His Majesty’s Government doing to seize this opportunity to grow our exports of British produce and therefore support and really encourage our fantastic and hard-working farmers?
Lord Benyon (Con)
The right reverend Prelate is absolutely right: there are areas for growth in our farming productivity. We want to see what we can produce. We are more than self-sufficient in produce such as lamb and poultry, but we want the opportunity to export as well. There are huge opportunities in horticulture, which is why we are working really hard with that sector to improve the productivity of food production right across the piece, and to look at the export opportunities that quality foods can achieve.
Baroness Jones of Whitchurch (Lab)
My Lords, the fact is that a small number of global food companies are making huge profits out of the current crisis, which is affecting not only consumers but farmers as well. Why do not the Government use the powers in the Environment Act to take action on supply chain regulation to make sure that everybody shares in the profits available there? Furthermore, why do not the Government take action to curb financial speculation in the food markets, because that is at the heart of the problem here?
Lord Benyon (Con)
I am very happy to take up any specific cases where the noble Baroness feels that undue influence has been applied to the supply chain. We have complex supply chains in this country; she is quite right to state that some companies are based overseas. However, where we find problems we can take action, not just through the Environment Act but through the Groceries Code Adjudicator, which this Government also set up.
Baroness Boycott (CB)
My Lords, the Energy and Climate Intelligence Unit report last week found that the combined impacts of climate change as well as oil and gas prices have driven up food prices by £11.4 billion—that is £407 per household. Obviously, that is much more serious for those on lower incomes. Of that £407, £170 is due to climate change and £236 is due to oil and gas prices. That really tells us, if we ever need reminding, how much the food system is dependent on fossil fuels. Can the Minister agree and support the transition now to agroecological food systems? Can he give us any reassurance that the new ELMS subsidy system will be back on track with the announcement of the new Prime Minister?
Lord Benyon (Con)
I think that it is back on track with the existing Prime Minister, or the one that is still there as we speak. I assure the noble Baroness that the very basis of ELMS is an agroecological understanding of our soil standard, getting proper functioning ecosystems to support the food that we produce—so I can absolutely give her that assurance.
Vehicles: Purchase Price and Running Costs
(2 years ago)
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Baroness Randerson
To ask His Majesty’s Government, further to the report by Fair Charge Driving Away from Fossil Fuels, published on 5 July, which found that if there were parity in purchase price and running cost, 100 per cent of drivers would choose electric rather than diesel or petrol cars, what steps they are taking to ensure that price parity is reached as soon as possible.
The Parliamentary Under-Secretary of State, Department for Transport (Baroness Vere of Norbiton) (Con)
My Lords, while the upfront purchase price for electric vehicles remains higher than for their petrol or diesel equivalents, in many cases these vehicles are cheaper to own and run. Generous tax incentives are in place, which, alongside fuel and maintenance savings, reduce the total cost of ownership.
Baroness Randerson (LD)
My Lords, the Fair Charge report highlighted the discrepancies in VAT for private and public EV charging. As energy prices rise, the discrepancy becomes even greater in real terms. There is a realistic danger that EVs will be seen as too expensive, although the Government, of course, get a greater income from tax as energy prices have risen. I realise it is difficult for the Minister to know what government policy is likely to be later this week, but will she undertake urgently to press whoever happens to be running the Treasury to reduce VAT on public charge points to 5%, in order to encourage EV take-up among all sections of society?
Baroness Vere of Norbiton (Con)
I am very happy to outline what government policy is. As the noble Baroness will know, and as is always the case when taxes are referred to, all taxes are kept under review. It should be stressed that the reduced VAT on domestic supply reduces bills for households by £5 billion a year. Most people do not charge their electric vehicles exclusively at public charge points. However, I accept that that discrepancy exists and, as I said, we keep taxes under review.
Lord Patel (CB)
My Lords, does the Minister believe that the UK strategy on battery production is still viable, particularly given the recent media reports related to Britishvolt and the decision to move the production of electric Minis to China from Oxford? Does that show a loss of confidence in the strategy?
Baroness Vere of Norbiton (Con)
I do not think it is a loss of confidence in the strategy. The Government’s intention is that the UK remains at the forefront of EV manufacture, innovation and batteries; that is why we have the Faraday fund and the automotive transformation fund. All these elements are really important, but I accept that some companies will come into the market, and some will leave. There will be some flux, but at the moment, we are not concerned.
Lord Hunt of Kings Heath (Lab)
My Lords, that sounds like a very laissez-faire attitude. What discussions have the Government had with BMW about this very unfortunate decision?
Baroness Vere of Norbiton (Con)
As far as I am aware, the Department for Transport has not had any discussions with BMW about this very unfortunate decision. However, I will inquire with colleagues in BEIS as to whether they have. But, as I say, there are always changes within any particular manufacturing sector. None of us wants the Mini to be produced in China and it may well be that other models come back to the UK.
Lord Forsyth of Drumlean (Con)
My Lords, I declare my interest as an owner of an electric Mini and a diesel car. The electric Mini is one of the best cars I have ever had. It costs nothing to run because I charge it from sunlight from my solar panels. What on earth are the Government doing by allowing this icon of British industry to be changed and moved to China?
Baroness Vere of Norbiton (Con)
Of course, a lot of the design and innovation that went into the Mini did come from the UK, but the Government are clearly not going to get involved in some decisions by private companies as to where they do their manufacturing. However, we can provide support to companies to make sure that they do manufacture in the UK and that is why we have the automotive transformation fund.
Baroness Sheehan (LD)
My Lords, can the Minister reassure the House that the end-life of EV batteries will not be landfill? Also, can she update the House on government support for research into the remanufacturing of EV batteries?
Baroness Vere of Norbiton (Con)
It is really important that we understand what happens to batteries throughout their lives. It is the case though that there are 20 million EVs on the world’s roads already and there is no evidence to suggest that their lifespans are any different from those of a petrol or a diesel vehicle. We expect that many EV batteries will have a guarantee of about eight years, or 100,000 miles. As for the end of their lifespan, it is very important that we focus on recycling. Of course, the Government are focused on that, and I will write to the noble Baroness with more information.
Lord Naseby (Con)
Is now not a good time for His Majesty’s Government to have a whole look? We have the strategy of 2030 ahead of us, when petrol cars are supposed to disappear, but at this point in time we have a situation where electric cars are hugely expensive; they are not available at a competitive price for ordinary families. Ordinary families living in tower blocks in my former constituency cannot recharge those cars, so is it not time that we had a look at the whole strategy openly and took a little time about it to ensure that we have a policy that is workable in the future, taking into consideration the point added by my noble friend on the Bench below?
Baroness Vere of Norbiton (Con)
The price of electric vehicles has fallen dramatically over recent years, and that was helped by the Government providing quite significant grants in the early years to ensure that the prices were lower. There are now 24 models that cost less than £32,000 new—
Baroness Vere of Norbiton (Con)
If I may finish—because I too would not buy a new car for £32,000—the second-hand market, in my view, is the key to getting widescale acceptance from, and affordable vehicles to, the consuming public. The second-hand market is getting stronger. The biggest suppliers to it are the fleets, and we are working with them to ensure that their models get to the second-hand market.
Lord Tunnicliffe (Lab)
My Lords, the transition to electric vehicles is vital to the survival of our society as we know it; the impact of climate change is even worse in many other countries. The report sets out some sensible recommendations to help on the way. Which, if any, of the three or two-plus-two recommendations does the Minister reject, and why?
Baroness Vere of Norbiton (Con)
I am afraid that I am not familiar with the recommendations in the report.
Baroness Meacher (CB)
My Lords, do the Government have a strategy to deal with financial incentives being given by the Chinese Government to entice British firms to move to China, and if so, what is it?
Baroness Vere of Norbiton (Con)
I will have to refer to the relevant department, but it is of course the case that the UK Government also provide support to various companies to invest in the UK and to create jobs here. All countries will have their own strategies, but I will write to the noble Baroness with more information.
Lord Leigh of Hurley (Con)
Will my noble friend agree to speak to her colleagues at Defra about the huge shortage of electric charging points on our inland waterways? There is a disproportionate amount of diesel and petrol boats, particularly on the Thames, which are heavily polluting—I declare an interest as an owner of an electric boat—but the reason that there are not more electric boats is simply the paucity of charging stations.
Baroness Vere of Norbiton (Con)
My noble friend raises a very important point. The Government are very focused on the decarbonisation of the maritime sector, whether that be inland or on sea, so I will certainly speak to Defra, but I will also write to my noble friend, because I think that there is more that I can say on inland waterways.
Lord Foulkes of Cumnock (Lab Co-op)
My Lords, is it not even more important to get people to stop using their cars as much as possible, whether they are electric, diesel or petrol, and go on the train? Is not that even more difficult, as I found this morning, when the 8.30 am and the 9.30 am trains from Edinburgh were cancelled because there were no staff available? The noble Baroness, Lady Ramsay, and the noble Lord, Lord Maxton, are stuck on a train. They were turfed off at Preston and had to catch another train. That is not reliable. What is the Minister doing to get reliability in our long-distance trains?
Baroness Vere of Norbiton (Con)
I absolutely agree with the noble Lord. There are some circumstances on our trains where the service is not very good at all. We are working very closely with some of those providers that are not providing the level of service that we want, because the Government’s goal is to provide choice. If people want to be able to use the trains, we have to have trains that actually work. We are very focused on that, and I am sure that the noble Lord will have seen comments from the Secretary of State for Transport regarding how we feel about the services being offered.
Police National Computer
(2 years ago)
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Baroness Ludford
To ask His Majesty’s Government what procurement criteria they used in awarding Fujitsu a £48 million contract to upgrade the Police National Computer; and whether their decision to award that contract took into account that company’s role in developing the Horizon software for the Post Office.
The Parliamentary Under-Secretary of State, Home Office (Lord Sharpe of Epsom) (Con)
My Lords, every contract award is considered on its own merit and in line with procurement regulations and evidence of historic supply and delivery. The police national computer is a critical service used by UK policing and other agencies to maintain public safety and security. The contract to replace PNC mainframe hardware technology, ensuring the future of the service, was awarded following market engagement on grounds of time, cost and risk to continuity of service.
Baroness Ludford (LD)
My Lords, the Government have awarded contracts to Fujitsu of over £3.5 billion since 2013, including nearly £500 million this year, of which £48 million was on the police national computer. Considering that Fujitsu’s Horizon software was at the heart of the Post Office sub-postmaster scandal, why do the Government believe that Fujitsu software has the necessary integrity for the critical data in the PNC? How is a business-as-usual approach on the award of contracts before the official Post Office inquiry concludes prudent? Lastly, how does this government largesse give Fujitsu any incentive to contribute to the massive compensation cost for sub-postmasters, which is set to fall on the taxpayer?
Lord Sharpe of Epsom (Con)
I thank the noble Baroness for her questions. The police national computer has been hosted on Fujitsu mainframe technology for over 30 years, and existing Fujitsu-leased hardware technology would not have been viable to use beyond March 2022. It required urgent replacement, which is why Fujitsu was selected. The market engagement exercise held in 2020 to review options to replace the Fujitsu hardware and support found no viable alternative solutions, and that is why Fujitsu received this contract—which, I should also stress, is making up the difference between now and when the new police national computer comes into operation. I could go on, but there was basically no alternative.
Lord Harris of Haringey (Lab)
My Lords, the Minister has given us a very interesting answer. Basically, he said that it came as a big shock to the Home Office that this equipment had expired. Can he tell us what confidence he has in the Home Office’s management of IT contracts of various sizes—bearing in mind, for example, the grotesque overspending on the replacement of the Airwave system for emergency services communication, and the fact that that contract has overrun by five or six years already, with no sign that the costs are going to be met?
Lord Sharpe of Epsom (Con)
I am afraid that that is not what I said to the noble Baroness or to the House at all. I have confidence that Fujitsu will deliver on this.
Lord Hogan-Howe (CB)
My Lords, I declare my interests, and I support the noble Lord, Lord Harris. The emergency services network is technology rather than IT. Not only is it five years delayed, but I think the costs have risen by five times, from around £2 billion to over £10 billion. As yet, I am afraid that the Government are trapped in a terrible contract with Motorola, which is delivering a legacy solution but is also charged with delivering the new one. Unfortunately, it is being paid £250 million more for the old system per year, so there is no great incentive. It is a great worry, not only for the Government but for the police, that this system is not yet delivered.
Lord Sharpe of Epsom (Con)
I understand where the noble Lord is coming from, and I commend him for his work on this and other matters. Obviously, I am here more to talk about the subject of the Question, but I will take his concerns back, find out more information and write to him.
Lord Polak (Con)
My Lords, to return to the question asked by the noble Baroness, Lady Ludford, about Horizon, the words that come to my mind are: “scandalous”, “miscarriage of justice”, “broken lives”, “families financially ruined”—and yet Fujitsu has paid nothing. Talking has gone on long enough. I know there are legal cases, but should not the Government stop any contracts to Fujitsu? It is just morally wrong.
Lord Sharpe of Epsom (Con)
My noble friend is right to point out that we are trying to get to the bottom of the Horizon issue. That is why Sir Wyn Williams has been tasked to hold his statutory inquiry. Fujitsu is a core participant and is co-operating fully. Accountability depends on evidence, so I think it is proper to let Sir Wyn hear it before judging any possible consequences.
Lord Kennedy of Southwark (Lab Co-op)
My Lords, was any consideration given by the Government to the public perception of awarding such a vital contract to a company with such a shocking record? Can the Minister confirm clearly whether Fujitsu was the only company that actually bid for this contract? If that is the case, how can we be assured of a genuinely competitive process? How will this improve standards? How do we get good value for money and end up with results which, when you consider the role of this company, is truly shocking? I endorse all the words of the noble Lord, Lord Polak: it is appalling that this company can get anywhere near another government contract.
Lord Sharpe of Epsom (Con)
As I said earlier in answer to another question, it was the only viable alternative. Other companies were invited in and, for reasons most of which were around the time it would take to implement new systems, Fujitsu offered the only solution. Of course, I agree with the public perception argument; however, I do not think we had any alternative.
Baroness Jones of Moulsecoomb (GP)
My Lords, given that the flaws in Horizon software by Fujitsu were the cause of an awful lot of distress and misspent money, are the Government confident that so far there have been no similar mistakes on the police national computer?
Lord Sharpe of Epsom (Con)
The Government are confident. There has been one incident of data loss, but it was a human error, as opposed to a software error and all that data has been recovered. So, yes, the Government are confident.
Baroness Randerson (LD)
My Lords, the Horizon scandal involved 736 innocent sub-postmasters being prosecuted; four suicides; many more individuals and families torn apart by the prolonged cover-up of technical problems; and a cost to taxpayers of more than £1 billion so far. I know this Government’s reputation for financial probity is at a very low ebb, but can the Minister explain how Fujitsu was able to land this complex and sensitive contract when the Government had removed it from the list of preferred suppliers in the last year?
Lord Sharpe of Epsom (Con)
I have to say again that I think I have answered most of the noble Baroness’s question already. Fujitsu is not a preferred supplier, but it is able to enter open competitions for government business. Fujitsu has not been found guilty of any fraud or other crime related to Horizon and is complying with all inquiries. There was no viable alternative.
Baroness Berridge (Con)
My Lords, I am grateful that my noble friend accepts the public perception point, because more taxpayers’ money is going into this company at the moment. Inquiries take a long time, but in relation to other inquiries, such as contaminated blood, there has been a process to expedite payments and, as the noble Baroness has outlined, some people have taken their own lives. Surely, we should expedite the public funds that need to be in the pockets of those people harmed by Post Office and potentially Fujitsu.
Lord Sharpe of Epsom (Con)
I agree with my noble friend. So far, to date, the Government and Post Office have made good progress on delivering compensation to postmasters through the scheme fairly and quickly—82% of eligible claimants have now received an offer, and £52 million has been offered in total. I accept that it is not enough, but it is being done.
Baroness Chakrabarti (Lab)
My Lords, the Government have presided over the economy and vital sensitive infrastructure, including tech infrastructure, for 12 years. If, as the Minister suggests, there was no viable alternative, why not?
Lord Sharpe of Epsom (Con)
Unfortunately, as I said, this relates to the delay in the rollout of the new system. The new system was delayed because of unforeseen complexity. I should state for the record that statistics around the police national computer are mind-boggling in their complexity: 30 million people’s information; 68 million vehicle records; 61 million driving licence holder records; 1.34 million daily transactions; 114 million checks per annum. It has to work; therefore, there was no viable alternative.
Baroness Wheatcroft (CB)
My Lords, could the Minister tell the House whether external consultants were involved in deciding that this contract should go to Fujitsu and, if so, how much were they paid for coming to the rather defeatist conclusion that there was no alternative?
Lord Sharpe of Epsom (Con)
The process was subject to all the usual Cabinet Office rules. I do not know how much external consultants were paid; I will find out.
Lord Cromwell (CB)
My Lords, will the Minister confirm—I think he has been trying to tell us—that Fujitsu has an unassailable monopoly on this contract?
Lord Sharpe of Epsom (Con)
No, it does not have an unassailable monopoly. It obviously has a long history with the police national computer. When the police national computer finally breathes its last, its monopoly effectively does the same.
Lord Sterling of Plaistow (Con)
Will the noble Lord agree that over the last century pretty well every government contract that has been put out becomes a monopoly? Is it not time that we had a new approach to how such contracts are handed out?
Lord Sharpe of Epsom (Con)
That sounds like a very sensible suggestion, and I will take it back to the department. I have not necessarily been around for as long as the noble Lord described.
Regency Act 1937
(2 years ago)
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Viscount Stansgate
To ask His Majesty’s Government what plans they have, if any, to amend the Regency Act 1937.
The Lord Privy Seal (Lord True) (Con)
My Lords, the Regency Act sets out the arrangements by which a regency is triggered, as well as provisions for the appointment of Counsellors of State. On occasion, the Regency Act 1937 has been amended so that its provisions effectively support the sovereign in the discharge of their duties and ensure the resilience of our constitutional arrangements. The Government will continue to consider their legislative programme for the remainder of the Session.
Viscount Stansgate (Lab)
My Lords, I thank the Leader of the House for that reply. The House knows that the Regency Act is still very relevant: it is the only reason why it was possible to open the current Session of this Parliament. Indeed, when you look at the final year of Her late Majesty’s reign, there were elements of a regency about it. Does the Minister not think it time to approach the King to discuss the potential amendment of this Act, and in particular Clause 6, which at the moment defines regents in relation to their line of succession to the Crown? Otherwise, are the Government happy to continue with a situation where the counsels of state and regency powers may be exercised by the Duke of York or the Duke of Sussex, one of whom has left public life and the other of whom has left the country? Is it not time for the Government to approach the King to see whether a sensible amendment can be made to this Act?
Lord True (Con)
My Lords, I thank the noble Viscount for the Question but he will of course understand that I will not discuss any private conversations with His Majesty or with the Royal Household. His Majesty King George VI set out in his gracious message to Parliament that there can be a need
“to consider contingencies which may hereafter arise, and to make such provision as will, in any event, secure the exercise of the Royal Authority.”—[Official Report, Commons, 26/1/37; col. 766.]
In that spirit, the Government will always consider what arrangements are needed to ensure resilience in our constitutional arrangements, and in the past we have seen that the point of accession has proved a useful opportunity to consider the arrangements in place.
Lord Addington (LD)
My Lords, can the Government indicate that they will at least consider that the person they go to in the first consideration will be somebody who actually undertakes royal duties, or at least some part of them, at present?
Lord True (Con)
My Lords, again, I will not comment on specific circumstances. I have set out the position in response to the noble Viscount, and, obviously, any consideration would also have to take place in close consultation with the Royal Household.
Hereditary Peers By-election
(2 years ago)
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Lord Grocott (Lab)
My Lords, I am grateful to the House for allowing me to make a few remarks after this latest clutch of by-elections; I remind the House that five new Members of Parliament have been elected since last Thursday with scarce a murmur from anywhere. I want to put into Hansard and on the record a little more information about the by-election that was held last week for the new Cross-Bench Peer.
I find the way in which these results are announced completely unsatisfactory. Obviously, that is not a criticism of the clerk—it is precedent—but we have notice of new Members of Parliament only by means of a very lightly drawn, barely noticeable script on the Order Paper. The only information we get, apart from the recent embellishment, which tells us the total number of votes cast, just tells us who has won the election. More information should be provided when the result is announced. I am unable to give it for the result that has just been announced because I would have to go along to the Printed Paper Office to get it, but I can give some information about the by-election for the new Cross-Bencher which was held last week. There were 10 candidates for that vacancy and 30 electors, so, three electors for every candidate. Twenty-two of the 30 voted; I make that a turnout of 73%. The winning candidate got 11 votes and the runner-up got 10 votes, so a quick calculation tells me that that is a majority of one, which of course makes this a hyper-marginal seat.
I simply say to the House that a by-election result has been announced without the figures and without even the winning candidates being present, let alone the losing candidates—usually, the losing candidates stick around as well for a normal by-election. With no criticism of the people elected whatever, it is without any reference to the House of Lords Commission, unlike any life Peer or Cross-Bencher appointed to this House. There really is need for more information to be presented to the House when the clerk reads out the result. I commend that to the House authorities and to the Leader, who is in his place and who I know takes these things very seriously.
Baroness Smith of Basildon (Lab)
My Lords, before the Minister responds, I wonder whether there may be an opportunity for he and I to discuss this through the usual channels. Not only do we have hereditary Peers by-elections, against which this House has voted in principle—with no disrespect to those candidates who come into the House, whom we welcome—numerous times. We also have additional Members coming to the House as Ministers—about 10 in the past couple of years—and now there are reports of a further prime ministerial resignation honours list from the Prime Minister, who has been in post for only about a month. It seems that we ought to have a little more thought about the membership of this House and, as the Burns report says, not having a House of quite the size it is, but one that allows us to do our best work in the best way. It would be helpful if we could discuss in a sensible, practical and respectful way ensuring that this House is of a size that enables us to do our job in the best way possible.
The Lord Privy Seal (Lord True) (Con)
My Lords, the noble Baroness talks about the size of the House, and I noticed the difficulty of finding a place on your Lordships’ Benches today. On the usual channels, I prefer to have such discussions in private, rather than on the Floor of the House. As far as new Peers are concerned, I simply say that I look forward to welcoming the eight new Labour peers who were appointed on the recommendation of the leader of the Opposition.
Business of the House
(2 years ago)
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The Lord Privy Seal
That, in the event of the Supply and Appropriation (Adjustments) Bill having been brought from the House of Commons, Standing Order 44 (No two stages of a Bill to be taken on one day) be dispensed with on Tuesday 25 October to allow the Bill to be taken through all remaining stages that day.
The Lord Privy Seal (Lord True) (Con)
I apologise, my Lords: I was not expecting to have to intervene on the previous matter, but, without prejudice to what we say in private, I heard what the noble Baroness said. I beg to move the Motion standing in my name on the Order Paper.
Sanctions (Damages Cap) Regulations 2022
Lord Harlech
That the draft Regulations laid before the House on 20 July be approved. Considered in Grand Committee on 18 October.
Relevant document: 11th Report from the Secondary Legislation Scrutiny Committee
Lord Harlech (Con)
My Lords, on behalf of my noble friend Lord Goldsmith of Richmond Park, I beg to move the Motion standing in his name on the Order Paper.
Armed Forces (Covenant) Regulations 2022
Lord Harlech
That the draft Regulations and Rules laid before the House on 20 July be approved. Considered in Grand Committee on 18 October.
Relevant document: 11th Report from the Secondary Legislation Scrutiny Committee
Lord Harlech (Con)
My Lords, on behalf of my noble friend Baroness Goldie, I beg to move the Motions standing in her name on the Order Paper.
Energy Prices Bill
Monday 24th October 2022
(2 years ago)
Lords ChamberRead Full debate Energy Prices Act 2022 View all Energy Prices Act 2022 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: HL Bill 59-I(a) Amendment for Committee (Supplementary to the Marshalled List) - (21 Oct 2022)
17:21 - Division on Amendment 8 - Ayes: 170 / Noes: 174 - Amendment 8 disagreed.
17:49 - Division on Amendment 14 - Ayes: 153 / Noes: 174 - Amendment 14 disagreed.
18:04 - Division on Amendment 25 - Ayes: 154 / Noes: 166 - Amendment 25 disagreed.
Lord Lennie
Member’s explanatory statement
This amendment and others in the name of Lord Lennie make the regulations in the relevant sections subject to the affirmative procedure.
Lord Lennie (Lab)
My Lords, this group of amendments is all about making various clauses subject to the affirmative procedure in your Lordships’ House. I give notice that we intend to divide the House on Amendment 25.
The amendments affect Clauses 2, 3, 6, 7 and 16, and Schedules 1 and 2, making them subject to the affirmative procedure. The Government seek to justify some of the use of the negative procedure by pointing out that the Secretary of State already has the power to modify or revoke the schemes in Clauses 2 and 3, and Clauses 6 and 7 for Northern Ireland.
Clause 16, which confers powers to make it a temporary requirement on electricity generators to make payment regulations, uses the affirmative procedure on first use and the negative procedure thereafter. The Government’s justification for a temporary requirement represents a significant intervention in the electricity market. This clause will define the main parameters of the scheme. After this, the Government believe that interest will wane, with only minor or technical amendments likely to occur, therefore justifying the negative procedure thereafter.
The justification for the Schedule 1 powers is that, although the Government recognise that the powers are significant, they are necessary to allow the schemes for relief of GB businesses. The Delegated Powers and Regulatory Reform Committee report, established in haste last week, says that by including paragraph 3(2) of Schedule 1 the Government have completely ignored the recommendation contained in its report:
“No attempt has been made to limit the powers or to ensure that they will be subject to parliamentary scrutiny.”
Nor was any “compelling justification” offered to support the Government taking these powers. Schedule 2 powers relate to Northern Ireland, where a similar provision is proposed.
In Clauses 21 and 22, the subject of Amendment 25, the Government assert that their approach would include a fuller period of consultation with relevant stakeholders providing suppliers with earlier certainty. However, what guarantee is there that these steps will ever be taken? The department also considers that any delay could have negative consequences for those who were to benefit from the scheme. However, there are enough examples of regulations being scrutinised after the fact—for instance, those relating to Covid—and even after this primary legislation, which, as it stands, took effect from 1 October 2022. I cannot see why this cannot be applied here.
The pace of things is another justification offered by the Government. The affirmative procedure would not allow certainty that the licence modifications would follow and this in turn would inhibit suppliers making required operational changes, slowing delivery this winter.
There does not seem much justification for the Secretary of State taking these overwhelming powers. Clause 22 applies similar powers to Northern Ireland, also without the same compelling justification. It allows the Secretary of State to tackle barriers to delivering implementation of the schemes as necessary. There appears no justification for this at all. The Delegated Powers and Regulatory Reform Committee is firmly of the view that any power conferred by Clause 22 is inappropriate and that the Government should act by,
“imposing a time limit on the exercise of the power which is commensurate with other time limits contained within the Bill.”
I beg to move.
Lord Rooker (Lab)
My Lords, I shall speak briefly to some of the amendments in my name in this group. This is the only time I shall intervene. Although I have tabled amendments in the second and fourth groups, I do not propose to speak to them. What I am about to say covers the same points.
I declare an interest as a member of the Delegated Powers and Regulatory Reform Committee. I do not speak for the committee; the report does that. Over the weekend, I read the Government’s inadequate response to the report. I am grateful for the speed with which the Government responded, as I suspect other committee members are. That was useful but their response was completely inadequate. It is significant that the government response makes no mention at all of the Delegated Powers Committee’s report from November 2021, Democracy Denied? The Urgent Need to Rebalance Power between Parliament and the Executive.
Clause 22(5), which is not referred to in the government response, is the subject of Amendment 28. According to paragraph 14 of the Delegated Powers Committee’s report, Clause 22(5) is, in effect,
“a Henry VIII power because it allows the effect of legislation, including primary legislation, to be modified by a direction.”
Paragraph 14 also says:
“There are no limits on the kinds of requirements which may be imposed through the directions power.”
Paragraphs 14 to 18 say firmly that the powers in Clause 22 are inappropriate. Clause 22 brings in what is referred to as “disguised law”. This was referred to in the November 2021 report as “camouflaged legislation” and an “unacceptable ploy”.
The Delegated Powers Committee report on this Bill refers to the memorandum supplied with the Bill, particularly paragraphs 154 to 162. Referring to the government memo, the report says that it
“does not explain the full range of the things which can be done”.
It goes on to say, in paragraph 16:
“We are also not convinced by the reasons given in the Memorandum for the power not being subject to parliamentary scrutiny.”
As such, the Delegated Powers Committee report says that the Government appear
“to have completed ignored the recommendations”
in the committee’s report of November 2021.
I want to make a more general point, which I shall not repeat on the other group of amendments. I was not a member of the Delegated Powers Committee when its November 2021 report, Democracy Denied?, was published, in tandem and in co-operation with a report from the Secondary Legislation Scrutiny Committee of your Lordships’ House, entitled Government by Diktat: A Call to Return Power to Parliament. Both reports—that from the Delegated Powers Committee and that from the Secondary Legislation Scrutiny Committee—were about Parliament and the Executive. They were not about this House and the elected House of Commons. Parliament and the Executive are what this is about.
Both reports were debated in this House on 6 January under a Motion tabled by the noble Baroness, Lady Cavendish of Little Venice. I have no criticism of the Minister or his team for reasons I shall make clear. I do not expect he has read either report; I am not sure any Minister has. I do not hold the Minister responsible. He and his government colleagues are taking advantage of the slack role Parliament has played to bequeath powers from Parliament to the Executive.
On Wednesday 20 July this year—a significant date because it was the day before the Summer Recess started—both the Secondary Legislation Scrutiny Committee and the Delegated Powers and Regulatory Reform Committee, including Peers who had been members of those committees last year when the reports were prepared, took evidence on the reports from the then Leaders of both Houses and First Parliamentary Counsel. There was no sign that anybody had read anything about the 6 January debate on both of them. It was abundantly clear that neither of the then Leaders had even been briefed on the views of this House.
Parliamentary counsel have clearly continued to draft Bills, such as this Bill, which have “completely ignored” the recommendations of the Delegated Powers and Regulatory Reform Committee report, Democracy Denied? Why have they done this? Repeatedly, parliamentary counsel are producing Bills which transfer powers from Parliament to the Executive. It is parliamentary counsel doing this—they draft the Bills.
During the exchanges on 20 July in respect of what is referred to as Question 16, I asked the First Parliamentary Counsel, Dame Elizabeth Gardiner, about her saying during our evidence that day that counsel
“have that discussion on a daily basis with the teams and with the Ministers about the nature of what they are asking for”.
I pointed out that, in my time as a Minister, in both Houses, over 12 years—it is in the minutes—
“I understood … that parliamentary counsel took instructions from the department’s lawyers and Ministers never got involved with parliamentary counsel.”
Dame Elizabeth’s answer was:
“I think things have changed a lot ... Probably we do meet policy officials and Ministers more frequently on Bills than we would have done 30 years ago”.
I have checked on this. I think this change, or breach of convention, has happened in the past 12 years. My experience, particularly in two departments, as I recall, when I served in this House—there were four altogether, but two in particular—was that it was specifically said to me when I joined, because Bills came up, that in general the Government accepted most of the recommendations from the Delegated Powers and Regulatory Reform Committee. It was the norm to accept the majority. I was repeatedly told that. I think this change, or breach of convention—it is certainly a lapse in the accepted standards of conduct—has happened only since 2010, when somebody started playing wild with parliamentary procedures, and the House of Commons was blindsided by it. That, I think, is very dangerous.
I am prepared to say that I think the old way was best. If lawyers gave instructions for policy officials so that the policy officials would have to say to department’s lawyers, “This is what we want to do, and what our Ministers want to do”, the lawyers would then use the legal structures to put that case to parliamentary counsel. By and large, the system worked. I think it would be far less likely that clear recommendations made by Parliament would be “completely ignored” if the lawyers were the ones who gave the instructions to parliamentary counsel, as was the case up until 2010.
I trust the lawyers here to follow the conventions. Quite clearly, parliamentary counsel work with the Government—let us make no bones about it. These days, they do not even have their own office block in Whitehall, to which I was once invited to when I was a Minister in the other place. I know the way they work; they are now ensconced inside the Treasury. They work for the Government; they are not independent.
Baroness Jones of Moulsecoomb (GP)
My Lords, I apologise for not speaking at Second Reading. I did listen to the Minister’s opening speech and I had made my views clear in an earlier briefing. My views sync very closely with those of the noble Lord, Lord Rooker. Quite honestly, this Government are out of control—we have known that for months, if not years—and it is time they understood they are not acting in a democratic manner. This is a “something must be done” Bill, and I understand why something must be done. However, it has so little detail, and the Government are expecting us to take this on trust. I do not trust the Government, and so there is a big problem here for me.
There are two big issues. First, these energy price schemes will make the difference between people being able to pay their bills or not pay their bills, and whether they can feed themselves, clothe their kids and that sort of thing. We have to be sure of all this detail. The Government are proposing to fill in about 90% of the Bill’s details at a later date, and they expect us to just wave it through. We cannot know the impact of this Bill on ordinary people.
Secondly, the Government have been determined to protect the profits of oil and gas companies, which we all know is a piece of idiocy when we look at the climate emergency. That profit will probably be reinvested in creating more opportunities for the oil and gas industry. The Government take a different approach to renewables, and this will cause a long-term disruption to renewable development. I would argue that investors will be encouraged to invest more in dirty oil and gas, rather than in clean renewables. That is a huge bailout for all those stranded carbon assets, and seems to me to be a completely illogical way to move forward.
I sense that the Government might mean well—actually, I am being too generous. I understand that something must be done, but this is not it. I want the Minister to explain those two issues. Will people be able to pay their bills? Will this cause more investment in dirty oil and gas?
Lord Teverson (LD)
My Lords, I will speak to Amendments 27, 31, 34 and 40. What I have to say is very much in line with the speeches that have already taken place and I will not detain the House for long, except to make this point again. We understand the urgency of the Bill, for the health of households and their heat and energy over the next winter, and that of businesses as well, but there is a lot else included in this Bill that need not be rushed through in the same way.
I turn to Amendment 27. On reading the Bill, I was quite shocked—the noble Lord, Lord Rooker, forensically went through this in principle—that it says on page 21, in Clause 22 (4)(a), that these directions “must be in writing”. These are key bits of government policy, where a Secretary of State or a person who is subject to directions under this clause—we do not even know who it might be—is able to just write what should happen. Our own amendment would substitute that with
“made by regulations subject to the affirmative procedure”.
Amendments 31 and 34, with Amendment 34 relating to Northern Ireland—it is great to see the noble Lord, Lord Rogan, here following his contribution during the Second Reading—would remove the powers of sub-delegation.
Amendment 40 is around the sunset clause, which again the Opposition has, quite rightly, majored on. Here, we have put down a two-year limit.
Clearly, the Bill goes way beyond the authority given to the Government and the Secretary of State, without reference to Parliament. Some of these amendments must be voted on for the Bill to be put right and sent back to the House of Commons.
Lord Cunningham of Felling (Lab)
My Lords, I begin by expressing my wholehearted support for the speech given by my noble friend Lord Rooker. He has so comprehensively discussed these issues that it is barely necessary for me to support him, but I intend to do so wholeheartedly, as I have said.
Perhaps I had better say that I was previously a member of the Secondary Legislation Scrutiny Committee and I am now a member of the Delegated Powers and Regulatory Reform Committee, as indeed is my noble friend Lord Rooker, as he said. I participated in the discussions of the two reports that he referred to: Democracy Denied and Government by Diktat. It is amazing how little response there has been from Ministers to those fundamentally important reports; fundamental in relation to this House and the other place, and in relation to the control—I use the word “control” advisedly—of ministerial actions and decisions.
The latest report of the Delegated Powers and Regulatory Reform Committee—the 14th report of this Session—on the Energy Prices Bill, says in paragraph 10:
“We are disappointed that, by including paragraph 3(2) of Schedule 1, the Government appear to have completely ignored the recommendations contained in our report.”
That is true: the Government have completely ignored the recommendations made in the committee’s report. Paragraph 10 continues:
“No attempt has been made to limit the powers or to ensure that they will be subject to parliamentary scrutiny.”
There is no provision for that under the Government’s proposals—no provision for parliamentary scrutiny of any kind. Paragraph 10 goes on:
“Nor do we consider that anything close to a compelling justification has been offered for these powers”,
and their inclusion in what the Government intend to pursue.
Paragraph 11 of the report says:
“Accordingly, we consider that the legislative sub-delegation provided by paragraph 3(2) of Schedule 1 is inappropriate. We also take the view that the power to give directions is inappropriate to the extent that paragraph 3(2) enables general directions to be given which would have legislative effect.”
This is Ministers giving themselves powers to give general directions that would have legislative effect. In my long experience—35 years in the other place, and a long time in this House—I have never seen proposals like this, ever, from any Government. That is the reality of it. I quote from paragraph 12 of the report:
“Accordingly, for the same reasons we consider that powers conferred by paragraph 3(2) of Schedule 2 are inappropriate.”
The Delegated Powers and Regulatory Reform Committee is chaired by a person who sits on the Government Benches—a privy counsellor and former Cabinet Minister in the other place. There is no doubt that he is a good chair of the committee. He, along with other Conservative committee members, has signed up to this report, which is a damning indictment of what the Government are doing. It is time for this House and the other place to call a halt.
The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)
I thank all noble Lords who spoke on this group. I understand many of the points that they made.
Let me first respond to the interesting points the noble Lord, Lord Rooker, made. I honestly do not think there has been any radical change from when he was a Minister. When he was speaking, I was racking my brains trying to remember. I have been responsible for bringing a lot of Bills to this House, taking them through, developing them in three different departments, and I honestly cannot remember ever having a direct meeting with OPC to give it the so-called instructions the noble Lord referred to. Clearly in PBL meetings, which he will be familiar with, they attend and report to PBL. However, I suspect my experience has been very similar to his experience as a Minister, in that Ministers are involved in discussing policy intent with the department, officials and department lawyers. The instructions to parliamentary counsel are given by department lawyers, obviously acting on ministerial direction and steers about what we want to achieve through certain policies. I can only speak for myself, but I think the noble Lord is saying “a conspiracy too far” here. I genuinely do not think things have changed rapidly since his time.
I will respond briefly to the noble Baroness, Lady Jones of Moulsecoomb, who posed me two questions. She asked, “Will this Bill will help people with their bills?” Absolutely, that is the whole purpose of it. It is to provide a subsidy to people for their bills, albeit indirectly via the suppliers, because otherwise they would be incredibly high, as the noble Baroness knows. Secondly, let me address her further conspiracy theories about this somehow being a hidden subsidy to the oil and gas companies. The noble Baroness is completely wrong. The oil and gas companies are not in scope of this Bill at all and there are no subsidies involved.
Baroness Jones of Moulsecoomb (GP)
I am so sorry to interrupt, but I would like the Minister to withdraw the word “conspiracy”. I have legitimate and reasonable fears. It is not a conspiracy; it is actual fact.
Lord Callanan (Con)
It is not a fact. The noble Baroness is absolutely wrong. Anyway, I am happy to take her reassurance on that. She was posing the question and I am giving her a direct answer. There are no subsidies involved for oil and gas companies in this Bill. They are not even in scope of the Bill. To answer her question directly, it is about direct support for people to help them with their electricity and gas bills.
Group 1 speaks to delegated powers in the Bill, including procedure, sun-setting use and scrutiny. I thank all those who spoke, those who tabled their thoughtful, well-intentioned amendments and the noble Lords, Lord Cunningham and Lord Rooker, who spoke on them. I also pay tribute, as the noble Lord, Lord Rooker, did, to the work of the DPRRC for its report on the Bill published last week. I have carefully considered and responded to it.
The first set of amendments would make certain regulations in the Bill subject to the affirmative procedure. I will go through all of them in turn. Amendments 1, 2, 3 and 4 relate to the energy price guarantee schemes in Great Britain and Northern Ireland. The Committee will be aware that the schemes have been operational from the first of this month. I am happy to tell the Committee that the regulations in the Bill to designate the schemes will be extremely brief and will simply identify scheme documents. They will therefore be technical in nature and I deem them perfectly appropriate to be subject to the negative procedure.
Lord Kerr of Kinlochard (CB)
Could the Minister give us an example of the circumstances under which the powers in this clause to amend licences would be made by a legislative Act that is not a regulation and would take the form of him just writing down, “Do it”? What circumstances would make this necessary? I find the arguments of the noble Lords, Lord Rooker and Lord Cunningham, rather compelling. The wording of subsection (5) is astonishingly wide.
Lord Callanan (Con)
I accept what the noble Lord says about it being astonishingly wide but, if he will have a little patience, I will quote some examples to him shortly, and he will see that they are not the biggest items that he can think of.
The powers in Clauses 21 and 22 have been included in the Bill to provide government with the ability to react at pace to unforeseen delivery barriers. Making them subject to the affirmative procedure could delay the provision of support to consumers this winter and put at risk the point when energy suppliers have certainty over the final delivery requirements.
The approach that the Bill takes to parliamentary procedure is not unprecedented: for example, a direction under the Electricity Act 1989 has already been used to deliver the energy bills support scheme in Britain. Furthermore, the powers in Clauses 21 and 22 may be used only “in response to” the current energy crisis,
“or in connection with the Act”
or with regulations or schemes made under it. They are therefore time-constrained in that respect. Amendment 39 would reduce the sunsetting provision for powers under the cost plus revenue limit from five years to three and a half years. We consider the five-year sunset appropriate for the Government to respond to the immediate effects of the energy crisis, while ensuring ongoing protection for consumers if gas prices remain abnormally high for a prolonged period. The upcoming consultation will allow the Government to further define the intended use of this power.
Amendments 40, 41 and 42 seek to sunset the powers under Clauses 21 and 22 to two years, with an extension permissible by affirmative regulations. The Bill already makes clear that Clauses 21 and 22 must be used only “in response to” the current energy crisis, or “in connection with” the Bill or with regulations or schemes made under it. Generally, those other provisions in the Bill are already subject to sunsetting. A crisis is, by its nature, something extraordinary and temporary. I submit that the circumstances and timing in which the Government can use this power are therefore already appropriately constrained by the Bill.
Three amendments have also been tabled that relate to requirements to consult. Amendment 19
“would require the Secretary of State to consult before utilising … powers”
on the temporary cost plus revenue limit. It is the Government’s clear commitment to consult as soon as possible; therefore, we do not believe that this amendment is necessary.
Amendment 21 would require the Secretary of State to consult on pass-through requirements on intermediaries. As the schemes are being stood up at pace, this requirement could delay much-needed support being passed through to consumers this winter, and therefore could be positively harmful.
Amendment 23 would require modifications to licences under Clause 21 to be subject to consultation with the relevant bodies. As I mentioned, this clause ensures the Government’s ability to react at pace to unforeseen barriers to delivering the schemes. A requirement to consult would, again, simply delay our ability to deliver the schemes effectively and quickly, and therefore would be counterproductive.
Finally, a set of amendments have also been tabled which would remove certain powers from the Bill, including the opposition of the noble Lord, Lord Rooker, to Clause 22 standing part of the Bill. Clause 22 and its powers enable the Government to issue directions to energy licence holders and the Northern Ireland regulator in connection with schemes under the Bill and in response to the energy crises. The ability to issue directions of a general character is necessary to deliver support under the Bill and to tackle barriers to their implementation. Amendment 26 would limit the Secretary of State’s powers to issue directions of a “general character” to those only of a “specific” character. Amendment 28 would remove Clause 22, which provides that, when a direction to a person conflicts with existing requirements in an “enactment or instrument”, such requirements should be “disregarded”. Currently, we envision limited circumstances in which these circumstances will arise.
I will now give the example asked for by the noble Lord, Lord Kerr: the Government may need to issue a direction to the Utility Regulator in Northern Ireland to ensure that the timing of electricity regulated tariff reviews is aligned with similar reviews in Great Britain. This may be necessary to ensure effective administration of the energy price guarantee in Great Britain and Northern Ireland. In doing so, it may be necessary to rely on Clause 22 to resolve any potential conflict between the terms of the direction and the statutory requirements of independence applying to the energy regulators in Great Britain and Northern Ireland, and any existing requirements as to timing in the supplier’s licences, to enable all parties to comply with the direction for tariff review alignment. Without this, licence holders or the Northern Ireland regulator may be uncertain about their legal position, and this could have the effect of households and businesses missing out on appropriate and timely support. This plays to the noble Lord’s points. I realise that there is a suspicion that there is some malign intent behind these clauses, but they are, essentially, designed to deliver support at pace in a fast-moving environment and to provide the Secretary of the State with the powers to ensure that this happens in a legally correct manner. I reassure the noble Lord that there is no hidden agenda here.
Lord Kerr of Kinlochard (CB)
I plead innocent to any imputation of malign intent, but it is an astonishingly wide power. The Minister’s explanation related it solely to Northern Ireland. It is not limited as the Bill is drafted to Northern Ireland, but it would be relatively easy by combining subsections (3) and (5) so to limit it. That would cause me to worry much less about this apparently extraordinarily wide-ranging power to overrule the law of the land or all existing regulation without making a new regulation.
Lord Callanan (Con)
The noble Lord asked me for an example. I have provided him with an example of one means that we envisage may be necessary. There could be other licensed modifications that we have not envisaged yet. As I said, this legislation has been drawn up at pace, using the excellent resources of lawyers and parliamentary counsel. It has been enacted very quickly. This is a clause that we think is necessary in order to, if you like, cover something that we have not thought of and that we have missed out in the Bill, but it is limited to use in the specific circumstances that the Bill requires.
Lord Rooker (Lab)
Just for the record, Amendment 28 refers to subsection (5). Does the Minister think, and is it his advice, that subsection (5) is a Henry VIII clause or not?
Lord Callanan (Con)
It is a power to give directions. Whether it qualifies as a Henry VIII power, I suppose depends on your definition of a Henry VIII power. Perhaps I may consult the lawyers and give the noble Lord a more detailed answer.
Additionally, there may be other circumstances—as I just said to the noble Lord—not yet known in which Clause 22(5) will be necessary to enable directions and the schemes that they are giving effect to to be implemented effectively with legal certainty and without undue delay. As I said, it is not unprecedented. A similar measure was included in the 1989 electricity regulations which we have just used to help implement this provision, and there has not been widespread abuse by a number of Secretaries of State from both parties who have been in office with that existing power since then. I understand noble Lords’ concerns, but history demonstrates that this is not unprecedented and noble Lords’ concerns are unwarranted.
Regarding Amendments 31 to 35, it is not uncommon for highly technical schemes to use tertiary legislation to provide for the detail of schemes, or for secondary legislation to enable directions to be made or provide that functions may be exercisable by persons named within them. These powers are crucial so that payments can be made for the energy bill relief scheme as quickly as possible—as I said, we are acting at pace, and I am grateful for the support of noble Lords to get this legislation through at pace—and to enable us to make any necessary changes to the technical nature and detail of the scheme as it becomes operational.
It is always the Government’s intention that delegated powers are appropriately limited and justified. Many powers in this Bill are already subject to the affirmative procedure and are expressly time limited. Other powers are subject to the requirement to use them in relation to the energy crises or in connection with other time-limited provisions in the Bill.
I return to the question from the noble Lord, Lord Rooker. I am told that it is not a Henry VIII power, but it has the same effect.
Lord Callanan (Con)
I knew it was a mistake to ask the lawyers for an answer, but there we go. Whenever I do these Bills, I always understand why I went into engineering and not the law when I did my degree.
However, I also emphasise the urgency of this Bill, which I believe the whole House understands, and I am grateful for Members’ support. Families and businesses up and down the country are hugely exposed to the energy crisis. It is crucial that the schemes—and I think all noble Lords share this aim—are rolled out and delivered in the way they are intended as quickly as possible and without delay. I would contend that provisions in the Bill, including the breadth of certain powers, enable to us to do just that.
I hope that I have been able to provide the House with sufficient assurances about how the Government will use the powers that we seek to take and hope that the noble Lord will be able to withdraw his amendment.
Lord Lennie (Lab)
My Lords, that is an interesting explanation from the lawyers about whether it is a Henry VIII clause. If it looks like a Henry VIII clause and it smells like a Henry VIII clause, it is a Henry VIII clause.
My noble friends Lord Rooker and Lord Cunningham made the important point that the DPRR Committee in its report has condemned the powers contained in Clause 22. There is no getting away from it: if it is pace that the Government are seeking, subjecting those instruments to the affirmative procedure would not significantly inhibit the pace at which they operate. The powers are vast and huge, and the example that the Minister has given is an acceptable one, but it is not the only circumstance that one can envisage. One can envisage the powers being used not by the noble Lord but by a succeeding Minister, in a way that is unforeseen by him. Therefore, the concerns remain. However, having said that, I beg leave to withdraw Amendment 1.
Lord Teverson
“(4A) Regulations under this section must apply to non-domestic customers—(a) that signed a fixed tariff agreement with their energy provider after 1 December 2021, and (b) on variable rates tariffs.”Member’s explanatory statement
Currently non-domestic customers who signed a fixed tariff agreement after 1 April 2022, and those on variable rates tariffs, benefit from the reduced energy charges. This amendment would extend this support to those customers who signed fixed tariff agreements between 1 December 2021 and 1 April 2022.
Lord Teverson (LD)
My Lords, I shall speak also to Amendment 6 in this group. Amendment 5 relates to the extension of the energy bill relief scheme for non-domestic customers. I hope that it is something that the Minister will be able to agree or reaffirm from the Dispatch Box, because it is really very straightforward. When the scheme was announced by the Government, only businesses that signed a fixed agreement after 1 April 2022 and those on variable rates were set to benefit. Businesses with energy agreements signed before this date—I repeat, that was 1 April—were unable to get a subsidy to their unit prices.
In the debate on the economy and the growth plan of 2022 in the House on Monday 10 October—so not so long ago—my noble friend Lord Fox raised this with the Minister, who responded that the Government would be “revising the cut-off date” so that contracts taken out between 1 December 2021 and 31 March 2022 would be “eligible for relief”. Can the Minister confirm that this is still the Government’s intention? If it is, given the uncertainty that businesses are facing with the current state of government, will he accept my Amendment 5, which seeks to put that commitment in the Bill? I see no reason why that should not be the case, to give absolute clarity and greater certainty to the non-domestic sector.
On Amendment 6, the alternative fuel payment scheme is intended to deliver a one-off payment of £100 to UK households which are not on the mains gas grid—I declare my own interest in that I rely on biomass and oil—and therefore use alternative fuels such as heating oil to heat their homes.
Powers in the Bill will enable the Government to deliver support via electricity bills under a similar delivery model to the energy bills support scheme, which, as noble Members will know, is a £400 non-repayable discount for eligible households to help with their energy bills, as announced in April by then Chancellor and soon-to-be Prime Minister Rishi Sunak. Households who are eligible for but do not receive alternative fuel payments or the £100 heat network payment—a very round number, as we saw on Second Reading—because they do not have a relationship with an electricity supplier, for example, will receive the £100 via this alternative fund, which will be provided by a designated body. According to the Government, they will set out timing and details of this payment soon. I look forward to hearing from the Minister whether we have any more detail at this time.
It is estimated that more than 4 million people in the UK are off the mains gas grid and rely on other means to heat their homes. As I know in Cornwall, fuel poverty is greater in rural areas than in urban areas and, crucially, it is often deeper, meaning that rural families need to save more money to make sure their energy bills are affordable. This amendment says that it is vital that a fast and easy way to use this system be set up to get these payments to them. Amendment 6 would ensure that payments are made directly to consumers’ bank accounts, which is clearly the quickest and easiest way to make the biggest difference to rural and off-grid customers. Therefore, I hope the Government will be able to accept this amendment, but I certainly hope that the Minister will be able to give more detail and a timeframe so that these particular consumers know their future. I beg to move.
Lord Lennie (Lab)
My Lords, our Amendments 37 and 38 seek to backdate the electricity and gas price reduction scheme to 8 September, which was the day the Government first announced the energy price guarantee. Apart from anything else, this would produce money to be passed on to customers’ bills. It may seem a small change, but it would be extremely popular among all UK households.
Baroness Bloomfield of Hinton Waldrist (Con)
I thank the noble Lords, Lord Rooker, Lord Teverson, Lord Lennie and Lord McNicol of West Kilbride, for their amendments, which seek to make changes to the schemes to reduce energy bills—namely the alternative fuel payments, the domestic energy price guarantee and the energy bill relief scheme.
First, turning to Amendment 5 tabled by the noble Lord, Lord Teverson, on the energy bill relief scheme, I am pleased to note that he agrees with the decision to extend the eligibility date for customers on fixed-term contracts back to 1 December 2021, which my noble friend Lord Callanan confirmed in this House on 10 October. This will be implemented in regulations. I can give further reassurance that when the scheme was first announced on 23 September, it stated that all non-domestic customers on variable contracts, as well as deemed and flexible contracts, will be eligible for the scheme. Given that these details have already been published and will be implemented in regulations, the proposed changes to the Bill are unnecessary. I hope that gives the noble Lord the reassurance he was seeking.
I turn to the amendment tabled by the noble Lord, Lord Rooker, which seeks to remove Clause 9. This clause provides for the establishment of the energy bill relief scheme in Great Britain. This scheme will provide a price reduction to ensure that all businesses and other non-domestic customers—for example, charities and public sector organisations such as schools and hospitals—are protected from excessively high energy bills over the winter period. Under the provisions in Clause 9, the Secretary of State may, by regulations, reduce the amount that all eligible businesses and other non-domestic customers would be charged for their gas and electricity. Clause 9 allows for this through the calculation of a notional wholesale price for gas and electricity, referred to as the government-supported price, with a discount being provided which pays the difference between the government-supported price and the wholesale price.
The clause provides for regulations to detail how the Government may calculate this reduction. We intend for the scheme to run initially for a six-month period. Schedule 6 to the Bill allows for the scheme to be extended for up to three further consecutive periods for up to two years. We recognise that the diversity of contracts between suppliers and their non-domestic customers makes implementation of the scheme complex. This clause therefore provides for necessary powers to support successful delivery of all aspects of the scheme, and to allow the Government to respond appropriately to any rapid changes in the market. I therefore ask that Clause 9 stand part of the Bill.
Turning to Amendment 6, tabled by the noble Lord, Lord Teverson, on the alternative fuel payment scheme, households eligible for the domestic alternative fuel payment scheme in Great Britain will receive £100 as a credit on their electricity bill under a similar delivery model to the energy bills support scheme; we are exploring a similar route for Northern Ireland. We understand that consumers are already experiencing significantly increased living costs, and that is why the Government are delivering this support to customers as fast as possible and have committed to delivery of the payment this winter. Requiring that payments be made direct to consumer bank accounts would significantly slow down the ability to deliver, meaning that the target to pay this winter would be unlikely to be met. This Government do not have an established direct relationship with the relevant consumers, and a bespoke delivery scheme would need to be created, which would take significant time.
Delivering the domestic alternative fuel payment as a fixed credit amount via electricity bills will be significantly quicker than other possible routes and means that customers need take no action to receive it. Consumers eligible for the domestic alternative fuel payment but who do not have a relationship with an electricity supplier will receive the £100 via the alternative fuel payment discretionary fund. Details on how to access this fund will be confirmed shortly.
Turning to Amendments 37 and 38, on the domestic energy price reduction scheme, tabled by the noble Lords, Lord Lennie and Lord McNicol of West Kilbride, I thank the noble Lords for their amendments to enable backdating of the electricity and gas price reduction scheme in Great Britain to 8 September. The energy price guarantee was implemented from 1 October so that consumers can expect to pay well below the scheduled increase in the price cap to £3,549 for a typical dual-fuel household. The energy price guarantee has been designed to work in combination with the May 2022 cost of living package to ensure that the most vulnerable households will see little change in their energy costs between last winter and the coming winter. I therefore see no need to alter the operative date of the energy price guarantee schemes. I hope that on this basis, the noble Lords will not feel it necessary to press their amendments.
Lord Teverson (LD)
My Lords, I very much welcome the Minister’s statement on the backdating to December, and that the obligation that was accepted by the Minister earlier this month is to be repeated. I thank her for that, but I am not quite sure where we are with households that are due the £100 but who do not have a relationship with an electricity supply company, which is probably not insignificant. Before I withdraw Amendment 5, can the Minister be a little clearer on how this is going to function?
Lord Callanan (Con)
The noble Lord makes a good point. As he correctly observes, it is difficult to implement in practice because by their very nature, those households do not have a relationship with their energy supplier. We are urgently looking at a delivery mechanism, with all the appropriate protections against fraud et cetera. Delivery is likely to be through local authorities, but we are still working on a precise mechanism and as soon as we have more details, we will update the House.
Lord Teverson (LD)
I thank the Minister for that. If you cannot do it directly through Ministers, then through local authorities is probably the right way to do it. I know that Cornwall council is already starting to make some preparations in that area. I beg leave to withdraw Amendment 5.
The Deputy Chairman of Committees (Lord Geddes) (Con)
My Lords, before calling Amendment 8, I must advise the House that the noble Baroness, Lady Thomas of Winchester, will be taking part remotely.
Amendment 8
Lord Teverson
“Report on effectiveness of energy efficiency programmes in reducing energy costs
(1) Within six months of the day on which this Act is passed, the Secretary of State must review the impact of energy efficiency programmes in reducing energy costs in accordance with this section.(2) A review under this section must consider the impact of—(a) the number of homes and business properties which have increased their EPC rating,(b) the number of homes and business properties which have undergone retrofitting programmes, including— (i) fitting of solar panels, and(ii) replacement of gas boilers,(c) increases in renewable energy sources, and(d) public messaging campaigns into changing energy usage habits.(3) The Secretary of State must lay a copy of the report before each House of Parliament.”Member’s explanatory statement
This new Clause would require the Secretary of State to report on the impact of energy efficiency programmes in reducing energy costs.
Lord Teverson (LD)
My Lords, we come back to a subject we always discuss in energy Bills, whether the dormant Energy Bill or the Energy Prices Bill in front of us today: energy efficiency and demand reduction. Whatever the Government say from their Front Bench about what is being done, it is quite clear that this is not seen as a priority in reality. Indeed, as far as I have noticed, it does not feature to any significant extent in this Bill. However, although I accept that the Bill is very much about short-term measures, we still have to look forward to the medium and longer term and how we make sure that, after the payments we are making and the Bill intends to make into the future—which are substantial, with estimates varying from £40 billion to £100 billion, depending on how long these measures last—we do not go back to square one whenever such a crisis arises again, despite having spent literally billions of pounds of taxpayers’ money.
This is a very mild amendment. We are being modest because we hope that the Government will accept that we should have at least something in the Bill about energy efficiency. We are asking for a proper and comprehensive review of costs to do with energy efficiency within six months of the Bill being passed. As noble Lords can see from the amendment, we are asking for a review of the impact of
“the number of homes and business properties which have increased their EPC rating … fitting … solar panels, and … replacement of gas boilers, … increases in renewable energy sources, and … public messaging campaigns”.
I would be interested to understand where the Government are on public messaging campaigns at the moment. I understand that the almost-past Government very much resisted them. Can the Minister give us more of an idea of where we are now?
What I am emphasising here is that it is essential that energy efficiency and demand reduction should be at the top of the list of tools of energy policy as a way forward. We clearly need some reference to them in the Bill, while we are making these huge payments, to make sure that businesses are able to continue in the future and that households can afford their energy bills without going into debt—although I fear that many will in any case. That is the core of this amendment and we take this very seriously. We believe that the Government have not performed sufficiently on this during their time in government.
I will also speak briefly to Amendment 9, and I thank the noble Baroness, Lady Bennett of Manor Castle, who is not in her place at the moment, for her support. Amendment 9 looks forward to where we go after this major splurge of public expenditure. I think a consensus is coming—from consumers, consumer groups and energy companies themselves—on how we need to treat energy Bills in the future, in that we have to move to a different place. One place we could move to is a social tariff. Nothing is perfect in this world. We know that in a situation where people move out of the definition of qualifying for a social tariff, it can have negative effects on income or whatever.
A social tariff would mean those households in fuel poverty being able to solve that issue by paying a different tariff on their electricity from those not in that degree of poverty. We all know that, even without the current crisis, many millions of households are in fuel poverty. This has not been solved by Governments over the years. The long-term way is energy efficiency and demand reduction but, in the medium term, surely we should start planning now for something of the order of a social tariff. I beg to move.
The Deputy Chairman of Committees (Lord Geddes) (Con)
My Lords, the noble Baroness, Lady Thomas of Winchester, is taking part remotely and I invite her to speak. She does not seem to be technically available at present; it is therefore open to any other noble Lord to speak to this amendment.
Baroness Brinton (LD)
My Lords, first, I apologise for being unable to be present at Second Reading. I am speaking to Amendment 12, which my noble friend Lady Thomas of Winchester has also signed. It sets up the mechanism for the Secretary of State to have a strategic plan for very vulnerable people who would be extremely adversely affected by power outages—for some, probably resulting in death—and for the requirement on energy suppliers to work with the local resilience forums, which are tasked with delivering local emergency plans in communities.
I read the impact assessment with interest. On page 28, paragraph 70, headed “Disability or vulnerability”, states:
“Of those surveyed … by the ONS Wealth and Assets Survey, over 40% of adults in Great Britain have a combined financial and property wealth below £23,249. Of those poorer households 41% have a physical or mental disability ... Furthermore, households with energy-using health equipment will typically be associated with higher energy use and stand to benefit more from the volumetric scheme”.
The Minister may remember that I raised the issue of ensuring electricity supply to the most vulnerable disabled and seriously ill people, who may die if their home electricity supply is not maintained, on 11 October 2022 when the noble Baroness, Lady Kennedy of Cradley, asked a Question on energy pricing. I cited our family’s experience when my granddaughter, then aged two, who had to use a ventilator and a heart monitor faced a power outage on her south London estate. I thank the Minister for his response to my question and his being keen to reassure me and the noble Baroness, Lady Finlay of Llandaff, but I was concerned that BEIS Ministers may not be aware of what is happening in practice and how serious the problem is.
Since 11 October, I have talked to others who rely on ventilators, dialysis machines and other equipment at home. It is clear that the reality of what happened to my granddaughter in a small-scale electrical outage in south London about four years ago is, in practice, not unusual. Let me explain the process. On the advice of the consultants at the Evelina London Children’s Hospital, and as a condition of her being allowed to leave hospital for the first time aged 11 months, my son had brought her home and registered with their energy supplier that she required ventilation and a heart monitor for about 17 hours out of every 24. Without it, she would have to be taken back to the specialist hospital as her lung capacity put her at high risk of death as her oxygen levels would plummet quickly.
My son had understood that the supplier would ensure that there was an alternative supply as soon as possible. On the evening of the outage, my son called the emergency line, who were encouraging: they were on the list for an emergency generator to be delivered to their house. After one hour, it had not arrived. They were told that it could take another two hours. At that time, and because my granddaughter was still quite small, he bundled her and all her medical kit—believe me, a carful—and drove to our house, an hour away. Believe me, if you have watched a small child struggling for breath, you do not hang around.
There is absolutely no doubt that the register of vulnerable users is helpful. However, the reality of a power cut means that the small batteries in those items that they have as a back-up will not last for many hours, especially if the outage is not planned and people do not know how long it will last for. That is why the suppliers knew that they had to get a generator to my granddaughter’s house. But they failed.
My concern is that, in the event of mass outages in the cold months of January and February next year, however unlikely, much larger swathes of the country will lose electricity in a number of hours. National Grid was predicting even worse last week—even if that is also deemed to be highly unlikely—and it might mean that the whole country would be without power from late afternoon until late at night for a number of days a week in January and February.
The Disability News Service picked up on the questions that the noble Baroness, Lady Finlay, and I asked. John Pring at the DNS has been investigating current practice and how large outages would be handled by the energy suppliers, so he rang them. They said, “Talk to the Department of BEIS”, so he rang BEIS, which said, “Talk to the Department of Health and Social Care”—I have no idea why. The DHSC has not even replied, probably because it is not involved in emergency provision planning.
Many disability groups are very concerned about this coming winter too, as they, like my family, have experience of support in an emergency not being quite what was expected. Neither BEIS nor the DHSC seemed aware that the energy suppliers should be talking to their local resilience forums, run by each local authority, which have a statutory duty under the Civil Contingencies Act 2004 to deliver their local emergency health plan in the event of such an incident. However, directors of public health whom I have talked to, who are jointly employed by their authority and by the NHS, are core to LRFs, and they say that talking to energy suppliers is extremely difficult.
It is important to be clear that not all help for those whose lives depend on electricity will be on the register. Those registered with suppliers will include the elderly and the frail who must be kept warm, but they do not need individual generators at home. The LRFs need to plan with energy suppliers where generators will go in community halls or other planned venues and how vulnerable people will be taken to that venue. The current advice from suppliers to disabled people on their helpline is—wait for it—get a thermos and more battery packs. I have to say that that is causing alarm, and it tells me that proper planning is not going on, and people who are supposed to be giving advice do not know what it should be. That is also confirmed by the directors of public health whom I have talked to.
Under the Civil Contingencies Act 2004, local resilience forums are level 1 responders, and energy suppliers are level 2 responders. Energy suppliers keep the register and must liaise with them. The problem is that at the moment the LRFs are entirely reliant on the energy suppliers communicating with them. As with Covid, when the local resilience forums played a fantastic role as we went into lockdown in their communities, the possibility of a serious outage means that there needs to be real planning now because, otherwise, people will die in a power cut. All the elements needed are available through various duties on differing people; the problem is that they are not joined up. Hence my amendment, which is to try to join up the key partners at a national level through the powers of the Secretary of State to create a strategic plan, while ensuring an action plan at a local level which gives a duty to energy suppliers to maintain contact with their local resilience forums.
The Deputy Chairman of Committees (Lord Geddes) (Con)
My Lords, I am glad to say that the technical gremlins have now been slain, and the noble Baroness, Lady Thomas of Winchester, is online. I therefore invite the noble Baroness to speak.
Baroness Thomas of Winchester (LD) [V]
My Lords, I am very grateful to my noble friend Lady Brinton for tabling the amendment, to which I have added my name.
There will be a lot of severely disabled people who, like me, are terrified of power cuts. We rely through the day and night on electricity to keep us alive. We are not talking about just hot drinks and hot water bottles. In my case, I am talking about a feeding pump, ventilators, riser lavatories, an electric hospital bed, two lifts, a door opener and a wheelchair that needs charging—and, of course, heating and light. There are many others much worse than I am.
In answer to my noble friend’s question on 11 October, the Minister said that the Government would do
“all we can to protect the most vulnerable.”—[Official Report, 11/10/22; col. 662.]
Can he be a bit more specific about exactly what the Government will do? The energy companies are not exactly strapped for cash at the moment, so I hope that, between the energy companies and the Government, there will be proper, practical planning for the most vulnerable customers if outages occur, which could literally make the difference between life and death.
We need reassurance on this; otherwise, we will be fearful of every winter storm. Can the Minister give us this reassurance?
Baroness Bennett of Manor Castle (GP)
May I beg the indulgence of your Lordships’ House: I was in the Grand Committee?
Baroness Bloomfield of Hinton Waldrist (Con)
I am very sorry, but the Companion is quite clear: if you were not here at the start of the debate, you are unable to speak.
Lord Foster of Bath (LD)
My Lords, I am sad that we cannot hear the words of the noble Baroness, and I very much support her amendment, because she, like me, believes that this Government are not doing anything like enough to reduce energy consumption, the amount of energy expended nor making the most efficient use of the sources of energy available to us.
Other countries are doing far more than we are. Germany, for instance, is rushing to try to reduce its energy consumption by 20% in a very short space of time; we are doing very little about that. On energy efficiency, it was only 11 days ago that the European Union countries got together to celebrate Energy Efficiency Day, and Mr Frans Timmermans, the Commission vice-president responsible for the Green Deal, stated the bleeding obvious, because he said:
“saving energy, not using energy, is the cheapest energy”.
I agree with him, given that it is perfectly possible, given the Long Title of the Bill, as my noble friend on the Front Bench pointed out, to have done far more on these issues.
In truth, from this Government, we have had scheme after scheme which has floundered and left the industry in total disarray. As a result, since I was a Minister with some responsibility for this, the amount of energy efficiency work in this country has declined by a staggering 90%. It has gone down by 50% in the past 12 months alone. What we get from the Government is a lot of fine words—the Minister trots them out from time to time—from various government documents. The trouble is that if you follow through on what is said, you discover that there is not much action to back it up.
As an example, the Clean Growth Strategy, a document produced by this Government in October 2017, stated very clearly that:
“The Government will look at a long-term trajectory for energy performance standards across the private rented sector, with the aim of as many private rented homes as possible being upgraded to EPC Band C by 2030, where practical, cost effective and affordable. We will consider options with a view to consulting in 2018”.
The consultation took place, and was in fact extended because of Covid to 8 January 2021. That was 21 months ago, yet we have still not had any evidence of a response from the Government. When are we going to get the results of the consultation and the action promised by the Government around privately rented homes?
The situation is made even worse when you look at socially rented homes, in which the vast majority of those who are less well off are living. Five years ago, that same document said that the Government were going to
“look at how social housing can meet similar standards on the same timetable.”
I understand that consultation is needed before you can go ahead, but one would have thought that by now the consultation would have started. Yet in a letter to me and many other noble Lords in the last few days, the noble Baroness, Lady Scott of Bybrook, wrote:
“The Government has now committed to consulting on introducing standards in the social rented sector. This will happen within six months of the Social Housing (Regulation) Bill gaining consent”.
The consultation has not even started for something promised five years ago.
We have a lot of fine words from the Government, but in many areas the action does not take place. This is why it is so important that we have Amendment 8 on the statute book, at least in the very minimal way that requires the Government to give us a report on what is happening and what the benefits really are.
In relation to that, I acknowledge that the Minister pointed out at Second Reading that the Government have introduced one new scheme relating to energy efficiency, called ECO+. It will somehow run alongside ECO4, which was preceded by ECO1, 2 and 3. However, we do not know how that will work. It would be helpful to have a little more detail about how the two schemes will work together.
I have a specific question to ask the Minister about this new wonder-scheme. We know from all the evidence that the previous ECO schemes have been raising improvements to people’s homes. The Government claim that those schemes have led to improvements saving people up to £1,000 a year. Looking at the ECO+ documentation, my understanding is that the scheme is in fact expected to lead to a saving for consumers of about only £200 a year. The difference between the savings of the early ECO schemes and what appears to be that of the new scheme is huge. I hope that the Minister can explain to me why that is the case.
I have a couple of amendments down, which I will speak to very briefly. Amendment 10 is based on something from the Government’s own document. On page 12 of this year’s British Energy Security Strategy—which, incidentally, they described as ambitious—it says:
“We will cut the cost for consumers who want to make improvements”
to energy efficiency by
“zero-rating VAT for the next five years on the installation of energy saving materials”.
Some of that was introduced by the then Chancellor—I cannot remember how many Chancellors ago that was—back in the Spring Statement. I welcomed this at the time, but I genuinely do not believe it went anywhere near far enough. A large number of energy-saving materials were not included in the list.
At Second Reading, I raised one such example: retrofitting a battery to an existing solar heating scheme. Introducing a battery makes a system infinitely more efficient, which is a benefit to the homeowner and a benefit to the nation as a whole because more energy can be put back into the national grid, not least at times of high demand. At that time, I proposed that VAT on additional, retrofitted batteries should be zero-rated. Batteries needed to be retrofitted because, when many schemes were first introduced, batteries were either too expensive or people did not see the benefits of them.
I then looked at some of the other items that were not in the list. I was staggered to discover that something as simple as double-glazing was not included. The figures are staggering: 86% of homes already have double-glazing but a high proportion—more than a quarter—is old fashioned and nowhere near as efficient as modern double-glazing. The relevant associations which produce the figures are firmly of the view that, if all windows could be brought up to current standards, a staggering £14.5 billion could be saved.
I am not asking the Government to pay for all the double-glazing to be done. However, we know from all the research evidence that reducing VAT would significantly help many people take on the additional burden of uprating their windows to modern double-glazing standards. Evidence has shown the impact of the reduction in VAT in other areas. I am convinced that reducing VAT on double-glazing and on some of the other items mentioned in Amendment 10 would be of enormous benefit.
Finally, I turn to Amendment 11 in my name. I draw the Minister’s attention to my earlier speeches. He has heard me speak on this subject in one form or another on numerous occasions, so I will not repeat it all. Suffice to say that all the evidence shows that this Government claim to believe that putting targets into legislation is beneficial for driving forward investment. I have 60 quotes from current and former Ministers and from government departmental documents that back up the claim that targets put into legislation ensure that action happens.
Amendment 11 is simple. It seeks to put into legislation the targets that the Government have already set for improving the energy efficiency of our homes. It would bring fuel-poor homes up to EPC level C by 2030 and all the rest of the housing stock by 2035. In this country, unlike, for instance, in the countries of our neighbouring friends in the European Union, we have far less efficient homes—15 million homes are below the appropriate energy efficiency targets set by the Government.
The industry has made it very clear that if it is now to invest in the research, training and equipment needed to start doing more work in this field, it needs to have the confidence of targets placed into legislation. The Government have refused this on numerous occasions so far, and not once have I heard a good reason from any Minister. I am optimistic that, on this occasion, I might get a decent reply. I look forward to hearing it.
Lord McNicol of West Kilbride (Lab)
My Lords, many of the amendments in this group are sensible and could easily be accepted by the Government. We on these Benches will support Amendment 8 if the noble Lord, Lord Teverson, tests the opinion of the House. The Member’s explanatory statement is exactly as the noble Lord said, and it is a modest amendment:
“This new clause would require the Secretary of State to report”—
just to report—
“on the impact of energy efficiency programmes in reducing energy costs.”
It is modest indeed, and I am at a loss as to why His Majesty’s Government are not willing to accept it.
To quote from the government website:
“Improving the energy efficiency of UK buildings is the quickest way we can support families and businesses, to respond to rising energy prices.”
I am sure we all agree. It goes on:
“Improving the efficiency of our homes could reduce our heating bills by around 20% and reduce our dependency on foreign gas.”
Again, that is something I am sure we all agree with, so these amendments are in line with BEIS’s priorities and language.
As the noble Lord, Lord Foster of Bath, said, the UK has some of the least energy-efficient housing in Europe. According to my figures, 19 million homes are estimated to be below EPC band C. His figure was 15 million; I am sure he will forgive the 4 million. In excess of 10 million homes are worse than EPC band C. Under the Conservatives, home insulation rates have plummeted. In 2013, the then Government cut energy efficiency programmes, after which insulation rates fell by 92% in 2013. Further to that, new statistics show that home insulation dropped again by 62% in the second quarter of 2022 compared with the first quarter, with only 35,000 installations being recorded. The Resolution Foundation estimates that 9 million households are paying an extra £170 per year on their energy bills as a result of these failures. Since then, the Government have botched the green homes grant, which has yet to be adequately replaced.
These amendments would help with the bills people have to pay, and they would help the Government, the country and consumers. On top of this, Labour would give the devolved Administrations the power and resources to bring every home in their area up to EPC band C or higher within a decade.
The chief executive of E.ON, Michael Lewis, has pointed out that a sustained programme of energy efficiency could have reduced the amount of energy used in UK homes by 25%. That is the equivalent of six Hinkley Point C power stations. As we have heard throughout the debate on these amendments, the cheapest energy is the energy we do not use. A simple uprating of a home from EPC band D to band C would save the bill payer some £500 a year on the basis of April prices, so if it is put to the test we will support Amendment 8.
Lord Callanan (Con)
My Lords, I thank the noble Lords for their interventions. This group includes amendments relating to energy efficiency and energy savings which would help to reduce energy costs and, of course, ensure energy supply for vulnerable consumers, which I will come on to shortly. I completely agree with noble Lords that improving the energy performance of domestic and non-domestic properties is vital in the context of affordability, energy security and fuel poverty.
Amendment 8, tabled by the noble Lords, Lord Teverson, Lord Foster and Lord McNicol, would require the Secretary of State to produce a report on the effectiveness of energy efficiency programmes in reducing energy costs. The Government already evaluate the impact of their energy efficiency programmes and publish extensive energy statistics and evaluation reports as a matter of course. There really is no shortage of published materials on these matters, and I believe that they sufficiently cover the intention of this amendment. Bedtime reading for noble Lords interested in this matter includes the Annual Fuel Poverty Statistics Report: 2021, the Household Energy Efficiency Statistics, and the English Housing Survey, commissioned annually, on housing circumstances, condition and energy efficiency in England. Therefore, I am not sure there is any more information we could provide noble Lords with, and we believe this amendment to be unnecessary.
The noble Lord, Lord Teverson, also asked about a government public campaign on energy demand reduction. As I have mentioned in this House before, I have been working with officials and we have just launched our new website on GOV.UK—we have migrated the SEA site over to the government website and updated it. We now provide home owners with a kind of home energy MOT that gives impartial recommendations and could help them save hundreds of pounds a year. It is linked to the EPC database, so it provides personalised information on people’s property. Of course, we will be rolling that out further and linking it to several other sources of advice from energy companies, charities and others, to make sure that people have the information they need to make energy efficiency savings.
Amendment 9, tabled by the noble Lord, Lord Teverson, would require the Secretary of State to formally assess the merits of introducing social energy tariffs. I would never accuse the noble Lord of wanting to go back in time or of being stuck in the past, but in 2011 the Government of which his party was a part replaced social tariffs in the energy sector with the warm home discount scheme. The warm home discount is a better scheme than the then social tariff scheme; it provides a consistent level of support, standardised across all the participating energy suppliers. It has been an improvement on the previous arrangement of voluntary social tariffs—not all companies took part in them—where the level of benefits and eligibility varied between energy suppliers.
I hope the noble Lord is not suggesting that we should go back to that time. The warm home discount was introduced as an improvement to the old social tariff system. Any new social tariff would be almost identical to the warm home discount in its design and operation. It is already a mandated, targeted mechanism to reduce the cost of energy for those in vulnerable circumstances, on benefits et cetera. If the noble Lord thinks about it, he will accept that this is a better way of doing essentially the same thing, but I do not disagree at all with the objective. In short, this proposal simply seeks to provide benefits to vulnerable energy consumers that are already provided by the existing warm home discount model, and it would add a further level of complexity to the support system. Certainly, to judge by my postbag from Members of Parliament, it is already quite a complex system with complex eligibility requirements, and I do not think we would be well served by adding to that complexity.
Before I turn to Amendments 10 and 11 from the noble Lord, Lord Foster, let me answer the questions he asked me. He compared ECO4, the current iteration of the energy company obligation, and the forthcoming ECO+, and highlighted that there could be different levels of bill savings in each one. The reason for that is that the energy company obligation is an obligation based on suppliers; it used to be bill funded and is now funded by the Exchequer. One of the elements of the mini-Budget that remains—the last time I looked—is the ECO+ announcement that I worked hard to get in there, and we will shortly be consulting on the way it works. We project lesser bill savings because we want to do more under that scheme. The latest iteration of ECO4 looks at whole-house retrofits, so it is obviously much more expensive and treats fewer whole-house property refits. We have to consult on the details of ECO+, but the idea is that it would provide a smaller number of targeted measures, possibly only two or three, such as loft insulation, cavity wall insulation and heating controls.
Even though they are both called “ECO”, they will be targeted at different parts of the market; indeed I hope ECO+ will be targeted more at the able-to-pay market—those who are not necessarily on benefits and slightly above benefit level but who are still suffering and could take advantage of some support. The noble Lord will not have long to wait. We are working on policy design now and we will consult shortly on how that will work. The House will have an opportunity to debate the regulations and it is my intention to have this up and running as early as possible next year.
The noble Lord also asked me about the PRS regulations. As he correctly said, we consulted on them; we are currently looking at the recommendations and working on a government response. If I am honest with the noble Lord, it is about getting the balance right between wanting to see improvements and operating in the private rented sector and not doing so at the expense of less rented properties being available where there are already shortages in many areas. It is about trying to get the balance right between, on the one hand, obliging landlords to improve their property and, on the other, not wanting to provide them with incentives to leave the market.
Amendment 10 would zero-rate VAT for battery storage when used to store energy generated by solar panels, and measures to reduce energy demand in domestic properties. The installation of central heating system controls and insulation draught stripping already qualify for the zero rate for energy saving materials. The noble Lord will, of course, know that changes to tax policy are considered as part of the Budget process. If he has ever had interactions with the Treasury, he will know that this is important and will be jealously guarded. Tax policy decisions are taken in the context of the Government’s wider fiscal position. It permits sufficient time to consider the impact of any changes on government finances and individual taxpayers. The Treasury would wish him to know that that it keeps all taxes under review and welcomes representations to help inform future decisions on tax policy. I am sure that the noble Lord will want to feed in his views to Treasury, as we all do.
Amendment 11 would make it a legal requirement, as of 31 December 2022, for all fuel-poor households to be upgraded to band C by 2030 and all other households by 2035, with specified exemptions. The Government already have a statutory requirement to upgrade as many fuel-poor homes to band C as is reasonably practicable by 2030, and we have set out in the 2021 fuel poverty strategy how we intend to do so. The Warm Homes and Energy Conservation Act 2000 placed an obligation on the Secretary of State to make regulations that have as their objective the improvement of households in fuel poverty by a target date. Such regulations have been made for each of the devolved nations. The Governments of Scotland, Wales and Northern Ireland have set out their own approaches. This amendment seeks to replicate that requirement. I therefore submit that it is unnecessary.
We remain committed to our aspiration of improving as many homes as possible to EPC C by 2035, where that is cost effective, affordable and practical. However, we need to retain flexibility to choose the best approach, including how and when to introduce reforms, rather than being restricted by a statutory longstop date. This will ensure that we set policy that reflects best practice in the industry and that homeowners will not be required to make upgrades that are sometimes inappropriate for their property.
We move on to the important issues raised by the noble Baronesses, Lady Brinton and Lady Thomas, in Amendment 12, which would require a
“strategic plan for the supply of energy for those who are disabled or seriously ill”.
I know that this is an important issue and one to which the noble Baronesses are deeply committed.
As I think the noble Baroness said, electricity distribution network operators are obliged to maintain priority services registers to ensure that support is given to the most vulnerable customers during power disruption, including those customers who are disabled and rely on electricity-powered devices. Furthermore, as the noble Baroness also said, under the Civil Contingencies Act 2004, network operators are required to liaise with local authorities, strategic co-ordinating groups and third parties such as local resilience forums and partnerships to share information about vulnerable customers and work together to provide welfare support.
Baroness Brinton (LD)
I asked the Minister whether he would meet me, the noble Baroness, Lady Thomas, and representatives of disabled peoples’ organisations. I think I heard him say that this was more appropriately handled by the Cabinet Office. Would he help me to ensure that this same group, including myself, could meet the relevant Minister in the Cabinet Office on this issue?
Lord Callanan (Con)
I will certainly reply, although of course I cannot speak for Cabinet Office Ministers. I checked and they do have responsibility for ensuring that the Civil Contingencies Act is followed and implemented. I will certainly do my best to facilitate what the noble Baroness wants.
Lord Teverson (LD)
My Lords, I welcome the Minister’s response to my noble friend Lady Brinton on that important issue. He said that there are already lots of statistics for energy efficiency: absolutely, there are. They are all over the place, and every time you need to search for them, you have to work out what they are. One, from the energy poverty statistics, points out that, in England alone, 3.6 million households are in fuel poverty. That was in 2020, before this crisis.
Although the Bill, which we welcome in principle, is there to solve that problem—or not make it any worse—let us remember that the present average price cap is £2,500 per household, which is getting on for double what it was in 2020. So the level of fuel poverty will hugely increase.
There may be good will or a wish among the Government but, whatever the Minister says—I do not doubt his sincerity—there is never a major move forward in the form of action on energy efficiency and demand reduction that actually makes a difference. As my colleague and noble friend Lord Foster, and the noble Lord, Lord McNicol, said, we have some of the least efficient housing and commercial building stock in this country. That is why we need to reboot the whole energy efficiency and demand reduction conversation, which must lead to action. This amendment is not the end of that process; it is a modest but essential start. On that basis, I wish to test the opinion of the Committee.
Lord Teverson
“Energy profits levy
(1) The Secretary of State must lay before Parliament an assessment of the additional revenue that would result from the following policy measures—(a) amending the Energy (Oil and Gas) Profits Levy so that it applies to oil and gas profits incurred since 1 October 2021,(b) removing from the Energy (Oil and Gas) Profits Levy allowances for investment in oil and gas extraction,(c) increasing the rate of the Energy (Oil and Gas) Profits Levy beyond 25%, and(d) implementing a windfall tax on the excess profits of coal- and gas-fired power stations.(2) In addition, the Secretary of State must lay before Parliament an official estimate of the oil and gas super profits over the next 2 years.(3) The Secretary of State must lay the report before Parliament no later than 31 October 2022.”Member’s explanatory statement
This new Clause would require the Secretary of State to lay a report before Parliament detailing the impact of expanding the government’s Energy (Oil and Gas) Profits Levy.
Lord Teverson (LD)
My Lords, without, I hope, taking away too much tension from the Committee, I am not going to press this amendment so I shall be relatively brief in explaining it. It has an important basis in the Government’s Energy (Oil and Gas) Profits Levy Act. It also has an element of looking at how the Bill and previous schemes discriminate against the renewables industry compared with fossil fuels.
A key element of Amendment 13 is to assess the impact of that date in the levy so that it applies to oil and gas profits incurred since 1 October 2021. The Government’s energy profits levy is effective from 26 May, meaning that profits accrued before that date are outside its scope. It was clear over a year ago that surging profits for the oil and gas companies were in stark contrast to the real struggle faced by ordinary people and small businesses faced with high and soaring energy costs. In fact, it was one year ago today that my right honourable friend Ed Davey MP called for the windfall tax on the profits of oil and gas companies, accompanied in due course by other parties and other parties represented in this House.
If the Chancellor had responded at that time and a levy had been in place from October, it would have raised billions more. If I could just remind the Committee of the profits since then, BP saw profits rise by 138% between quarter 1 of 2021 and quarter 1 of 2022—from £2.6 billion to £6.2 billion; it was similar for Shell. These combined super-profits alone amount to £7.5 billion in the first quarter of 2022. That is £7.5 billion more than they made in the same quarter in 2021. Had those windfall profits had been taxed by the same amount, it would have raised £1.8 billion.
What we are looking for in particular here has to do with the levy. Like proposed new subsection (1) in Labour’s Amendment 14, proposed new subsection (1)(b) in Amendment 13 calls from the removal of allowances in the levy for investment in oil and gas extraction. This is one of the key differences between the revenue cap on renewables and the fossil fuel industry, where there is that huge investment incentive of getting 80% back for investment in—dare I say?—fossil fuels, obviously. That is where we want there to be quality.
We on these Benches know, as do Members from other parts of the House, that renewables, rather than fossil fuels, are really the way forward. The Government have committed themselves to a large amount of investment in offshore wind. We recognise that but we need to keep at least a level playing field in taxation matters between renewables and fossil fuels. I very much believe that we need then to push investment in renewables further forward. I beg to move.
Lord Lennie (Lab)
My Lords, the whole question of the energy market is complicated and beset by a series of legislative procedures which can cause confusion. That said, the new clause proposed by Amendment 14 would simply require the Secretary of State to produce a report assessing the impact of removing the investment allowance from oil and gas companies, as set out in the Energy (Oil and Gas) Profits Levy Act, and, in particular, to assess the impact on domestic and non-domestic users. Currently, oil and gas companies receive an 80% rebate on every pound invested but that is not available to renewables or other zero-carbon technology. This appears to tilt the market away from investments in cheaper domestic clean power sources towards oil, gas and fracking.
The proposed new clause would require the Government to assess the revenue and profits of electricity generators and oil and gas producers every six months, to see what the effects would be. Amendment 20 would require the Secretary of State to disaggregate the cost of production of natural gas from the cost of production of other energy sources to reduce the cost of electricity to domestic and commercial consumers. This dates back to when gas was the only game in town for energy companies; now, renewables account for 43% of the generation mix.
Gas prices have increased fourfold since the beginning of 2011, which means that consumers are paying much more for electricity than the average cost of generation across the market. Splitting the market is a likely consequence, by creating a separate pool for cheaper, intermittent, renewable generation and a second for traditional fossil fuel, which in turn could lead to consumers determining when to use cheaper electricity for things such as car charging by timing their usage accordingly. Electricity prices would be determined competitively by companies considering their own boundaries rather than working through gas. I give notice of our attention to move Amendment 14 to a vote.
Lord Callanan (Con)
I thank all noble Lords who have tabled amendments in this area, on the energy profits levy, including an amendment that seeks to reduce the costs of electricity to consumers.
I start with Amendment 13, tabled by the noble Lord, Lord Teverson, which would require the Secretary of State to publish a report on the additional revenue that could be raised from expanding the energy profits levy. I shall say something very similar to what I said to the noble Lord, Lord Foster, that all taxes are kept under review, and any changes in tax policy should be considered and announced by the Chancellor, in line with the usual Budget processes. The Treasury view, therefore, is that this amendment is not appropriate for this Bill.
The energy profits levy has been designed with a bespoke tax base, appropriate to respond to the extraordinary global context of high oil and gas prices. The levy is expected to raise substantial revenue while providing companies with a new incentive for investment. It is right that we continue to encourage investment in North Sea oil and gas to strengthen the UK’s vital offshore oil and gas sector and bolster our future energy security. The amendment would also require the Government to produce an estimate of upstream profits expected in the next two years. Such estimates will be highly sensitive to commodity price fluctuations. Given the volatility in prices since last year and that most companies’ out-turn profits are publicly available, it is not clear that producing such an estimate would be a beneficial use of public resources.
I turn to Amendment 14, tabled by the noble Lords, Lord Lennie and Lord McNicol. This amendment requires the Secretary of State to publish a report on the impact of removing the investment allowance in the energy profits levy. The Treasury has made clear its view that it is not for this House to discuss the matters raised by this amendment in relation to this Bill, on the basis that fiscal issues are a matter for the House of Commons. Tax policy changes are an area for the Treasury, which believes that the Chancellor should consider and announce any changes in line with the usual Budget process. Taxation on the profits of oil and gas producers is not in scope of this Bill. The energy profits levy, introduced under the Energy (Oil and Gas) Profits Levy Act 2022, has been in place since May. It is not standard for the Government to publish assessments of the economic impacts of measures that they are not introducing. The Government already monitor the UK oil and gas sector; data on upstream production is published regularly on GOV.UK. It is not clear how a report on the impact of a hypothetical change would be a beneficial use of public resources.
I turn to Amendment 15, also tabled by the noble Lords, Lord Lennie and Lord McNicol, which would require the Secretary of State to publish an assessment of the revenue and profits of electricity generators and oil and gas producers every six months. The profits of oil and gas producers are not in scope of these measures but are subject to the energy profits levy, which has been in place since May. The out-turn revenue and profits of most electricity generators are already in the public domain, so I do not believe this amendment is necessary. The objective of the Energy Prices Bill is to protect consumers from very high energy prices. We recognise that we must strike a balance that is fair to generators, achieves value for money for consumers and maintains investor confidence. That is why it is appropriate that the House gets the chance to debate fully the first set of regulations made under the temporary cost-plus revenue limit.
Lord Teverson (LD)
I thank the Minister for his reply, and beg leave to withdraw the amendment.
Lord Lennie
“Report on additional expenditure treated as incurred for purposes of section 1 of the Energy (Oil and Gas) Profits Levy Act 2022
(1) The Secretary of State must, within six months of the day on which this Act is passed, publish and lay before Parliament a report on the effect of removing the allowance under section 2(3) of the Energy (Oil and Gas) Profits Levy Act 2022.(2) The report must set out projections of the effect of the reduction set out in subsection (1) on domestic and non-domestic energy bills.”Member’s explanatory statement
This new Clause requires the Secretary of State to produce a report assessing the impact of removing the investment allowance for oil and gas companies as set out in the Energy (Oil and Gas) Profits Levy Act, and in particular to assess the impact on domestic and non-domestic bills.
Lord Lennie (Lab)
My Lords, the welcome part of the Minister’s statement was the consideration of disaggregating gas from electricity. We welcome that and look forward to seeing the outcome. But Amendment 14 simply asks for a report to be produced; it is not trying to interfere in Treasury decisions or to do anything about fiscal policy. It is simply trying to find out whether the market is distorted and, if it is, by how much. I wish to test the opinion of the House on this amendment.
Lord Lennie
Member’s explanatory statement
This amendment and others in the name of Lord Lennie make the powers in Clause 22 subject to affirmative parliamentary procedure including a sunset Clause.
Lord Lennie (Lab)
My Lords, I just want to remind the House of the warnings and the contribution from the noble Lords, Lord Rooker and Lord Cunningham, about the Government ignoring the recommendations of the DPRRC as against the normal practice of this House. I beg to test the opinion of the House.
Arrangement of Business
Baroness Bloomfield of Hinton Waldrist (Con)
My Lords, before we move to the regret Motion in the name of the noble Baroness, Lady Sherlock, I will just outline the next steps on the Energy Prices Bill. Noble Lords now have 30 minutes to table amendments to the Bill on Report. Therefore, amendments need to be tabled by 6.50 pm. Members can do so with the Public Bill Office in the usual way. The House will resume proceedings on the Bill at a time to be displayed on the annunciator.
Universal Credit (Transitional Provisions) Amendment Regulations 2022
(2 years ago)
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Baroness Sherlock
That this House regrets that the Universal Credit (Transitional Provisions) Amendment Regulations 2022 (SI 2022/752) do not take adequate steps to protect claimants from financial hardship removing (1) the requirement to evaluate the managed migration programme after the initial 10,000 claimants have been transferred, and (2) the obligation to involve Parliament in the decision to expand the rollout of the programme nationally.
Relevant document: 10th Report from the Secondary Legislation Scrutiny Committee (special attention drawn to the instrument).
Baroness Sherlock (Lab)
My Lords, my regret Motion relates to the regulations which amend the process of “managed migration”, the means by which DWP plans to move people who are currently claiming legacy benefits to universal credit. Some 2.5 million households receive legacy benefits, with most receiving ESA or tax credits. Some of those households will move on to universal credit over time through “natural migration” if, for example, their circumstances change. Some will choose to move and some will end their benefit claims altogether. The rest will be moved on to universal credit via a compulsory managed migration process. This was originally intended to be completed by April 2017. It is now due to happen, I believe, by late 2024. Will the Minister confirm if the current aim is still to complete migration of all legacy benefit claims by late 2024?
Concerns about this process have been expressed over many years, both within Parliament and outside. Originally, we all assumed the term “managed migration” meant that DWP would in fact manage the process of transferring people from the current benefit on to universal credit, but that is not what is going to happen. Rather, people will get a letter telling them to apply for universal credit and three months later their benefits will be stopped, even if they have not made an application for UC. If they do not make a successful application within that time, they will no longer be eligible for transitional protection, which is the only guarantee they have that they will not be worse off when they move to universal credit. I will return to this.
The original managed migration regulations were introduced in 2018, but the volume of concern from many quarters, including the Secondary Legislation Scrutiny Committee, led to their being withdrawn. After a couple of false starts, some new regulations were introduced in January 2019. These still, however, did not address some of the key concerns about the migration process.
DWP began testing the migration process in 2019 through a pilot, which was expected to last some 12 months before being evaluated and the process gradually scaled up. Such was the concern that the then Secretary of State undertook to come back to Parliament before the full rollout. The 2019 regulations permitted only 10,000 migration notices to universal credit to be made, after which Parliament would have to vote specifically to extend the migration to the rest of the remaining legacy benefit caseload. However, after only a handful of cases, Covid hit and the pilot was abandoned.
These new regulations remove that 10,000 limit, leaving the Government free to scale up the rollout entirely at their discretion, without any further reference to Parliament. In place of a pilot, DWP is running a “discovery phase”, but there is no transparency about how this will work or what the learning is from it. Without information about success criteria and performance, there is no way for Parliament to hold the Government to account on this hugely complex and vital project. DWP was due to publish an evaluation strategy and a full evaluation for the pilot, but I believe it is not planning to do so for the discovery phase. Is that true? If it is not doing so, will she explain why not?
I commend the Secondary Legislation Scrutiny Committee for its valiant if ultimately fruitless efforts to get DWP to provide more information and answer questions about this new approach. DWP’s case seems to be in essence that it managed lots of new applications very quickly during the pandemic, so it does not need a pilot to prepare it to scale up. However, as the SLSC points out, it offered no evidence to support that view. It said:
“Our concerns were not simply an issue about gearing up IT platforms and administrative capacity but also about the practical impacts that these changes might have on benefit claimants. DWP has been entirely silent on these issues in the EM for these Regulations”.
The Committee also noted that DWP has no firm plan for achieving transition by the end of 2024, nor does it explain why providing evidence to Parliament after 10,000 notices would obstruct that objective. It said:
“In 2019, the then Secretary of State, Amber Rudd MP, undertook to gather evidence and return with it to Parliament, to seek permission to complete the migration. That undertaking has been overturned by this instrument without explaining either why that promise will not be fulfilled or offering alternative briefing to this House. … In doing this, DWP also removes any obligation to involve Parliament, particularly the House of Lords, in the decision to expand the rollout”.
The Committee then wrote to DWP to ask for further justification for the removal of the cap, but noted that the response it received:
“Does not provide any additional explanation”.
It therefore drew these regulations to the special attention of the House and concluded:
“We therefore still take the view that the House has been given insufficient detail to make an informed decision about DWP’s proposals”.
The Social Security Advisory Committee also took these regulations on formal reference. SSAC is privy to rather more detail than most parliamentarians about DWP’s plans, but its most recent report was still casting doubt on the department’s capacity to meet its ambitions, noting the lack of evidence to back up the information about DWP performance. SSAC was also concerned about the removal of the requirement to return to Parliament at the 10,000 mark. It said in its last report:
“In the absence of such a stage-gate, we are not convinced that the governance arrangements currently in place are sufficiently robust to safeguard against, or put strong mitigations in place for, those risks which have the potential to impact adversely upon up to 1.7 million households and to affect public confidence in the programme”.
Has the Minister’s department been able to satisfy SSAC any further since then?
Coming back to Parliament is not just a matter of protocol. Amber Rudd, as Secretary of State, made that commitment because of widespread concern about the impact this process could have on a very large number of people. Will the Minister tell us the latest figure for the number of people likely to be subject to managed migration? I believe that, as of December 2021, DWP estimated that some 1.7 million claims would be migrated, but that figure may have come down a touch. However, that is a lot of people.
To summarise, I have three main concerns. First, I am concerned about the way the process will affect vulnerable claimants, given that the plan to stop legacy benefits three months after a managed migration notice has been issued is going to operate like a hard stop. DWP’s suggestion that its pandemic experience means that everything will be fine does not answer the question, because the legacy benefit caseload is not the same as the caseload that came on to universal credit during the pandemic. Almost half of those people, or thereabouts, are claiming ESA, the benefit for people who are sick or disabled. Most of those are in the support group and most have been on ESA for at least five years.
Mind points out that as of last August:
“There are more than 700,000 people with mental health problems, learning disabilities and dementia receiving income-based ESA who will be affected by managed migration”.
Managed migration is therefore going to affect some of the most vulnerable claimants, including many who will really struggle to deal with this process without support. Both SSAC and the Work and Pensions Select Committee have raised concerns about the impact of managed migration on vulnerable claimants. I understand that DWP’s own research highlights similar risks.
DWP says, “Don’t worry, we will support vulnerable claimants through the managed migration process”, but the Minister will be aware that charities in this field are not confident that DWP is always good at being able to identify and support all the vulnerable claimants. CPAG research found that staff do not systematically ask if claimants with a mental health problem require any reasonable adjustments to their service, contrary to the department’s own guidance. We know from some of the terrible cases that hit the newspapers this does not always work the way that it should.
Lord Storey (LD)
My Lords, I am grateful to the noble Baroness, Lady Sherlock, for bringing forward this regret Motion, which highlights important issues arising from the continued managed migration from legacy benefits to universal credit, and I pay tribute to her detailed knowledge in this area. As she said, the Government removed the need for the DWP to return to Parliament after 10,000 claimants had been migrated to universal credit from legacy benefits without a full evaluation of the programme so far.
In supporting her Motion, I will raise three important concerns: the lack of safeguards for vulnerable claimants, as we have heard; transitional protection, given the evidence of adverse impact of technical issues on claimants; and lack of scrutiny by Parliament, removing the opportunity for MPs and Peers to challenge and question the process so far or to introduce any legislative changes thought necessary.
First, the impact on vulnerable people can be severe. Fifty per cent of claimants of legacy benefits are on employment support allowance, which is a benefit for people who have an illness or disability that prevents them working. The process of claiming universal credit is difficult but for these people it presents a major challenge. The DWP plans to stop payment of legacy benefits to those who do not comply after three months; this is a significant sanction and could cause major distress, particularly to the most vulnerable claimants. The Government have removed the cap without publishing an evaluation. It seems essential that managed migration should be halted until an evaluation has been published.
Secondly, transitional protection is available only to those households that are migrated. There is evidence of the adverse impact of a number of technical issues on certain groups of claimants. For example, claimants will be better off if migrated after the annual uprating and worse off if migrated before. That is unfair and inequitable. People transferring from temporary to mainstream accommodation will have the housing cost element added to their universal credit. That will erode any transitional protection they may receive.
Carers, of all people, who give so much to our communities and who are entitled to the limited capability for work-related activity, will lose out on transitional protection, as the LCRWA full amount means that transitional protection is eroded by this element. Transitional protection comes to an end when joint claimants separate as a couple, even when a partner has died or left as the result of an abusive relationship. A full evaluation would enable these important issues to be reviewed and, where necessary, action to be taken to strengthen transitional protection. No claimant should be worse off at the point of transfer and vulnerable claimants need to be protected from the consequences of not coping with claims.
Thirdly, there is a lack of accountability to Parliament. As the Secondary Legislation Scrutiny Committee points out, insufficient detail has been provided for there to be confidence in the DWP’s capacity to carry out the full migration without detriment to claimants. The managed migration to universal credit is an enormous project. The volume of claimants alone is a cause of concern, in that failure to deliver competently could cause widespread distress and hardship to those claimants.
Of the 2.6 million people still on legacy benefits, up to half are vulnerable long-term claimants such as the sick or disabled. The DWP needs to provide stronger evidence of its competence to communicate with the most vulnerable claimants and of its capacity to transfer their claims without disruption to those payments. Parliament should not be excluded from this major project, the impact of which on the poorest and most disadvantaged people may be very serious. It is essential for MPs and Peers to exercise full scrutiny and accountability and that they are kept in full touch as the project is rolled out. We support the Motion.
Lord Farmer (Con)
My Lords, the Minister told the House on 17 October that, as of February 2022, 5.18 million working-age adults, or 12.7% of the GB working-age population, were receiving out-of-work benefits. She explained that the largest categories were universal credit “out-of-work” or those with “no work-related requirements”, but can she inform the House how many are claiming the legacy employment and support allowance? Presumably, they would all be migrated as part of “move to UC”.
She also said that the DWP is trying to reduce the flow into unemployment and inactivity through prevention and retention work by supporting disabled people and people with long-term health conditions. Will the migration of people currently claiming legacy employment and support allowance into universal credit mean these claimants receive more attention from work coaches, with the aim of their being better enabled to work? This is not about being punitive, but ensuring that no one is simply parked on benefits when their well-being and sense of purpose would be greatly boosted by working or increasing their hours. This is obviously even more important when there are so many vacancies.
Baroness Lister of Burtersett (Lab)
My Lords, I am grateful to my noble friend for tabling this important regret Motion, which she introduced with her usual power and precision. All I can do is reinforce some of the points she and the noble Lord, Lord Storey, made emphasising how much this matters for both the well-being of claimants, particularly those in vulnerable circumstances, and transparency and accountability to Parliament.
I have yet to see a convincing justification for the removal of the stage gate, which was introduced to assuage concern raised in both Houses. Two reasons were given by the then Secretary of State in a letter to the chair of the Work and Pensions Committee in May: first, that early lessons and observations were captured during the truncated pilot in Harrogate. We have not been told what those lessons were and, curiously, in oral evidence to the committee in June, the next month, the same Secretary of State said:
“We learned a bit in Harrogate, but not a lot. The main thing we learned in Harrogate is not to do it the way it was done in Harrogate.”
That is all the more reason, one would have thought, for maintaining the piloting approach that Parliament was promised. But, no, apparently UC’s resilience during the pandemic means that a pilot is no longer needed. As my noble friend pointed out, that was a very different exercise involving a very different group of people, almost certainly far fewer in vulnerable circumstances. Instead of the pilot, as we have heard, we have what is called the discovery phase—which sounds so appealing, like a mystery cruise, but has actually reassured no one, particularly the SLSC and SSAC, never mind external stakeholders.
Although ultimately SSAC drew back from recommending that the stage gate be retained, it made clear its concerns at its abolition. Among the points it made was the need to monitor the impact of the declining ratio of staff to claimants during the discovery phase and to publish before the Summer Recess the criteria for scaling up and moving on to the next phase of implementation, yet, to my knowledge, they have still not been published. Why not? Will the Minister give an undertaking today to do so, and to ensure that the declining staff/claimant ratio is monitored?
These and other issues, as we have heard, stem from a concern about the risk to claimants of the whole exercise. When the original regulations were considered, the view was put strongly by SLSC and SSAC that the balance of risk lay too heavily on the claimant. This was why CPAG, of which I am honorary president—I am grateful for its full briefing—Z2K and disability organisations called for the automatic transfer of migrated claimants, rather than requiring them to make a new claim. I never saw a plausible reason for rejecting that idea, but clearly it will not happen. As my noble friend asked, could the department at least consider the suspension of an existing claim rather than its termination in cases where a new claim is not made in the required period—not least because of the implications for transitional protection?
The Parliamentary Secretary, Cabinet Office, and Parliamentary Under-Secretary, Department for Work and Pensions (Baroness Stedman-Scott) (Con)
I thank the noble Baroness, Lady Sherlock, for raising this Motion, and noble Lords for their contributions. I would also like to thank representatives of the Secondary Legislation Scrutiny Committee and members of the Social Security Advisory Committee for their detailed scrutiny of these regulations and for reports relating to their assessment of the impact of these regulations. We have continued ongoing dialogue with SSAC. From the meeting we had with the noble Baroness, Lady Sherlock, we were able to confirm to her that we were in a much better place with SSAC and the committee.
I will endeavour to answer all the questions, because I want to, but I am sure that there will be some things that I have to write about. I ask noble Lords to allow me to do that. Because of the technical nature and depth of the questioning, it is very important that I get those things right. I should also say that we had a pre-brief meeting with the noble Baroness, Lady Sherlock, and I am happy to put on record that after this debate, however it transpires, we are prepared to have further meetings so that people can raise points which we can learn from as we go on. I hope that demonstrates that we wish to get this right and be transparent.
The Universal Credit (Transitional Provision) Amendment Regulations 2022, laid on 4 July, came into force on 25 July 2022. These regulations build on insights from the previous Harrogate pilot and from the pandemic and improve the existing legislative framework so that it better supports the DWP’s revised strategy, published in April 2022, Completing the Move to Universal Credit. I can confirm that the strategy is to migrate all legacy benefit claimants into a single, streamlined and simplified benefit system by the end of 2024.
The Motion tabled today by the noble Baroness is driven not by criticisms of the technical provisions and amendments within the regulations; these make needed improvements to legislation that sets out how claimants should be migrated to UC and protections they receive in doing so. They will also remove unnecessary complexities that benefit neither the claimant nor the taxpayer or provisions that do not reflect our policy intent. The concerns are instead focused on the removal of a statutory limit on the number of claimants, in the belief that this risks a lack of oversight of DWP’s progress and transparency about the nature of our plans for migration. These reflect concerns raised by the Social Security Advisory Committee and the Secondary Legislative Scrutiny Committee, and whilst I am sympathetic to their origins, I can assure the House that they are misfounded.
First, moving to universal credit is a good thing for claimants. Overall, we estimate that most people are better off under UC. We estimate that 55% of all legacy claimants will have a higher entitlement under UC, relative to legacy benefits; around 10% of legacy claimants will see no changes; and 35% will have a lower entitlement. That 35% who are not better off will be considered for an assessment for transitional protection to support that move over. Once they are moved over, they take advantage from a more dynamic system of support that focuses on work, incentives and earnings.
However, despite these advantages, the startling fact is that those who could benefit most—those still to migrate over—either are not aware or do not share this opinion of universal credit. Internal work looking at claimants’ attitudes suggests that there is a hesitancy towards moving to universal credit as there is concern that they will not be better off.
Baroness Sherlock (Lab)
Just to clarify, nobody who has raised the question of uprating has asked the Minister to comment on the amount by which benefits will be or should be uprated. On the assumption that every year there is some uprating, the value of transitional protection will be different before the next financial year or after, so if somebody moves before, they will be worse off than if they move after. The questions are, first, whatever those rates are, will the Government do anything about that? Secondly, will the department warn a claimant who could choose to migrate either side of the line that they will be worse off if they go this side of the line?
Baroness Stedman-Scott (Con)
The answer to that question is that I will need to write to the noble Baroness. She raised it in our meeting and I have asked my officials to prepare me a written answer so that I get it correct. I will write to the noble Baroness and place a copy in the Library.
All noble Lords who have taken part today have asked a number of justifiable and understandable questions. I will make sure with my officials that they are all answered in a subsequent letter. I thank all noble Lords who spoke whose questions enable us to clarify in more detail. Be reassured that the Government are fully aware of the concerns over the scrutiny of managed migration. We believe that managed migration to UC is the right step for claimants and that this is the right time. We believe we know how to protect claimants and are learning from the discovery phase. Given my response, I respectfully ask the noble Baroness to withdraw her Motion to Regret.
Baroness Sherlock (Lab)
My Lords, I thank all noble Lord who have spoken tonight and thank the noble Lord, Lord Storey, for making some important points about the position of vulnerable claimants and asking some good questions. I thank my noble friend Lady Lister for a powerful speech illustrating the range of issues that will have to be considered very carefully over the weeks and months ahead. I am grateful to the noble Lord, Lord Farmer, for raising the questions he did and to the Minister for answering them.
Given the lateness of the hour and the business ahead of the House, I will not respond at great length, but I want to say a couple of things. First, the Minister said that my Motion was “mis-founded” because universal credit is good for claimants, so they should be encouraged to move across, and they do not want to do anything that gets in the way of that. She is right that many people will be better off on universal credit, but others will not. For those who will be worse off, it is small comfort that someone else will be better off. It is incredibly important that those who will be worse off, and especially the significant numbers who are vulnerable, are given appropriate support, that their needs are properly attended to and they are not simply left behind, as she said, when others are moved across.
Secondly, she is right that a number of people are worried about universal credit, but not just on the grounds of media comment. The experience of some universal credit claimants has not been good: waiting a long time for benefits, complicated processes, things that they did not understand. I know, just from the charities and churches that I have spoken to, that the experience has not always been straightforward. There are good reasons for people to be concerned.
There are a number of questions here. The Minister is right: she said the Government wanted to change the regulations because the new approach better fits with their strategy and the old approach placed some regulatory constraint. That was the point: the point was to place some constraint. That is why the Secretary of State did it; that is what it was for; and that is what the Government have simply abandoned.
The Minister has said several times that she will update Parliament at the appropriate stages. The fact is, once these regulations go through, there is nothing to require her to come to the Floor of this House and say anything. The only reason she is here tonight is because I tabled a Motion against these regulations, so once they go through, the department will have complete freedom to whatever it wishes. I am really grateful for the time and the detailed responses she has given, but will she please commit to going through Hansard with some care? I think she will find when she does that there were questions that were not answered, or not answered fully. Secondly, will she please look for opportunities to engage this House and not simply the Work and Pensions Select Committee, so that we, as well as the other place, can properly have our say?
Baroness Stedman-Scott (Con)
I think I have emphasised the value of regular meetings, updating people and giving them the opportunity to advise us of things they are worried about and things that have gone wrong. I have given my word here. I know our Secretary of State—
Baroness Stedman-Scott (Con)
The noble Baroness, Lady Lister, saves the best line till last. I have no doubt that we want to take people with us; we want to know what does not work, and we want to amend it. I give noble Lords my word and the Government’s word that we will have that interface.
The point the noble Baroness raises about the people who will be better off and those who will not—they will not be any worse off with transitional protection—is a very fair one. These are the sort of things that people talk to each other about and get very worried about, so I will take that back and try to give a more definitive answer than I have given, if that is acceptable to the noble Baroness.
Baroness Lister of Burtersett (Lab)
The Minister keeps talking as if transitional protection is the answer. As noble Lords have pointed out, many people will not get it or will not get it for very long, and there is the whole question of the inflation uprating. It is worrying for people: if they know what is going to happen, they know that transitional protection may not last long at all. So, please do not talk as if that is the answer.
Baroness Stedman-Scott (Con)
I have no intention of talking as if that is the answer and nothing will be wrong after that. I understand that it has a fixed life. Our job is to work with these people, and I understand the vulnerabilities. I understand the barriers people face when work coaches are trying to find them extra hours they can do, taking into account the things that are stopping them now. The relationship with their work coach will be invaluable. There is nothing in a work coach’s job description that says they must say, “You’ve just got to do this”. I hope that the relationship with the work coach will make a huge difference, and that they will go to their superiors when there are real issues that cannot be overcome through those channels.
Baroness Sherlock (Lab)
My Lords, I thank the Minister for her answers. There are still some outstanding questions, and I remain very worried about the impact on people who are utterly dependent on the benefits they get to keep body and soul together. I very much hope that we will have opportunities to discuss this. However, I have reached the limit of what I can do about these regulations, and voting on this Motion would not change them. In the light of that, I beg leave to withdraw the Motion.
Independent Inquiry into Child Sexual Abuse: Final Report
(2 years ago)
Lords ChamberRead Full debate Read Hansard Text Watch Debate Read Debate Ministerial Extracts
The Parliamentary Under-Secretary of State, Home Office (Lord Sharpe of Epsom) (Con)
My Lords, with the leave of the House, I shall now repeat a Statement made in another place by my right honourable friend the Home Secretary. The Statement is as follows:
“With permission, Madam Deputy Speaker, I would like to make a Statement about the independent inquiry into child sexual abuse. Last Thursday, the report of the Independent Inquiry into Child Sexual Abuse was published. It concludes seven years of investigation into institutional failure across England and Wales to protect and safeguard children from child sexual abuse.
I want to thank the chair of the inquiry, Professor Alexis Jay, and her whole team for their fearless dedication and commitment in uncovering generations of horrendous societal, professional and institutional failings. I have written to Professor Jay and want to meet with her in the coming weeks to discuss her findings.
Above all, I want to extend my profound gratitude to the thousands of victims and survivors who have come forward to share their testimonies and experiences with the inquiry. That took immense courage. We will honour that courage by keeping their voices front and centre in everything we do and in overseeing a radical improvement in how this crime is dealt with and prevented. The whole House will be deeply moved by the reasons that victims and survivors gave for wanting to share their stories. They wanted their experiences to be acknowledged, to be listened to and to be taken seriously; they wanted to protect other children from suffering as they have suffered. Yet they also wanted not to be defined by this experience and to find, as one survivor put it, “life after abuse”. Madam Deputy Speaker, they are heroic.
Nothing—nothing—is more wicked than hurting a child, and there is no worse dereliction of duty than failing to protect a child. The report reveals horrific abuse of children. It makes for devastating and distressing reading. It finds that organisations have put their reputations ahead of protecting vulnerable children—either turning a blind eye or actively covering up abuse. That is inexcusable.
I am a father of three children and this report has made for very difficult reading. I cannot imagine the pain that victims have been through. Madam Deputy Speaker, I say this on behalf of the Government and all Governments who came before: to all the victims who have suffered this horrendous abuse, I am truly sorry.
The inquiry heard from more than 7,300 victims and survivors. It investigated abuse over not only the last seven years but several decades. The report makes a wide range of recommendations, including greater accountability, increased reporting, better redress for victims, an increased focus on bringing the perpetrators of these abhorrent acts to justice, and a stronger voice from government on this issue. The Government will take all these recommendations, and the insights provided by brave survivors, seriously.
Getting this right will mean everyone redoubling their efforts and working more closely together—all of government, the police, the health and care system, local authorities, schools, and all other interested parties. I will convene meetings with Ministers across Whitehall to drive that change. Our new child protection ministerial group, set up following the care review, will champion children’s safety at every level and provide the leadership to oversee vital reforms across children’s social care. Several government departments have been core participants in the inquiry, and we have been working to respond in real time to recommendations already made during the course of the inquiry.
The actions that we have taken include the Government’s tackling child sexual abuse strategy, published in January last year; driving initiatives to increase reporting of this too often hidden crime, including awareness-raising campaigns, and to improve the confidence and capabilities of frontline professionals to identify and respond to child sexual abuse; ensuring that education and safeguarding professionals are better equipped and supported in identifying harmful sexual behaviours and protecting children from peer-on-peer abuse and harm; targeting offenders by investing in the National Crime Agency, GCHQ and new technology, and by giving the police stronger powers; and providing better support to victims—committing to a new Victims Bill and increased funding for specialised support services.
The conclusion of the Independent Inquiry into Child Sexual Abuse marks the end of a vital period of reflection and learning. It must also mark the start of the next chapter in how society confronts and defeats this evil. Nothing must be allowed to get in the way, be it inertia, misplaced cultural sensitivities, indifference, self-interest or cowardice from those whose job it is to protect children.
In fact, it is the job of every adult to do all they can to protect children. Anything less is a profound moral failing, let alone a professional or institutional failing. Walking by on the other side is never acceptable. Would-be abusers need to know that they will be caught and punished. Victims need to know that it is never their fault and that they will be heard and protected.
I have laid a copy of the inquiry’s report in Parliament. It is only right that the Government now take time to carefully consider its findings and recommendations in full. We will respond comprehensively and in line with the inquiry’s deadline, but let me make a promise now: I will use all available levers to protect our children and right the wrongs exposed by the inquiry’s findings. I will do all in my power to improve how law enforcement and the criminal justice system respond to child sexual abuse. I will work with my ministerial colleagues and across party lines to hold organisations to account, bring perpetrators to justice, and support victims and survivors with compassion and total care.
Where we can act more quickly, we will. That is why we have already announced that, through the support for victims and survivors of child sexual abuse fund, we are allocating up to £4.5 million over three years to seven organisations to support victims and survivors. The fund is only the start in addressing the inquiry’s recommendations but it is another step towards ensuring that we are providing vital support for children and young people who have experienced sexual abuse, adult survivors, and parents and carers of victims. It is also just one part of the more than £60 million a year that the Home Office is investing in tackling this crime.
Child sexual abuse is a terrible but preventable crime, and we must prevent it. We will do so with the recommendations of this inquiry in front of us and the words of heroic survivors ringing in our ears. I commend this Statement to the House.”
Lord Ponsonby of Shulbrede (Lab)
I thank the Minister for repeating the Statement. I join him in paying tribute to the 7,300 victims and survivors who gave testimony to the inquiry, and who have shown great bravery and strength in telling their stories; but there will be many thousands of other victims who did not feel able to come forward. I hope they too will feel that this report is a substantial and serious attempt to understand the extent of institutional failure to protect children over many decades.
This report, seven years in the making, is of immense importance. It offers practical solutions and a solid, rational oversight of a crime that is alternately ignored or sucked into conspiracy theories, which we see through organisations such as QAnon. The report shows the true banality of evil, and it is all the more powerful for that; I pay tribute to Professor Jay for producing it.
This is a report about one of the worst imaginable crimes—about the sexual abuse and exploitation of children and the institutional cover-ups when the abuse came to light. These institutions were there to protect children but instead they acted to protect their own institutional reputations.
The report raises concerns about current child protection arrangements. First, it refers to the explosion in online-facilitated child sexual abuse, including the grooming and rape of children and babies. The Home Secretary did not mention this in his Statement, but can the Minister confirm that the online harms Bill will complete its passage through the Commons next week and be accelerated straight to the House of Lords? Can the Minister also confirm that the National Crime Agency will not have to make the 20% staff cuts which it has been asked to draw up in the recent past?
Secondly, the report says that
“significant reductions in funding of public services”
after 2010 is one of the key factors that has had
“a deleterious impact on responses to child sexual abuse.”
Does the Minister accept the damage done by the scale of the cuts in child protection? What can he say about protecting our existing arrangements in the forthcoming spending review?
Thirdly, the report is clear that organisations still do not take child protection seriously enough. What is the Home Office’s position on a mandatory duty to report child sexual abuse? The Labour Party has been calling for it since 2014, and it is worth noting that former Prime Minister Theresa May, who initiated this report, supported this key recommendation of the report.
Fourthly, the report is clear about the failings in the criminal justice system. The charge rate on child sexual abuse has dropped from 32% in 2015 to 12% last year. There are many other examples of failures in the criminal justice system too, but surely child sexual abuse should be the top priority.
Fifthly, the Home Office has responsibility for unaccompanied asylum-seeking children, yet the independent inspectorate found just last week that they were being placed into unsuitable hotels where the staff did not even have DBS checks, and hundreds of children have gone missing. What action have the Government taken since the Minister saw those reports over the weekend?
This report is clear about the systemic failures, past and present. We in the Labour Party have been part of the problem. My right honourable friend Yvette Cooper apologised on behalf of the Labour Party for its part in that failure. Too often, there has been a deference to power, which has overridden a duty of care.
I spoke about the banality of evil. Noble Lords will know that I sit as a magistrate in London. Magistrates would not normally deal with these types of offences but several times in my experience as a magistrate in family courts, youth courts and adult courts, I have had witnesses and defendants make very serious child sex-related accusations when we were dealing with far lesser charges in the court process. We as a court system need to be alert to people reaching out for help when they are in the court system. We owe it to the thousands of survivors who have spoken out.
I have two final points to make. The first and very important point is that this is not a historical problem; it is happening today. My question to the Minister is: what is being done to ensure that children know where and how to report abuse? Secondly, I repeat a point made by many Members in the other place: can the Minister give an undertaking that there will be regular reports to Parliament on how the Government are implementing the recommendations in the report?
Lord Paddick (LD)
My Lords, I thank the Minister for repeating the Statement. This seven-year Independent Inquiry into Child Sexual Abuse sheds light on extraordinary and appalling institutional failings. I want to thank the right honourable Theresa May MP for establishing this inquiry in the first place, as well as Professor Alexis Jay, the chair, and her panel, and, most of all, the survivors and victims who selflessly came forward because they wanted to prevent what had happened to them happening to anyone else.
This is a catalogue of failure to protect children, failure to listen to children and failure to believe children. There must be a change of culture, both in society and in those institutions which put their reputations before protecting children. We on these Benches are also truly sorry. All Governments have failed these survivors and victims, along with the police, health and social services, and local authorities. We have all let down the victims and survivors of child sexual abuse.
The physical and emotional damage these children have suffered has led to a lifetime of suffering. The Home Secretary said that the perpetrators will be “caught and punished” and that “all available levers” in his power, including the police and criminal justice system will be used to bring offenders to justice. Can I ask the Minister how that will be brought about when there is a lack of police resources, the police are already overstretched and the Crown Prosecution Service does not have enough lawyers? The proportion of criminal cases overall resulting in prosecution is falling and there are serious backlogs in the courts. Will the Government increase the resources to the criminal justice system, for example, those available to the police and Crown Prosecution Service? Will the Government ask those institutions to prioritise child sexual abuse cases?
It is right that we should say sorry to the victims and survivors, but we should also not forget those falsely accused whose lives and reputations were seriously damaged as the police lurched from not doing enough to the opposite extreme. Those making false allegations damaged genuine victims as well as those they wrongly accused. Every victim must be protected, cared for and believed while the police engage in an objective search for the truth.
I shall mention three specific issues. First, will the Government introduce an effective statutory duty to report child sexual abuse?
Secondly, when it comes to unaccompanied asylum-seeking children, as has already been said, they are being placed in inappropriate accommodation in hotels where those looking after them have not been DBS checked. More than 100 have gone missing. In going missing, they are vulnerable to sexual abuse. In the Home Secretary’s Statement, he said that
“there is no worse dereliction of duty than failing to protect a child”,
but the Home Office has not been protecting these children by allowing them to go missing. What are the Government doing to ensure that this is stopped?
Thirdly, on prosecutions, the Home Secretary talked about the number of convictions for possession of indecent images of children increasing by 39%. But what about the number of children being rescued from abuse and the children in those indecent images? What about the prosecutions of those producing the images, not just those in possession of them?
There were 2 million pages of evidence and 107 recommendations. It will take time to fully process and action all those recommendations. That must not be lost in the current political turmoil. Child sexual exploitation is endemic and increasing. As the report says:
“this is not just a national crisis, but a global one.”
Urgent action is needed to reverse the increasing numbers of children being abused. Can the Minister confirm that the Government will regularly update the House and not wait until all the recommendations have been addressed?
Lord Sharpe of Epsom (Con)
My Lords, I thank both noble Lords for a large number of questions. I will do my best to get to all of them in the time available.
I agree with the noble Lord, Lord Ponsonby, that of course there are many thousands of other victims. We should be thinking about those who were unable, for whatever reason, to come forward, as well. As the noble Lord, Lord Paddick, said, there were an enormous number of submissions. Once again, I commend those who did and their bravery.
The noble Lord, Lord Ponsonby, asked me about the Online Safety Bill. I cannot confirm that it will be given expedited progress through this House. However, as the noble Lord noted, I believe it is on Report in the other place next week. We will be working with DCMS, particularly in light of this report.
In terms of cuts to the NCA, I do not know how it will be managing its budget. What I can say is that the Government have committed to a £20 million per annum uplift to that budget, which is going through. Whether that impacts staff numbers I cannot really say. I apologise for not having that information to hand. When we do, I am sure we will be able to come back to the House with it.
The noble Lord also asked me to accept the damage done by cuts. I am afraid I am going to refer back to an answer I gave in a debate last Thursday. The world has changed, and a lot of these crimes have developed as a result of the changes we were just discussing regarding the online world, so the responses will have to change. It would be inappropriate of me to use hindsight to say how the world might have been had things been done in a different way, given that the world has changed enormously. I cannot do that.
A number of questions were asked about the mandatory duty. I think the noble Lord, Lord Paddick, called it a statutory duty. This is going to be looked at. The Government have committed to look at all the various remaining recommendations. I remind noble Lords that 107 recommendations were made and 87 have been already actioned because they came out before the publication of the final report. The Government have committed to look at the remaining 20 and respond to them all within the six-month period. That is what we will be doing.
I understand the arguments for mandatory reporting. The inquiry’s report powerfully draws out the systemic failures of institutions to treat child sexual abuse seriously, as both noble Lords have noted, and to properly report allegations of child sexual abuse. As I have just said, we are committed to supporting front-line professionals working with children and to making sure they feel confident and equipped with the right resources and training to identify and respond to concerns or cases of child sexual abuse.
I could go on about this. There is one little caveat I would like to make. The noble Lord, Lord Ponsonby, suggested that the Labour Party was calling for this in 2014. In 2016, there was a consultation on mandatory reporting; I do not know if he remembers that. The evidence was very mixed. There were plenty of principled reasons from high-profile organisations which have a vested interest in this particular subject, which were not necessarily in favour of it. All these things have to be considered, and I am very happy to share those statistics with him afterwards if he would like.
Both noble Lords asked me about the criminal justice system and the various numbers. Again, there were calls for more money which obviously I am unable to answer. However, I can answer a little regarding the numbers of prosecutions and offences committed. I think my right honourable friend the Home Secretary referred to this in his speech. There were 103,496 child offences recorded by the police in the year to March 2022. It is a horrific number and a 16% increase on the previous year to March 2021.
However, there has been an increase, as the noble Lord, Lord Paddick, noted, in the number of convictions for indecent images. That number has increased by 39%. It is still a small number; I acknowledge that it is too small. I cannot say what has been happening to the victims of those images. I would like to be able to give him more information. I will investigate and come back to him if I can. I could go on in terms of the numbers, but, frankly, it is pretty horrible, and I think we should move on.
A question on unaccompanied asylum seekers was asked of me. On average, unaccompanied children seeking asylum are moved to long-term care within 15 days of arriving in a hotel. Obviously, we know that more needs to be done. That is why we are working closely with local authorities to increase the number of placements available and offer councils £6,000 for every child they can provide accommodation for. Any child going missing is obviously extremely serious and we work around the clock with the police and local authorities to urgently locate them and ensure that they are safe.
There is a lot of work being done around public awareness already, to which the noble Lord, Lord Ponsonby, referred. I am sure I will have an opportunity to go into more detail on precisely what that work is, but he should rest assured that it is happening. My right honourable friend the Home Secretary committed to action all the remaining recommendations, or at least to come back with considered responses to them within the six months mandated by the inquiry. I think I have answered most of the questions. I apologise if I have not, but I shall leave it there.
Lord Judge (CB)
My Lords, the problem is that this is happening today, tonight and tomorrow morning. The Government must decide which of the 107 recommendations should have priority. There can be a debate about this, but one that needs urgent attention is legislation to deal with mandatory reporting. The first question is: on whom should such a duty be imposed? Obviously, it should be institutions responsible for the care of children, as well as individuals in positions of trust. But we also have to be careful that, in our haste, we do not impose a duty on victims to report other victims. They may find it impossible to report their own stories, so why should they be in a position where they have to report someone else’s? In some institutions, it must be perfectly obvious to victims that there are other victims of the same person.
We need to be careful about legislation. It is not an offence of obstructing the police for me not to answer a question; it is an offence to lie. If we are going to amend that law, we need to be clear about how we will do so. Section 44 of the Serious Crime Act 2007 is almost impossible to understand. I beg whoever is responsible for legislation not to simply say, “Well, we’ve got a good Act about that.” It is not a good Act; it is very difficult to follow, and it is confused in any event because it did not follow the Law Commission’s recommendations. So can we legislate urgently to deal with these issues but also be careful about how we do so?
The Lord Bishop of Exeter
My Lords, I am sure that those of us who sit on this Bench, along with—
Lord Sharpe of Epsom (Con)
Sorry, I thought it was me.
I thank the noble and learned Lord, Lord Judge, for that eloquent explanation of what I have just tried to explain, perhaps less eloquently, to the noble Lord, Lord Ponsonby. The previous consultation on this, which reported in 2018, also illustrates a little of what the noble and Lord described. Some 51% of respondents felt that introducing a duty to act would have negative consequences, 68% felt that mandatory reporting would have an adverse impact and 85% felt that it would not ensure that appropriate action was taken. This included people like the Children’s Commissioner and the NSPCC, who know what they are talking about. Some of the reasons given in the report—these go very much to what the noble and learned Lord said—were that it could
“dissuade victims from disclosing incidents of abuse and reduce ‘safe spaces’ for children.”
It could also have
“an adverse impact on the child protection system … e.g., by impacting the recruitment and retention of staff”.
Also,
“Increased reporting may divert attention from the most serious … cases”.
So many other reasons were given, illustrating the complexity of this subject and the care with which it needs to be looked at. So I agree entirely with the noble and learned Lord.
The Lord Bishop of Exeter
My Lords, those of us who sit on this Bench, along with all on other Benches in your Lordships’ House, are deeply saddened and ashamed by the harm and suffering experienced by victims and survivors of abuse. I salute the courage of survivors in coming forward to share their stories. We are determined to learn from the mistakes of the past and make the Church as safe a place as possible. That is why we welcome this final report and are already embracing its various recommendations with, for example, the Church of England’s redress board, which has a victims and survivors working group. In this respect, what exactly is the Government’s intention? Is it their preference to support institutions, including the Church, in establishing individual redress schemes? Or is it their intention to create a new overarching external regulatory body in this respect?
Lord Sharpe of Epsom (Con)
The right reverend Prelate obviously makes some good points. I will outline what the Government are doing to ensure that all sectors and leaders of society are working together to tackle child sexual abuse. In his opening speech in the other place, the Home Secretary comprehensively outlined the cross-party and multiagency dimension to all of this. We are transforming the way that local safeguarding agencies work together to ensure a more effective response in safeguarding children.
The Children and Social Work Act 2017 introduced significant reforms, requiring local authorities, clinical commissioning groups and chief officers of police to form multiagency safeguarding partnerships. All of the new partnerships were in place by September 2019, but we know that there are still improvements to be made to the quality and consistency of the local partnerships. We are working with local partners to understand and address those challenges in ensuring effective independent scrutiny, engaging with schools and other relevant agencies and distributing funding.
I reiterate that the Government are firmly committed to supporting all institutions that play a role in safeguarding children to develop robust safeguarding strategies that are carefully monitored, ensuring the safety and protection of children, regardless of where they live and spend their time.
Baroness Sanderson of Welton (Con)
My Lords, I worked with the right honourable Member for Maidenhead in setting up this inquiry. At the time, plenty of people said it should not have been launched: they said it was all in the past and that there was no point in raking it all up again. Then they said that the terms of reference were too broad and that it would never end. I am pleased to say that they were wrong on all counts.
I congratulate Professor Alexis Jay on her brilliant stewardship of this inquiry and on her hard-hitting report. As she did in Rotherham, she has revealed truths that mean we can never look at society in the same way again. There is too much to say here, but I will cite a couple of important statistics in the report that have not been mentioned. In any year group of 200 children, it is estimated that 10 boys and more than 30 girls will experience sexual abuse before the age of 16. The number of sexual abuse offences recorded by the police where the victim was a child under the age of four has risen by 45% in recent years. So, as noble Lords have said, this is not in the past; it is very much in the present, and it will continue to wreck lives if we do not do something to stop it.
Having worked on the inquiry’s Truth Project, I have listened to the accounts of victims and survivors. Although everyone’s experience is different, the damage is always the same: families torn apart, lives forced in a different direction and feelings of shame, anger and hurt. We should thank all those who came forward to ensure that what happened to them does not happen to future generations. Thanks to Professor Jay, it does not have to; she has given us the answers.
As I said, it is a brilliant report, but it can only ever be as good as the action that flows from it. So I thank my noble friend the Minister for the Statement, which reflects the deeper understanding that we now have of this issue. But could he assure the House once more that the Government will look quickly and seriously at its recommendations and ensure that all the relevant departments across government play their part in implementing them? As we saw from the interim report, if they do not work together, we cannot drive through the change that is very much needed.
Lord Sharpe of Epsom (Con)
I thank my noble friend for her remarks and commend her for her efforts when she was working with the right honourable Member for Maidenhead. I am grateful for the opportunity to commend the former Prime Minister for her extraordinary work on this.
Those statistics are genuinely appalling, particularly when they are put in those terms. I have read them as percentages, which perhaps seem rather dry, but to give numbers is harrowing. The Government have made it clear that they are determined to work across agencies and across departments; that work will be ongoing, and all relevant departments will be involved in it.
Something the Home Secretary said bears repeating: when asked about a Minister for children, he said:
“We all … have to be Ministers for children”.
I think he is right.
Baroness Brinton (LD)
My Lords, it is disappointing that recommendation 13, on mandatory reporting, is not a pure system; it is a bit of a hotchpotch of mandatory reporting systems. Will the Government undertake to compare recommendation 13 to successful models of mandatory reporting elsewhere in the world, including Australia, Canada, Denmark, France, Ireland and the USA? In particular, will they compare the views of public bodies before it was introduced and after? In each of those countries, there has been a significant gain in confidence in the regulated bodies that have to report.
Lord Sharpe of Epsom (Con)
I thank the noble Baroness for those suggestions. I will happily take them back to the department and Home Secretary, and strongly recommend that he investigates them.
Baroness Bennett of Manor Castle (GP)
My Lords, the Statement made in the other place says, in summary:
“Victims need to know … that they will be heard and protected.”
I will pick up a point made by the noble Baroness, Lady Sanderson, and the noble Lord, Lord Paddick, who focused on the issues of the justice system. Abusers will of course seek out the most vulnerable: those who are the most excluded from society, including young people who may not be in education, employment or training; asylum-seeking children, as many noble Lords have identified; and those from particularly economically and socially disadvantaged communities. For them to be genuinely heard and to be able to talk to a sympathetic ear, resources will be needed in places such as schools and with their GPs and social workers—indeed, if one can imagine it, with immigration officers and border staff. Will the Minister acknowledge that there needs to be adequate resources in all those institutions where vulnerable children will encounter potentially responsible adults? The resources need to be there to enable those institutions to react appropriately.
Lord Sharpe of Epsom (Con)
Of course, I acknowledge that resources need to be adequate.
Baroness Bottomley of Nettlestone (Con)
My Lords, do I have the permission of the House to speak, because I was not here for the earlier Statement?
Lord Davies of Gower (Con)
It is normal to be here at the outset, so I regret that, on this occasion—
Baroness Bottomley of Nettlestone (Con)
I gave evidence to the inquiry, and I have had very personal experiences of all this, so may I speak?
Lord Davies of Gower (Con)
Yes, on this occasion, we will make one exception.
Baroness Bottomley of Nettlestone (Con)
Thank you.
I did not applaud the remit of the inquiry; it was much too broad. We had terrible problems with the chair, with whom we were, at last, third time lucky. The inquiry should not have been set up by the Home Office. In my days, it would have been set up by the health department, and now it should be by the education department—if it were, it would have been more focused, more relevant and more specific. It was far too broad.
I do not agree with all the recommendations, but I do agree with mandatory reporting. I will explain why very quickly. I used to be a chair of the juvenile court. I was a psychiatric social worker, but my first job was working with the Inner London Education Authority with a special boarding school, where I realised that the headmaster was abusing the children, if not also the parents. This was the most appalling horror to me, a virtuous person of 24. I reported it to my boss, who said, “If you complain about these sorts of things, they will not allow social workers at residential schools. You must not be a politician, Virginia; you’re a social worker”.
I then went and spoke to a very senior member of the Inner London Education Authority, a Labour member who was a friend of my family—I broke my professional line—and told her about this simply appalling man who was abusing children and the institution. She basically did nothing. Of course, what they did is what is reported in the report: they wrote him a good reference and he went off to Tunbridge Wells. I immediately wrote about this to my friend Patrick Mayhew—then the MP—to warn him, “If you ever hear anything about him at all, you must jump immediately”. Mr Bertram went off to Canada.
I say this because I think that few noble Lords in this Chamber will understand how horrific it is to think that you are working with a virtuous institution and gradually realise that the person leading it—and responsible for vulnerable children—is a perpetrator of horrendous crimes. Beyond all this, mandatory reporting would have helped me; I would have been able to say to my boss and to the local authority politician, “We have to have mandatory reporting”. So I commend Alexis Jay. She has ended up doing a very good job, but it has been quite a long journey getting there. Thank you for letting me speak.
Lord Sharpe of Epsom (Con)
I am pleased that we did. I thank my noble friend for her unusual perspective on this subject. I have absolutely no doubt that her personal experiences were replicated all too often in the past. Regarding mandatory reporting, I certainly appreciate her perspective and will take that back. As I have tried to explain, it is a complex subject. As the noble and learned Lord, Lord Judge, explained, it requires careful thought, but my noble friend’s remarks are noted.
Baroness Newlove (Con)
My Lords, I add my warmth to the report that Professor Jay has produced. It has taken a long time and cost a lot of money. I am speaking for the victims; in my role as Victims’ Commissioner, I gave evidence three times. There are excellent recommendations. While I know that there are over 100 recommendations, and that the Government must respond within six months, six months is a long time for victims and survivors to wait for something to change for them.
I have challenged the Government in my role as Victims’ Commissioner about the criminal injuries compensation scheme, which has had a very tight budget. I am conscious that the compensation process for these victims and survivors is going to be very lengthy, very bureaucratic and will put them off claiming the compensation they duly deserve. For example, I had to fight in my role to get £20 for a victim who had to print off papers; there was a question mark about whether they would pay £20 for ink. So my concern is that, while it might seem very simple that the Government will do this and that, the monetary value given to organisations is not enough to support the services that these victims and survivors need. I would like a fast target on criminal injuries compensation, because these people have waited long enough to have their voices listened to and to be given the better, healthier lifestyle they truly deserve.
Lord Sharpe of Epsom (Con)
I thank my noble friend for those very sensible remarks. The Home Secretary said earlier that six months is obviously the absolute limit to come back with answers on these matters, but if we can come back quicker, we will. I am quite sure that he meant that when he said it. Criminal compensation—or victims’ compensation, I should say—will of course be considered along with the other recommendations. I will certainly take my noble friend’s perspective back to the Home Office.
Supply and Appropriation (Adjustments) Bill
Monday 24th October 2022
(2 years ago)
Lords ChamberRead Full debate Supply and Appropriation (Adjustments) Act 2022 View all Supply and Appropriation (Adjustments) Act 2022 Debates Read Hansard Text
East Kent Maternity Services: Independent Investigation
(2 years ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Baroness Merron (Lab)
My Lords, I start by thanking Dr Bill Kirkup and his team for bringing together a report of harrowing events. This litany of failures makes for very difficult reading, and it marks another landmark for a further group of families fighting for justice who should not have had to do so. Forty-five babies could have survived had they received care at the nationally recognised standards. I am sure that the thoughts of the whole House are with the bereaved families at this extremely painful time.
This is, regrettably, yet another example of women’s voices being ignored and silenced, to the extent that some were told that they were to blame for the deaths of their babies. At a time when women are at their most vulnerable, they were let down by the very people who they were relying on to keep them safe. However, this is not a one-off: East Kent is the latest in a long line of maternity scandals, including at Shrewsbury and Telford Hospital NHS Trust and Morecambe Bay, while the upcoming review of services in Nottingham is expected to be highly critical. Dr Kirkup said that avoidable deaths happened because recommendations that had been made following reports into other scandals had not been implemented. I would be grateful if the Minister could respond to this.
We know that no woman should ever have to face going into hospital to give birth, not knowing whether she and her baby will come out alive. Those who allowed this culture of neglect and what was referred to in the report as a disturbing
“lack of kindness and compassion”
to take root must be held accountable. Can the Minister tell your Lordships’ House how this may happen?
It is shocking that there is a pattern of avoidable harm in maternity units across the country. Half the maternity units in England are failing to meet safety standards. Pregnant women were turned away from maternity wards more than 400 times last year. One in four women are unable to get the help that they need when in labour. The Government need to fully accept all the recommendations in Dr Kirkup’s review without delay. I hope the Minister will today confirm that this is the case.
In the wake of the Ockenden review, the former Health Secretary announced additional funding for maternity services to help deliver the reform that is clearly needed. Can the Minister tell your Lordships’ House how that funding has been spent and how its impact will be measured? Indeed, it would be very helpful if the Minister could bring a further report to this House on progress in the improvement of maternity services.
Underpinning the issues in maternity care and across the NHS is, of course, the workforce. But more midwives are leaving the profession than are joining it and there is now a shortage of some 2,000 midwives in England alone. Can the Minister indicate where we can find the workforce plan to get the staff needed to provide good and safe care in the short, medium and long term? It is evident that the Government must provide the staff that maternity services desperately need to provide safe care across the health service.
I am sure we were all concerned to read the Care Quality Commission’s report published just two days after Dr Kirkup’s report. It also makes sobering reading. It says that maternity services in England have deteriorated to their lowest level, services are worsening and, time and again, there are issues with the leadership and culture in maternity units.
The CQC’s chief executive said that the failings were systemic in the NHS, with two in five maternity services now ranked as requiring improvement or inadequate. This is a wholly unacceptable situation. Does the Minister share the view of the regulator that the issues in maternity services are a “national challenge”?
This CQC report shows that there has been a deterioration in maternity services overall and in relation to their safety, describing progress on improvement as “slow”. The proportion of maternity services ranked as inadequate or requiring improvement is, we see, the worst it has ever been. What actions will the Government take? Will the Minister be meeting the CQC urgently to discuss its findings? How will a major change in maternity services be brought about?
All that women and their loved ones ask for is to have confidence that they and their babies will be safe. This really is not much to ask. I hope the Government will provide the means to deliver this.
Baroness Brinton (LD)
My Lords, I want to start from these Benches by sending my deepest sympathies to the bereaved families and to say that we admire the parents for their campaigns over many years against the dreadful treatment by the east Kent hospitals trust for more than a decade. I echo the thanks and gratitude from the noble Baroness, Lady Merron, to Dr Kirkup and his team. Once again, he has risen to the challenge of providing a very clear picture of what has gone wrong at a hospital trust.
The trust failed to read the signals over an 11-year period. The Kirkup report puts this very bluntly and is exceptional in the way it uses evidence. Yes, there is the evidence of the voices of mothers and their families and the evidence from staff, but equally important is the use of data, especially the CESDI data from the Confidential Enquiry into Stillbirths and Deaths in Infancy. In the section headed “What happened to women and babies”, paragraph 1.16 says that
“we have not found that a single clinical shortcoming explains the outcomes. Nor should the pattern of repeated poor outcomes be attributed to individual clinical error, although clearly a failure to learn in the aftermath of obvious safety incidents has contributed to this repetition.”
This short paragraph encapsulates how failings have become cultural in the trust. Paragraph 1.19 says that
“we have found that the origins of the harm we have identified and set out in this Report lie in failures of teamworking, professionalism, compassion and listening.”
It is really worrying to have the report from the CQC of a few days ago, which echoed these exact points but more broadly across maternity services in England.
As has been mentioned, there is a wider problem. We know that. The reports on Morecambe Bay, Shrewsbury, Telford and now Nottingham, where Ms Ockenden is now working, show that systemic and cultural failures, especially with the complexity of regulators, are creating real problems. There is the idea that clinical staff will allow favouritism and the opposite of growing and supporting staff, while letting things fester and not caring to drag patients into their concerns.
Can the Minister outline the timescale for the independent working group report referred to in the Statement? The creation of the group is welcome; its main remit is to advise the maternity transformation programme in England—but by when? Is the work of the group revealing that other maternity services have problems, even if we do not know how severe they are or if they are as severe as East Kent?
In the section on the actions of the regulators on page 9, at paragraph 1.50, Dr Kirkup identified that
“the Trust was faced with a bewildering array of regulatory and supervisory bodies, but the system as a whole failed to identify the shortcomings”.
It is good that it is reported that NHS England and Innovation sought to bring about improvements, but every other trust is also facing that same complexity of different regulators. Are the Government looking at the roles of regulators and how their competing demands can be streamlined to avoid this problem?
The Commons Minister said that she would review all the recommendations and provide a full response once she has had time to consider it. I think we all appreciate that the NHS has a very large workload at the moment, but can the Minister say roughly what timescale we are looking at?
One key problem in many maternity services is with the workforce, especially midwives. Although NHS England made an exceptional grant in March of £127 million as a boost for
“safer and more personalised care”,
can the Minister say—I echo the point made by the noble Baroness, Lady Merron, which he will not be surprised to hear—where the workforce plan is for the next decade for maternity services? A year’s extra money is not going to help with training the midwives of the future and ensuring that maternity units are professionally and adequately staffed.
Dr Kirkup also criticised NHS England for firing chairs and chief execs too frequently, indulging in a blame game that reinforced the culture happening inside East Kent. It is no longer good enough to say, once again, that this must never happen again. This is the third devastating report in under seven years, and another is now being prepared in Nottingham. What will the Government do in the next three months to ensure that further appalling practice will be uncovered and dealt with immediately?
The Parliamentary Under-Secretary of State, Department of Health and Social Care (Lord Markham) (Con)
Dr Kirkup’s report, published last week, contains some stark and upsetting findings. As mentioned, the report examined more than 200 births in east Kent between 2009 and 2020 and found that, had care been given at nationally recognised standards, 45 babies might not have lost their lives and many more families might not have experienced such distress at what should have been a time of joy. He also found a toxic culture in the trust, with a disturbing lack of kindness and compassion, and victims’ families even blamed for their devastating losses. The report underlines that the NHS needs to be better at identifying poorly performing units and at giving care with compassion and kindness, as well as team working with a common purpose and responding to challenge with honesty. I take all the findings and areas of concern extremely seriously.
I want to thank Dr Kirkup and his team; his experience has been invaluable and I know that his approach to putting families first has been welcomed. I also know that hearing the accounts of families has been a harrowing experience at times, yet, as he said, it is difficult to imagine just how hard it was for the families as they relived some of their darkest days. I am profoundly sorry to all the families who have suffered and continue to suffer from these tragedies. I pay tribute to the families who have come forward to assist the review; it is thanks to the tireless efforts, courage and determination of families in east Kent that we have been able to shine a light on maternity failings in East Kent Hospitals University NHS Foundation Trust.
Before directly addressing the recommendations, I want to put the tragic findings in the context of an improving service overall. Since 2010, stillbirths have declined by 19%, neonatal mortality over 24 weeks by 36% and maternal mortality by 17%. That is not to undermine the seriousness of the circumstances.
On the recommendations, I echo the comments already made. I know that it is top of Minister Johnson’s agenda in making sure that there are speedy, but also measured, responses. As part of that, I want to touch on some of the points made, particularly by the noble Baroness, Lady Brinton, about the use of data as part of the early warning indicators. I think we all agree that that is key to this area. This is exactly the work that the national maternity safety surveillance and concerns group was set up for: to make sure that there is methodical oversight in this area. It is in its power to recommend that people are put into the maternity safety support programme; 23 hospitals are currently in it and it is recommended that four have progressed enough to come out again, but another 10 have been identified that may need to be put into it.
It depends on how you look at it, and whether you take solace in these trusts being identified, or whether you are concerned about the number out there. Personally—I hope I echo the comments of all of us in the House—I believe it is much better that we identify them and deal with it, however uncomfortable that might be in the meantime. The lesson we have learned from these unfortunate cases, as recognised by the noble Baroness, Lady Merron, is that we have seen a failure of leadership and accountability here.
I am glad to see that, in responding, the trusts have been unequivocal in accepting unreservedly the failings on their part and have apologised wholeheartedly. As we know in these times, when dealing with these situations the first thing that has to happen is recognising that the problem exists.
I will need to write to the noble Baroness about the extra investment and how that spend is being allocated. It is very much on the agenda of Minister Johnson to look at that and at the improvements that have been made.
On the shortage of midwives, the picture as I understand it right now is that we have had a stable number of midwives—around 21,500—over the last four years. Within that, we do have the target, as mentioned, to increase it by 1,200, and that is part of the £95 million investment towards this. I accept that doing that is more than a one-year plan and needs to be part of a much larger picture.
I welcome the CQC focus on this area. It is something that we all agree needs to be an area of focus; if that makes for some uncomfortable findings then so be it. It is only when we understand those areas that we can really get on and make sure that we deal with them. I hope that we are looking to move on in these areas.
The Maternity Safety Support Programme is a force for good, and I am glad to say that, in East Kent, they have been working on the improvement plan as part of the support programme, and 65 of the 67 actions have now been completed, with the final two to be completed by the end of November. That is not to be complacent: that work should have been done a lot earlier, but I am glad to see it is being worked on now.
I have tried in these answers to respond to the questions, but I will follow up in any areas where I have not. In summary, I again thank and pay tribute to those families whose tireless determination to find the trust in telling their stories has brought us to this important point. The Government will be reviewing and considering all the recommendations from the report. We will listen, learn and act to ensure that no other family has to ever experience the same pain in the future.
Baroness Gohir (CB)
My Lords, I thank noble Lords for being patient with me, as I am still learning the rules. I draw attention to my interests in the register. Given the continuous maternity concerns raised in this and many other reports, including by women’s groups, is it time to have a maternity commissioner? As the noble Baroness, Lady Merron, mentioned, what needs to happen to ensure that we get that change? Could the answer be a maternity commissioner who is independent and who then holds the Government to account?
Lord Markham (Con)
The noble Baroness is right to say that it is clear that we have not got it right to date, as shown by the fact that these instances have come up. We are taking the right steps with the Maternity Safety Support Programme that we have put in place, and its ability to put trusts into special measures—as I say, that has already been done on 23 occasions and it is being considered for another 10. I believe we have got those early warning indicators in place now, and trusts are being held to account. At the same time, we have to be open, to make sure that we continue to look at and review this, to see whether it has sufficient teeth and, dare I say, intelligence to properly identify these areas. If it does not manage to do that, we must make sure we put in something else, in addition to what is there already.
Baroness Cumberlege (Con)
My Lords, I have had a very long interest in maternity services, and it seemed to me, on this occasion, that I could make a few comments. This report is truly remarkable. It is investigating the tragedies and failures, the lack of care, the divisive attitudes among professionals, and the lack of teamwork and much else. The report is really here partly due to the pressure of patients and the public, who wanted to bring to the attention of the Government the failures in East Kent.
I thank my noble friend for his report. The recommendations are different from the usual recommendations, in that they go much wider than just East Kent; they go across the country as a whole, and they are very important. On reading that report, has he any ideas about how to stimulate the doctors, nurses, midwives, obstetricians, managers and leaders not only in East Kent but across the country to take note of what it is saying? It very much affects not just them but parents, families, friends and childbearing women, and it is important that they have optimal care that is kinder, compassionate, more personal and safer. What action are the Government going to take, working with NHS England, because there are a lot of partners in this area of maternity? Will he ensure that the recommendations are not ignored—that they are not just put on a shelf and forgotten—and will he come back to Parliament within, say, four to six months to explain what progress has been made in implementing them in the four areas cited for action? I would very much welcome that, because I want to see this report implemented and not just put on another shelf.
Lord Markham (Con)
I thank my noble friend for her question; I know this is an area in which she has longstanding interest and expertise. She refers to embedding compassionate care and, perhaps like all of us, I am surprised to learn that, unfortunately, we may need training in this area; but I agree that it needs to be done because it is fundamental. A culture and leadership programme has been put in place, and we have set up national guardians, the idea being that everyone in every trust has the freedom to speak up. There are 800 of them as of today. I take this issue seriously and I commit—if I am here—to come back within four to six months to report to the House on the progress made, as requested.
Lord Berkeley of Knighton (CB)
My Lords, all too often we hear sentiments of regret and apology—“we have learnt lessons”; “it must not happen again”—and of course, in a sense, what else can you say? My noble friend’s suggestion of someone with specialist knowledge overseeing this is very helpful, but does the Minister agree that this is another area where we have to encourage people to whistle-blow? It is not a term I like much, because it suggests something which is not pleasant, but very often there are people who are alarmed and think something is wrong, but who are too frightened to speak out. If we could foster a culture where that fear is diminished and people feel able to speak out, and that they should, we might get much earlier warning.
Lord Markham (Con)
I agree, and if I may I would like to quote Dr Bill Kirkup in the report:
“Clinicians should not have to live in fear”
where “honest clinical errors” are made. That is exactly the point: we need to introduce a culture whereby people feel able to do that. He goes on to blame systemic failures in leadership, a point that the noble Baroness, Lady Brinton, made, and which is very pertinent here. We are talking about honest mistakes. Everyone wants to do a good job and tries do a good job; it is where they feel that they cannot bring up and honestly discuss those issues that we have a systemic problem, so I agree that it begins and ends with the leadership.
Lord Inglewood (Non-Afl)
My Lords, I know nothing about health policy, Kent or the hospitals in Kent, but our grandson was born in one of the hospitals of the east Kent trust earlier in the summer. We have heard about some of the horrifying things that have happened. There is no excuse for that, but in all hospitals and such establishments there are people who, despite the problems, are doing the real job to the best of their abilities. I should simply like to put on record our gratitude to the staff involved in the birth of our grandson.
Lord Markham (Con)
I thank the noble Lord. As he rightly points out, the vast majority of workers are very diligent and good at what they do, and that should rightly be recognised. At the same time, I do not think any of us here wants to sweep under the carpet the problems that clearly exist. We need to be sure that, among the fantastic work, we are ever vigilant to root out the bad.
Baroness Bennett of Manor Castle (GP)
My Lords, a Department of Health statement on the appointment of the first ever patient safety commissioner—on which, as your Lordships’ House well knows, the noble Baroness, Lady Cumberlege, was a driving force—noted that the NHS Patient Safety Strategy was published in 2019
“to create a safety learning culture across the NHS”.
The statement also noted that it had introduced a statutory duty of candour, which requires trusts to inform patients if their safety has been compromised. I think everyone in your Lordships’ House is well aware that our NHS staff are exhausted, overstretched and overworked. When I read that statement, I could not help thinking about how there are different reports, strategies and approaches coming from all kinds of directions. Can the Minister assure me that staff are being given clear leadership from the very top and a clear framework in which to work, rather than a continual barrage of directions without the resources to deliver them?
Lord Markham (Con)
I believe that staff are now being given that framework. Historically, as the report shows, they have not always been given that. Clearly, if this report is really going to lead to meaningful change, we have to make sure that the framework is adhered to going forward. That is what I believe the maternity support programme is all about.
Energy Prices Bill
Monday 24th October 2022
(2 years ago)
Lords ChamberRead Full debate Energy Prices Act 2022 View all Energy Prices Act 2022 Debates Read Hansard Text Amendment Paper: HL Bill 59-I(a) Amendment for Committee (Supplementary to the Marshalled List) - (21 Oct 2022)