House of Lords

Monday 16th October 2023

(7 months, 1 week ago)

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Monday 16 October 2023
Prayers—read by the Lord Bishop of Sheffield.

Lord Speaker’s Announcement

Monday 16th October 2023

(7 months, 1 week ago)

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Lord McFall of Alcluith Portrait The Lord Speaker
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My Lords, I know that the House will have been shocked by the recent terrorist attack on Israel by Hamas. I invite the House to join with me and observe a minute’s silence in recognition of all those innocent Israelis, Palestinians and others who have lost their lives, all those taken hostage, and those affected by this conflict.

A minute’s silence was observed.

Oaths and Affirmations

Monday 16th October 2023

(7 months, 1 week ago)

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Lord Burnett of Maldon made the solemn affirmation, and signed an undertaking to abide by the Code of Conduct.

Retirement of a Member: Lord Stevenson of Coddenham

Monday 16th October 2023

(7 months, 1 week ago)

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Lord McFall of Alcluith Portrait The Lord Speaker (Lord McFall of Alcluith)
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My Lords, I should like to notify the House of the retirement, with effect from 1 October, of the noble Lord, Lord Stevenson of Coddenham, pursuant to Section 1 of the House of Lords Reform Act 2014. On behalf of the House, I should like to thank the noble Lord for his much-valued service to the House.

Paediatric Care: Wating Times

Monday 16th October 2023

(7 months, 1 week ago)

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Asked by
Baroness Wheeler Portrait Baroness Wheeler
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To ask His Majesty’s Government what recent assessment they have made of the impact of the length of waiting times for paediatric care on children’s developmental outcomes.

Lord Markham Portrait The Parliamentary Under-Secretary of State, Department of Health and Social Care (Lord Markham) (Con)
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Cutting waiting lists is one of the PM’s top five priorities, and we are aware that waiting times impact more developmentally on a younger person’s life. Given this, we are committed to ensuring that babies, children and young people are prioritised in integrated care systems, and that the reforms in the Health and Care Act 2022 to improve child health and well-being outcomes are delivered on the ground.

Baroness Wheeler Portrait Baroness Wheeler (Lab)
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My Lords, the Academy of Medical Royal Colleges has described sick children as the

“forgotten casualties of the NHS’s waiting list crisis”

across hospital and community health. NHS data shows that over 220,000 are waiting for children’s and young people’s services, including paediatrics, autism spectrum disorder diagnosis, health visiting, and speech and language therapy. Even worse, almost 20,000 have been waiting over a year—that is 8% up on the previous month. What action are the Government taking specifically to address this appalling situation, and what cross-government measures are in place to try to mitigate the huge knock-on impact on children’s education, health and well-being, and on their families?

Lord Markham Portrait Lord Markham (Con)
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I thank the noble Baroness for bringing this question up; this is an important area, and we all know that a year in the life of a child aged 10 is a lot more impactful than it is to a 60 or 70 year-old. It is a question very well put. Since receiving this Question, I have been working on it with the department and talking to the relevant Ministers about what we can do specifically. We are expanding capacity generally through the CDCs and the 95 surgical hubs designed around this space, but we are putting in measures with ICSs and tiering to make sure we are specifically addressing children’s wait times as well.

Lord Allan of Hallam Portrait Lord Allan of Hallam (LD)
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My Lords, it is naturally very stressful for any parent when they face a long wait for their child’s paediatric referral. That stress is often compounded by the fact that it is left to the parents themselves to chase things up through confusing referral systems and systems that are still far too manual and depend on paper letters that get lost. Will the Minister make a priority of improving the information flow to parents about a child’s referral, so that they can quickly and easily see what is happening and know what to expect?

Lord Markham Portrait Lord Markham (Con)
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That is a point very well made. as the noble Lord knows, that is one of my priorities and what we are trying to do with the app. There will be a number of launches, but already we are seeing hundreds of thousands of messages going out via the app to make sure that people are getting them on time. That has become the backbone of our communication system and will expand across the piece to try to cover exactly the points the noble Lord raises.

Lord Hunt of Kings Heath Portrait Lord Hunt of Kings Heath (Lab)
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My Lords, in addition to the list raised by my noble friend, I would also mention hearing assessments for children who do not initially get the newborn hearing assessment. Does the Minister consider that one of the problems is that, around the table at the ICBs and integrated care systems, no one really has the responsibility of representing the interests of young people and children, and that this is reflected in the discussions they have on prioritisation? If he would agree to look at this, does he not think we need a way of ensuring that, around that table, experts in issues relating to children, infants and young people are brought to the fore?

Lord Markham Portrait Lord Markham (Con)
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It is now the legal responsibility of the ICBs to appoint an executive lead in this area, but I think the point generally is a good one. As I said, as a result of this Question I have managed to spend some time looking into this and we clearly need to make sure it is a priority. One of the other things I have been talking about with the executive team of the NHS is how we can introduce this to the tiering measures so that hospitals are given special help in making sure that children’s wait time is one of the key priority areas, and we can put more resources and support towards that and more support where hospitals are not performing well in that area. I agree with the noble Lord.

Lord Laming Portrait Lord Laming (CB)
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My Lords, does the Minister agree that all staff in the front line of these services need to be aware of the dangers of child abuse or child neglect, because the developmental needs of very young children can also be indicators of serious neglect in the home?

Lord Markham Portrait Lord Markham (Con)
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Yes. That is where our colleagues in the Department for Education have a key part to play. Start for Life is a joint initiative with DfE which is trying to look at early diagnosis. At the same time, often some of those issues can manifest themselves in anxieties and mental health issues. That is why we have done a lot of work to expand the number of mental health-aware teachers and assessors in schools, so that we can have early detection.

Lord McLoughlin Portrait Lord McLoughlin (Con)
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Have the Government made any assessment of the impact of strikes on waiting times?

Lord Markham Portrait Lord Markham (Con)
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Unfortunately, industrial action is impacting on waiting times; we estimate that about a million appointments have been lost to date. Clearly, that is a matter of regret and not good news for anyone.

Baroness McIntosh of Hudnall Portrait Baroness McIntosh of Hudnall (Lab)
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My Lords, I take the Minister back to the question from the noble Lord, Lord Allan, who referred to the necessity for parents to do a lot of running around and following up for themselves. Does he agree that this is a particular problem with the management of long-term conditions in young people—for example, ADHD and other things relating to autism—where the challenge is not just to get the diagnosis but to then get a consistent level of treatment over the long term? Can he comment on what steps have been taken to improve that? Can he also comment on the reported limited availability of appropriate drugs for treating young people with ADHD?

Lord Markham Portrait Lord Markham (Con)
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I am aware from personal experience that, when you have a child with neurodiversity or developmental needs, it is a long journey. We are seeing this manifest itself much more in recent years; I was talking to Minister Caulfield about this just this morning. One-to-one is always preferable but, where capacity is constrained, group education and help can sometimes lend themselves to this space. It is a long-term condition, and clearly it will not be solved by treatment over a few months but needs many years.

Lord Winston Portrait Lord Winston (Lab)
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The Minister quite rightly referred to the brain development of a child being very rapid and resulting from experience, and to various experiences having a profound effect on children’s development. However, he did not mention the place of primary care and, particularly, general practitioners in this. Does he feel that general practitioners are getting enough resources to be able to assess children on a more routine basis? The app will certainly be useful, but it does not get them clearly involved with medical practice; we need some standard way of doing this. Can he give us some information about the role of the GP?

Lord Markham Portrait Lord Markham (Con)
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The role of the GP is clearly vital. That is what I was trying to get behind in the Start for Life initiative and clear early warning indicators. Clearly, that needs to go right through the development of a child at different key stages along the way. On digital treatments, I was at Boston children’s hospital last week, and it has early indicators for dyslexia—for example, looking at pattern recognition via an app, as it is not until children are older that they can see letters. Similarly, early signs of neurodiversity can be seen in the way that children play online on certain apps. I think we can add some of these digital support tools, but clearly the GP has a primary role.

Lord Addington Portrait Lord Addington (LD)
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My Lords, following on from his last comment, can the Minister give us some idea of what contact there has been on this with the Department for Education? We are supposed to talk to each other, but it becomes increasingly apparent that we do not do so.

Lord Markham Portrait Lord Markham (Con)
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I like to think that we have good contact on this, centred around, as I said, Start for Life, which is a £300 million joint programme between ourselves and the Department for Education. There are also other things; for example, noble Lords might remember me mentioning the Bradford pilot previously, where we are looking at children’s scores in test environments and using those where there may be early indicators of ADHD or other neurodiverse needs. There is quite a bit of work going on in this space. No doubt we could always work more closely, but there is some promising work being done.

Lord Kamall Portrait Lord Kamall (Con)
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My Lords, looking at the waiting lists, there is clearly an issue of different needs and levels of seriousness in the conditions that people are suffering. Can my noble friend the Minister tell us what sort of prioritisation process has been put in place to make sure that those who need care immediately are prioritised over those who could possibly wait a little longer?

Lord Markham Portrait Lord Markham (Con)
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Probably the best example of that is in the whole area of cancer, which we all agree has to be the absolute priority. We have set up children’s cancer networks precisely around that. They are also set up so we can do whole genome sequencing for all children with cancer and start to introduce specific point-of-care medicines especially for them. These are examples of where we are saying that this really is the priority and that it is what we will devote all our resources to.

Carbon Capture and Storage Infrastructure Fund

Monday 16th October 2023

(7 months, 1 week ago)

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Asked by
Baroness Jones of Moulsecoomb Portrait Baroness Jones of Moulsecoomb
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To ask His Majesty’s Government how much of the Carbon Capture and Storage Infrastructure Fund they have awarded in contracts to companies involved in the oil and gas industry.

Lord Callanan Portrait The Parliamentary Under-Secretary of State, Department for Energy Security and Net Zero (Lord Callanan) (Con)
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My Lords, no contracts have yet been awarded through the cluster sequencing process. The amount that may be awarded to individual projects is still subject to negotiations. Project sponsors are from a range of industries including cement, industrial gases, energy from waste, et cetera. In addition, up to £40 million of the CIF is being spent under the UKRI industrial decarbonisation challenge fund, which aims to deliver significant reductions in industrial carbon dioxide emissions.

Baroness Jones of Moulsecoomb Portrait Baroness Jones of Moulsecoomb (GP)
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That is sort of good news, because I hope that this Government are not going to give any of that funding to fossil fuel companies, or to any other industry that has not only had tax breaks in the past and made massive profits but trashed the planet knowingly. Will the Minister give me any sort of promise that fossil fuel companies will not be entrusted with this sort of technology, which is already considered very risky and ineffective?

Lord Callanan Portrait Lord Callanan (Con)
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No, I will not give the noble Baroness that assurance, for a number of good reasons. First, in the real world, as opposed to in the noble Baroness’s fantasy green world, CCUS is an essential technology.

None Portrait Noble Lords
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Lord Callanan Portrait Lord Callanan (Con)
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The Climate Change Committee has said that CCUS is essential and not an option if we are to meet our net-zero goal, which we wish to do. Secondly, in a number of industries—cement and energy from waste, et cetera—CCUS is the only option to decarbonise those industries. Unless the noble Baroness is saying that she wants them all to close down, so that we have no building in this country and import all our cement from overseas, what is her practical solution in the real world to delivering these technologies?

Baroness Jones of Moulsecoomb Portrait Baroness Jones of Moulsecoomb (GP)
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I will send the Minister a manifesto.

Baroness Northover Portrait Baroness Northover (LD)
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My Lords, the Minister has just confirmed that no commercial plants are yet operational in Britain. Is the Government’s plan to capture 20 million to 30 million tonnes of CO2 by 2030 not therefore unachievable? Why are the Government subsidising this with £1 billion, at the expense of proven renewables?

Lord Callanan Portrait Lord Callanan (Con)
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It is not one or the other; we need to do both. Of course we need to push ahead with renewables, and I have set out many times in this House how well we are doing. Almost 60% of electricity in the last quarter was delivered by renewables, but CCUS is also essential. We have committed £20 billion-worth of funding to CCUS over the next few years because everybody thinks it essential to meeting our goals. It also offers a massive export opportunity for this country, as we have expertise in many of these technologies. The estimate is that capturing 20 million to 30 million tonnes of CO2 by 2030 could deliver up to 50,000 jobs, many of them in our industrial heartlands.

Baroness Blake of Leeds Portrait Baroness Blake of Leeds (Lab)
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My Lords, the Government have only recently entered negotiations with track 1 clusters, despite the climate investment fund being announced three years ago. They have earmarked £0.3 billion of the £1 billion fund for this financial year. This does not leave much time for negotiating. Are the Government concerned that this deadline, caused by their own delays, will impact on their negotiating position? Is the Government’s priority using this money well or simply using it?

Lord Callanan Portrait Lord Callanan (Con)
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My Lords, this makes me think that we cannot win on this. One part of the Opposition does not want to award these contracts at all and the Labour Party thinks we should have done it earlier. The reality is that we are proceeding with negotiations. It is our aim to have the contracts let for the first 10 projects by quarter 3 of next year. This is a really exciting technology, but we need to do the negotiations properly and get maximum value for money for the taxpayer from what is an emerging new industry.

Lord Geddes Portrait Lord Geddes (Con)
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Can my noble friend bring the House up to date on the Government’s support for tidal power?

Lord Callanan Portrait Lord Callanan (Con)
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My noble friend is dogged in his pursuit of this, and I have answered his question before. As he knows, under the last contracts for difference round, a number of tidal projects were successful in receiving funding.

Schools: Music, Art, Craft and Dance

Monday 16th October 2023

(7 months, 1 week ago)

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Asked by
Baroness Garden of Frognal Portrait Baroness Garden of Frognal
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To ask His Majesty’s Government what plans they have (1) to revitalise music, art, craft and dance, in state schools, and (2) to recruit teachers of these subjects.

Baroness Barran Portrait The Parliamentary Under-Secretary of State, Department for Education (Baroness Barran) (Con)
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My Lords, the Government remain committed to pupils receiving a high-quality cultural education, including in music, art and design and dance. We are investing around £115 million in music and arts up to 2025, in addition to core school budgets. There are over 468,000 full-time equivalent teachers in state-funded schools in England, the highest since the school workforce census began. We are offering £10,000 tax-free initial teacher training bursaries for art and design and music from 2024-25.

Baroness Garden of Frognal Portrait Baroness Garden of Frognal (LD)
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I thank the Minister for that very positive reply. However, one of the very many damaging offshoots of the EBacc and Progress 8 has been to degrade—indeed, in some cases to eliminate —music, dance, art and crafts from state school curricula, but every young person deserves the opportunity to experience and enjoy them. What is more, the arts are major contributors to the nation’s economy. The Minister has mentioned funding; how are the Government funding music hubs? How specifically do the Government intend to recruit teachers for these life-enhancing subjects?

Baroness Barran Portrait Baroness Barran (Con)
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To put the noble Baroness’s concerns in perspective, I point out that if one takes into account both GCSEs and technical awards, which I know she values, just over half of students—52%—take either a GCSE or technical award. We are funding the music hubs with £79 million per annum for delivery but there is an additional £25 million fund for the purchase of musical instruments. In my Answer I gave an indication of the bursaries we will be providing to encourage recruitment.

Baroness Wilcox of Newport Portrait Baroness Wilcox of Newport (Lab)
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My Lords, as a former drama teacher and current chair of trustees of the Council for Dance, Drama and Musical Theatre, I know how important studying the arts is to children’s lives. When such access is limited in schools, it is the poorer students who are denied the benefits. Surely we all want young people to carry a love of learning that sets them up to achieve and thrive, and the arts are central to this. Can the Minister give an update on the progress of the cultural education panel? When can we expect its report?

Baroness Barran Portrait Baroness Barran (Con)
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The Government would not disagree with anything the noble Baroness said on the importance of arts and other wider curriculum subjects. She will be aware that we published our new music education plan in June 2022. We will be publishing the cultural education plan in the coming months.

Lord Lexden Portrait Lord Lexden (Con)
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My Lords, should we not note and commend the existence of nearly 1,700 partnership schemes through which state and independent schools are working together to develop the talents of their pupils in music and art subjects? Will the Government give vigorous support to the further increase and expansion of these valuable partnership schemes?

Baroness Barran Portrait Baroness Barran (Con)
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The Government have been very supportive of partnerships between the independent sector and state-funded schools. I absolutely recognise the important work done by the 1,700 schemes and I hope we see many more in future.

Lord Hampton Portrait Lord Hampton (CB)
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My Lords, I declare my interests in the register. We now have EBacc, Progress 8 and the new BritBacc—I presume that is what it is called—which all exclude creative subjects. Does the Minister agree that, until the Government stop their obsession with mandatory A-level maths and their focus on purely academic subjects, there is little chance of revitalising the teaching of creative arts in schools and therefore recruiting teachers to teach them?

Baroness Barran Portrait Baroness Barran (Con)
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To clarify, there is no mandatory maths A-level; there will be the provision of maths to 18, which will take us to the same position as every other G7 country. The noble Lord is a teacher and understands better than I do how children learn but, through the EBacc, we are delivering an important rich store of knowledge from which children can apply their creativity, critical thinking and imagination.

Lord Bishop of Sheffield Portrait The Lord Bishop of Sheffield
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My Lords, many Anglican and Roman Catholic cathedrals regularly send professional musicians into schools to support them with singing, at minimal charge. For example, by 2026, Sheffield Cathedral plans to support 30 schools a year with high-quality, curriculum-based music teaching, mostly in our most deprived communities. Does the Minister think there might be scope here for partnership with government to maximise the potential of such schemes?

Baroness Barran Portrait Baroness Barran (Con)
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I very much welcome that initiative. That ecosystem between our different cultural institutions, including charities and, of course, religious organisations, is extremely important. However, in practical terms, local relationships between schools and local cultural organisations can work best, and our music hubs help to link those up.

Baroness Williams of Trafford Portrait Baroness Williams of Trafford (Con)
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My Lords, shall we hear from the Labour Benches? There will then be plenty of time to hear from the Lib Dem Benches.

Baroness Blower Portrait Baroness Blower (Lab)
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My Lords, I am pleased that my noble friend on the Front Bench added drama to this list, because I am sure that the Minister knows that it has been lost from the curricula of very many schools. Although 52% is more than half, it is simply inadequate: very many children in our schools get no exposure to art, drama, music or dance. I ask the Minister to meet with the professional bodies, particularly the teachers’ unions, to look at how we might review and keep under review the 11-to-16 and the five-to-11 curricula, to ensure that all children, in every school, have access to these subjects.

Baroness Barran Portrait Baroness Barran (Con)
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As the noble Baroness knows, drama is obviously part of the national curriculum, so I do not quite recognise her description that many children receive no exposure to drama at all. There has also been a massive expansion of technical and vocational qualifications. Since 2016, the numbers of pupils taking music VTQs have gone from just over 8,000 to almost 18,000. There was a similar increase, from just under 9,000 to just over 18,000, for speech and drama. Perhaps unsurprisingly in some ways, the huge expansion has been in multimedia studies, which have gone from just over 4,000 students in 2016 to 54,000 last year.

Lord Addington Portrait Lord Addington (LD)
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My Lords, can the Minister give us an idea of what the Government are doing to encourage people to take up the subjects here part-time or as hobbies, due to the huge benefit you gain from being involved in things like community activity in dance and drama? Where is this being done, how are those hubs being created, and are we sure we have people who know enough to make these things fun for those other than the incredibly talented?

Baroness Barran Portrait Baroness Barran (Con)
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I meet many teachers who deliver these subjects, and I am struck by their commitment and skill. Close to 100% of teachers in art and design and in music have a relevant qualification post A-level.

Baroness Evans of Bowes Park Portrait Baroness Evans of Bowes Park (Con)
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I refer noble Lords to my entry in the register of interests. Earlier this year, I attended a performance of scenes from Shakespeare plays by year 5s from North Wootton Academy at St George’s Guildhall, the oldest working theatre in the UK. When I spoke to pupils afterwards, it was clear not only how much they absolutely loved the experience but just how much confidence they had gained from performing on stage and in front of an audience. Can my noble friend explain or outline what the department is doing in addition to the fantastic school-led initiatives, of which that is one, to try to ensure that children of all ages are able to perform in public?

Baroness Barran Portrait Baroness Barran (Con)
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My noble friend paints a wonderful picture; I think that the House can imagine the pleasure of those children involved. I was fortunate enough to go and see something similar with a number of school orchestras and choirs performing, and I absolutely agree with what she said. We continue to support such activities, and will do more in our cultural education plan. I remind the House that we have also included an hour of music a week as compulsory, as our expectation in the school curriculum.

National Cyber Security Centre

Monday 16th October 2023

(7 months, 1 week ago)

Lords Chamber
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Asked by
Baroness McIntosh of Pickering Portrait Baroness McIntosh of Pickering
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To ask His Majesty’s Government what is the role of the National Cyber Security Centre in monitoring and preventing cyber attacks.

Lord Ahmad of Wimbledon Portrait The Minister of State, Foreign, Commonwealth and Development Office (Lord Ahmad of Wimbledon) (Con)
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My Lords, the NCSC, as the UK’s technical authority, is the UK Government’s authoritative voice on the cyber threat, providing independent assessments and improving cybersecurity across the United Kingdom. The NCSC provides protection at scale and drives improvements to resilience and security to mitigate threats from our adversaries and reduce cyber harms in the UK. Through tailored expertise to protect citizens, businesses and organisations, the NCSC works to make the UK the safest place to live and work online.

Baroness McIntosh of Pickering Portrait Baroness McIntosh of Pickering (Con)
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My Lords, I am grateful to my noble friend for that Answer, and for the White Paper that the centre has produced. What advice would my noble friend and the Government give to a firm in North Yorkshire that underwent a cyberattack a year ago and had its systems restored only by the payment of a rather large ransom in cryptocurrency? The White Paper focuses on prevention but, in the midst of an attack, what can a company possibly do other than pay the ransom?

Lord Ahmad of Wimbledon Portrait Lord Ahmad of Wimbledon (Con)
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My Lords, my noble friend raises a couple of important points. First, on ransom demands, as she will be aware, it is the firm position of the Government and UK law enforcement that we do not encourage, endorse or indeed condone the payment of ransom demands. For example, if you pay a ransom after your computer has been affected or your systems have been impacted, there is no guarantee that you will not be targeted in the future by criminal groups. In that regard, Lindy Cameron, the CEO of the NCSC, and the Information Commissioner have written to the Law Society and the Bar Council.

However, the Government offer specific support, including to small businesses. There are the 10 Steps to Cyber Security and the Small Business Guide; there is also a ransomware portal that provides fresh advice, as well as the NCSC’s assured cyber incident response scheme. It is ever evolving, but the Government are very robust, and we are working across departments to ensure that we give the best information and response possible.

Lord Harris of Haringey Portrait Lord Harris of Haringey (Lab)
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My Lords, of course, I refer to my interests in the register. I suspect that the excellent schemes that the Minister has outlined are very useful but that they do not address the question that the noble Baroness, Lady McIntosh, asked. If a company or organisation is subjected to a ransomware attack, can it get tailored help as to what to do in real time from the NCSC, and how do people know how to access that?

Lord Ahmad of Wimbledon Portrait Lord Ahmad of Wimbledon (Con)
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My Lords, if the noble Lord reflects on the answer that I gave, he will see that I answered the question quite directly. The first point is, “Don’t pay”, because the experience is that there is no assurance. Of course, a small company will have limited resources, and some of the portals, information and websites, as well as the response that I have outlined, are designed to help exactly those kinds of small businesses in their response. However, one thing is very clear, whether it is within my department or the Home Office: that by paying such demands there is no assurance, for a small or a large company, that a ransom attack will not happen again.

Baroness Stuart of Edgbaston Portrait Baroness Stuart of Edgbaston (CB)
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I declare an interest as the chair of Wilton Park, an executive agency of the Foreign and Commonwealth Office. Small organisations, while they are not completely part of government, nevertheless provide some back-door entrance to government by some people with malign intent, and they carry quite disproportionate costs to ensure their cybersecurity. Have the Government given any thought to how they could support ALBs and executive agencies across government more comprehensively?

Lord Ahmad of Wimbledon Portrait Lord Ahmad of Wimbledon (Con)
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My Lords, I recognise the vital insights of the noble Baroness. In working across government, we also work to ensure that government systems, structures, departments and agencies are fully protected. As I said in my Answer, this is an ever-evolving and ever-challenging threat—what is good today needs to be adapted for tomorrow’s threats. Where specific issues arise, be they for small businesses or for agencies, we seek to provide the necessary focused support.

Lord Purvis of Tweed Portrait Lord Purvis of Tweed (LD)
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My Lords, I have visited the centre and greatly admire the work of the whole team. The public and the private sector should adhere to its advice. The Government have consulted on prohibiting payments to ransomware. The Minister and I well know that the source of many such attacks is Russia and, currently, Iran. Does it not sit ill that businesses are only being told not to pay ransomware, rather than having a legal prohibition, when that money will end up in Tehran or Moscow?

Lord Ahmad of Wimbledon Portrait Lord Ahmad of Wimbledon (Con)
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My Lords, the noble Lord is quite correct and we have often discussed these issues and challenges. The mitigations we have put in and the advice we provide are all part of an overall package but, as I am sure he will agree, the challenge is that we also need sharp-end sanctions against these states. As I know from my experience at the Foreign Office over the last few years, we never used to call out or challenge state actors for cyberattacks. We now do so. The two countries the noble Lord named—Russia and Iran—are very much part of our focus. I am sure he will acknowledge that we have imposed cyber sanctions on Russia.

Baroness Smith of Basildon Portrait Baroness Smith of Basildon (Lab)
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My Lords, to take the Minister back to prevention, he will be aware of the increase in the number of ransomware issues—the incoming Costa Rican Government last year and the Irish healthcare system the year before were both hit by ransomware attacks. Can he tell the House more about what we are learning through international co-operation? Prevention is obviously better than having to deal with a significant problem afterwards, so I hope that we are learning something from other countries that have had to deal with this and that we can extend that to public bodies and private organisations.

Lord Ahmad of Wimbledon Portrait Lord Ahmad of Wimbledon (Con)
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I totally agree with the noble Baroness and assure her that we work very closely with our key international partners in calling out some of these cyberattacks against companies or even government websites and systems. We seek to act together and have done so. She will be aware that at the beginning of next month we will host an AI summit, which the Prime Minister is overseeing, very much aimed at exactly what she articulates—how we can learn from each other while improving our responses. I always say that, for cyber and many of the other challenges we face, as good as mitigations or mechanisms may be, those who seek to cause us harm—be it to business or directly to the Government—are looking at new ways to overcome them, so we will continue to share and co-operate with our key partners and allies on this.

Lord Clement-Jones Portrait Lord Clement-Jones (LD)
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My Lords, a few weeks ago, the National Cyber Security Centre issued a warning about the risks of “prompt injection attacks” on the new large language models such as ChatGPT when used in the workplace, which enable them to be open to manipulation. What are the Government doing to ensure that they mitigate that risk in their own workplaces?

Lord Ahmad of Wimbledon Portrait Lord Ahmad of Wimbledon (Con)
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My Lords, as I have said, we are working across government and internationally. I think we all recognise the catch-up element with the evolution of these new methods. There are transformational elements with new innovations—that is why I referred to the AI summit, which is intended not just to avail us with the opportunities these new technologies present, as the noble Lord articulated, but to address the challenge and high risk presented to government, industry, sectors and individuals.

Noble Lords may recall the sad occasion when this very Parliament was attacked physically. I remember the emotional exchanges and statements made at the time, including by my noble friend Lady Evans. There was another attack at that time, on the parliamentary emails of many Members of this House and the other place. The knowledge base available for mitigation was limited, as was awareness. I think most Members and colleagues were concerned about getting their machines and devices up and working rather than about the data loss. The more learning, education and information we can share, the better we will be at mitigating some of these risks.

Lord McLoughlin Portrait Lord McLoughlin (Con)
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My Lords, a company which is the subject of a cyberattack may not wish to be publicly identified, but they may have suffered severe financial problems. How is HMRC taking this into account and giving those companies some breathing time to put right what may have happened to them? It is all very well saying it in one section, but is there a cross-government approach to this issue?

Lord Ahmad of Wimbledon Portrait Lord Ahmad of Wimbledon (Con)
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My Lords, I assure my noble friend that we do have a cross-government approach to this. He raises a very important point about both risk and the cost associated with cyberattacks, and we are very much seized of this. I have already outlined specific schemes and support. It is very important that we share this, however, so in the interests of full information, I will write to my noble friend and put on record in the Library the number of schemes that are available for information sharing and the support that can be offered to those impacted.

Non-Domestic Rating Bill

Third Reading
Moved by
Baroness Swinburne Portrait Baroness Swinburne
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That the Bill do now pass.

Baroness Swinburne Portrait Baroness Swinburne (Con)
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My Lords, I am grateful to noble Lords on all Benches for their co-operation on the Bill. The passage of the Bill will be a significant milestone in the reform of business rates, following our manifesto commitment and the subsequent Treasury review. When the Government examined the business rates system, they did so in the context of considerable upheaval due to the pandemic. Nevertheless, several themes emerged from which the conclusions of the review were formed.

The debates in this place have underlined the support for measures to improve the responsiveness of business rates to market changes. This was a key request from businesses during our review, the central achievement of the Bill and something I believe we can all be pleased to support.

With the first three-yearly revaluation cycle having now begun, the Government are already developing the new systems for data sharing that will enable regular three-yearly revaluations beyond 2026. Ratepayers and their representatives are the key stakeholders in these reforms, and the Valuation Office Agency will engage closely with them on the design of the future system. It has been pleasing to note that, while there is understandable appetite among noble Lords for even greater frequency, there is also a recognition that implementing such major changes to a tax requires a careful and incremental approach. I will repeat, then, what I said on Report: the Government will monitor these changes and keep the frequency of revaluations under consideration.

The Government’s review of business rates also identified the opportunity to reduce or remove business rates liability where this would support improvements to business premises or the decarbonisation of buildings.

The Bill enables the remaining parts of this package—namely, mandatory improvement relief and heat network relief—to be delivered from 1 April next year. This is a key part of producing a business rates system that better reflects our national priorities.

The Bill of course will now return to the other place for consideration of the Government’s amendments. As noble Lords are aware, these are of a technical but nevertheless important nature. That is true of much of this Bill, which shows the value of the expertise that we have witnessed in debate. Therefore, I will take the opportunity to repeat my thanks to the noble Earl, Lord Lytton, who identified those improvements and who more generally has offered the benefit of his considerable experience in rating to enrich the debates on this Bill. I also extend similar thanks to the noble Lord, Lord Thurlow, and other expert contributors to those debates, including the noble and learned Lord, Lord Etherton, and the noble Lord, Lord Ravensdale.

I thank the Front-Benchers opposite for their highly constructive and pragmatic approach, especially the noble Baronesses, Lady Hayman of Ullock and Lady Pinnock, and the noble Lord, Lord Shipley. It has been clear that the Bill enjoys broad support, but their probing has opened fruitful areas of discussion and given us the chance to say more about the Government’s work. I am sure noble Lords will join me in thanking members of the Bill team for their engagement. As I have mentioned, this is a complex area, and the preparation and delivery of a Bill such as this rely on the commitment and experience of officials from across the Department for Levelling Up, Housing and Communities, the Treasury, the VOA and HMRC. I also thank parliamentary counsel for their drafting of the Bill and their wider support to the Bill team. With that, I beg to move.

Lord Shipley Portrait Lord Shipley (LD)
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My Lords, I thank the Minister very much for her conclusion to this Bill. I extend our thanks also to the noble Baroness, Lady Scott of Bybrook. As she said, the Bill has broad support in your Lordships’ Chamber. I am grateful for the Minister’s assertion that we have introduced a pragmatic approach to the content of the Bill, for I think it is true—we have done just that. I was particularly pleased to hear the Minister say that the Government have a commitment to monitor what actually happens. I know that, on all sides of the House, that will be very gratefully received.

The Bill has a number of very welcome changes: in particular, more regular revaluations, which will be a big help. However, problems remain. Crucially, the level of business rates is too high. Business rates used to be around half the rental level of a property; they are now almost equal. This financial burden is putting a huge pressure on many businesses, not least in the retail sector. I said on Report and at other stages of the Bill that small business rate relief should be further extended, particularly to assist the high street. I also think the Government should not be increasing the level of business rates next year by the rate of inflation.

I hope the Government will take on board comments made on all sides of the House about the need to review the non-domestic rates valuation process itself for its accuracy, its communications and its explanations to business rate payers. The noble Earl, Lord Lytton, has been particularly concerned about the issue of material change of circumstance. There is a new definition and there is a view that I share with the noble Earl, Lord Lytton, that it is too narrow. I am reconciled to what the Minister has said, which is that they will keep it under review.

Thirdly, the Government need to keep a close eye on the level of payments made by warehouses when those warehouses have a retail purpose.

In conclusion, I think that the NDR system is broken. This Bill is a welcome improvement, but it is not a solution. Business rates cannot just be a means of revenue raising by the Treasury. I hope that this Government, and any future Government, will simply bear in mind that we need a major reform of the business rates system.

Baroness Hayman of Ullock Portrait Baroness Hayman of Ullock (Lab)
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My Lords, I thank the Minister for her opening remarks. I also thank the noble Baroness, Lady Scott, for all her work on the Bill; I wish her well from our Benches and we look forward to seeing her back in her place very shortly.

As others have done, I thank all noble Lords who took part in the debates on the Bill. It is a short Bill, but it is quite complex in areas, so it has been incredibly helpful to have real expertise and insight from noble Lords—such as the noble Lord, Lord Thurlow, and the noble Earl, Lord Lytton, who have been mentioned—not only for Government Ministers but for those of us leading on the Opposition Benches. It was good to be able to understand the implications of the Bill through the expertise noble Lords brought to the House. I agree with the noble Lord, Lord Shipley, that, having had that, the Bill is now in a better place than it was when it began in this House. It is an important Bill, and it is important that we improve the situation of business rates from how they currently stand. However, I also agree with the noble Lord, Lord Shipley, that there are still a few outstanding issues; that is why it is important that the Government keep their commitment to monitoring the outcomes of the Bill, particularly on the timescales of revaluation. As we discussed in Committee, some of us would have liked to see revaluation done more regularly, so it is important that we keep an eye on that.

As we discussed in the debates on the Levelling-up and Regeneration Bill, as well as on this Bill, there are a lot of concerns about our high streets and our small businesses on them—and business rates are a critical part of how they are supported. So, as we are also coming to the end of the Levelling-up and Regeneration Bill, I hope that, going forward, the Government will still consider different ways in which we can continue to support our high streets and small businesses. Having said that, we were pleased to support the Bill and we welcome it moving forward.

Bill passed.

Water and Sewage Regulation (Industry and Regulators Committee Report)

Monday 16th October 2023

(7 months, 1 week ago)

Lords Chamber
Read Full debate Read Hansard Text Read Debate Ministerial Extracts
Motion to Take Note
Moved by
Lord Hollick Portrait Lord Hollick
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That this House takes note of the Report from the Industry and Regulators Committee The affluent and the effluent: cleaning up failures in water and sewage regulation (1st Report, HL Paper 166).

Lord Hollick Portrait Lord Hollick (Lab)
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My Lords, I am pleased to introduce this debate on the affluent and the effluent. I thank our staff for their valuable contributions to the committee’s work, and the many contributors who gave evidence to the inquiry.

In May last year, we launched our inquiry into water and sewage regulation following a public outcry at the discharge of sewage into our waters. We published our report this March, which received a response from the Government that was curt and dismissive and implied that the committee had gone beyond its remit in questioning matters of public water policy. It was a clear attempt by the Government to dodge parliamentary scrutiny of their record.

In April, the Government published their Plan for Water. In May, England’s water companies issued an apology for sewage discharges and announced a recovery plan. We then launched a follow-up inquiry in June focusing on the role of Defra, which concluded with a letter to the Secretary of State last month; a response to that letter is expected on 27 October, this month. In our report, we found that, after privatisation, pressures on the water and sewerage network increased due to climate change and population growth; but the levels of investment fail to match that, leading to a serious deterioration in water quality and a network struggling to cope. Storm overflows are supposed to provide a safety valve during periods of heavy rainfall, but they are now used as a matter of routine.

According to Environment Agency figures, there were more than 300,000 monitored sewage spills in 2022 and 75% of all rivers are polluted. The Environment Agency itself has struggled to monitor or enforce against water companies due to budget cuts. There has been a growing pressure on our water supply itself, meaning that England will require an initial 4 billion litres of water a day by 2050, an increase of 41%. Taps will run dry with increasing frequency unless new water supplies can be established and more measures are introduced to reduce demand. The last reservoir built was in 1991. The Government’s plans for storm overflows estimates that £56 billion of investment will be needed by 2050 to clear up this mess. To this end, water companies have proposed investing £11 billion before 2030. Further billions of pounds will be needed to maintain the existing infrastructure.

Water companies recently published their business plans for the next five-year price review, proposing to invest £96 billion between 2025 and 2030—a 90% increase on the current period and a very welcome acknowledgement of the need for action. It is clear that investment over the last decade in our water system fell far short of what was needed—a casualty of weak regulation and incompetent government leadership. The opportunity to invest when interest rates were historically low and before prices surged with inflation was squandered. Now, a much higher level of investment is needed to remedy this neglect, and that burden will fall heavily on household bills.

Ofwat has the powers to regulate the price water companies can charge, the level of their capital investments and the size of returns they can make to their investors, but it has failed to ensure that companies invest sufficiently in water infrastructure, thus creating a backlog. Ofwat has been cautious about raising customer bills to finance long-term investment without the determined political backing of the Government. Decisions about the level of what people pay is, in the end, the responsibility of the elected Government, who must give regulators clear guidance on how to strike the right balance between investment and affordability.

The Government’s 2022 strategic policy statement for Ofwat gives no sense of priority—in effect, ducking this key decision. Will the Government provide further guidance on pricing ahead of the next price review? Underinvestment means that customer bills have been flat or falling for 15 years, but it is now inevitable that they will have to increase from 2025, when Ofwat’s next price review comes into effect. Company business plans published recently are proposing an average increase of 28.6% by 2030, even before inflation is taken into account. Including inflation, Thames Water has proposed a sharp 61% increase on today’s bills by 2030.

In the face of these rises, the Government must ensure that consistent support nationwide is offered to households struggling with their bills during a cost of living crisis. The Government initially committed to consult on a single nationwide social tariff to end the current postcode lottery, but then dropped the proposal. Water companies are now trying to help by more than doubling the number of households eligible to receive support, but the Government should have stepped in to ensure consistency. They urgently need to set out their approach.

Water companies have been assiduous in maximising their returns from their monopolies. It has been estimated that their dividends extracted since privatisations have exceeded £50 billion, while the debt of water companies has increased to over £60 billion, partly as a result of private equity owners loading the companies up with debt to help to pay themselves larger returns. All this has been in plain sight of a dozing regulator and an unconcerned Defra. This debt mountain has left companies vulnerable to higher interest rates. Ofwat now has stronger powers to control dividends and has set out a more determined approach, but this cannot recoup what has already been lost. The regulator now faces the challenge of requiring companies to boost significantly their level of investment just when they are facing rising costs, financial strains and uncertainty over government and regulatory actions, all of which is making water companies much less attractive to investors.

It is not clear to us that the water companies are capable of delivering investment at the level that is required. This is why we have called on the Government to increase the use of competition in delivering major water infrastructure. With this approach, specialist infrastructure companies, rather than the water companies themselves, can build the infrastructure that we urgently need. This approach has reduced the costs of the Thames Tideway tunnel project from an expected £80 per customer per year to around £25. Specialist infrastructure companies without the financial baggage of water companies can be an efficient and cost-effective solution for large projects. We recommend that the Government legislate to make it easier for more infrastructure to be built in this way. We await their response.

We noted in our recent report that some progress has been made. We called for the Government to provide a national water strategy, to look at the water system holistically, which they have done through the Plan for Water. The Government have also designated a National Policy Statement for Water Resources Infrastructure, as we recommended, to help water infrastructure to proceed more smoothly through planning. Funding has also been made available to monitor storm overflows. Ofwat has tightened its controls on the sector’s finances and, together with the Environment Agency, is investigating the water companies’ role in sewage discharges. All essential funding was previously cut by the Government.

However, major challenges remain. Can the Minister explain what action will be taken to reduce water demand? Why has mandatory water metering not been introduced? Concerns remain about the capacity of water companies and their supply chains to carry out projects at the necessary scale proposed. To ensure that infrastructure plans are independently assessed and their progress professionally reviewed, we recommend that consideration be given to granting the National Infrastructure Commission a statutory role to carry out these duties.

We remain concerned at the Government’s deep-rooted complacency. They have failed to set out how customers will be supported to pay rising bills. They have failed to provide Ofwat with any guidance on how to balance investment and bills. They have shown an almost casual confidence in the task of funding a huge investment programme in very challenging times. Nowhere is this complacency clearer than in relation to wet wipes. In 2021, a consultation found that 96% of respondents supported a ban on wet wipes containing plastic. The Government’s response was to bring forward yet another consultation—which was published only this weekend, after two years. Can the Government tell us when the ban is expected to take effect? This is an easy win. Its delay is unnecessary and deeply damaging to the environment.

Too often in the water sector, government, regulators and water companies have shown themselves to be poor stewards of an essential public service by preferring the easy, short-term option to prioritising the long-term well-being of the system, the quality of water and the environment. We need the Government to take responsibility to ensure a clean, plentiful water system free of sewage. The public deserves better. I beg to move.

Lord Agnew of Oulton Portrait Lord Agnew of Oulton (Con)
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My Lords, I am grateful to the noble Lord, Lord Hollick, for precipitating this debate. I declare an interest as a member of the Industry and Regulators Committee and as a farmer who holds some irrigation licences.

As you will see from the report our committee published on 23 September, to any objective eye we are in a very poor place, be it by security of additional supplies, through population growth, behavioural habits or hotter weather; poorly maintained infrastructure, perhaps best and most recently illustrated through Thames Water’s failure to bring the only significant desalination plant on stream during one of the hottest summers on record; or the financial health of the sector, which has been consistently raided for dividends and executive bonuses, while racking up ever-higher levels of debt. Thames Water alone has a whopping £14 billion of debt; it was debt free when it was privatised.

Meanwhile, sewage releases, politely called storm overflows, are running at extraordinary levels because the sector has failed to invest in adequate mitigation. According to the Defra consultation document published in March last year, in 2020 there were 400,000 sewage discharges, totalling over 3 million hours of sewage flow. Some 10% of those overflow points pumped out raw sewage more than 100 times each. All of this was under the supposedly beady eye of two large regulators, Ofwat and the Environment Agency. Even the regulators’ regulator, the Office for Environmental Protection, as recently as five weeks ago announced

“possible failures to comply with environmental law … in relation to … sewer overflows”.

It is interesting that, in the Government’s response to an Urgent Question triggered by the OEP’s intervention, they said that they started monitoring sewage overflow 10 years ago. If that is the case, what has this monitoring achieved when, in 2020, there were still 400,000 discharge events?

It is my contention that buried in this ocean of complacency is the more disingenuous excuse that it is all too expensive to deal with. In 2020, the Government optimistically created a thing called the Storm Overflows Taskforce. In November 2021, it reported that it would cost between £350 billion and £600 billion to solve the problem. This is equivalent, at the bottom end, to 15 more Elizabeth lines or—dare I say it?—at the top end, to six more full-fat HS2s. This is ludicrous, because numbers like this attempt to shut down the debate, as they are utterly unaffordable. The reality is that so much could be done affordably.

At its simplest, a sewage overflow is activated when the volume of water is more than can be handled by the sewage treatment plant, into which the water flows. Our infrastructure has been and continues to be built to comingle sewage and rainwater, so this is a constant problem. The solution is to reduce the amount of rainwater that hits the sewage plant in a concentrated period of time. There are at least two effective and simple solutions to help achieve this, and one alternative to expensive, hard-infrastructure treatment plants.

First, in a pilot scheme on the Isle of Wight, households were given water butts with slow-release valves, enabling water to be held in the butt until after the storm and then released, in a measured way, over hours and days. As of this month, Southern Water had agreed to extend the pilot to the whole of Cowes. This tiny intervention has, so far, delivered a 70% reduction in sewage releases. In a year, this could be rolled out across the whole of England and Wales at minimal cost. Perhaps the Minister could explain why his department is not pushing this small and elegant solution far harder.

Secondly, certain areas of farmland could be designated to be inundated during heavy storms. With an increasing trend for environmentally led farming, such as overwintered stubbles, this is becoming more and more viable. The Government were considering this in 2016; perhaps the Minister could update us but, rather than giving us a cursory reply today, I ask him to write with some detail. Over 50 million gallons of water flow through my own farm a year, ultimately ending up in the sea, in a system that cannot cope with inundation. It would be perfectly feasible for me to hold areas of land under water for a week or two, while the local drainage system recovers. To put this volume of water into perspective, it is equivalent to about half the annual drinking water requirement of Norwich. So one farm, of a couple of thousand acres, could make a real difference. It would require lateral thinking and proper co-ordination between the regulators and water companies. Perhaps the Minister could tell us if such dexterity of mind exists inside the bureaucratic machine.

The third solution, which now has credible pilot sites, is the use of wetlands in place of hard infrastructure. I recently visited a site in north Norfolk where the cost of construction was £250,000 and the annual running cost £10,000, against a treatment plant of £1 million with running costs of £100,000 a year. With the imminent arrival of biodiversity net gain regulations next year, the opportunity to incorporate more wetlands, and pay for it, becomes possible.

I have tried to show that there are innovative but proven ways to solve these problems without breaking the bank. Lastly, I ask the Minister whether his department is on target to provide a full and unambiguous response to our committee’s letter, due a reply on 27 October, covering this and other issues.

Baroness Taylor of Bolton Portrait Baroness Taylor of Bolton (Lab)
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My Lords, it is a pleasure to follow the noble Lord, Lord Agnew, who in the committee gave us many examples of practical things that could be done. I am glad he has had the opportunity to raise them in the House today.

To say that the investigation into the water companies was timely is a great understatement. There has been a great deal of public concern about the performance of the industry, the profits taken out and the state of our rivers and beaches. The early response to our report shows the great contribution that House of Lords committees can make to debates on wider issues. The immediate response from the press—from the Times to Feargal Sharkey and experts—has been very positive in welcoming the recommendations in the report. The water companies seem to have regarded it slightly as a wake-up call and to have understood that they cannot get away with the kind of approach they had in the past—although part of their approach was to give an apology and say, “But it wasn’t really us; it was all the people who went before us”.

On the other hand, the Government’s response, as my noble friend said, was curt and dismissive. The Secretary of State, in particular, thinks she has immunity to every problem that has ever arisen in her department.

I have to admit that I never wanted privatisation in the first place, and I was part of the Front-Bench team in the Commons opposing it. I recently saw the figures I used during the wind-up there, which showed that the Labour Government from 1974 to 1979 invested £1,254 million in the water industry per year, but that from 1979 onwards, when the Conservatives came in, there was a sudden drop. Investment went down to £926 million, then £899 million, then £818 million. In other words, there was deliberate underinvestment to try to make a case for privatisation, because we were told that was the only way the investment would come.

We had big promises from the water companies—they were going to solve the problems of leaking pipes and everything else—and we were promised that Ofwat would be the great guardian of the consumer and the taxpayer. It has been very different in reality. Investors have done very well; the rest of us have had serious problems and been left with a situation in which we now need many critical improvements, because those promises were not fulfilled. The water companies have done well, but everybody else, as my noble friend pointed out, has been left with considerable problems. This industry has not invested, and very big figures are needed in investment for the future.

We have seen the dividends taken out of water companies and the big salaries paid to many executives working there. While the companies may say that they recognise the problems, there is no guarantee that they will be easily able to provide the investment that is now needed. Therefore, we now face a very significant and serious dilemma.

Investment is needed—my noble friend pointed out the scale—but who will pay for it? Those who ripped us off are long gone. Many of those companies have been sold on and assets have changed. Water companies maximised their returns but many debt issues remain. We as consumers and taxpayers will not get the money back from the investments that were promised; we paid our water rates and so on. The big question still remains as to how these issues will be dealt with and who is to pay.

There is another very big issue: the nature of regulation. Is Ofwat fit for purpose? It has been too weak. Has it not had enough powers? Has it chosen not to use those powers? Has it lacked government support, or has it just been outsmarted by the water companies? Whatever the fact of how this has happened, we are in a situation where regulation of the water industry, and probably a whole range of industries, needs to be completely overhauled. These companies, and the people regulating them, need to act in a totally different way in future.

Lord Cromwell Portrait Lord Cromwell (CB)
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My Lords, I had the privilege of being a member of the committee that produced this report under the incisive chairmanship of the noble Lord, Lord Hollick. At the start of our inquiry I actually had some sympathy with the regulators and the water companies. The regulator, Ofwat, had been left by government to take what amounted to controversial decisions about the prioritisation between its objectives and those of the water companies. The water companies were primarily tasked with providing clean, cheap water, and to a great extent they have done so. If noble Lords need proof of that, please consider that, every weekend, millions of people in this country wash their cars and water their gardens with what amounts to pure, purified drinking water. Rightly or wrongly, environmental issues have been moved up the list of priorities only more recently.

However, this pool of sympathy dried up during the course of our inquiry. As the noble Lord, Lord Hollick, referred to, we uncovered financial engineering being used to take advantage of regional monopolies, including debt loading and opaque dividend extraction. This was at the expense of much-needed—now frighteningly overdue—investment into the very infrastructure on which our water and sewerage system depends.

How did we get here? As regards the regulators, the committee was far from convinced that Ofwat had the business savvy to spot what was going on and act early enough to stop it. By its own admission, it took only a light-touch approach to regulating the industry. The Environment Agency—demoralised and lacking the resources it needed to hold the water companies to account—has also not kept water companies up to the mark on their environmental performance. Indeed, civil society organisations called out the issues of pollution long before the regulators did. The committee’s very timely report also helped to bring the issue to prominence, as the noble Baroness, Lady Taylor, mentioned. Finally, Defra, the department with overall responsibility, appears to have been far too complacent in looking into what was going on. It left the regulators and water companies themselves to make decisions about the competing demands of sewage and water management, and profit.

Where does this leave us? The regulators have taken some steps, at least latterly, but Ofwat’s Water Company Performance Report 2022-23 makes for depressing reading. Performance has fallen short for the majority of companies. Seven of the water companies are described as “lagging”, the report’s lowest categorisation, while fewer than half achieved their performance target on reducing pollution incidents.

We now have a water and sewerage industry desperately in need of a massive catch-up on spending, with numbers ranging from the Government’s quotation of £56 billion—noble Lords should remember that that will be spent over 25 years—to the hundreds of billions cited by the water companies, and the almost fantasy figures that the noble Lord, Lord Agnew, quoted from the task force.

Long-term money for infrastructure needs to be raised and sustained, not just in the short term but over the years and decades ahead. A crucial question therefore is how to raise the necessary investment funds. First, there is currently no suggestion that the money extracted by private equity investors will ever be recovered. Secondly, we have a number of water companies that have themselves been teetering on the brink of being washed over the financial weir into bankruptcy. Thirdly, we were told initially that the water companies would raise this money in the City or from their existing investors, but the talk now is of putting up customer bills. At a time of economic uncertainty and a cost of living crisis, when the benefits of investment might take 25 or more years to be felt, that is an extremely challenging proposition to put forward.

So we seem to be up sewage creek without an affordable paddle—but this is not just about money. The committee had severe doubts about the capability of some water companies, even if the necessary billions of pounds were made available to them, to manage the very substantial infrastructure projects that are required. Ofwat, when asked about this, appears to be crossing its fingers and hoping for the best.

To conclude, solving the problems highlighted in this report is going to be a long haul, and for that reason I hope that the current and future Governments will take note of it. I will pose four questions to the Minister and look forward to his responses when he winds up. How much money is needed to modernise our water and sewerage systems? How is that money going to be raised? How will this massive infrastructure renewal be competently delivered? Finally, are Defra, the regulators and the water companies really up to the job of getting these matters right?

Baroness Bowles of Berkhamsted Portrait Baroness Bowles of Berkhamsted (LD)
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My Lords, I have been on the Industry and Regulators Committee since its inception and I am pleased that, before my time to rotate off, we will be looking at the issue, among other things, of whether regulators have the right kinds of remits, overlaps and priorities and whether the government/regulator relationship is right. It is my view that our Ofwat inquiry highlights well areas for improvement in those matters and, in the important case of utilities, whether privatisation has made things far too private—by which I mean lacking in transparency and in action.

One of the conclusions of our report deals with this by suggesting that utility companies should be subject to the same kinds of transparency requirements as publicly listed companies. There has clearly been failure. Water companies have got away with sweating the assets for far too long, to pay out large dividends instead of properly providing for future infrastructure, and have turned emergency sewage discharge into a routine way of operation.

Regulators focused too much on bills as their yardstick, were dozy about future water security and complacent about discharges, while Governments—always suspect in the short-term electoral cycle—have set meagre targets and inadequate Environment Agency budgets and have been held in thrall to the construction industry when it comes to changing planning laws in necessary ways. It is a catalogue of failure, leaving a dire situation for both finance and infrastructure.

A fundamental requirement throughout the company and regulator chain must be to ensure investment sufficient to match demand caused by population growth, property development and climate change. That has fallen a long way behind and there is no way to claw back the money that has gone to private pockets, leaving consumers to foot the bill in future. I doubt there is going to be any other way.

Behavioural change in water consumption has a part, and it will now have to be more draconian than it need be, and so too does banning harmful products such as wet wipes that cause environmental damage and cost. Why is it that the pleas of the wet wipe industry to government have overturned the needs of the sewage industry? The Environment Agency has found that last year the environmental performance of water companies was at its lowest ever, so what are it and the Government doing about it, other than monitoring decline?

Ofwat says that 14 of the 17 water companies have not spent the funds they have been granted to invest in the network, with some spending less than half. So what is happening, other than knowing the bad statistics? In recent times, there have been more fines levied for pollution, but that is not getting at those responsible; it has to come back to the boards and executives of the water companies. Whether it is sewage or lack of investment, these are things that affect the health and well-being of everyone. I am just as worried about a pathogen in waterways as I am about a dodgy financial product. The first might kill me, the latter might fleece me—so why do we closely regulate only the latter?

The former Ofwat chair Jonson Cox said in a letter to the committee that the sector had “lost public legitimacy”. He said it was

“tempting to lay the blame at the doors of regulators. But these are FTSE 100/250 scale companies and need to take responsibility, as the regulatory regime requires them to do”.

He went on to say:

“The CEOs and shareholders of these large-scale companies need publicly to face into their performance shortfalls, and not hide behind their trade association, Water UK, or regulators”.

Well, I agree with that, as did the committee, but surely as utilities they have responsibilities beyond that of top-end listed companies and must be held accountable accordingly—not, as seems currently the case, having health and safety cop-outs and being treated more leniently than others who released pathogens into public places would be. If water companies do not perform, responsible people should be banned from the sector, and indeed from other utilities—end of. Regulators need to be more joined up, cover more and be more active. Utilities are special and special provisions must apply, and that should apply to underspending on investment as well as to illegal discharges.

Baroness Jones of Moulsecoomb Portrait Baroness Jones of Moulsecoomb (GP)
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My Lords, I congratulate the noble Lord, Lord Hollick, and the members of his committee on the most fantastic report. I have really enjoyed this debate so far and I look forward to the Minister’s replies on all these crucial issues of public health and the health of nature and the environment. It has been quite a slog to get this issue on to the agenda, but finally it is on the agenda and the public know about it. They are fully aware of it. I do not want to give any hints to the current Government on how to perhaps claw back some of the votes they have lost so far, but this is going to be an issue on doorsteps for the general election, so the faster the Government act, the better for them. Obviously they are going to lose big time, but we do not have to worry about that too much at the moment.

Ofwat, the water regulator, has said repeatedly over the years that water companies have had all the money they needed to do the necessary investment—so we have to ask where it has gone. Ofwat allowed our bills to rise by more than 40% in recent decades in order to fund investment, but the investment largely did not happen. Most of it went to shareholders at the average rate of £2 billion a year for the past 27 years. That money is our money; it is taxpayers’ money. I do not want to pay higher bills; I want a refund, and I think a lot of people will agree with me.

We are all fed up with pollution in our rivers and on our coastlines, with sewage floating past swimmers and surfers, and with businesses suffering when signs are put up saying, “Please don’t swim here”—not to mention environmentalists despairing at the loss of ecosystems because of the filthy rivers. We have to ask what the regulators have actually been doing over the last three decades, and whether it is possible to create an enforcement regime that will hold a private monopoly to account. I suspect that many of the public are no longer asking about regulations and regulators; they are probably asking about the prison sentences that ought to be given out. I am not a big fan of increasing the prison population, particularly at the moment, so if we are to penalise the people who have put us in this position—for example, the CEOs who are personally responsible for polluting our rivers—we should issue community service orders so that they can work on the ground to fix the pollution that they have created.

Water companies themselves should be fined if they dump sewage. Instead of those fines adding to the water bill, the money should be found by selling shares to the Government. If they keep getting fined, the public will get their water companies back into public ownership at no extra cost. Certainly, no water bill should go up until there is a guarantee that no money will go into shareholder bank accounts, be siphoned off to parent companies or be taken out by CEO or senior staff bonuses. I want the CEOs of these water companies put on notice that they will be taken to court if the problems are not fixed.

There are a lot of options for cleaning up this mess but they all involve a lot of money and some understanding from the Government that this is an urgent situation that has to be fixed. I very much look forward to the Minister telling us what the Government are going to do. Quite honestly, the petty, rather dismissive response from the Government to the report from the noble Lord, Lord Hollick, is shameful. I do not understand how any Government could be so petty and almost vindictive.

Lord Whitty Portrait Lord Whitty (Lab)
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My Lords, I thank my noble friend Lord Hollick for his cogent introduction, and thank the committee for what is a trenchant, highly critical report with very interesting recommendations and conclusions. This is a complete failure of the system of regulation, post-privatisation. I would also like to thank whoever invented the title of the report because it most succinctly expresses the outrage at the pollution that is caused by these water companies and the affluence with which they have treated their shareholders, investors and those who bankroll them. It is a disgrace, and one which this House and the Government need to face up to.

I have to first make a confession. I was a small cog in the structure of regulation of this industry, for a few months at Ofwat and for several years at the Environment Agency. That was more than 10 years ago. I clearly remember thinking and arguing at that time that the system was inadequate and that we had failed to use the powers that we already had, particularly in Ofwat but occasionally in the Environment Agency as well. In those days, the Environment Agency had more resources for monitoring, but we did not always use our powers to their full extent—and we see the results.

It is possible to argue that, in the early years of privatisation, more resources were brought to much-needed investment, technology and management improvement. But after that first period, this has not been the case. We now need to face up to the fact that the major political parties are not prepared to commit themselves to renationalisation. Like the noble Baroness, Lady Jones, I would prefer that solution. If it is not possible, we need to start again on the system of regulation, not only of the areas covered by Ofwat, the Environment Agency and the Drinking Water Inspectorate but of the wider aspects of the water system. These broader aspects include taking account of the growth in population and the pressures from housing and from business, of the fact that water usage in this country is one of the highest in Europe, and of the fact that we completely fail to address water efficiency in appliances for industry, agriculture and domestic households.

We need a new start. In my view, if we are not to go for renationalisation then we need to establish a single and very powerful regulator for the water sector as a whole—one which subsumes all these interests and puts water centrally, as it should be, in the management of the resources of this country. It is not only about the dangers that the sewage overflows and discharges cause to our rivers and fisheries, and their threat to human health; it is also about the complete and utter failure to recognise that, as climate change progresses, water will become scarcer and less predictable, and so we need a much more effective system of management and a much stronger regulator.

We need a regulator if we are to keep the present system of ownership because these are regional monopolies, untroubled by competition. Unlike some privatised industries, there is no competition. They are also untroubled by requirements to review the franchise periodically, as exist in some privatised industries. That means they are almost free to make as much money as they like. If we add to that the complete failure of co-ordination and of clear strategies by the regulators and Defra, then we are heading for catastrophe unless we start again.

I ask the Minister to recognise that the list of failures spelled out by my noble friend and his committee in the report need a new approach. If we are not going for renationalisation, can all parties commit to a much more effective system of regulation and to starting again? I agree with the noble Baroness, Lady Jones, that sanctions need to be placed on these companies. I would hope that those sanctions were effective and would eventually lead to the sector being brought back into public ownership. But in the meantime, we need a much more effective and co-ordinated—and much more environmentally sensitive—system of regulation, which recognises and addresses the problems of this sector, and we need to start now.

Lord Cameron of Dillington Portrait Lord Cameron of Dillington (CB)
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My Lords, I must first declare my interests as a farmer and chair of the UK Centre for Ecology & Hydrology.

Rivers are an important source of life. They host a huge range of species, both above and below the waterline—too many to list in a five-minute speech. They also have a life force of their own, having run through our landscapes for millennia. We are here today and gone tomorrow compared to these moving symbols of what should be our national pride. They are also a force for cohesion. The early Babylonian and Egyptian empires, for instance, were founded on their management of water. Even today—this is a topical point—with all the violence in Israel, there is a movement there called the Blue Peace, the theory being that the management of water is too serious an issue to be disturbed by nationalistic politics. People from all sides have indeed kept talking, whatever the extremists are up to.

I mention all that because I am trying to emphasise a point, well made in the report and by other speakers today. As a nation, we are currently failing our rivers and must now make more effort to all work together to ensure they are restored to the historic institutions they should be: places as sacred as our cathedrals, where nature and mankind should thrive together. It is obvious, as others have said, that we are currently failing to achieve that end. It is also obvious that any campaign for instant renewal of our rivers is way beyond the current resources of this nation or its water consumers, but we have to start now to turn the situation around.

First—this is a practical point—in order to make a realistically costed plan, which sorts out the essential from the merely good to have, we need a map of the detailed condition of all our rivers, from headwaters to estuaries. The only way we will achieve that is by testing all the waters on a more regular basis. Where possible, we should have remote electronic monitors up and down all our rivers. I know these monitors are costly at the moment, and slightly limited in the information they provide, but their efficiency will improve, and their price will drop if the quantity is guaranteed. I believe we need thousands of them.

Sampling by staff is an extremely skilled job and takes time. It is therefore expensive, so random sampling is rare. I have heard stories from farmers—possibly exaggerated—that the chance of their bit of river being randomly tested is less than once in 100 years. We need to know on a daily basis what is happening to our rivers so that we can decide what our financial priorities ought to be. Sampling by staff, for instance, does not happen at night, nor usually at that vital time when it is raining.

With money short and rivers below par, we need to know what our priorities should be. For example, are the phosphates too high in the night or the day, or before or after rain? Is it the nitrates or the microplastics, nanoplastics, chemicals or a lack of oxygen that is the more pressing problem in each river? You can find out more from continuous monitoring in two weeks than you will probably find after many years of random sampling. We need to know how and where to spend our money.

I will touch quickly on a couple more points. I strongly support the report’s emphasis on building up more water supplies through new reservoirs and water transfers. The less water we take out of our headwaters and iconic rivers such as chalk streams, the less will be the effects of whatever pollution is seeping into system.

Finally, we need everyone, led by the Government, to come together—it is that cohesion agenda again—to promote better behaviour by water users. Thames Water has said that 85% of the 75,000 blockages it clears annually are caused by things that should go in the bin. We all know about wet wipes, but the public also need to know about the dangers of antibiotics, medicines and other no-nos getting into the system. We need a campaign to educate the public about not using the sewage system as an alternative to rubbish collection. I can see it being quite an amusing and imaginative campaign.

It is going to take a lot of work, money and time to get our rivers right again, but that work has to start now. I thoroughly commend this report.

Lord Sikka Portrait Lord Sikka (Lab)
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My Lords, I thank my noble friend Lord Hollick and the members of the Industry and Regulators Committee for their excellent report. In common with many previous speakers, I have no confidence in Ofwat; it needs to be replaced by a body which is independent of the industry and has a majority of customer-elected representatives on its board.

Can the Minister explain what justifies the 35% operating profit margins for water companies? I have not come across anywhere else in the private sector that competes having that kind of margin. High profit margins have not been accompanied by high levels of investment—indeed, others have commented on how low and how poor it is.

The investment picture is muddled by financial engineering. Let me give noble Lords some examples. On 28 June 2023, in the other place, the Minister responsible for the environment said:

“Water companies have invested £190 billion since privatisation”.—[Official Report, Commons, 28/6/23; col. 281.]

This amount does not appear to be right at all. Let me flag up some reasons for this. One example is on page 134 of Thames Water’s 2022-23 financial statement. It states that the company

“capitalises expenditure relating to water and wastewater infrastructure where such expenditure enhances assets or increases the capacity of the network. Maintenance expenditure is taken to the income statement in the period in which it is incurred. Differentiating between enhancement and maintenance works is subjective”.

A translation of that is that the amounts which are capitalised for maintenance cannot be independently corroborated at all. Will the Minister return to the House and make a statement explaining how much of the maintenance expenditure has been capitalised by water companies so far?

I turn to my second example. Water companies have the same policy as Carillion, which was destroyed by it; namely, they are capitalising interest payments on their debt, which is utterly imprudent. This overstates their investments and distributable reserves, and it understates their leverage. In the last two years alone, Thames Water has capitalised £330 million of interest payments, which increases its capacity to pay dividends. So will the Minister return to the House and make a statement explaining how much of the interest has been capitalised by water companies and what the related risks to them are?

Water company dividends, which a number of speakers have referred to, are also understated. On 28 June, the Minister in the other place said that Thames Water

“has not paid any dividends for the last six years”,—[Official Report, Commons, 28/6/23; col. 287.]

but that is not what the company’s accounts say at all. Page 43 of its 2022-23 financial statement describes a £45 million payment to its immediate parent company, and the word “dividend” is used. Thames Water Utilities Holdings Limited received that and then forwarded it to another company, whose accounts also say that it is a dividend. So, just in the last two years, Thames Water has paid its parent company £82 million. If it is spelled “dividend” and if directors and auditors say it is a dividend, it must be one—the Minister cannot deny that in any way. A wholly owned subsidiary has only one shareholder—the parent company—and, if the subsidiary is paying a dividend, it is a dividend. I hope the Minister will be able to clarify that.

Strangely, page 43 of Thames Water’s accounts also says that this dividend is not really a dividend because the purpose is

“solely to service debt obligations and group related costs of other companies within the wider Kemble Water Group”.

If there is any substance to that claim, Thames Water is saying, “We are understating our leverage”. What the hell is Ofwat doing? It is utterly out of its depth in trying to read the accounts and make sense of financial engineering. So will the Minister return to the House and make a statement on how much has been extracted from water companies in the form of dividends that are not really dividends?

Finally, the committee’s report raises questions about executive remuneration and, in a sense, it welcomes that Ofwat might have a say in that. I do not want Ofwat to have any such powers to influence executive remuneration at water companies. These must go to the customers, who must vote every year on executive pay. If they think they got a good enough service from water companies, they will approve directors’ remuneration. Let there be a bit of democracy; how could the Minister oppose that?

Duke of Wellington Portrait The Duke of Wellington (CB)
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My Lords, I declare my registered interests that are relevant to this debate. I welcome the Industry and Regulators Committee’s report and congratulate its members, particularly the chairman, the noble Lord, Lord Hollick.

When the water companies were privatised in 1989, I cannot imagine that Ministers then thought that so many of them would pass into the hands of private equity groups, many of them based outside the United Kingdom. As the water companies are monopoly suppliers of essential water services to households and businesses, it is clear that they must be regulated. Regulation is divided between the Water Services Regulation Authority, known as Ofwat, and the Environment Agency. In paragraphs 2 and 3 of its recommendations, the committee suggests that there should be much closer co-operation between the two agencies. I ask the Minister whether it might not be more effective to merge into Ofwat the parts of the Environment Agency that currently regulate the water companies.

There have clearly been failings over the past 34 years in how the water companies have been regulated. The Environment Agency, for its part, pleads lack of resources. I am not convinced by that, although the committee appears to accept the argument. The problem has been that addressing the discharge of sewage into rivers and on to beaches has not been a high enough priority for the Environment Agency and, therefore, not enough of its extensive resources have been directed to oversight and monitoring of these monopolies. If all along there had been a department within Ofwat responsible for environmental regulation, in addition to financial regulation, for which it is responsible, the growing problem of sewage discharges would have been detected and understood much earlier and corrective action could therefore have been taken some decades ago. Will the Minister and his colleagues give serious consideration to whether the structure of the regulation of water companies is correct, and whether there should not in future be a single regulator?

There are several other recommendations in the report which I completely support. Paragraph 24 recommends banning the sale of non-biodegradable wet wipes. I was pleased to see that, finally, the Government on Saturday launched their latest consultation on this, but I am not sure why they think that further consultation is necessary, as the overwhelming majority of this House and the other place, and of members of the public, are in favour of banning those products.

I also welcome paragraph 35, in which the committee questions whether the 2050 targets in the storm overflows discharge reduction plan are sufficiently ambitious. I hope that, when that plan is reviewed in 2027, the then Ministers will be more ambitious.

I support paragraph 47, in which the committee recommends that it should be part of water company licences that bonuses and performance-related pay of executives be linked to environmental performance. I also support paragraph 49, requiring that water companies, even though they may now be owned by private equity groups, should still be subject to the same level of transparency as they were originally, when they were publicly listed companies. This must surely be right for monopolies formerly owned by the state.

There are two final recommendations of the committee that I strongly support. Water metering should be compulsory for all households and businesses where possible. For households, the cost of meter installation must be borne by the water company. This will clearly help many consumers to reduce their water consumption.

The last recommendation of the committee is that there should be more stretching targets for reduction of water leaks. A few months ago, I asked the Minister why the Government’s target was to reduce leaks only by 50% by 2050. That does not seem sufficiently ambitious. Ofwat currently estimates that leaks amount to 51 litres per person every day. The idea that in 27 years’ time, the companies will still be leaking 25 litres per person per day does not seem in any way justifiable.

I very much hope that this excellently titled, excellently written report will cause Ministers seriously to review how the water companies are regulated.

Viscount Chandos Portrait Viscount Chandos (Lab)
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My Lords, as a newly appointed member of the Industry and Regulators Committee, I am privileged to have my name attached to this report, although I did not participate in the earlier evidence session. As chair, my noble friend Lord Hollick skilfully led the committee to its unanimous and deeply but constructively critical conclusions and has delivered a compelling introduction this afternoon. I pay tribute to him, the other committee members and the staff, who did the really hard work. Coincidentally, important work was done by the committee in pushing the boundaries on parliamentary language and the titling of reports, as should be the case with a former tabloid proprietor as chair.

I strongly endorse the report as a whole and will speak briefly on a couple of themes. I declare my interests as a trustee of the Esmée Fairbairn Foundation, a major funder of freshwater causes in the UK and, through its endowment, an investor in the Robeco sustainable water equities fund, and as a trustee of the Ernest Kleinwort Charitable Trust, a funder of the Chichester Harbour Trust.

I start with that last organisation, about which its chair, John Nelson, wrote in the Observer in July:

“one of the most beautiful and important natural harbours in the UK, I witness on a daily basis its now-rapid destruction, caused in large part by an extraordinary deterioration in water quality—thanks largely, in our case, to Southern Water”.

Mr Nelson is not a diehard environmental campaigner but an experienced former investment banker and, for full disclosure, a friend and erstwhile colleague of mine. He worked on the privatisation of utilities in the 1980s and 1990s. I may disagree with his contention that, even as originally devised, the privatisation of the water industry had anything to recommend it, but his analysis of the disaster arising from the combination of aggressive capital structuring by private equity and infrastructure owners that acquired many water companies, weak regulation and complacent government policy is devastating. He wrote:

“we now have a water industry that is probably 15 to 20 years behind in terms of infrastructure investment … We can all, of course, blame the water companies, but at the heart of this is the failure by the government to recognise the long-term issues, and to act”.

My noble friend Lord Sikka and I do not agree entirely about private equity’s impact on the general economy, but if in this case its behaviour has been unacceptably aggressive, government policy and regulatory enforcement should be and have been robust enough to counter this. The Government and Ofwat have prioritised holding down consumer prices over the maintenance and enhancement of quality. The consumer interest is not solely about price. Swimming in rivers and by beaches that are not polluted by sewage or other toxic substances should, for instance, be a universal right. Recognising that many families, most of all those on lower incomes, are hurting from the cost of living crisis, it is all the more regrettable, as other noble Lords have noted, that the Government have not honoured their promise to introduce a single social tariff rather than the postcode lottery under which support can vary between £70 and more than £250 per household.

I strongly endorse the report’s advocacy of nature-based solutions as a cost-effective and environmentally friendly form of delivery. Ofwat must act to make these easier to adopt.

I end with one of the most depressing pieces of evidence given in our follow-up sessions this summer, by David Black, chief executive of Ofwat. As the noble Lord, Lord Hollick, wrote in his letter to the Secretary of State,

“David Black raised a different concern around water companies’ capacity to deliver major projects … the sector … has … little experience in taking major projects forward and has low public standing”.

What an abject failure Conservative government policies over 40 years have been, starting with the doctrinaire privatisation of the industry. How feeble Ofwat’s regulation of the sector has been, even within those failed policies.

Baroness Bakewell of Hardington Mandeville Portrait Baroness Bakewell of Hardington Mandeville (LD)
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My Lords, I congratulate the noble Lord, Lord Hollick, on his excellent introduction to this brilliant report. All contributors to the debate have raised the worrying operational methods of the water companies. The noble Lord, Lord Cameron of Dillington, raised the absence of water testing.

Water is a resource we have taken for granted for far too long. We assume there will always be a sufficient supply for our needs: we turn on our taps and are able to drink clean water, we can shower whenever we wish, and we assume that when we flush our toilets, the system will deal with it and all will be well. Sadly, those days are gone, and everyone has a part to play in ensuring that our water supply is plentiful and fit for purpose and that our streams, waterways and coastlines are not stinking and polluted.

Primarily, it is the role of the water authorities to ensure that water supply and sewage disposal are fit for purpose. However, there has been little infrastructure investment over a long period. No new reservoirs have been built since 1991 and are not likely to be before 2029. The population of this country, however, has increased dramatically over this period. Water authorities appear not to have taken any of this into account in their business plans or strategies. The noble Lord, Lord Whitty, referred to this absence.

There have been failures on all sides: Governments have not provided sufficient funding for enforcement or set a central direction, and Ofwat has not required water companies to provide sufficient investment in infrastructure but has encouraged keeping consumers’ bills low. The Minister has, in the past, raised the difficulty of increasing water bills. During a cost of living crisis, care is needed to protect the vulnerable to ensure that water supplies are not cut off due to inability to pay water and sewage charges—the noble Lord, Lord Hollick, referred to unaffordable bills.

It will be a challenge but there must be more investment in solutions. There do not need to be costly concrete constructions, which Defra seems to prefer; the lower-cost, nature-based solutions are much preferable. NBS help with restoring habitats, storing water, creating new woodlands and rewetting bogs. However, when such solutions are put before government, they are rejected in favour of costly concrete solutions, with technical specifications cited as a reason. In a time when water is seen as a finite resource, it is not reasonable to apply the same technical specification to nature-based solutions as apply to concrete ones. A quite different approach is needed, and the noble Lord, Lord Agnew, gave an excellent example. Ofwat, the Environment Agency and Defra need to encourage nature-based solutions and, together, provide new guidance to make this happen. Reaching net zero is vital and if it is possible to assist in this process, then this should be a priority.

Nutrients are polluting our waterways due to runoff from both farming and housing developments. Developers have been dragging their feet on this issue. Due to the right to connect, they have failed to separate surface water runoff from foul water discharge. This has, in part, led to the current scandal of increased sewage overflows, especially when there has been no rain. Instead, developers should be encouraged to ensure that all new buildings have rainwater harvesting capabilities. It is time the right to connect was repealed.

I was dismayed to find that despite the vote in the Chamber banning nutrient discharge from housing developments, the Government are delaying the implementation of this measure, which would assist in improving countryside and wildlife habitats. Biodiversity net gain would have been mandatory in planning from November—that is, next month—but the Government have told developers that this will now not be implemented until sometime next year. Can the Minister say when exactly this law will be implemented and what the Government are doing to ensure that developers take rainwater harvesting seriously?

In April this year, the Government produced a plan for water: their integrated plan for developing clean and plentiful water. This was a step in the right direction but does not go far enough. An effective national water strategy is needed. Recently, the Secretary of State for Environment wrote to water companies via the Environment Agency, suggesting investment plans should be slowed down in order to keep water bills at a low level. This is a false economy. We need a water and sewerage infrastructure that is fit for purpose and can meet its current demands, not one that is antiquated, creaking at the knees and crumbling.

The Environment Agency has seen its budget cut drastically, from £170 million in 2009-10 to £76 million in 2019-20. Some increases have been made to its budget since then, but nothing takes it back to its original level and it does not account for intervening inflation. Underfunding has led a to lack of enforcement action, which is no longer a deterrent. The polluter pays principle is not taken seriously. Fines have been derisory compared to the profits which water companies have made.

Privatisation has led some water companies to put share dividends and directors’ bonuses before infrastructure investment. I noted in the report that it was suggested that no reward payments should be made when a water company did not meet its water quality targets. I fully support this view. The noble Baroness, Lady Jones of Moulsecoomb, has spoken eloquently on this.

In 2021, storm overflows, referred to by the noble Lord, Lord Agnew, were used 325,533 times for 2.6 million hours. Given that polluted water is a human health risk, I support the view that individual CEOs and directors should be held personally accountable for failures, with the penalties increased dramatically for them. I fully support paragraphs 252 to 256 of the report. It is time the softly, softly approach was abandoned altogether. The mechanism is there in the Environment Act for this to happen. The Office for Environmental Protection has a critical role to play and has already demonstrated that it is up for the challenge.

As I said at the beginning, this is a problem where we all have to play a part. I turn to wet wipes. The vast majority of packaged wet wipes indicate that they are not flushable, but this is in ridiculously small print. It is time the consumer realised that by flushing wet wipes and other plastic items down the toilet, they are responsible for helping to create fatbergs which are clogging up our sewerage system. It is time to ban plastic in wet wipes, but do we really need consultation, as the noble Duke, the Duke of Wellington, indicated? Manufacturers should move away from plastics. The information on flushability must be on the front of the package and in a minimum of 10-point characters, so that a magnifying glass is not needed to read it. Consumer awareness should be raised via advertising.

My noble friend Lady Bowles of Berkhamsted raised the issue of water usage by householders, including watering their gardens and washing their cars—which, as the noble Lord, Lord Cromwell, indicated, should be minimised. Use by farmers, horticulturists and manufacturing industry must be minimised where possible. This must be coupled with a programme of reservoir provision, both small local and larger regional provision. Not to do so is to adopt the attitude of the ostrich. The water and sewerage system must meet the demands of the current population, which is not predicted to decrease: quite the opposite. I know the Minister is aware of the difficulties surrounding the water industry and I look forward to his response to the many justified questions raised in this debate, especially those from the noble Duke, the Duke of Wellington.

Baroness Hayman of Ullock Portrait Baroness Hayman of Ullock (Lab)
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My Lords, I thank my noble friend Lord Hollick for his introduction to our debate on this excellent report. He laid out the recommendations that the report makes to the Government, which have been discussed by noble Lords today.

I will pick up a few of the recommendations in particular, looking first at water demand and reservoirs. A lot of concerns have been raised about our water for the future and the infrastructure required to manage it, so I would be interested to hear from the Minister what action the Government intend to take to reduce water demand and to increase consumer awareness about this issue.

On reservoirs, the report confirms in paragraph 308 that,

“despite the need for reservoirs … under current plans, not a single major one will have been built in the UK between 1991 and 2029”.

As my noble friend Lord Chandos mentioned, this is a failure of infrastructure and planning. One of the pieces of evidence taken from Professor Barker was about the Cheddar reservoir and the fact that Ofwat refused to fund it on the basis that the case had not been made—but it was subsequently recognised that it was actually really important. We also know about the issues with the inability to construct the reservoir in Abingdon, which has been going on for years. Mr Black of Ofwat told the committee that

“the planning process will need to align with the needs of water resource management”.

I would be interested to hear the Minister’s response to that. I had a meeting with Mr Black some time ago, and he seemed surprised to hear that in Cumbria they are closing reservoirs. There does not seem to be any joined-up thinking about our future water use, so I would be interested to hear the Minister’s response on our future ability to supply the country with the water that it needs.

One of the issues that my noble friend Lady Taylor raised was about the Government’s response to the report; she said that it was pretty dismissive, and other noble Lords have said similar. The Government seem to be saying, “Well, we don’t need to do that because we are already making plans for water, storm overflow action plans, legislative initiatives and so on”. But the point we are trying to make here is that, although that may be very well, it does not seem to be working. What will the Government do to ensure that it will make a difference?

Let us look at the Government’s Storm Overflows Discharge Reduction Plan. I am aware that, following consultation, the Government have published an expanded plan to extend the targets of the plan to coastal and estuarine storm overflows, for example, but the extended new plan does not answer the criticisms in the report. For example, it is criticised for not setting environmental targets and ambitions at an outcome level. Other criticisms are that there is

“a disconnect between DEFRA and regulators … that ‘DEFRA targets are about the number of sites that are improved, while Ofwat has a proposal … for the number of events per storm overflow’”,

and that the plan

“is very focused on just the water industry and fails to grasp the holistic approach”

needed across all sectors. Can the Minister explain how the Government intend to manage those criticisms and to improve the situation?

In Ofwat’s response to the report, it welcomed the awarding of extra funding for the next two years; we welcome that as well. It also points to the water companies’ commitment of £10 billion of extra investment by 2030. But, as has come out in this debate, how will that be paid for and who will pay for it? Will it land on the taxpayers—the people already paying a lot for their bills? As we have heard, people are not well off at the moment. We have heard again about the dividends given to directors, so whose shoulders should this cost fall on?

Ofwat also claims that companies have pledged to reduce storm overflows by 25% by the 2024 price review. If it is so straightforward for them to say that they can reduce them by a quarter, why has progress not already been made on this? Also, does that mean the reduction or eradication costs regularly cited by the Government are accurate? It does not make sense to me that they can suddenly say that they will reduce them by 25% when it has been, to be blunt, such a pickle.

Back in June the committee launched a follow-up inquiry into Ofwat, the water industry and the role of government, with oral evidence sessions in June and July, including with the Minister, Rebecca Pow MP. I am concerned that the committee’s work on this is ongoing, because that suggests that it was not convinced by the Government’s current approach and response. Why does the Minister think the committee feels it has to continue with this work?

The noble Lord, Lord Cromwell, spoke about his concerns about the ability of the regulators and the department to deliver what is required. This was clearly demonstrated by the Environment Agency’s 2022 performance assessment and the diabolical rating of almost every water company, bar Severn Trent. My noble friend Lady Anderson took some SIs in September on broadening Ofwat’s powers, including allowing the regulator to impose unlimited fines on failing water companies. As this change was announced some time ago, and improved in the Commons prior to the Summer Recess, I ask the Minister when we will see the power used. Does he genuinely believe it will lead to different outcomes? We need different outcomes from what has been happening to date.

Also in September, we had the news that the OEP was looking at whether Defra, the Environment Agency and Ofwat acted unlawfully in failing to prevent water companies’ sewage discharges. The Environmental Audit Committee and its chair, Philip Dunne MP, have expressed concerns around this as well.

Ofwat published its latest annual water company performance report in September, which seems to be quite a busy month for the water industry. The report found that fewer than half of companies met targets in relation to sewage, which triggered a requirement for money to be returned to bill payers. Many noble Lords have talked about the fact that if bill payers are not being served properly, they should have some money returned to them. Does the Minister agree that the Government are at fault and that responsibility lies at the Government’s door for that situation? The Government cut back enforcement and monitoring of water companies releasing into rivers and the sea, and they are now not properly being prosecuted when they are blatantly breaking the law.

One of the committee’s recommendations was to increase the Environment Agency’s resourcing. In their response the Government noted the recommendation but argued that the inquiry was primarily focused on Ofwat, which, as I said earlier, has had extra funds. But should sewage discharge fines not be given to the Environment Agency so that it can expand its enforcement efforts? Does the Minister not agree that that would make more sense?

We believe that the right approach should be to put the water industry under special measures—basically to force it to improve its performance, as that does not seem to be happening otherwise. We believe that there should be mandatory monitoring of every water outlet. The noble Lord, Lord Cameron, talked about monitoring. The noble Baroness, Lady Jones of Moulsecoomb, talked about the importance of effective sanctions. We believe that there should be severe and instant fines for illegal sewage dumping and that the money raised should be used to fund additional enforcement measures.

We believe that Ofwat should be empowered to ban the payment of bonuses to water bosses unless their companies hit performance targets. We also believe that we should introduce criminal liability for water company directors whose companies break the law in an extreme and persistent manner. Again, this is something that I have raised with the Minister during Oral Questions.

As my noble friend Lord Whitty said, the current situation is a disgrace. I am starting to lose track of how many times we have debated this or asked Questions about this. As the noble Duke, the Duke of Wellington, said, it is time that the Government became genuinely more ambitious in this area, because it is really time that we stopped the failures of our water industry.

Lord Benyon Portrait The Minister of State, Department for Environment, Food and Rural Affairs (Lord Benyon) (Con)
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My Lords, I refer noble Lords to my entry in the register and start by thanking the noble Lord, Lord Hollick, and the members of the Industry and Regulators Committee, for the report. This has been a thorough and wide-ranging inquiry and, as the noble Baroness, Lady Hayman, showed, it was extremely timely, given the current focus on the water industry and the role of government. I also thank the committee for the recommendations from its follow-up inquiry, to which the Secretary of State will respond very shortly.

If the noble Lord or any member of the committee feels that our response was terse, I deeply regret that. If Defra had a fault, it was that in the past it used to indulge in reams of replies on this. We have tried to condense the points. Where something is in another document—for example, the Plan for Water—we have referred committees, individuals and others in our responses to those documents. That is perhaps a more economical way of doing this, but if people have confused it with a lack of respect for the work that has been done, I regret that.

However, I do not share the committee’s conclusion that there has been complacency or a lack of leadership from the Government on the topic of water regulation. No Government have done more to tackle the pressing issues facing the water industry. Back in 2013, as Minister for the Natural Environment and Fisheries, I set out that water companies should introduce monitoring for the vast majority of combined sewer outflows by 2020. This will be at 100% by the end of this year. The fact that we did not know where these outflows were is an example of complacency and one that we have set about dealing with. The increase in monitoring has meant that the Government and regulators better understand the scale of combined sewer outflow discharges, so that we can take stronger action to improve the situation.

I am delighted that this information is available not only to informed and determined Members of this House but to the wider public. A very good point was made by the noble Lord, Lord Cameron, on monitoring. A wonderful citizen science project has been launched called the Riverfly project, which encourages people to assist the Environment Agency in monitoring. However, technology is moving very fast in our favour. It is now possible to put telemetry in our rivers that can give us, on our phones, real-time information on pollutants. We can then work with statutory bodies such as the Environment Agency to improve and deal with particular sources of pollution.

Just last month, we expanded our Storm Overflows Discharge Reduction Plan, first published in 2022, to cover all overflows. We also added marine protected areas and shellfish water protected areas to the sites that are prioritised for early action. This is the largest infrastructure programme in water company history, with £60 billion of capital investment by 2050.

We have also requested action plans from water and sewerage companies on how they will improve every storm overflow in England. These will be published shortly. In April 2023, we published the Plan for Water, our comprehensive strategy to transform the water environment. The plan contains all the actions we must take to meet our water goals and transform the water system, and provides the leadership and long-term thinking that the noble Lord’s committee and others in this debate say is required. These are but a few examples of the comprehensive action that this Government have taken on water, and I will take the opportunity to address some of the specific points raised by noble Lords.

First, the committee raised crucial points about investment in the sector and the impact on consumers. This October, the water industry announced a planned £96 billion of investment between 2025 and 2030. This represents the largest investment in infrastructure ever made by our water industry, and an 88% increase in investment compared with the current five-year price review period. It shows that the sector is responding to the actions of this Government to clean up our rivers and seas, drive more investment and jobs in the UK, and ensure stronger regulation and tougher enforcement to achieve a step change in the water industry.

This investment comes at a cost. Noble Lords will have seen estimates from the water sector suggesting that water bills will rise by an average of £156 a year by 2030 to fund the increased investment. It is important to stress that these are not final figures; they are an opening pitch. It is important to remember that the current average water bill in England is lower than that in many European countries such as Spain, France and Norway.

For many years I have been talking to members of environmental NGOs and to parliamentarians from all sides who have told me that water bills need to rise. I have said to them, “By how much?”—and I get a prominent, audible silence from them, because nobody is prepared to say how much water bills should be. For just over £1 a day, households in this country receive all the water they need and have all their dirty water taken away. I know that all Members of this House are very mindful of the cost of living crisis for some communities. We have to balance that with our bills. But, if people are to tell Ministers and policymakers privately that bills should rise, they need to say by how much and show how they are going to reduce the impact on hard-pressed families.

Examples of the kinds of support and innovations that my noble friend Lord Agnew raised are there to be seen. I do understand the points he made; there are some wonderful schemes that are now receiving Ofwat’s approval and driving innovation in the sector. For example, Southern Water has £35 million to explore innovative options and pilot sustainable interventions to reduce storm overflow spills by, for example, building and constructing wetlands. I will come on to talk about that key point, which was made by the noble Baroness, Lady Bakewell.

Ofwat will now undertake a robust scrutiny process to ensure that these plans meet statutory requirements and government targets, to check that families are not paying for what companies should already have done and to give customers the best value for money. The Government are mindful that this announcement will raise concerns from consumers about their bills. In developing their business plans for 2025 to 2030, water companies have considered the impact of increased investment on customer bills and developed schemes that best suit the needs of local customers.

I was pleased to see Anglian Water proposing a new medical needs discount to provide direct financial aid to those whose medical needs require more water. This will be funded by the company owners and will help to support the most in need without adding to customers’ bills.

Therefore, while I note the committee’s disappointment in the Government’s decision not to proceed with a single social tariff scheme, it should be confident that this Government continue to work with industry and consumer groups to protect those struggling to pay.

Moving on to the topic of securing the investment needed to deliver our plans, I would gently challenge the committee’s view that the water sector will not be able to raise the required investment to meet our ambitious targets—a point raised by the noble Baroness, Lady Taylor, and others. The water sector continues to attract international capital and there are examples of companies that have already secured additional finance to deliver their 2024 price review business plan. For example, Severn Trent Water announced on 29 September it had raised £1 billion of new equity from its investors. Investors have made clear that a reset is needed in the water sector, and the proposed £96 billion investment presents a clear step forward in that direction. It is now for Ofwat to review plans to ensure they strike the right balance of pace, while protecting customer bills. Companies must deliver value for money. Any increase in customer bills must be justified, efficient and deliver significant improvements in river quality and water resilience. Customers should only pay for new investment, not for companies’ past failings.

I will address very quickly some of the points raised in this debate. The noble Lord, Lord Hollick, in moving this debate, talked about dividends, as did others. The average dividend payment represents 3% to 4% of the gearing and I think that is not exceptional—that is why it is attractive to pension funds—and I welcome the investment of organisations like international sovereign wealth funds and others. A dividend rate of 3% to 4% is not the kind of figure that many would see as greedy, or usury, in terms of the investment.

The noble Lord, Lord Hollick, also raised the issue of water demand, as did others. Current water usage is around 145 litres per person. In the environmental improvement plan, we have a target of 122 litres per person by 2037 and 110 litres by 2050. Those are tough targets to hit, but we have set out a process, working with the regulators and water companies, to hit them.

The noble Lord, Lord Agnew, spoke about the figure of £350 billion to £600 billion—a very wide bracket—which he said is the required investment to solve the problem of pollution. It is actually the cost of separating clean and dirty water and retrofitting that into the millions of houses in this country. That is, frankly, not feasible or possible to do. I like his scheme of water butts, and other schemes, and there are plenty that are working, and we want to see them rolled out. There are agri-environment schemes that are taking on flood management and using farmland to store water.

We are seeing a massive increase in interest in the creation of new wetlands, and I challenge the noble Baroness, Lady Bakewell, who said that the Government are obsessed with concrete and steel. That was the case when I was Minister for water in the coalition Government and I found that Ofwat was sceptical of nature-based solutions, because it could not measure them. It liked concrete and steel because it could measure the quality of the water coming in and out and see whether the asset was working. Nature-based solutions are more complicated, but we managed to convince Ofwat to let a thousand flowers bloom. Some of them might not work, but to say the Government do not like it is 180 degrees in the wrong direction; we love nature-based solutions, we want to see more of them, we are funding them through our natural environment investment readiness fund, we want to see biodiversity net gain and private sector ESG green finance being used for this, and we want to make sure that happens soon.

I would love to debate longer and harder about whether we should renationalise our water industry. It is a very dated and slightly binary argument, but I just feel that it is fundamentally yesterday’s argument. I hope we can move forward and see that the model has been independently assessed as having seen water bills less than they would have been if it had not happened, and investment greater. The Social Market Foundation believes nationalisation would cost £90 billion, and I think there are better uses for that money. I want to see it ploughed into out natural environment and water companies investing in—

Lord Sikka Portrait Lord Sikka (Lab)
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I am grateful to the Minister. Since he referred to nationalisation, could he explain why is it acceptable to the Government that entities owned by foreign Governments can own utilities here, while there is no government-owned entity here that owns the utility? In other words, the privatisation that he referred to is a bit of a sham, is it not?

Lord Benyon Portrait Lord Benyon (Con)
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I think it has been wonderful to see pension funds invest—perhaps those paying the pensions of those of us in this Room. I totally welcome the fact that people want to invest in the regulated utility sector in this country, whether water, energy or any of the other sectors. It has seen a step change in investment and has helped keep bills down.

I was interested in the speech of the noble Lord, Lord Cromwell, who talked about our ability to do big infrastructure projects. I was involved in trying to persuade a lot of sceptical people, within government and outside it, of the importance of building the Thames Tideway tunnel. There was opposition from the Liberal Democrats, from Members of my party in both Houses, and certainly from the Labour Party. There was a belief that it would not work and that it would put up bills by £85 in the Thames Water area. It will actually put up bills by around £22. It is being built and it was the right thing to do. The Government stepped in as the guarantor. It is an example of a very large investment in one piece of infrastructure. There are many others that are much smaller that have—

Lord Cromwell Portrait Lord Cromwell (CB)
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Either the Minister is agreeing with me or perhaps I was not clear. My concern is whether the water companies have the competence to implement these sorts of infrastructure projects. He has given a very fine example of a non-water company implementing the Thames Tideway. Will there be more of that? It seemed very doubtful that Ofwat had confidence in the water companies delivering these multi-billion pound infrastructure projects.

Lord Benyon Portrait Lord Benyon (Con)
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Multi-million pound infrastructure projects are being done by water companies; I will come on to talk about reservoirs. Some are doing them better than others; it would be a very strange world if they were all the same. The Government watch this matter very closely. We require investment and we want it done in the right way.

The noble Baroness, Lady Jones, who is shaking her head before I have even said anything, said that water companies should be fined; they are being fined record fines. One was fined £90 million last year.

Lord Benyon Portrait Lord Benyon (Con)
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Perhaps the noble Baroness would allow me to finish. We passed more legislation in the Moses Room just the other day to ensure that unlimited fines can be imposed on water companies. I do not know where she has got the idea from that we do not.

Baroness Jones of Moulsecoomb Portrait Baroness Jones of Moulsecoomb (GP)
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I thank the Minister for his response. My point was that water companies can pay those fines very easily; they just pay and they do not care. We should assess the amount of the fine and then take shares from the company to that amount. That would make much more sense.

Lord Benyon Portrait Lord Benyon (Con)
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We make sure that the money comes not from customers but from shareholders so that it is fair.

Lord Sikka Portrait Lord Sikka (Lab)
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Further to the noble Baroness’s point, since 2010 Thames Water has been sanctioned 92 times and fined £163 million, yet it remains a leader in unplugged leaks, sewage dumping and financial engineering. What did that fine actually achieve?

Lord Benyon Portrait Lord Benyon (Con)
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I hope the noble Lord heard me say that we have changed the rules. Fines by the Environment Agency are no longer capped at £250,000. They can be unlimited and there can be criminal sanctions for companies that break the law.

I think the noble Lord, Lord Sikka, said that £82 billion was paid. I might have misheard him. My understanding is that Thames Water paid its parent company £82 million to finance its debt, but it has not paid dividends to its shareholders in the last six years.

I will move on to the noble Duke, the Duke of Wellington. His recommendation for a changing landscape of regulation may well have its time. We need to review these things now and again. It is above my pay grade, but perhaps over time we should think about it.

To those who say that we are not resourcing the Environment Agency, I say that we have increased its annual spend by £2 million a year. That has produced nearly 50 enforcement officers looking at the quality of water. We want to see leaks reduced by 50%, which is an enormous number of litres of water, and have set out very demanding roles for that.

I come to the responses from the Front Bench. I have made my point about nature-based solutions and I hope the noble Baroness, Lady Bakewell, understood that. I say to the noble Baroness, Lady Hayman, that we will continue with this work. It is continuous; this is not an issue that is of a single moment in time. Our strategic policy statement to Ofwat showed an absolute step change in how we saw the regulatory framework for water companies. I suggest that she was slightly confusing Ofwat and the Environment Agency on enforcement. The Environment Agency is the organisation that enforces water companies; Ofwat sets the parameters and is the regulator.

Baroness Hayman of Ullock Portrait Baroness Hayman of Ullock (Lab)
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I was suggesting that some of the money given to Ofwat could be given to the Environment Agency for enforcement.

Lord Benyon Portrait Lord Benyon (Con)
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I will take that away. I think that they are both funded properly. I want to make sure we continue to do so and allow them to carry out the work the Government require of them.

I will just touch on the reservoir issue. The draft plans contain proposals for multiple new supply schemes, including nine new desalination schemes, nine new reservoirs including an addition to the Havant Thicket reservoir that is being built, 11 water recycling schemes, and many new internal and inter-company transfers to share resources.

It is not just water companies that need to take action to protect our water supply—it is every single one of us. That is why the Government’s Plan for Water sets out clear action to reduce demand. The game-changer in the Plan for Water makes it easier to build reservoirs. The new water resources—through the Regulators’ Alliance for Progressing Infrastructure Development, known as RAPID—and securing planning consent through the DCO process, including having water resources infrastructure as a national asset, are certainly making things better on that front. I hope we will see an easier process. The noble Baroness quite rightly raises Abingdon reservoir; that has been going on for more or less as long as I have been alive. I want to make sure that very important structures like that are built. We cannot just go through a circular process of planning inquiries, with very smart lawyers who delay getting important assets built.

With that, I think I have covered most of the points raised. In conclusion, I again thank the noble Lord and his committee for their detailed work on these important issues. I welcome the opportunity to debate these matters in the House. I have confidence that the plans that this Government have put in place will deliver the greater investment, tougher regulation and stronger enforcement needed to transform the water industry and ensure that the clean and plentiful water we need is available for generations to come.

Lord Hollick Portrait Lord Hollick (Lab)
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I thank all the speakers in today’s debate. The Minister can be in no doubt about the anger about what has happened in the water industry and the fury of consumers. He talked about companies not being prepared to reveal what their price increases will be. Well, they have just announced them, and they are going to be between 28% before inflation and, in the case of Thames Water, 61%. I am afraid they will fall on household bills. Nobody is hiding the cost of this neglect of investment. Since privatisation, £200 billion has been invested in the water industry, which is about £5 billion per year. I am not adjusting for inflation, but we have now gone up to £96 billion over the next five years, so we can see the sharp rise to cover the lost ground. I pointed out in my remarks that, at the time, inflation and interest rates were low and therefore the cost of repairing the roof while the sun shone was there for all to see, but I am afraid that the Government squandered that opportunity, and we all will pay the bill for that.

Motion agreed.

Net Zero (Economic Affairs Committee Report)

Monday 16th October 2023

(7 months, 1 week ago)

Lords Chamber
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Motion to Take Note
Moved by
Baroness Kramer Portrait Baroness Kramer
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That this House takes note of the Report from the Economic Affairs Committee Investing in energy: price, security, and the transition to net zero (1st Report, HL Paper 49).

Baroness Kramer Portrait Baroness Kramer (LD)
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My Lords, the noble Lord, Lord Bridges, the chair of the Economic Affairs Committee, sends the House his apologies as he had to be absent today. He wished to move the debate on the committee’s report Investing in Energy: Price, Security, and the Transition to Net Zero because it has been 15 months since it was issued, but any further delay in debating its conclusions and recommendations in this Chamber would have been intolerable, so the role falls to me.

I start by thanking all the witnesses who gave evidence to the committee and expressing our appreciation to the outstanding staff who were essential in enabling us to deliver the report: Adrian Hitchins, Peter Jenion and Gurjeet Rathore, and I also thank one of our current staff, Neil Mellor, who helped me remember a report that I had put aside 15 months ago.

This is a brief debate, so I shall spare everyone a discussion of the impact of the Russian war in Ukraine on global energy markets and the impact of energy price rises on the cost of living of ordinary people. However, both factors were constantly in our minds and part of the background as we developed this report. Our focus was the Government’s commitment in law to achieve net zero by 2050 and their target to decarbonise the power system by 2035. We sought to answer the question: how can the Government mobilise the capital needed to ensure that the transition is orderly and that energy supply is affordable and reliable?

Our conclusions were structured under four headings. First, we considered investment and action in the short term. We urged the Government to seize the moment and respond to public concerns on energy prices by: speeding up the pace of reducing energy consumption, notably by accelerating measures such as home insulation; signalling very clearly that goal to the private sector; and providing far more detail on how such investment will be released. We asked the Government to publish an energy demand strategy and to include financing options and a means of incentivising investment in energy-efficient measures. We are still waiting. We called on the Government to re-examine their limited ambitions for onshore wind, to extend the life of nuclear power stations over coal power stations—that essentially seems to be the focus—and to seek an agreement with the EU and Norway on energy co-operation to manage possible shortages of liquefied natural gas.

Our second set of recommendations focused on increasing investment in the transition. While the committee supported the Government’s clear and ambitious targets for many renewable technologies, we asked for far more policy detail on a range of issues, including long-duration energy storage, market structures and mechanisms for hydrogen production, market models for carbon capture and storage, and investment in transition networks. We also sought more policy detail on the delivery plan for nuclear and sought an explanation for the Government’s target for 24-gigawatt nuclear capacity when the Climate Change Committee can see a route to only something like half that capacity. That question remains essentially unanswered.

The committee also suggested:

“Any extension of oil and gas exploration or investment should focus on projects with short lead times … and not enable substantial levels of long-term production that conflicts with net-zero objectives”.

I shall make a comment about that at the end of my speech.

We sought an assessment of the energy profits levy and any plans for carbon pricing. To oversee the complexity of the energy network, new technology and the security of supply, we recommended a new body, independent of government: the future systems operator.

Our third set of recommendations focused on financial regulation to ensure that the mandate for the Bank of England to support the transition to net zero included having regard to energy security. We received a fairly extensive response from the Bank of England assuring us that it was aware of the issues.

We called for better data and better disclosure. We also asked for the Government to help unlock new capital with Solvency UK; they have made moves in that direction. We asked them to work internationally on green taxonomies—investors need consistency, not just in the UK but across the whole marketplace that they serve—and to consider international opportunities, such as working with the EU common purchase platform. We also raised the issue of access to critical minerals and mitigating vulnerabilities in the supply chain.

All these strands were pulled together in our call for an energy strategy. Throughout the committee’s work, it became increasingly evident that there is a critical missing piece: a detailed and comprehensive plan. The gaps between the Government’s ambition and practical policy are significant. We recommended that the strategy should both set out a proper plan, even if in broad terms, and provide an assessment of costs and savings. A net-zero delivery plan would highlight vulnerabilities, take account of key issues such as energy security and foreign policy, and energy affordability, and help avoid a disorderly transition. An agreed plan in which all parties have confidence removes uncertainty—and, without certainty, the private sector will not make the critical commitments and investments necessary to achieve net zero.

The work of the committee ended here, in essence, but I will add a few comments of my own based on recent developments; I stress that they are my own comments. I recognise that this Government have made some progress—on a hydrogen road map, on identifying our first carbon capture site, and on a plan for insulation—but I agree with the Climate Change Committee in its comments made in March:

“Delivery and deployment of infrastructure must be achieved at a much greater pace”.

I am—as I said, these are personal, not committee, remarks—utterly disappointed by the Government’s decision to approve the Rosebank oil and gas field development. There is no way that I can see that it meets the committee’s recommendation that

“investment should focus on projects with short lead times … and not enable substantial levels of long-term production that conflicts with net-zero objectives”.

The five-year delay of the ban on the sale of new petrol and diesel cars is not just a blow to the UK automotive industry but, indeed, a blow to achieving net zero on time. I think others in this debate will expand on this but, talking to people within the automotive industry, the comment that has struck me most strongly is that the delay has made a fool of those who believed, and made investment decisions based on, the Government’s original commitment. Undermining certainty is a very dangerous thing to do, especially in a policy so critical to us as net zero, and so complex because of all the related activities and decisions.

The decision to delay for nine years the ban on fossil fuel heating for off-gas grid homes; exemptions to the ban on the sale of gas boilers in 2035; scrapping the requirement for landlords to ensure that all rental properties have an energy performance certificate of grade C or higher from 2025—all these are not just disappointments but, again, undercut any sense of certainty for the private sector as it decides how to plan and invest.

I thank all the members of the committee, several of whom will be speaking in this debate. They often have much more understanding of the broader issues here than I do, so I hope that their comments will be taken very seriously. Some of our members have passed on to pastures new. I also thank our chairman, the noble Lord, Lord Bridges, even in his absence, for his determination to be inclusive; we were a committee of fairly varied opinions. His wisdom and skill in focusing on the essentials in the end gave us harmony and brought us to a report around which there was a great deal of consensus.

The key messages of the report are the need for accelerated action, for an independent co-ordinating body and, above all, for a detailed and comprehensive energy strategy that gives certainty to individuals and the private sector, and—these are my own words—is not subject to whims and elections. That remains key to achieving net zero and resolving the potential conflict of net zero, affordable energy and energy security. We have to make sure that all three goals are wedded together in the co-ordinated plan that we then deliver. I ask that the House takes note of the report.

Lord Frost Portrait Lord Frost (Con)
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My Lords, I am grateful for the opportunity to debate this report. I declare my interest as an unpaid trustee of the Global Warming Policy Foundation, a charity.

The committee’s report, as has been said, is now over a year old and therefore, unfortunately, rather out of date. It reflects a world where the policy goal of net zero was undisputed and its economic and financial underpinnings unquestioned. As we know, during 2023, as the real-world costs of the net-zero transition have become more apparent across western economies, we are beginning to see thinking change. Our own Government’s very welcome, though still minimalist, decisions to delay the deadlines for compulsory transition to EVs and gas boilers recognise the reality that the current course to net zero is likely to prove impossibly costly and politically and economically unworkable.

I certainly agree with the committee’s scepticism, though perhaps not from the same direction, about the relationship between the Government’s net-zero plans and hard reality. Nowhere is that scepticism more justified than in one area: wind power. Given the short time available, that is the issue I want to concentrate on today. One often hears it said that wind power is both a cheap form of energy and one that enhances energy security. I am afraid that both those points are fundamentally mistaken. Given the time constraints, I want to make just two broad points.

The first of these is the obvious one: wind power is intermittent and therefore requires back-up. We get wind power only when the wind blows, so widespread use of it means that we must maintain a back-up source of dispatchable power, currently gas. It is argued that the back-up to wind power in the future will be electricity storage. Unfortunately, this is implausible. Doing so through battery power will be fabulously expensive—several times the annual GDP of this country—if it is even possible at all. Hydrogen might be a little cheaper, though still well beyond what can plausibly be paid for. I am afraid that last month’s Royal Society report about hydrogen storage, which purported to show its feasibility, is based on rather implausible assumptions. At least, I hope they are implausible. For example, there is a belief that total UK electricity demand in 2050 will be half what it is now. We face a rather bleak future as a country if that is so.

The truth, which wind power proponents shy away from, is that the more wind power you have, the more gas you need as well. The resultant rickety generation system then makes the overall grid less reliable, while balancing it becomes ever more complex and costly—last year it was nearly £4 billion for this alone. This stressed renewables grid cannot be relied on by a modern economy.

Secondly, as a result of these things, wind power is expensive. It is obvious that running wind plus back-up will always be more expensive than just back-up. Moreover, running that back-up gas network at partial efficiency brings extra costs and deters the investment that we want to see. It is widely believed that wind power costs are coming down fast, but this really does not seem to be the case. The estimates produced by the department are a little disconnected from this reality.

If, as the department claims, an offshore wind farm can deliver power at £44 per megawatt hour, or £55 in current money, why did no wind farm developer take up the offer last month of contracts for difference at £65 per megawatt hour? Why did Vattenfall cancel its plans for the Norfolk Boreas wind farm in July, rather than deliver energy at the price it was contracted to—prices, by the way, that ignore the costs of back-up or strain on the grid? It is obvious from examining the published accounts of companies that costs have not fallen to any great extent, onshore or offshore. A policy based on the assumption that they have therefore makes no sense.

The truth is that the whole wind power project risks being a huge waste of effort and resources. It is going to deliver us, at fabulous cost, an electricity grid that is more unreliable, less secure and more expensive than the one we have now. The correct way forward to reach any serious target to reduce carbon emissions has to be a gas to nuclear programme, first by more modern CCGT generation at existing sites and restarting fracking, following that with a revived nuclear programme. We will obviously be able to do that only if we can eliminate the market distortions and the massive subsidies and consumer costs that come with the current wind power programme.

I do not have much expectation that this is going to happen, given the investment that this Government and their predecessors have made in wind power. I still hope that my noble friend the Minister and his department will look at these issues with a fresh eye and perhaps at least put in place a proper red team review of the wind power programme, before it is too late.

Viscount Chandos Portrait Viscount Chandos (Lab)
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My Lords, the noble Baroness, Lady Kramer, has made a masterly introduction to this debate on the Economic Affairs Committee’s report Investing in Energy: Price, Security, and the Transition to Net Zero, a profoundly complex and challenging subject. I was proud to be a member of the committee at the time of the inquiry and, like the noble Baroness, I pay tribute to the noble Lord, Lord Bridges, for his excellent chairmanship and the work of other committee members and the staff.

A week is a long time in politics, so the 65 weeks that have elapsed since the publication of this report is an age. Unlike the noble Lord, Lord Frost, I believe that its analysis and conclusions stand up well to the changes during this time, although three different Prime Ministers and, in particular, breathtaking U-turns by the current incumbent of 10 Downing Street—in residence but not in power—have continued to move the goalposts hugely on government policy. I should draw the attention of the House to my interests as disclosed in the register and in the report: as a trustee of the Esmée Fairbairn Foundation—a major funder of environmental causes in the UK as well as, through its endowment, an investor in sustainable energy funds—and as a personal shareholder in Greencoat UK Wind.

Within the committee, we debated whether the challenge of balancing the issues of cost, security and achieving net zero could helpfully be described as a trilemma. I argue that it is even worse, not least in mangling the English language: it is a quadrilemma, as security must not involve unacceptable conflicts with, or compromises of, our foreign policy. For that reason, in the short to medium term the committee concluded, based on evidence we received from witnesses across the range of interested parties, that there needs to be further selective investment in fossil fuel production to meet the country’s need for energy security, consistent with other foreign policy objectives. But my personal view, at least partly shared by the committee, I think, is that to help meet the net-zero target, which is not an essay crisis with a last-minute deadline but a continuous path of action and emissions reductions over the next 27 years, the Government may need not just to prioritise the approval of short lead-time projects but to find ways to underwrite shorter periods for exploration of new fields. Stranded reserves may need to remain stranded.

In my remaining time, I will touch on two big themes: technology and money. The astonishing creativity of scientists and the technology sector as a whole must not be an excuse for inaction now. Technology in a wide range of areas, such as hydrogen, network transmission, carbon capture and, most significantly, nuclear, lies at the heart of the progressive improvements and reductions in emissions that are essential to achieve the underlying objectives of net zero: keeping global warming to no more than 1.5 degrees centigrade, and, importantly, a 45% reduction in emissions by 2030—seven years’ time.

Investment, both pure science and commercial, is highly important. However, a realistic assessment of how quickly technology can deliver results must be factored into the policies the Government adopt. Investors in hydrogen projects see no prospect of it being a valid means of storage in this decade. The Government have placed great weight on small modular reactors riding like the cavalry to the rescue, but the technology is still unproven. The first licence in the US was granted at the beginning of this year after the expenditure by the company concerned of half a billion dollars over 10 years.

Finally, on money and timescale, if a week is a long time in politics, then an hour is a long time for hedge fund traders. That seems to be the only explanation for the Prime Minister’s claim that recent decisions were essentially long-term ones. Net zero cannot be achieved without the expenditure of money. Just kicking the can down the road beyond the next election, perhaps betraying a lack of confidence from the Prime Minister that it will be his problem, is not acceptable. A Labour Government will make that investment within the constraints—

Lord Mott Portrait Lord Mott (Con)
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My Lords, can we keep all our speeches to five minutes, please? Could the noble Viscount now wrap up his comments?

Viscount Chandos Portrait Viscount Chandos (Lab)
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A Labour Government will make the investment that this Government have failed to.

Lord Turnbull Portrait Lord Turnbull (CB)
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My Lords, I am now a member of the Economic Affairs Committee, but I was not when this report was published. Had I been, I would have endorsed it for bringing a measure of realism and proportion to the debate about net zero. It is helpful that the report recognises that there will be a transition, which will take several decades, during which there will still be a requirement for fossil fuels in the British economy.

When I first worked on energy policy some decades ago, the dominant framework was the so-called trilemma. Energy policy had three objectives. The first was sustainability; it had to advance the Government’s environmental objectives, especially on climate change. Secondly, there was the objective of affordability; the price of energy should not impoverish unfairly poorer people or small businesses, nor make major industries uncompetitive. Third was security of supply and resilience; it should protect energy consumers and society from major shocks. The aim was to find a solution which optimised a combination of those objectives. It was not to pick one objective and maximise the achievement of that at the expense of the others.

The Climate Change Act 2008 demolished this framework, giving climate change primacy. It is the only objective protected in statute. The Climate Change Committee was established to warn government about progress towards its environmental goals and to propose measures needed to correct course. The CCC has also been backed by extremely eloquent and well-paid spokesmen, some of whom were sitting here a few minutes ago.

As well as no statutory backing, the other objectives have had no equivalent sponsor. There has been no body equally resourced and voiced to defend the interests of poorer people, small businesses and traders, nor to speak for major industries. Nor, more dangerously, has there been a body of equivalent authority to monitor the state of energy security or resilience. This has become glaringly apparent since the Russian invasion of Ukraine. Witness the reluctance to start filling the Rough storage facility. For too long we have tolerated dependence on our enemies, such as Russia, or our Saudi fair-weather friends. With such a lopsided structure it is unsurprising that policy decisions have been warped.

The EAC report is therefore to be welcomed for bringing a greater sense of balance between the three objectives. It is also consistent with the Prime Minister’s latest set of announcements. The reaction from the CCC has focused on two issues in particular: the coal mine in Cumbria and the go-ahead for offshore oil and gas exploration. The CCC argued that these measures have no effect on energy prices and that they do not enhance security of supply. Despite the eminence of their proponents, both arguments are flawed.

The EAC report acknowledged that extra UK fossil fuel output will have little effect on prices, which are set in world markets, but this is not the knock-down argument it claims to be. If, during the transition to net zero, UK output of oil and gas is higher and world prices go up, the value of that extra output will also rise—in effect, creating a natural hedge to offset what would be a loss to UK national income.

On output, it is argued that security will not be enhanced if the extra output is contracted to be exported. However, that depends on how the contracts are written and the terms the Government set for extraction licences. For example, is there an obligation to contribute to building up our strategic reserves? I doubt if any other country in the world takes the view that having greater domestic output has no bearing on the security of supply.

Notice the contradiction here. It is said that extra fossil fuel output is too small to be material on prices, but that same increase in production is claimed to be big enough to have a damaging impact on world CO2 emissions. You cannot have it both ways. Eventually the CCC is forced back on to the argument that the extra output will reduce our influence in the world debate. However, with our CO2 emissions being only about 1% of the world’s total, we are not major players, and we will be seen as having a loud voice but carrying a small stick.

I have one reservation with the report. It looks favourably on the discussions going on to ensure that banks and other sources of finance pay greater attention to the risks of fossil fuel investments becoming stranded assets. Indeed, they could be—just like the canals. But there are many places where one will find stranded assets. A lot of them are more immediate and closer to home. A walk down the high streets of Britain or its office districts will show you many stranded assets. The airfields of the south-west of the USA are littered with surplus aircraft, which are stranded on someone’s books. By all means, be wary of stranded assets, but do not treat oil and gas investments as a special case.

In conclusion, I welcome this report, with its greater recognition that oil and gas will be needed during the transition, and indeed beyond 2050, and that we must pay more attention to all three objectives in the trilemma. So long as we continue to be a consumer of oil and gas, it would be better to produce a higher proportion of it for ourselves.

Baroness Bennett of Manor Castle Portrait Baroness Bennett of Manor Castle (GP)
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My Lords, it is a pleasure to take part in this debate. I listened particularly carefully to the speech of the noble Lord, Lord Frost, who represents a small but very vocal segment of the debate covered by this report and the broader net-zero issue. I would like to correct one statement the noble Lord made about the Royal Society report. It does not assume a halving of electricity demand. I will quote a paragraph from the report:

“The demand for electricity in Great Britain in 2050 is taken to be 570 TWh/year in this briefing, roughly twice current annual demand”.

I thank the committee for the report and the noble Baroness, Lady Kramer, for her excellent introduction. I will make three points, pairing the 86 pages of the report and the Government’s 28-page official response—I am not counting the letter from the right honourable Mr Rees-Mogg, who was briefly relevant as the Secretary of State—because, despite the change in governing regime, it seems that there has been disturbingly little change in government energy policy.

The noble Baroness, Lady Kramer, focused on paragraph 121 of the Economic Affairs Committee’s report, and I make no apologies for focusing on it as well, because it is absolutely crucial. It quotes Dr Fatih Birol, the executive director of the International Energy Agency:

“Nobody should imagine that Russia’s invasion can justify a wave of new large-scale fossil fuel infrastructure in a world that wants to limit global warming to 1.5°C”.

But in the Government’s written response, as in their subsequent response, there is reference to launching a

“new oil and gas licensing round”,

which is exactly what they have gone ahead and done. You might think that they have not read the report at all. The noble Lord preceding me referred to stranded assets. I point out that the Committee on Climate Change estimates that new oil and gas licences take, on average, 28 years to begin producing. We are talking at a time when we clearly cannot use any significant amounts of oil and gas.

My second point is on the committee’s recommendation that the Government publish an “energy demand reduction strategy”, focusing particularly on home energy efficiency. This is just one of the many disaster areas of energy policy. It is worth noting that insulation rates in homes today are well below where they were when David Cameron, as Prime Minister, decided to “cut the green crap”. Listening to the Prime Minister’s comments at the recent Tory party conference, you might have thought that, given the committee’s report’s focus on the need for green skills—these are often debated in your Lordships’ House—they might have been a focus of Tory education policy. So can the Minister say how the proposed new British baccalaureate, the major education policy announcement, fits with the green skills agenda?

Thirdly, on carbon pricing, the committee calls for the provision of

“clarity to investors and … incentives to fund projects necessary for the transition”.

The official government response here has since been overtaken by events. We have recently seen a sharp decline in the carbon price, attributable to the Government’s decision to release 53.5 million additional allowances from a reserve pot to the market between 2024 and 2027. That means that emissions prices have fallen to less than half of the EU equivalent, when they used to be more or less at parity.

I credit the Financial Times for noting the financial and economic impact of this. It has left British exporters facing hundreds of millions of pounds in EU carbon border taxes within the next decade. That means that money that would have come to the British Treasury will now go to the EU; are the Government happy about that?

Baroness Noakes Portrait Baroness Noakes (Con)
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My Lords, I declare my registered interests as an investor in a number of energy companies. I too am a member of the Economic Affairs Committee, and I pay tribute to the chairmanship of my noble friend Lord Bridges of Headley. It is a shame that he is not able to be here to lead this debate, but I thank the noble Baroness, Lady Kramer, for introducing the report so ably.

It has taken 15 months for there to be a debate on this report and, after all that, we are allowed only five minutes. Our Select Committees should be an integral part of how Parliament holds the Government to account, but they are being sidelined. I hope that the Government will do better in future to allow Select Committee reports the time they deserve in your Lordships’ House.

A lot has happened in the energy space in the last year since we reported. I particularly welcome the Government’s recent announcements, which have brought a welcome sense of pragmatism to the delivery of net zero. As we heard, the report focused on how much investment was needed in order to deliver net zero by 2050 and where that investment would come from. The Government’s response has not shed much more light on this. But the even bigger questions, which the report did not set out to look at, are: who pays, when they have to pay it and how much they have to pay. These are the biggest challenges facing the delivery of net zero.

The Government have never been clear with the public about how much the cost of achieving net zero will affect them. Indeed, my noble friend Lord Hammond has recently said that successive Governments have been “systematically dishonest” about it. The public have little understanding about how green levies are already inflating their energy bills or about what they will pay for in future, including the impact of delivering a nuclear programme. We need a proper grown-up debate with the public about what costs they are prepared to accept.

The advocates of net zero often assert that, in the long run, the costs are likely to be outweighed by the benefits. Long-range forecasts, such as those from the Committee on Climate Change, are only as good as the underlying assumptions on which they are based, and it is not surprising that many of those assumptions are highly contestable. They were also made at a time when interest rates were near zero, and today’s “higher for longer” environment does not improve the calculations.

The renewables sector lives on subsidies and, as we heard, it imposes costs by way of extra investment in grid infrastructure and in back-up storage or generation capacity for when the sun does not shine and the wind does not blow. Consumers pay for all of that. As my noble friend Lord Frost pointed out, renewable energy itself seems to be getting more expensive rather than less, as the latest auction round showed. Who really knows what renewables will end up costing consumers, not in a hypothetical 2050 but in three, five or 10 years’ time? A 25-year forecast has no meaning to those who pay bills in the short and medium term. Today’s energy consumers should be centre stage in the conversations about the cost of delivering net zero.

The country as a whole remains supportive of the Government’s net-zero ambitions, but polling shows that support weakens when the impact on bills is factored in. As energy bill payers discover what net zero is costing them, and as those costs increase, so support for the policies will likely decrease. At the end of the day, net zero will be delivered in this country only if the British people are prepared to pay for it, either in their bills or in higher taxes. The Secretary of State for Energy Security and Net Zero described net zero as a form of religion. Religious belief is all very well, but it does not pay the bills.

It was never sensible to sign a blank cheque to deliver net zero in a country that accounts for less than 1% of global emissions, and we certainly ought not to sign a blank cheque for some notion of global leadership. This House must never forget that the British people will decide what happens, whatever the politicians and the metropolitan elite think.

Lord Howell of Guildford Portrait Lord Howell of Guildford (Con)
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My Lords, I apologise for delaying the Front-Bench speakers a few minutes in their replies to what I regard as a really excellent report. In fact, I rate it the best one that has so far come from your Lordships’ House on the great energy transition.

In my brief intervention I will simply add one point. The report rightly explains that most of the funds for the great energy transition ahead will have to come from the private sector, which will have to do the heavy lifting. Governments may be strapped for cash—all Governments, not just this one, or any future one—but, as the report rightly says, there is certainly a huge amount of investment money around the world in both pension funds and sovereign wealth funds. Indeed, I declare an interest in advising one of the biggest funds, as in the register.

These funds will come here only if there are investible projects, and this applies acutely in the nuclear power field, which is central to our all-electric future. The present UK plan, as I understand it, is to build another mega-gigawatt plant at Sizewell in Suffolk, described as a replica of the unfinished and vastly overbudget one now being built at Hinkley Point C. This is just not very attractive for investors; even with the regulated asset-based idea, which piles the money on the consumer and taxpayer from the start, the attraction is not really there. The EPR design is anyway full of problems; even the French say that it is too complicated. The prize one that was supposed to work in China had to be partly closed, and others are full of difficulties. The taxpayer and the struggling consumer have to carry the full burden and a good deal of the risk.

Smaller new designs, which are becoming available and can be built much quicker off site, should right now be the absolute priority, as in many other countries. They could be highly attractive to investors and are ready to produce clean electricity from existing nuclear sites. Of course such sites will have the wiring already, which many other sites do not, and they can be ready before these risky and out-of-date white elephants are anywhere near finished, and well before the end of this decade. Therefore they will make a major contribution to our net-zero aims.

Please will my noble friend confirm that the Government are at least aware of those key facts before they mistakenly plunge ahead with Sizewell C, committing billions to it, which I understand could be very soon? Indeed, it would be nice if the opposition spokesmen could also confirm that they are aware of these realities, which so far seem to have escaped too many people.

Lord Teverson Portrait Lord Teverson (LD)
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My Lords, I also declare my interest: it is in a company called Aldustria Ltd, which is into energy storage. I absolutely agree with the noble Lord, Lord Frost, that there are many issues around energy storage, particularly in the long term, on which I know the Government have done a number of consultations.

I congratulate my noble friend Lady Kramer on her introduction to this report. She is absolutely right: it has taken far too long to get it to the Floor of the House. As the noble Viscount, Lord Chandos, said, there have been three Prime Ministers since the report came out. The only thing that I would say is that it has actually managed to get to the end of its process slightly quicker than the Government’s Energy Bill, which started in the same month that this report was published but has still to be completed. I hope that that will happen before the end of this month. That shows the urgency that the Government wanted to put into their energy strategy but did not, particularly on electricity and carbon capture and storage.

I shall come back on energy costs for a minute, in response to the noble Lord, Lord Frost. The noble Viscount, Lord Chandos, is absolutely right about 2050. It is not about reaching net zero that year—you have to get it all the way through. I do not think that methane was mentioned in the report—I may be wrong—but that is one area where there may be some quicker wins.

I absolutely agree with the noble Lord, Lord Turnbull, about Rough storage, although I think that only a small amount of that facility is contracted to the Government. Centrica is hanging on to the rest of it, and there is no guarantee that it will be there long term. That is a real vulnerability.

As for new gas and oil and, particularly, coal facilities, I do not see any UK Government banning exports of those products. I do not see that ever happening, which is why I do not think that there is any effect on our energy security or, indeed, on global pricing for those new openings.

I shall come back on demand reduction in a minute in response to the noble Baroness, Lady Bennett, as it is an important area. But I just say to the noble Baroness, Lady Noakes, that I came up as a traditional economist, and it always seemed to me that it was really important to cost the idea of externalities into actual pricing systems. With carbon emissions we have huge externalities that are not priced into market competition—and that is why there have to be differences.

I also say to the noble Baroness that, of course, there is a huge kickback at the moment to the Government on contracts for difference through the Low Carbon Contracts Company, whereby at the moment actual market prices are hugely higher than strike prices. I would be interested to understand from the Minister—

Lord Teverson Portrait Lord Teverson (LD)
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Yes, exactly. The Minister corrects me. That is even more to the point. I think it has got to several billion pounds in terms of coming back into that sector working the other way, which probably exceeds now the green costs that there were. That is quite an optimistic look at that.

It seems to me that one real problem in this area—because the world has moved on since last July—is with those recent announcements that my noble friend went through from the Prime Minister. They probably did not have as big an effect as some people said, but they did drive a horse and carriage through our international reputation, as indeed did the coal decision in Cumbria. Our being seen as a global leader in this area, which the report was keen to emphasise, has been trashed to a large degree, and has been seen as such by allies such as America and the European Union.

I want to come back to those announcements, one of which was to abolish the Energy Efficiency Taskforce. The Minister was chair of that, and I understand that four meetings took place. Whether you look at security or at cost, the most secure energy is the energy that you do not need. The energy-efficiency side is important in that area, as well as cost. I would be interested to understand from the Minister why he was made redundant by the abolition of that committee. The UK should be a real leader, and really move in this area. The report asks for an energy demand reduction strategy, and that is really called for. It is not just around buildings, as the Government’s response said that it was; it is around a much broader area, including appliances and other interests.

One thing that has been emphasised during this debate is private investment, which it is clear is absolutely essential to deliver net zero. I am not pessimistic about this. Most private investment takes place to reduce costs, not to increase them. Companies do not invest to increase prices; they invest to reduce prices, and that is what we should aim for with the net-zero strategy.

One problem with the Prime Minister’s announcement, and all the other issues that have happened, is that we have a wobble with investor confidence—absolutely we do. Those messages that go out to industry and the investment sector say that we are no longer reliable on our government policy or on the foundation of confidence going forward. That has an even bigger effect when we have the Inflation Reduction Act in the United States and the EU green deal industrial plan on the other side of the channel. I would be interested to understand from the Minister when the Government will really respond to that huge financial challenge, which really prejudices how we can deliver net zero through the private sector in future.

I will make one or two further points, as I am sure the House will want to move on. The noble Baroness mentioned the UK Emissions Trading Scheme. I have been very hopeful—not because I am pro-European but because of liquidity and various other areas—that there should be a tie-up between the UK Emissions Trading Scheme and the EU equivalent. I understood that that was a government objective, but now we have a huge divergence in prices. The UK ETS a year ago was about £100 per carbon tonne; it is now down below £40. In the EU, it was around €100 per tonne a year ago but is now down to about €80. A huge difference has opened up. I would be interested to hear the Minister’s reaction on how the carbon border adjustment mechanism will affect that, as Europe starts to develop it over the next few years. That price signal is so important in terms of taxation and disappearing incentives for investment in our economy.

I am glad to see the noble Lord, Lord West, is here, because one of the key issues in energy security at the moment is defence, which has not been mentioned in this debate. In Finland, we have seen potential interference with the explosion of one of its energy pipelines and we have seen Nord Stream 1 and 2 destroyed. We know from our intelligence that the Russian Federation is keeping a very close eye on our undersea energy and communication networks. The Minister may not have an answer to this, but it is one of our major concerns in energy security as we move forward and have more interconnectors offshore. I am sure he agrees that this is a major thing we must look at.

Finally, coming back to consumers, the energy companies and Ofgem estimate that, as we reach the end of summer and enter winter and higher bills, the outstanding energy bills from consumers will be about £2.6 billion. Are the Government happy with that? Do they think it is sustainable for low-income families? Do they intend to do anything about it? This is probably the biggest challenge of all. Although the noble Lord, Lord Frost, talked about the importance of gas, which will be important for many years, the gas price has driven inflation and the high costs to families of keeping warm. It has led to inflation, which has led to the failure of those offshore wind projects. It is important that we restart that, but the problem is not the technology and the price coming down in real terms; the problem is inflation. What will happen to families over this winter?

Lord Lennie Portrait Lord Lennie (Lab)
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My Lords, I thank the noble Baroness, Lady Kramer, and, through her, the noble Lord, Lord Bridges, and other members of the Economic Affairs Committee for producing this weighty report. July 2022 was also when the Government first announced their intention to legislate for the country’s future energy needs in the Energy Bill. The Energy Bill has now expanded to some 400-plus pages, has still not become an Act of Parliament and is due for further consideration by the other place later this week.

Lord Callanan Portrait Lord Callanan (Con)
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It would not if the Government acted as Parliament recommended.

Lord Lennie Portrait Lord Lennie (Lab)
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There is a process to go through. The amendments we made were to the benefit of the Bill rather than to take away from it.

There is some crossover between the Economic Affairs Committee report and the legislation but, sadly, nowhere near enough. The starting point of this report was back in February 2022, when the Economic Affairs Committee launched an inquiry into how the Government could support investment in UK energy to achieve greater security of supply, improve affordability and meet the UK’s net-zero targets.

The committee considered how the Government planned to achieve the following two separate but related objectives. First was the commitment in law to achieve net zero by 2050 alongside the target to decarbonise the system by 2035. The committee considered how this target might be achieved while ensuring the UK’s energy supply was “affordable and reliable”. It argued that encouraging private sector investment was the key to achieving net zero. However, the committee said there was

“a gap between the Government’s ambitions and the practical policy that is needed to provide confidence and clear market signals to investors”.

The second was the Government’s plans to mitigate the effect of rising energy prices exacerbated by Russia’s appalling invasion of Ukraine in 2022.

The report produced by the committee recommended that the Government should take the following measures over the next three to five years—now two to four years. First, they should publish a net-zero delivery plan which would detail how the UK could achieve net zero in an orderly way. Secondly, they should publish an energy demand reduction strategy which would include measures to increase incentives for investment in energy efficiency measures for buildings and to support the development of resilient supply chains and workforce skills—as the noble Lord, Lord Teverson, pointed out, this has not happened. Thirdly, they should increase the deployment of renewable energy sources to reduce the UK’s dependence on gas markets, including onshore wind, which it describes as

“one of the cheapest and fastest ways to increase renewable energy generation”,

despite the reservations of the noble Lord, Lord Frost. Fourthly, they should maintain existing energy generation in the immediate future while extending the life of nuclear power stations over coal power stations, as this would result in lower carbon emissions. Finally, they should seek to reach agreement with other European countries to manage energy supply emergencies. Have any of these measures been taken on board?

The committee also recommended that the Government should take action to increase investor confidence to make more private capital available to support the transition to net zero, by setting out a cost analysis of their targets to achieve 24 gigawatts of nuclear capacity. As the noble Baroness, Lady Kramer, pointed out, this figure is more than double the capacity assumed by the Climate Change Committee. Can the Minister explain the variance between the two? It also recommended they provide more detail on the capacity, timeframes and expected costs of increasing long-duration energy storage, outline the market structures and mechanisms that would be used to support increased hydrogen production and support carbon capture and storage by fulfilling their commitment to develop four low-carbon industrial clusters. They should also design “market models” to provide information to investors on the types of technology required, to give potential investors greater confidence in the long-term viability of carbon capture and storage. Is there any sign of this happening?

Since the report was published, a number of government changes have affected energy policy. The Energy Bill was introduced in 2022 under Prime Minister Boris Johnson. It included measures intended to leverage investment in clean technologies, protect customers and maintain the safety, security and resilience of the energy system. It reached Committee on 7 September 2022 and was thereafter paused by the new Prime Minister, Liz Truss. Following Liz Truss’s resignation, in December 2022 Committee started again and, under Prime Minister Rishi Sunak, the House of Commons is now scheduled to consider Lords amendments on 18 October. In February 2023, BEIS was replaced, with responsibility for energy policy transferred to the Department for Energy Security and Net Zero. Grant Shapps served as Secretary of State for Energy from February to 31 August; currently, the Secretary of State is Claire Coutinho, but for how long is anyone’s guess.

Chris Skidmore published his review Mission Zero: Independent Review of Net Zero on 13 January 2023. It concluded that the UK was not on track to meet all its targets towards achieving net zero and stated that the Government needed to do more to make the most of the economic opportunities arising from the transition to net zero. The Government have published a series of policy updates on their plans. In March 2023, Powering Up Britain was Secretary of State Grant Shapps’s launch of the new Government’s energy strategy. In the same month, Mobilising Green Investment: 2023 Green Finance Strategy updated the previous green strategy. In this, the Government committed to commissioning an

“industry-led … review into how the UK can enhance our position and become the best place in the world for raising transition capital”.

Has it happened?

On 20 September 2023, Rishi Sunak, still the PM, gave a speech in which he announced some changes to government policy on achieving net zero. While working towards meeting their overall 2050 net-zero target, he said that policies including the ending of the sale of petrol and diesel cars and vans, plus the sale of new gas boilers, would be pushed back by five years to 2035. How does this help achieve net zero? Its effect has been to deter investment by undermining the commitment and consistency required by business, as the noble Lord, Lord Teverson, and the noble Baroness, Lady Kramer, said.

This is the framework in which the Economic Affairs Committee report is being considered. Of its 38 recommendations, only a small handful have been taken forward. However, the Government’s initiatives to secure private capital by certainty and leadership are woefully inadequate. In the meantime, more changes have been confirmed. Alok Sharma, chair of COP 26, is standing down. Chris Skidmore is not going to contest his seat in the next general election. The offshore wind auction attracted no bids because the strike price was wrong.

Tony Blair once said:

“I’ve not got a reverse gear”.

It is a pity the same cannot be said of Rishi Sunak. The report rightly states that the Government cannot be expected to accurately predict what is going to happen in the future. Surely, though, we can expect more than what is currently on offer.

Labour would establish Great British Energy. It would invest in order that Britain can lead the world in carbon-free energy and technologies. Labour will ensure that we have the grid we need to rewire our country. Our public investment will stimulate private investment to bring prosperity to every part of Britain.

Lord Callanan Portrait Lord Callanan (Con)
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First, I add my thanks to the noble Baroness, Lady Kramer, for securing this debate, as well as thanking noble Lords for their insightful contributions.

It was a bit rich for the noble Lord, Lord Lennie, to criticise us for not getting the Energy Bill on to the statute book. The reason we have not done that is because the Opposition—despite saying that they support it—have supported largely irrelevant and superfluous amendments to the Bill. If the noble Lord is so keen to get it on to the statute book, he has the opportunity to prove it next week when it will come back to this House. I hope the Opposition will agree with the passage of the Bill, rather than just saying that they support it. We will then be able to get it on to the statute book and proceed to the secondary legislation, which will result from the primary powers, on things such as hydrogen, CCUS, et cetera.

Lord Lennie Portrait Lord Lennie (Lab)
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I think it is a bit rich for the Minister to say that the Opposition parties are responsible for the delay to the Energy Bill. It was paused by the Government for three or four months, when they went absolutely silent. We were knocking on the door asking what was happening with the Energy Bill, but nothing was forthcoming.

Lord Callanan Portrait Lord Callanan (Con)
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We would have had the Energy Bill on the statute book by now if it was not for the amendments the Opposition had supported. My point remains.

As the Prime Minister made clear in his recent speech, it is extremely important that we chart the fairest credible path to net zero, bringing people with us through democratic debate. As several noble Lords have mentioned, we have shifted to less drastic targets on phasing out fossil fuel cars and boilers because of the potential for sharp upfront costs to families already struggling with the cost of living.

The 2035 target for decarbonising the power sector, however, remains in place. Why is that? It is not just because this a critical bridge to net zero by 2050—which, I remind the House, we have a legal obligation to deliver —but, in response to my noble friend Lady Noakes, because wind and solar are the cheapest forms of electricity, which is also the reason why I, as a fiscal conservative, am in favour of them.

Against that, and as the noble Lord, Lord Turnbull, noted, international fossil fuel markets are volatile as they are driven by geopolitics, and our own reserves are now declining. Yes, the price of offshore wind has now risen from a historic low, but it remains well below that of gas, nuclear or gas with CCUS. In response to my noble friend Lady Noakes, we are going hard for clean electricity because it is not in tension with cheap electricity; nor is there tension in such electricity having the security of being produced domestically. It is, if you like, electricity with a UK flag plastered upon it.

The UK energy system in 2035 and beyond is going to be a mixture of tried and trusted technology and new innovation. We have connected approximately 40 giga- watts of renewable electricity—primarily wind and solar—to the grid since 2010. The point made by the noble Lord, Lord Teverson, is completely valid: with the high price of electricity, driven primarily by gas, the vast majority of those contracts for difference are now paying back into the system and subsidising consumer bills. It is not the case that the amount of renewables we have on the grid is contributing to the high price. It is driven entirely by international gas prices, and the problem is that we do not have enough of it connected to the grid. If we had more, prices would be lower.

On the nuclear side, Hinkley Point C and Sizewell C are under development, and we have set up Great British Nuclear, whose first objective is to support small modular reactor development, which my noble friend Lord Howell will, no doubt, be pleased to hear.

My noble friend Lord Frost raised an issue about wind and solar. Wind and solar are clean, cheap and homegrown. Of course, my noble friend is right to say that they currently rely on unabated gas as back-up. UK gas usage has declined in the past decade as wind power has proportionately increased. Of course, it is true to say that we need a portfolio of technologies to replace unabated gas, including power CCUS; hydrogen; short- and long-duration storage; renewables, such as tidal and geothermal; interconnection; energy efficiency; and demand side flexibility. We need all these technologies. My noble friend Lord Frost and the noble Lord, Lord Teverson, will be pleased to hear that there is currently nearly 38 gigawatts of electricity storage in its various forms in the planning pipeline.

Resilience comes from having diversified sources of supply and strong relationships with trusted partners and allies. We will work closely with the EU and bilaterally on both short- and long-term energy security. As the noble Viscount, Lord Chandos, will be pleased to hear, I was delighted recently to launch a UK-German hydrogen partnership with German State Secretary Nimmermann, where we are working on a broader energy and climate partnership.

Of course, investing in energy security is about demand as well as supply. We have made great progress in upgrading what is probably the oldest housing stock in the world. Despite what the noble Baroness, Lady Bennett, would have us believe, residential emissions in this country have fallen by something like 31% since 2010; that is the second biggest improvement in the G20.

The noble Lord, Lord Teverson, was concerned about the decision to discontinue the Energy Efficiency Taskforce. The body was formed very much around Dame Alison Rose as my co-chairman and, without her, we believed it was better to streamline its function into existing work. We remain extremely grateful to the members of the task force, who produced some excellent work and recommendations; I continue to meet them regularly and we will continue to listen to their wise and trusted advice on the importance of energy efficiency.

The noble Lord, Lord Lennie, mentioned demand management. I can inform the noble Lord that the National Grid is planning to run its demand flexibility service again this winter—subject to Ofgem approval—as it proved so successful last winter.

The noble Lord, Lord Teverson, asked about the UK ETS, and that remains a cornerstone of our climate policy. It remains the fact, though, that the price is set as a market mechanism. The UK ETS is a separate market to the EU ETS so it is possible, as we have seen, that prices will fluctuate and differ, although both do have similar levels of ambition. The noble Lord will have noted that in the summer, we decreased the cap and aligned it with our net-zero ambitions. This means that the number of permits we issue in the future will continue to decline in line with our net-zero ambitions.

A number of noble Lords raised the important issue of nuclear, and our current nuclear fleet is of course ageing. While the Government have no direct involvement in the decision to expand lifespans, we are pleased that extensions are happening where the technology is performing above original expectations, and I am pleased that the noble Baroness, Lady Kramer, is in agreement on this point. On new build, we are continuing towards taking Sizewell C to final investment decision this Parliament.

The noble Baroness, Lady Kramer, did however note her personal opposition to Rosebank, as did a number of other noble Lords. Notwithstanding the shift towards renewables, it is important to remember the total UK energy use in 2022 was still 77% oil and gas. Following extensive scrutiny by regulators, including environmental impact assessments and a public consultation, we have granted new licences, including for Rosebank. As the noble Lord, Lord Turnbull, alluded to, domestically produced gas is around four times cleaner than imported liquid natural gas. Oil and gas production also provides around £17 billion to the UK economy each year and supports around 200,000 jobs.

Let me address directly the point made by the noble Baroness, Lady Bennett. New licences will merely slow the already inbuilt decline in UK production levels, rather than see them increase above current levels. Even with continued exploration and development, oil and gas production is expected to decline by 7% per year. This decline is faster than the average global decline needed to align with the UN 1.5 degrees centigrade pathway. Even with new licences, the amount of oil and gas produced in the UK sector will continue to go down as these fields come to their natural end.

I will deal with the point on the AR5 auction round. It was successful in broadening contracts to both tidal and geothermal projects, but, of course, we were disappointed by the lack of offshore wind bids. That was because developers were experiencing unprecedented economic conditions. However, as we have now moved to an annual process, in less than a year AR6 will open, and we will of course incorporate the lessons learned and ensure that AR6 reflects the most recent evidence.

As stated, we remain committed to the challenging but deliverable target of decarbonising the power sector by 2035, while at the same time, and most importantly, maintaining security of supply, which is absolutely critical. The Government are supporting investment, innovation and regulatory reform across the full range of technologies that will need to be developed and deployed in concert.

Baroness Kramer Portrait Baroness Kramer (LD)
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My Lords, all that remains is for me to say thank you to all of those who participated in this debate. We have heard a very wide range of views and I think anyone listening to this range of speeches, including the Minister’s, would turn around and say “Yes, energy strategy and fast, energy demand reduction strategy and fast, and it sounds like we need infrastructure far more rapidly than we had previously planned”. I hope that those are the lessons that are taken away by everybody who is here, and I thank everyone for participating in this report and taking note of its content.

Motion agreed.

Israel and Gaza

Monday 16th October 2023

(7 months, 1 week ago)

Lords Chamber
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Lord True Portrait The Lord Privy Seal (Lord True) (Con)
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My Lords, with the leave of the House, I shall now repeat a Statement made in another place by my right honourable friend the Prime Minister. The Statement is as follows:

“Mr Speaker, the attacks in Israel last weekend shocked the world. Over 1,400 people murdered one by one; over 3,500 wounded; almost 200 taken hostage; the elderly, men, women, children and babes in arms murdered, mutilated, burned alive. We should call it by its name: it was a pogrom. The families of some of the missing are in the Public Gallery today. We call for the immediate release of all hostages, and I say to them, ‘We stand with you. We stand with Israel’.

The murdered and the missing come from over 30 countries, including the United Kingdom. The terrible nature of these attacks means it is proving difficult to identify many of the deceased, but, with a heavy heart, I can inform the House that at least six British citizens were killed. A further 10 are missing, some of whom are feared to be among the dead.

We are working with Israel to establish the facts as quickly as possible, and we are supporting the families who are suffering unimaginable pain. We are also helping British citizens who want to leave Israel. We have organised eight flights so far, bringing out more than 500 people, with more flights leaving today. We are working with neighbouring countries on land evacuations for our citizens in Gaza and the West Bank. I have spoken specifically to President Sisi about supporting civilians to leave Gaza via the Rafah border crossing, which at present remains closed, and we have a Border Force team in Egypt working with our embassy to help citizens when they are able to cross.

I will come back to the grave humanitarian situation in Gaza in a moment, but first I want to address the British Jewish community directly. As I said at Finchley United Synagogue last week, and at the Jewish school I visited this morning, we stand with you, now and always. This atrocity was an existential strike at the very idea of Israel as a safe homeland for the Jewish people. I understand why it has shaken you to your core and I am sickened that anti-Semitic incidents have increased since the attacks. We are doing everything we can to protect you. We are providing an additional £3 million for the Community Security Trust to protect schools, synagogues and other Jewish community buildings, and we are working with the police to ensure that hate crime and the glorification of terror are met with the full force of the law. I know that the whole House will support this and join me in saying unequivocally that we stand with the Jewish community.

I also recognise that this is a moment of great anguish for British Muslim communities, who are also appalled by the actions of Hamas but are fearful of the response. We must listen to those concerns with the same attentiveness. Hamas is using innocent Palestinian people as human shields, with the tragic loss of more than 2,600 Palestinian lives, including many children. We mourn the loss of every innocent life, of civilians of every faith and every nationality who have been killed, so let us say it plainly: we stand with British Muslim communities, too.

Israel was founded not just as a homeland for the Jewish people but as a guarantor of their security, to ensure that what happened to the Jewish people in the Holocaust could never happen again. Through its strength and resilience, Israel gradually achieved some of that longed-for security, despite the strategic threats on its borders, including Hezbollah in the north with Iran at its back. Israel normalised relations with the UAE and Bahrain through the Abraham Accords and moved towards normalising ties with Saudi Arabia—steps that not long ago were considered almost unthinkable.

One reason why this attack is so shocking is that it is a fundamental challenge to any idea of coexistence, which is an essential precursor to peace and stability in the region. The question is: how should we respond? I believe that we must support absolutely Israel’s right to defend itself, to go after Hamas and take back the hostages, to deter further incursions and to strengthen its security for the long term. This must be done in line with international humanitarian law, but also recognising that Israel faces a vicious enemy that embeds itself behind civilians.

As a friend, we will continue to call on Israel to take every possible precaution to avoid harming civilians. I repeat President Biden’s words: as democracies, we are

‘stronger and more secure when we act according to the rule of law’.

Humanity, law, decency, respect for human life—that is what sets us apart from the mindless violence of the terrorist.

There are three specific areas where the United Kingdom is helping to shape events. First, we are working to prevent escalation and further threats against Israel. On Friday, RAF surveillance aircraft began patrols to track threats to regional security; I have deployed a Royal Navy task group to the eastern Mediterranean, including RFA “Lyme Bay” and RFA “Argus”, three Merlin helicopters and a company of Royal Marines, ready both to interdict arms and to support the humanitarian response; and we are bolstering our forces in Cyprus and across the region. Let me be clear: we are not engaging in fighting or in an offensive in Gaza, but we are increasing our presence to prevent broader regional instability at this dangerous moment.

Secondly, I am proud that we are a long-standing and significant provider of humanitarian aid to the Palestinian people. I can announce today that we are increasing our aid by a third, with an additional £10 million of support. An acute humanitarian crisis is unfolding, to which we must respond. We must support the Palestinian people, because they are victims of Hamas too. Like our allies, we believe that

‘Hamas does not represent the Palestinian people, or their legitimate aspirations to live with equal measures of security, freedom, justice, opportunity and dignity’.

Hamas simply does not stand for the future that Palestinians want, and it seeks to put the Palestinian people in harm’s way. We must ensure that humanitarian support urgently reaches civilians in Gaza. That requires Egypt and Israel to allow in the aid that is so badly needed.

We also need to keep the situation in the West Bank at the forefront of our minds at this moment of heightened sensitivity. Earlier today, I spoke to Mahmoud Abbas, the leader of the Palestinian Authority, to express our support for his efforts to provide stability.

Thirdly, we will use all the tools of British diplomacy to sustain the prospects of peace and stability in the region. Ultimately, that requires security for Israelis and Palestinians and a two-state solution, so we are increasing our regional engagement. I have spoken to Prime Minister Netanyahu twice in the last week, along with the US, France, Germany, Italy and others. My right honourable friend the Foreign Secretary was the first to visit Israel after the attacks. I met His Majesty the King of Jordan yesterday—a long-time voice of reason and moderation. I have spoken with the leaders of Turkey and, previously, Egypt, and I will speak to others in the coming days. Our partners in the region have asked us to play a role in preventing further escalation, and that is what we will do. However hard it is, we need to ask the tough questions about how we can revive the long-term prospects for a two-state solution, for normalisation and for regional stability, not least because that is precisely what Hamas has been trying to kill.

In conclusion, backing Israel’s right to defend itself, stepping forward with humanitarian support, working to protect civilians from harm, and straining every sinew to keep the flame of peace and stability alive—that is our objective. It is the right approach for the region, and it is the right approach for Britain. I commend this Statement to the House.”

Baroness Smith of Basildon Portrait Baroness Smith of Basildon (Lab)
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My Lords, I thank the Lord Privy Seal for repeating today’s Statement and for providing updates on the Government’s actions and the co-operation taking place, as I am aware, with other countries. I share his total condemnation of Hamas’s appalling and ongoing attacks on Israel.

When we heard the initial news just over a week ago, the accounts of unimaginable horror and suffering, and of hostages being taken, were deeply shocking. The senseless murder of men, women, children and babies is hard to comprehend. Those images of 250 young people targeted and killed while celebrating a Jewish holiday at a music festival are impossible to understand. As each day unfolds, every Member of this House will have seen film and photographs showing the suffering and horror, in a way that words can never convey.

In Israel, and now in Gaza, innocent citizens are grieving for their lost and injured loved ones; there is so much pain and suffering. It is imperative that both this House and our Parliament as a whole speak with one voice against such terror and for the dignity of all human life; and that we stand with Israel in solidarity and support of its right to defend itself, to rescue the hostages and to protect its civilians. As long as Hamas has the capability to carry out attacks on Israeli territory, there is no safety. Yet what makes this harder to bear is that that is the very reason for the existence of Israel. As the Lord Privy Seal said, it is more than a homeland; it was there to ensure that what happened in the Holocaust could never happen again. Some in your Lordships’ House will have friends and family who have moved to Israel, permanently or temporarily. For many, it provided a sense of belonging and affirmation of their Jewish identity; they wanted security and peace. Yet Hamas has no interest in peace and is not protecting Palestinians.

Let us be clear—the Lord Privy Seal emphasised this point too: Hamas is not the Palestinian people, and the Palestinian people are not Hamas. So, as we support the right, and indeed the duty, of Israel to defend itself and to seek to bring the hostages home, we must also recognise that it is both Israelis and Palestinians who are suffering terribly because of Hamas’s actions. That is where the responsibility for this crisis lies squarely: with Hamas. Terrorism can never be justified; it can never be excused. Hamas is not protecting the security of the people of Gaza as it unleashes terror and then hides behind them. It should release all the hostages.

We welcome the steps taken by this Government to support Israel’s response and the additional aid funding announced today. Secretary of State Antony Blinken said:

“We democracies distinguish ourselves from terrorists by striving for a different standard—even when it’s difficult”—

and it is never more difficult than this.

We also agree with the Government that Israel’s defence must be conducted in accordance with international law. Civilians must not be targeted, and innocent lives must be protected. Humanitarian corridors are required and humanitarian access, including to food and water, electricity and medicines, is needed to save lives. There must be proper protection for those who put themselves in danger to deliver such aid and medical help. Can the Lord Privy Seal provide the most up-to-date information he has on the status of the Rafah crossing in that area?

These attacks are also having a huge impact across the UK. Many of us will have heard desperate accounts from those whose loved ones have been killed or are missing. They are worried for the lives and the future of friends and family in Israel and Palestine. The sharp increase in anti-Semitic incidents, and reports of Islamophobic threats and abuse, must be denounced in the strongest possible terms. When I heard that Jewish schools were closing out of fear for the safety of pupils and that Jewish people were hiding their identity in public, I was not only shocked and angry but deeply saddened. Many Jews and Muslims have worked within the wider community to bring people together, to foster understanding and acceptance of our differences and to celebrate both shared and diverse religious views and cultures.

We must support them and share responsibility with them, because we cannot allow our community cohesion to be destroyed. Over the past week, we have seen images and heard personal, direct accounts of the absolute true horror of these attacks, and it has been deeply distressing.

Let us be clear: we condemn the terror of Hamas and reiterate that it does not represent the Palestinian people. Hamas’s brutality only escalates the problems and destroys lives, hope and the pursuit of peace. We continue to support and strive for a two-state solution: a Palestinian state alongside a safe and secure Israel.

The time ahead will be so difficult and challenging. In absolute defiance of the brutality of Hamas, the UK must stand with Israel, for international law, for international co-operation and for the protection of innocent lives. We remain united in those values.

Lord Newby Portrait Lord Newby (LD)
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My Lords, we were all horrified to wake up 10 days ago to see the dreadful scenes of violence in Israel. The scale of Hamas’s terrorist activities has been beyond belief, and we condemn it unequivocally. The abduction and degradation of hostages, including women and children, are particularly appalling. We echo demands for the immediate and unconditional release of all hostages, and abhor the suggestion that they should be used as bargaining chips. We think particularly of those British citizens currently missing, who may be among those being held hostage today.

I have no personal connection with the region, but 50 years ago this month, as a student, I made a visit under the auspices of a UN youth and student association to Palestinian refugee camps in Lebanon, Syria and Jordan. On the day the Yom Kippur War broke out, as a guest of the Israeli Government, I was on a visit to the Golan Heights. I heard and witnessed the start of the Syrian attack in that war. It is therefore a source of profound sadness to me that in the intervening 50 years, so little has been done to deal with the root causes of this conflict.

The impact of the atrocities on families in Israel, but also the wider community abroad, is understandably profound. We stand in solidarity with the Jewish community in the UK, in Israel and around the world, who now feel fear and grief. We utterly condemn the anti-Semitic incidents in the UK, which have tragically increased in recent days. We welcome the additional support the Government have committed to the Community Security Trust and their assurance that the police will take firm action to deal with hate crime and the glorification of terror.

Israel has, without question, a right in international law to defend its territory and citizens, and we fully support that right, but it is also vital that terrorists are now targeted, not civilians—again, in line with international law. Many innocent Palestinian civilians have been killed in recent days in Gaza, and the whole population now live in fear of attack.

They also face an absence of essential supplies. I believe that water supplies have been reinstated, but the same does not, I think, apply to food and electricity. Do the Government agree with the UN Secretary-General’s comment that the entry of supplies into Gaza must now be facilitated—again, in accordance with international law? It is also vital that the Government make humanitarian aid available with immediate effect, and it is good that extra funds are being made available for this purpose. But when the Government say that £10 million is an increase of a third in humanitarian aid to the Palestinians, does the noble Lord accept that this is a third of a figure that has been cut by 90% as a result of the Government’s overall aid cuts, and that a mere £10 million will simply not be nearly enough? Can the Government explain how they intend physically to get the aid to the people who need it?

The Prime Minister said he had spoken to President Sisi about British citizens being able to leave Gaza via the Rafah crossing. The crossing remains closed, but the Prime Minister implied that it might soon reopen, at least for foreign nationals. Is that a correct interpretation of the present situation? Looking beyond the current crisis, the people of Israel and Palestine have an equal right to live free from fear, and the UK and its partners in the international community therefore simply cannot allow a return to the status quo ante. We agree with the Prime Minister that if we are to bring violence to an end once and for all, it is for countries such as ours, which has long-standing ties to the region, to take a leading role in bringing about lasting peace based on a two-state solution. It is vital that the Government look to the longer term today, as well as to the immediate, in this most crucial moment.

Lord True Portrait Lord True (Con)
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My Lords, I thank both the noble Baroness and the noble Lord for their remarks. I express my personal appreciation for the eloquence and passion with which the noble Baroness the Leader of the Opposition spoke. She spoke, as we from this side seek to speak, on behalf of the whole House and country, and I was moved by much that she said. I am of course equally grateful for the support from the noble Lord, Lord Newby, and the Liberal Democrat Benches. Yes, it is sad that 50 years after the Yom Kippur War, we are still in this situation.

Addressing the present, we have to accept that the situation at the present moment is the result, as the noble Baroness opposite said, of one of the most atrocious, despicable and cowardly planned and deliberate terrorist attacks that we have seen in recent memory. Both the noble Baroness and the noble Lord asked about the state of crossings and Rafah. I read the Statement and looked at it again when the noble Lord, Lord Newby, was speaking. The Prime Minister did not give any kind of undertaking. He said that he had specifically raised the issue of the Rafah crossing with President Sisi. The position is as I described it in the Statement: it remains closed currently, but we are working with the Egyptian authorities, we are in contact with them and it is our hope that it may be possible to facilitate approved individuals, including British nationals, to leave Gaza via Rafah—but that is not the position at present. It is the direction in which our diplomatic efforts are directed.

I welcome what both the noble Baroness and the noble Lord said about the Government’s position on humanitarian assistance. Perhaps the noble Lord, Lord Newby, was mildly churlish about it. In fact, it should be remembered that, between 2016 and 2021, the United Kingdom directly funded almost 10% of the United Nations work in that region.

We are calling for unimpeded humanitarian access so that essential aid can reach civilian populations, and that includes food, water, fuel and medical supplies. I agree with noble Lords that the conflict launched by Hamas has exacerbated an already dire humanitarian situation. We are providing £27 million in overseas development aid to the Occupied Palestinian Territories this year through partners including the United Nations Relief and Works Agency and the United Nations Office for the Coordination of Humanitarian Affairs. We are also in close contact with the Palestinian Authority, and we urge it to use its influence to condemn Hamas’s brutal actions.

To return to the point made by the noble Baroness opposite, it is Hamas that has been discouraging civilians in Gaza to move towards the relative, certainly not perfect, safety that might be afforded. Hamas has shown no consideration, certainly not for the Israeli civilians it so brutally slaughtered, but nor for the Palestinian people it purports to represent, so I endorse and repeat the noble Baroness’s condemnation of Hamas.

I also welcome and support the comments from the noble Baroness and the noble Lord, Lord Newby, condemning the anti-Semitic attacks. It is almost inconceivable, in the light of the events that we have seen, that there are people among us who support and welcome this action and support the perpetrators. People in this House believe that in the United Kingdom, no Jew, no Muslim, no citizen, whoever they may be, of whatever age or walk of life, should ever go in fear, should ever be subjected to hate, should ever be subjected to criticism for who they are. That is the profound resolve of this Government. This Government are not only providing support for the protection of Jewish citizens, as the Prime Minister announced in the Statement, but continuing our programme for safety and security of Muslim places of worship and other places of concern to the Muslim community.

Of course, the noble Lord, Lord Newby, is right that in the long run the two-state solution, as the Prime Minister set out in the Statement, remains the only viable outcome. The United Kingdom will continue to work for it. It will come slower rather than sooner because of this brutal act of terrorism, but it remains the objective of the United Kingdom Government. I repeat my gratitude to noble Lords opposite for what they have said in support not of this Statement but of Israel and the position that the Jewish people find themselves in, and for their humanitarian concern and feeling for the Palestinian people.

Lord Howard of Lympne Portrait Lord Howard of Lympne (Con)
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My Lords, I have just been talking to the families of some of those who have been taken hostage in Gaza. The NGOs and the United Nations have understandably been vociferous in their concern for the civilian population of Gaza. However, those organisations have been working in Gaza for many years and so must have extensive contacts with Hamas and its leadership. Will His Majesty’s Government urge those organisations to use their contacts with Hamas to persuade it to release the hostages now—the grandmother, the Holocaust survivor, the babes in arms, all 199 of them—in return for which Israel has said it will resume the supplies of food, fuel and water to the people of Gaza?

Lord True Portrait Lord True (Con)
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My Lords, the British Government will bend all their efforts not only to securing the release and safety of British people who are missing but to supporting all those who have been kidnapped, taken and oppressed in the way that my noble friend describes. We are talking to a range of organisations and nations—sovereign states and others—which may have capacity to bring to bear on the Hamas leadership. Whether that will soften the hearts of some of the people who ordered this atrocity I hesitate to forecast. However, I promise my noble friend that the British Government will pursue the action that he refers to.

Lord Pannick Portrait Lord Pannick (CB)
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My Lords, I very much welcome the Statement and the eloquent comments of the noble Baroness, Lady Smith, and the noble Lord, Lord Newby. This is personal for me. My wife is Israeli. We have a home in Israel. We have friends with family members who were murdered by Hamas nine days ago. The Statement mentioned international law. Do the Government agree that the obligation of Israel to respond in a proportionate manner depends in very large part on the severity of the threat which it faces?

Do the Government further agree that there can be no doubt that the threat is very grave indeed, since Hamas aims not to negotiate a peace treaty or to secure a two-state solution but to destroy Israel? It has the military capacity to send thousands of missiles and we have seen that it has the ability and the willingness, astonishingly, to enter Israel to torture, murder and abduct its citizens simply because they are Jewish. Hamas does not care whether they are supporters of the Netanyahu Government or of a peace settlement. They do not care whether they are religious or secular, whether they are babies or elderly ladies. Do the Government agree that there is no country in the world that would tolerate such a threat on its borders and that therefore a military response is the only available response to the threat posed by Hamas?

Finally, do the Government agree that international law does not prohibit military action which, sadly and regrettably, will lead to civilian deaths, especially when Hamas hides behind the civilian population? Does the Minister agree that the essential difference between Hamas and Israel is that Hamas aims to kill civilians—Jews—while Israel does all that it can to avoid civilian deaths?

Lord True Portrait Lord True (Con)
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My Lords, I thank the noble Lord for his comments. I offer my sympathy and concern to his friends and family.

This is an unprecedented situation. The UK stands side by side with Israel in fighting terror. We agree that Hamas must never again be able to perpetrate atrocities against the Israeli people of the kind that the noble Lord has so eloquently referred to. The UK has a strong track record of supporting international law. That remains our position. We call on our friends and partners to do the same. Israel has stated that it will operate within international law. As the noble Lord said, every country is allowed to defend itself. It is not for the UK to define their approach. Israel suffered an appalling terrorist attack. It has a right to respond and defend itself.

Lord Bishop of Sheffield Portrait The Lord Bishop of Sheffield
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My Lords, I thank the Minister for the Statement.

There is no justification for the truly shocking atrocities perpetrated by Hamas nine days ago, a shock exacerbated for many of us by the fact that those attacks took place on the Sabbath. Nor is there any justification for the cancers of anti-Semitism and Islamophobia that stalk our own streets. We on these Benches condemn both unequivocally. It is plainly true that no one in this House questions Israel’s right to self-defence or that this right must be exercised judiciously, in accordance with international humanitarian law. I pray that this consensus will hold in the coming weeks, for the sake of the cohesion of communities across Britain—including in South Yorkshire, where I serve.

In view of the unfolding and escalating humanitarian tragedy, and looking to the future, what assurances have the Government sought and been given that the innocent people of Gaza will be able to return to their home neighbourhoods after the immediate conflict?

Lord True Portrait Lord True (Con)
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My Lords, obviously that is the wish that all might have. I thank the right reverend Prelate for his remarks and agree very much on the importance of community cohesion. The reality is that Israel is reacting to the attack, which the right reverend Prelate rightly characterised as an attack on the Sabbath of such horror. I agree with the noble Lord, Lord Pannick, that there is a distinct difference between those who seek to kill babes because they are Jews and a nation that we believe—as the President of Israel has stated—will operate within international law. If Hamas turned away from terror, laid down its arms and dedicated itself to improving the welfare of the Palestinian people, we would not have to wait too long for the outcome that the right reverend Prelate seeks, and we all devoutly wish that that will one day happen.

Lord True Portrait Lord True (Con)
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I am not sure that I can be whipping the House as well. There is time for all Benches to be heard and I think the noble Baroness was possibly up first—but let us get on, because time is going by.

Baroness Blackstone Portrait Baroness Blackstone (Lab)
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I am very grateful to the noble Lord. My Lords, the cold-blooded murder of Israeli civilians and the taking of hostages was a dreadful crime against humanity. However, the Israeli reprisals in Gaza and their effects on the Palestinian community there are deeply concerning. Does the Minister accept that no crime against humanity justifies another one? Does he agree with the UN Under-Secretary for Humanitarian Affairs, who condemned all the parties for their rhetoric and called on all countries to ensure respect for the rules of war? Can the UK Government do more to ensure this and that the actions now being taken are in line with international humanitarian law and give some hope for the two-state solution?

Lord True Portrait Lord True (Con)
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My Lords, what we have seen in recent days has gone a little beyond rhetoric, I fear. I would say to the noble Baroness that of course all countries have a responsibility to seek to abide by international law. When the Prime Minister spoke to Prime Minister Netanyahu last week, he emphasised that it was important to take all possible measures to protect ordinary Palestinians and facilitate humanitarian aid. Those things are vital. We have a strong track record of supporting international law and we ask our friends and partners to do the same. Israel has stated that it will operate within international law, but it has a brutal terrorist enemy to deal with.

Lord Palmer of Childs Hill Portrait Lord Palmer of Childs Hill (LD)
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My Lords, after the barbaric massacre of Jews taken from a Holocaust instruction manual, can the Minister see any peaceful resolution to an attack that started with the supreme evil of murdering young people who were enjoying themselves?

I follow what the noble Lord, Lord Pannick, was saying, because many years ago I sat down for coffee with a member of Fatah who had spent years in an Israeli jail. I asked what we could offer Hamas: “What do they want?” He replied that it wanted the complete eradication of Israel and the removal of Jews. Will the Minister confirm that he agrees that nothing has changed?

In the last few days, 6,000 rockets have rained down on Israel. Residents old and young of the kibbutzim have been slaughtered and abducted. Israel has decided that containment of Hamas does not work, which means that if possible it must be defeated. Neither Israel nor Egypt wants to occupy Gaza; they just need a clear view of Hamas, the enemy. Does the Minister agree that Israel is not bombing exit routes, as it is in Israel’s interest that the people of southern Gaza leave? It is Hamas that wants the human shield to remain to cover its barbaric terrorism.

Lord True Portrait Lord True (Con)
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My Lords, the noble Lord expressed very eloquently the feelings that the many people who have witnessed these events have. It is important that our hearts go out also to the Palestinian people who have been caught up in this. Israel has our full support in fighting the terror of Hamas, as I think I have made clear. It is extremely important that the window for civilians to relocate remains open for as long as possible and that civilians are allowed to relocate voluntarily and safely. Hamas also must support that objective. We will seek to press that all possible measures are taken to ensure safe humanitarian access and to protect civilians.

As the noble Lord says, Israel has been attempting to minimise civilian casualties by warning residents to leave northern Gaza; that has been complicated by Hamas terrorists telling the local population not to leave and instead, as the noble Lord said, using them as human shields. The situation is immensely bleak. One can see no short-term brightness. If I may, I suggest that we should all resort to prayer.

Lord Polak Portrait Lord Polak (Con)
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My Lords, I was in Jerusalem last week. Before I say my few words, I will say that I sat in the other Chamber and watched the Prime Minister and the leader of the Opposition speak, and then there was a two-hour discussion. It is shameful, when so many Members want to speak, that we are being curtailed. There may be a way of extending this. I also appreciate the Lord Speaker’s arranging of the one minute’s silence.

Actually, there are no words. With the noble Lord, Lord Howard, I too met the family of Ada Sagi, including her son Noam. It is so vital to mention her name. Ada Sagi should have been in London today, celebrating her 75th birthday with her family. She is from Kibbutz Nir Oz and she is being held by those monstrous Hamas terrorists.

All I am going to do is to ask the Leader and other noble Lords to join me in saying a prayer that is said in every synagogue throughout the world when there is a problem like this. In Hebrew it is called “Acheinu Kol Beit Yisrael”:

“As for our brethren, the entire house of Israel who still remain in distress and captivity, whether on sea or on land, may God have compassion on them, bring them from distress to relief, from darkness to light, from servitude to redemption, at this moment, speedily, very soon”.


Lord True Portrait Lord True (Con)
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My Lords, I pray for all innocent souls created under God. If it would help the House, I can say that we have had discussions in the usual channels. I am sad that my noble friend said that there had been an attempt to cut off discussion; this is not the case. I hope that we will provide time for a debate on these matters next week; I believe 24 October is the date.

Lord Austin of Dudley Portrait Lord Austin of Dudley (Non-Afl)
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My Lords, I draw the attention of your Lordships’ House to the presence in the Chamber this evening of relatives of some of the hostages. I am sure that the whole House stands with them in total solidarity, praying for the safe return of the hostages and the IDF soldiers who have to go to Gaza to release them and to deal with Hamas. We all say to you, “Am Yisrael Chai”.

The position of the people of Gaza is solely and squarely the responsibility of Hamas. When Israel withdrew in 2005, Gaza had a functioning economy, control over imports and exports, discussions on a seaport and plans for discussions on an airport too. Then Hamas launched a bloody coup, drove out Fatah, executed its rivals and used the Gaza Strip as the basis to launch a campaign for the destruction of Israel. The poor people of Gaza are also the victims of Hamas’s brutal dictatorship, while its leaders amass billions and live in luxury in Doha.

Earlier today, UNRWA accused the terrorist gangsters of stealing humanitarian aid. Will the Government investigate these reports and ensure that any aid that we provide goes to where it is needed?

Lord True Portrait Lord True (Con)
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My Lords, I can add little to what was said in the Statement, but I of course express the fullest solidarity that we—I am sure I speak for all Members of this House—have with members of the families who have been caught up in this dreadful affair. I express that freely.

Earl of Courtown Portrait The Earl of Courtown (Con)
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We have only three and a half more minutes. Can people be as quick as they can with their questions?

Lord Howell of Guildford Portrait Lord Howell of Guildford (Con)
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My Lords, after that fine prayer, I have just one question. While it is clear that the Hamas butchers should be hunted down for their revolting crimes against humanity and made to pay for them, and while we somehow have to get out those hostages who have not been executed in cold blood by Hamas in the meantime, does the Minister agree that minds should begin to turn, for the longer term, to revisiting the two-state process and combining it with the best features of the Oslo accords and the Abraham accords, into which great thought was put? In the future, they are the key to Israel’s sustainability, survivability and the stability of the whole region.

Lord True Portrait Lord True (Con)
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I agree with that. I said in the Statement that the Government’s position is that we should return to seek the two-state solution, and ultimately seek the way of peace. The way of terror is the way of death.

Baroness Foster of Aghadrumsee Portrait Baroness Foster of Aghadrumsee (Non-Afl)
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My Lords, terrorism can never be contextualised and unfortunately I know that first hand. Under the Terrorism Act 2000, Hamas is a proscribed organisation and it is an offence to invite support for a proscribed organisation. Can the Leader of the House tell us what actions His Majesty’s Government will take to deal with the enormous amount of people on the streets of the United Kingdom asking for support for this proscribed organisation—including in Belfast, where we had the spectacle of convicted IRA terrorists asking for support for Hamas?

Lord True Portrait Lord True (Con)
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My Lords, I agree with my noble friend. Hamas is proscribed—those who invite support for this group could be jailed. However, arrests are an operational matter for the police. The Home Secretary has asked police to step up patrols and monitor protests.

Baroness Deech Portrait Baroness Deech (CB)
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My Lords, I mourn the passing of a young relative, only 22, who died in the military just a few days ago. I hope that the Minister will agree with me that the root cause of this is Iran. It is Iran that has funded Hamas and it is its equipment being used. We must stop funding Iran. At this very moment, there are protests outside the BBC, because the BBC has become partisan in not using the word terrorists. Above all, I hope the Minister will dry up the source of funds to Iran.

Lord True Portrait Lord True (Con)
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My Lords, broadcasters are independent in this country, a free country, but as the noble Baroness will know, the Culture Secretary took up certain matters, which she has referred to. So far as Iran is concerned, Hamas is fully responsible for the appalling act of terror that has taken place, but Iran poses an unacceptable threat to Israel, including through its long-term support for Hamas, Hezbollah and Palestinian Islamic Jihad. We condemn Iran’s destabilising activity throughout the region and we will look at its activities with wide-open eyes.

Adult Social Care (Adult Social Care Committee Report)

Monday 16th October 2023

(7 months, 1 week ago)

Lords Chamber
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Motion to Take Note
Moved by
Baroness Andrews Portrait Baroness Andrews
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That this House takes note of the Report from the Adult Social Care Committee A “gloriously ordinary life’’: spotlight on adult social care (HL Paper 99)

Baroness Andrews Portrait Baroness Andrews (Lab)
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My Lords, it is almost a year since the Adult Social Care Select Committee published its report. It is five months since we had the Government’s response. Although this debate has been delayed, there is no bad time to debate adult social care—it is always timely and always urgent. I am extremely grateful tonight that so many Members of this House have stayed for a late debate to share our report and to listen to the Government. I know that members of the committee particularly appreciate the contribution of the noble Lord, Lord Polak, after his highly emotional intervention in the previous Statement.

Many members of our committee could not be here, for very different reasons. I am very grateful to all of them—particularly to those who are here. We will feel the absence of the noble Baroness, Lady Campbell of Surbiton—not only because she is exceptional at what she does, and how she does it, but because she made an extraordinary contribution to our committee. I am also grateful that there are people who were not even on the committee here tonight who want to address the report. It was a great privilege to chair the committee and to have the task of asking the questions we did.

The two great transformational changes of our age are an ageing society and climate change—and they are interrelated. We have known about both for decades. They are both in the “too difficult” box, which is why it has taken so long to organise the courage to address the issues. We are trying to catch up.

In our report, we ask two questions which we thought had been particularly neglected. Why is adult social care so invisible compared to the NHS? What would make a real difference to the poverty and ill health that come all too often to the 1.5 million unpaid carers who do care work for more than 50 hours per week or the 4.5 million carers who are conscious that their own health is suffering?

There were a few differences of emphasis in the committee, but we were of a mind, and we were helped enormously by an outstanding group of officials from the House: Abdullah Ahmad, Daphné Leprince-Ringuet, Alasdair Love and Megan Jones. They shared with us a sense that this committee would do things differently and address these difficult questions and give more justice to them. In that spirit, we put a high emphasis on co-production and our experts by experience—not just our superb special advisers, Jon Glasby and Anna Severwright, but our expert witnesses who have tested our conclusions and stayed alongside us this year while we have debated this report and who will be watching this evening. We put an equal emphasis on empowering those who care and those who are cared for—whether caring for young disabled adults or elderly and chronically sick relatives.

Our recommendations inevitably prioritise the need for clearer pathways through the maze of information that people are offered, putting emphasis on them having a greater say in what they are able to access and use, and on their contribution as well as the labour of love that is caring. We put huge emphasis also on partnership with the Archbishops’ Commission. We shared our witnesses, evidence and conclusions—which often overlapped, because they were rooted in the same values.

Our recommendation, which was probably the most important, made it clear that adult social care is far and above being, as it is too often seen, a vital but secondary handmaiden to the National Health Service. It is so much more than that. “The NHS saved my life,” said one of our witnesses, “but social care enabled me to live that life to its best”. That is the difference, and it is why we say that adult social care must be a national imperative with stronger national infrastructure. This is the way to release its full potential, to make the best of its values and skills, realised not just in better processes but in the trusted relationships that underpin everything done in this area, and to make it possible for people who care, and people they care for, to live that “gloriously ordinary life”—the title of our report that has resonated so widely with everyone who has come across it; it is so modest, and yet it says so much.

Inevitably, there were some recommendations that were hardly new and did not need to be. I defend in particular the need to ditch short-term improvisation and plan courageously for the long term, whether through funding, a carers strategy, or a resilient and versatile workforce, or for appropriate housing to support ageing at home and not in hospital.

We have had a raft of reports this year that have all more or less made the same case, from the Local Government Association, the Association of Directors of Adult Social Services, Social Care Future, and Skills for the Future. Many of them ask for the Government simply to recognise the scale and urgency of the issue of the false economy that has followed from a decade of austerity and massive cuts to local authorities—the lost hours of caring, the higher cost of caring, the endless waiting lists, the exhausted carers, paid and unpaid, the profound inefficiencies in the system, and the lost opportunities that have marked this decade.

Because the people who know so much agree on so much, our report has resonated widely, and the Government will not be surprised that their response to our report has met with dismay. In November 2022, the Prime Minister announced an indefinite delay to capping care costs. The director of Silver Voices saw this as the “final betrayal” of older people. In April, the “next steps” proposals, published during the recess, were met with a genuine sense of dismay because this was a plan for only two years, not for the future. The workforce budget of £500 million had been cut in half. Many of the bolder ideas in the White Paper have been lost in transition. When the NHS workforce plan was eventually published there was not a word about social care, without which, as the King’s Fund points out, none of the ambition, which is great and serious, can be realised.

Therefore, we were not that optimistic about the Government’s response. There was much that we could welcome. For example, the Government acknowledged the central importance of the adult social care sector—how could they do otherwise? They said that they would support the Carer’s Leave Bill, at long last. We also welcomed specific commitments, for example to ensure better data collection, more and better R&D, and more investment in innovation across the sector, but that was the least we could expect, and it should have been in place at least a decade ago. The fact is that the lack of data has reinforced invisibility. It has made it so much more difficult to plan for the right, consistent, scalable and deliverable policies on a day-to-day basis, not just today but in the future. As we report, the expectation is that the family will go on caring, but by 2030 1 million people in this country will have no families to care for them.

That is why we sought to change the lens and interrogate the future, recognising that the demography and expectations of 1947 have changed beyond recognition while the assumptions of who will care have not—it is nearly always still women. Although we have just started to integrate services, health, housing and social care should be planned from the beginning to work as closely as possible together if we are to make living longer not a fearful prospect but something to celebrate.

That is why we put such a strong emphasis on a commissioner for adult social care and support: to bring voice, visibility, agency and challenge to the service. That is why the Government’s response, calling for a chief nursing officer, misses the point. That is why we recommended an urgent review of the Care Act 2014, which held so much promise, only to be told that this would be delivered through the Health and Care Act. Not so: the scope and the potential of these Acts are very different. I ask the Minister to take both these recommendations away for further consideration.

We have also had no response at all to other fundamental questions that impact deeply on the day-to-day possibilities of what carers, paid and unpaid, can expect. We asked for a review of the pay and working conditions that disable the sector and make it so difficult for disabled people to employ and pay for a personal assistant. Where they are available, they do not stay because the employment bureaucracy is so chaotic and, frankly, they can get more money working in the health service or in Asda. These recommendations were rejected. Although there is some good news in the plan for a Skills for Care workforce this week, and numbers of vacancies are slightly down, we cannot build the future of adult social care on improved immigration. It is a contradiction in terms and of the Government’s policy. It is certainly not an answer to 152,000 vacancies across the sector.

What does it mean to build a valued and versatile care force? It means that you have to pay people decent, dignified and proper wages. At the moment, many carers do not even get the national living wage. Can the Minister tell me why and what this Government, in their remaining days, can do about it?

All these recommendations would have strengthened the resilience of the whole workforce, from personal assistants to paid carers, but they would really have helped the unpaid carers, who would have known that their labour of love, which as we know saves us billions of pounds a year but costs them their jobs, their incomes, and their mental and physical health, is valid and visible. So, indeed, would our recommendations for a more forceful and consistent approach from employers towards flexibility and support in the workplace, and for mandatory housing provision and standards.

However, the recommendation that would have made the most difference to unpaid carers was an increase in the carer’s allowance—a shameful £76.75 a week, which, because they have to work a minimum of 35 hours, works out at £2 an hour. We called for an increase not only in the pay available but in the flexibility around the threshold. The Government rejected that recommendation too.

In short, the Government rejected all our key recommendations relating to funding, workforce planning, accessible housing, support for personal assistants and unpaid carers. The subtext of their response was, “We are doing it all already”. We are not.

We asked at the end of our report: if not now, when? When will unpaid carers see real change? The answer came back, “Not yet; not now”, so there is more wasted time when we face record-breaking NHS waiting lists and the distress of all those elderly people who cannot go home from hospital because it is not safe for them to do so.

Our committee’s main message is that we need a new, more positive and more confident approach to adult social care to enable it to deliver those “gloriously ordinary” lives. That means that disabled young people and older people should have more say in the support they are offered, better choice, and a service that will attract people to work in it because it is well paid, progressive, has status with recognised skills, and more capacity because it is built on stronger and sustainable partnerships between paid and unpaid workers, recognises the expertise held by both, uses the full resources of the voluntary sector, has more visibility through a national champion to challenge poor practice, and shows what change looks like. That is the way to spread best practice and innovation. If we invest in the care economy, just as we should invest in childcare, we will build not just a fairer community and strong families but a foundation for a more efficient and more resilient real economy.

Baroness Fraser of Craigmaddie Portrait Baroness Fraser of Craigmaddie (Con)
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My Lords, I was privileged to sit on the Adult Social Care Committee, which was so ably and sensitively chaired by the noble Baroness, Lady Andrews. I thank her for her comprehensive introduction to the debate.

I found it incredibly hard to think of what to say; it has all been said many times. We know what needs to be done. I pay tribute to my noble friend the Minister for his work and perseverance in this area, because I know that he knows what needs to be done and that he understands this sector, but we do not seem to be moving the dial one iota for people.

I travelled down from Scotland this morning, and our experience of attempts to create a national care service is not one I wish to recommend to the House. So far, its development has cost £1.26 million in engagement, £1.38 million in staff costs, an accountability agreement with local authorities and the NHS and an inadequate skeleton Bill that has been delayed three times. As Scotland illustrates, the top-down approach does not work. It is expensive and futile and, despite all the time and money spent on it, not one person’s care in Scotland has been improved.

For me, the Government’s People at the Heart of Care is based on very sound conservative principles, but we will not enable people to have choice and control unless plans are backed up by funding and action. Our committee’s report illustrates how carers, paid and unpaid, are key to ensuring that those who draw on care can indeed lead a “gloriously ordinary life”.

We heard of the huge challenges experienced by people in being able to find good PAs. The Government acknowledged in their response to the report that personal assistants are “invaluable”, yet this crucial and apparently valued workforce is unregulated, too often paid only the minimum wage, on zero-hours contracts and not funded enough to be employed full-time, and has no access to ongoing training and no recognised qualifications.

The Government have promised to improve career pathways and opportunities for progression within the adult social care workforce, and have identified £250 million to do this. Can the Minister give us any details on how this is to be spent? How could it help more people access PAs? I have encouraged the Minister before to look at the charity ENABLE’s PA model in Scotland, and do so again to support this.

As the noble Baroness, Lady Andrews, said, unpaid carers carry a huge burden but are largely unseen, unappreciated and ignored. The Minister will not be surprised to hear me calling yet again for improved identification. The discrepancy in the estimated number of unpaid carers of between 2.4 million and 6.5 million in our report illustrates how woeful our ability to identify this key group currently is.

In May the Government updated their road map for better data for adult social care, which recognises that while a variety of various sources capture some information on unpaid carers, they lack consistency and coverage. As I understand it, a new regular survey focused on unpaid carers is to be created. Can the Minister give us any update on these plans?

The Government’s vision that data should be collected once and shared with those who need it is one of those common-sense statements that sound really simple, but that I know will be very difficult to achieve and implement. Who will social care data be shared with? Will people needing care and their unpaid carers have access to their data? There are examples given, such as GP records being shared with home care managers and authorised social care staff, but who is classed as “authorised” in this context?

My worry is that social care provision is still far too far down the priority list. At the recent party conferences, neither the Prime Minister nor the leader of the Opposition spent any time discussing social care. Even the Minister for Social Care spoke about integrated healthcare teams and community health services, not social care. She spoke about how we continue to look at health and care through the prism of the NHS, saying:

“It often feels like the acute hospital is like the sun in the NHS solar system with everything else spinning round it. But it doesn’t have to be that way”.

She is right. I agree with her, but until we turn the telescope around and focus on enabling people to lead a gloriously ordinary life, social care will always lose out.

Lord Bradley Portrait Lord Bradley (Lab)
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My Lords, as a member of the Adult Social Care Committee, I welcome this debate on our report and add my praise to the chair of the committee, my noble friend Lady Andrews, for her wisdom and guidance throughout. I also refer to my interests in the register.

Time is short, so I will limit my contribution to just a couple of our key recommendations. But I start by quoting the very beginning of our report, which posed the question:

“Why should we care about adult social care?”

The blunt answer is that

“it concerns all of us”.

In our lives we are likely to need that support, or to care about someone who does. It

“affects the lives of over 10 million adults of all ages in England at any one time”.

In recent years, driven by the consequence of an ageing society and the cost of residential care, together with the challenges of funding and staffing, the increasing demands on adult social care have rightly forced it up the political agenda. Tragically, though, despite a raft of reports, research papers, White Papers and legislation, very little has improved for those who depend on and provide adult social care. As we said in our report:

“Many aspects of the system remain invisible and overlooked by the public and policy makers alike”.

This is particularly true of unpaid carers, which is why we put a spotlight on them in the report—people with lived experience of the current system.

Our report said:

“We heard the frustration and anger of those who have to battle to access even the most basic support, and who have experienced adult social care becoming ever-more distanced from a service that might enable them to live a life of their choice.

We also heard the testimonies of unpaid carers, the often invisible spouse, child, parent, sibling or friend who has to step up to provide care and support when the system is failing”.

These moving testimonies by individuals and the many wonderful organisations that try to help and support them were not made through bitterness but from a loving and caring perspective, simply asking for help and recognition of the dire and exhausting plight they often find themselves in currently.

It is against this background that the committee made its recommendations. I highlight just two tonight. First, the committee recognised that while a stronger, more resilient and integrated care sector is needed at the local level—and I believe the integrated care boards and systems must make this an absolute priority and drive this agenda forward—

“we also believe that some new and effective national leadership that focuses attention on adult social care is urgently needed”:

a real champion for social care. As Sir Andrew Dilnot described it to us, we need

“a single person whose job it is to think or worry about social care and do that publicly”.

The committee believed that:

“One effective way of doing so would be to establish a Commissioner for Care and Support, tasked with acting as an effective champion and upholding the rights of disabled adults and older people, as well as unpaid carers. The Commissioner would also embed more accountability and challenge in the system”.

What was the Government’s response to this recommendation? They said they believed that

“new statutory roles are not the most efficient way to promote and protect the rights of these groups. The duties covered by such a role are covered by work elsewhere in the system”.

To say that this response is disappointing would be a massive understatement. I do not believe that, for example, the excellent work of the Children’s Commissioner, if abolished, would be well covered elsewhere in the system. The Children’s Commissioner ensures an independent focus on the needs of children, and adult social care deserves the same focus. When he replies to this debate, will the Minister explain where the efficiency, transparency, accountability and, crucially, independence is clear in the current system?

Secondly, and very briefly, I will address our recommendations to review the care allowance, which the noble Baroness, Lady Andrews, touched on. It currently does not reflect in any way the real value of unpaid carers. In my view, it is unacceptable that this is the lowest benefit of its kind, exacerbated by the threshold of caring hours and the low and inflexible earnings limit.

The Government’s utterly complacent response is to say:

“The government keeps the earnings limit under review and considers whether any increase in the limit is warranted and affordable”.

I believe that this is disrespectful to the millions of unpaid carers, without whom this care system would collapse and who need crucial financial support now. Their caring responsibilities often arise through an unforeseen incident or circumstance, such as a sudden diagnosis of chronic illness, a devastating accident or a stroke, so dramatically undermining household income or long-term financial and pension planning. I urge the Minister to reflect on this and respond accordingly tonight.

Baroness Wolf of Dulwich Portrait Baroness Wolf of Dulwich (CB)
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My Lords, I welcome this debate and the opportunity to thank the noble Baroness, Lady Andrews, and her committee for a marvellous report, which is enormously informative, and, above all, for the fact that they have highlighted the role of the unpaid carers who keep us all afloat. I have no current interest to declare, but I was for many years a trustee of a small local charity that provided sheltered accommodation and respite care, and I am going to draw on that experience in what I say.

In recent decades, we have seen massive changes in the organisation and delivery of adult social care. In 2019, the Guardian found that 86% of care home beds are now in private for-profit homes, 3% are provided by local authorities and 11% are provided by charities. Yet in every study I have seen, charities are top rated by users ahead of local authorities and for-profit provision. In large part, this is because of what one witness before the committee called the “fine-grained” knowledge of local communities. Charities are uniquely well placed to harness this and to develop opportunities to bring such a fine-grained knowledge to bear on the provision of effective care that responds to individual local needs.

However, the regulatory and funding environment militates against small, local or charitable provision. Complexity comes up time and time again in the report, and rightly so. It creates huge barriers and huge deadweight costs. I think it is worth thinking about those costs because all of what we are talking about takes place within a context of growing demand and growing pressure on care budgets, so if there are ways in which we can save money, we really need to take advantage of them. My experience was of ever-growing regulatory and bureaucratic demands which devoured time and resources and favoured the supposed economies of scale delivered by large chains. These demands also meant local authorities felt safer dealing with big centralised companies, big concerns and people who knew about the latest central diktat and spoke the regulators’ language, but this is not the language of those involved in and dependent on social care. We must tackle complexity and the centralisation that fuels it because it creates a gap between the creators of policy and writers of rules and the people involved in delivery and use. It is not easy to simplify. It takes commitment and time, but it can be done. I wish the Government’s response had acknowledged this more explicitly. Can the Minister provide any further information on whether the Government recognise the need for such a sustained effort to simplify the system?

I also want to endorse as strongly as possible one of the report’s recommendations and its emphasis on respite care and providing breaks for unpaid carers. Recommendation 33 says:

“The Government should dedicate ring-fenced funding to increase the availability and capacity of services that provide flexible short breaks for unpaid carers”.

I very strongly agree. It may seem odd to have devoted most of the time that I have been on my feet to talking about local responsibilities and local decisions, and of course we need to make the system simpler and more local in how things are spent and in reducing regulatory complexity, but we are also, as I said, operating in a system where the pressures on budgets are gigantic. If we do not ring-fence funding this way, I fear the same thing will happen as happened in the local authority where I got my experience, which was that when our little charity closed the door respite care on a regular basis in the local authority effectively ceased. It was a chance for the local authority to reduce expenditure and walk away from something. However, this respite care and these breaks for unpaid carers are a lifeline. They are quite complex to organise and seem quite expensive, but when you take into account the direct benefits to carer well-being and their ability simply to carry on, I think we have to acknowledge that what they bring in results and rewards is enormous and that simply looking at apparent up-front costs obscures this reality. I would have been happy to have seen more recognition of this in the Government’s response.

I would like to take this opportunity once again to thank the committee and its chair for a wonderful report and to say how tremendously important it is that we remember those unpaid carers.

Lord Bishop of Sheffield Portrait The Lord Bishop of Sheffield
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My Lords, I start by paying tribute to the noble Baroness, Lady Andrews, and to all the members of the Adult Social Care Committee for the excellent report they produced last year, full of thoroughly perceptive and practical recommendations to government and speaking to the longing we all have to live a life of joy, fulfilment and purpose. The committee undertook its work in precisely the same period as the Archbishops’ Commission on Reimagining Care and it is heartening to see the considerable amount of overlap in the values proposed and the conclusions reached. Both contribute to the growing consensus that we cannot any longer tinker around the edges of the existing system. We must reset and reimagine the way that social care is understood, organised and delivered.

The committee report identifies quite correctly the importance of making social care a national imperative, yet it notes the widely held perception that social care is something that affects other people and that many begin looking for information about support available only once they have reached a crisis. The Archbishop’s Commission on Reimagining Care argued that it will be possible to reimagine social care only if we fundamentally rethink our attitudes in society, where too often we are inclined to treat people as if their value is determined by factors such as age, gender or ability rather than affirming and celebrating the dignity of all human beings, valued for who they are and not for what they do.

At best, social care is the means by which people are enabled to live a full life. This is not the responsibility of the government alone. Churches, for example, have an important part to play in supporting people to flourish in community. I think of the hugely valuable dementia cafés currently organised and hosted by church communities in my diocese, for example, in the parishes of Sprotbrough in Doncaster and Handsworth in Sheffield, which are both run in partnership with local authority well-being services.

The primary recommendation of the Archbishops’ Commission on Reimagining Care is the development of a national care covenant which would clarify the roles and responsibilities for social care to be shared across society. The language of covenant encourages us to move away from ideas of contracts and rights towards powerful notions of partnership and interdependence. We all stand to benefit from a society where our dependence upon one another is recognised and celebrated and promotes the flourishing of all so that each one of us indeed has the best possible chance to live a “gloriously ordinary life”. Will the Minister say how far the concept of a national care covenant has been found useful by the Government in their ongoing efforts to reimagine social care?

Lord Polak Portrait Lord Polak (Con)
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My Lords, it is a great honour to follow the right reverend Prelate. In the same way, it was a great honour to have been a member of the Adult Social Care Committee. I pay tribute to the noble Baroness, Lady Andrews, and the other members of the committee who took me along with them.

It was a learning experience for me, and there are one or two points that I would like to pick up. I notice that the noble Baroness, Lady Barker, is, sadly, not in her place. The thing I learned from her is something that we do not always think about: she talked a lot about the issue of ageing without children. I thank God that I have family and that we looked after my mother, who I will come on to in a minute. It is something that you do not appreciate until you hear it. The noble Baroness is a great champion for understanding that this will affect many, many people across the country. I was glad to learn that from her.

Similarly, I was very much a supporter of the suggestion, as mentioned by the noble Lord, Lord Bradley, that we ought to have a commissioner for care and support. Just as the noble Baroness, Lady Barker, is a champion for her issue, we need a champion who can help my noble friend the Minister and other members of the Government to focus on this. Otherwise, it gets trodden down and nobody really takes responsibility; it is too big and, in the end, nothing really happens.

I made a plea last time I spoke on this subject and I make no apologies for repeating it. Looking around the House, I say to everybody: the one thing I learned is that it is important to take politics out of social care. Let us get politics out of it and let us try to help.

In the end, for me, it was an experience that suddenly became practical. During the time that we were sitting as a committee, my mother took ill in Liverpool; she sadly passed a few months ago. What is overridingly important is to have something that we missed—we did not understand what to do as a family; I have just made a note to call it a “guide for the ignorant”. We need a guide so that, when people find themselves in a situation like this, they know what to do, who to ring, where to go, who to ask. Currently, it is a lottery.

As it happens, I am from Liverpool and the organisation there was pretty impressive. There was a STARS scheme, which the Marie Curie centre had put on, and they came in to see my mum four times a day while she needed help. Without that, I do not know what we would have done. I live here, my sister lives in London and my mum was in a flat in Liverpool.

The experiences we had throughout were horrendous. As I have said once before here in the House, we experienced the best and the worst. The worst was when a nurse was assessing my mum—who could not speak any more—to see what the next stage of care would be. The nurse was in Maidenhead, or somewhere in Kent, and she was in Liverpool, unable to speak, and they did it on Zoom. It was a relic of Covid, of course, but it was no help to my mum at all. It took weeks before they had to pass on their report, from Margate, to a panel of three people who had never met my mother, to decide what sort of care she would get. It is mad. I repeat: we need a guide for the ignorant. The Government need to provide something like this so that people know where to go.

To conclude that story, the Marie Curie hospice in Liverpool was amazing; the people there were amazing. They cared for my mum for three and half months, which is pretty unusual in a hospice. They could not have been nicer. I remember after she passed, I thanked them for everything they had done and then I said, “But where is the gold watch? She has been in a hospice for three and half months”. They were amazing and I shout out to them.

In conclusion, it was a deep honour to have been a member of the committee chaired by the noble Baroness, Lady Andrews, and I learned so much. Following the point made by the noble Baroness, Lady Fraser, I ask the Minister to explain the role of data and patient records, and how we can use technology to support people to stay in their homes as long as possible.

Baroness Finlay of Llandaff Portrait Baroness Finlay of Llandaff (CB)
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My Lords, it is a great privilege—

Lord Davies of Brixton Portrait Lord Davies of Brixton (Lab)
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My Lords, it is a pleasure to take part in this debate and I very much appreciate the work of my noble friend Lady Andrews and the committee in producing such an excellent and helpful report.

The big issue, of course, is paying for sufficient care—we have been playing with that issue for 20, 30 or more years—but, short of a grand plan, we can leave that on one side for the purposes of this debate, because, in any event, much can be done. What I would like to stress is the need to take better care of the carers. There is a paid social care service on which there are recommendations that it should be properly funded and properly staffed with appropriate status and skills, but I am very pleased that the emphasis in this debate has been on unpaid carers.

The report sets out excellent proposals and I am sure we have all been sent additional proposals from Carers UK, with an emphasis on issues such as an improved carer’s allowance related directly to the national living wage and—an issue that is extremely important to those concerned directly—some form of carer’s leave.

I want, however, to add an extra point about carers and their pensions. This arises because the unpaid carers are all too often, all too frequently, poor. They are poor because they are unable to work, or have to work limited hours, because of the care they are providing. It affects them directly during the period when they are providing care, but it also lingers on throughout their lives because they have missed opportunities for promotion and career development. The inevitable result is that they end up poor. The problem with their pensions is that, in our current pension system, you get a reasonable pension only if you have had a reasonable income while at work; because of the gap in your employment income, you have a gap in your pension.

There must be some way of improving the pensions provided for carers who have no, or limited, employment income. In one way or another, this will require providing them with credits for additional pension. My favoured approach is that they should get additional national insurance pension on top of their basic pension to make up for the gap arising from their inability to earn while providing care; so, these carers should get some additional credits for their state pension.

This is very much an issue for all carers—male, female, sons, daughters, parents. They are all affected in the same way but, as most care is provided by women, it impacts far more significantly on women. Hence, the main reason for the gender pensions gap, which should get more attention, is that women provide the care. The way to solve that problem is to provide them with some pension entitlements for the period when they were providing that care.

It is not mentioned in the report but I will now be pressing this issue as often as I can. Clearly, it is relevant here: care for carers means providing them with decent pensions.

Baroness Finlay of Llandaff Portrait Baroness Finlay of Llandaff (CB)
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My Lords, I apologise to the noble Lord, Lord Davies, that in my keenness to follow the noble Lord, Lord Polak, I jumped up too early. I was very glad to hear about the experience of the noble Lord, Lord Polak, with Marie Curie. I must declare that I am a vice-president of Marie Curie; I should also declare my co-chairing of the Bevan Commission, an independent think tank on health and social care in Wales, and my experiences in palliative care.

The noble Baroness, Lady Andrews, is to be commended for a gloriously inspiring report on adult social care which spotlights how much could be achieved by co-production with those in receipt of services and those on whom they depend. The government response has pointed out that additional funding of “up to £2.8 billion” is available in 2023-24 and “up to £4.7 billion” in 2024-25. Can the Minister explain how this funding will be distributed, whether it is ring-fenced for local authorities and how it will be allocated? Palliative care patients often need both social care and specialist palliative care involving the voluntary sector. Will they be able to draw on this funding for their integrated services, which we have already heard about this evening from the noble Lord, Lord Polak?

“We all want to live in the place we call home with the people and things we love, in the communities where we look out for one another, doing what matters to us”.

This definition, as in the report from #SocialCareFuture, explains how social care is not only about services; it is about having a life. For those with progressive disease, this desire to live to the full becomes pressing and urgent. Palliative care works to restore quality of life and a sense of personal worth. This core aim should be the same across the whole of social care: to add life to years, rather than focusing only on years to life. To achieve it, the workforce must be empowered to use their initiative to meet need and with time enough to go at the pace of the person.

Today, I was fortunate enough to meet a group of mothers who have children and young adults with multiple complex conditions. They were stressing the financial problem: they are unpaid carers who are getting burned out, and there is a huge lost opportunity. They realise that their children must be somehow prepared for independence because, as they get older and die, their children are likely to outlive them. However, the current system does not encourage that. It is simply about providing a response to the most pressing needs, rather than taking a long-term preventive approach, particularly when these young people are still able to develop.

The report highlights the ageist and disability-phobic attitudes that impede the ability of those with disability and who are older to function to their maximal ability in society. Such attitudes exist widely, sadly, including in health. Will the Government work with the voluntary sector to change attitudes and ensure that people are free to state what they need? The question “What matters to you?”, followed by sensitive listening, can guide the provision of services that empower, rather than a menu of services just given to people.

As the noble Lord, Lord Davies of Brixton, pointed out, we cannot expect the social care workforce to achieve the level of personalised care needed unless there is parity of esteem for them and without attention to their own welfare. Many have a wealth of valuable experience: the NHS could co-produce education and training with the social care workforce and with those with experience of receiving care. That would break down some barriers and improve integration.

In their response, the Government refer to the grant funding to Think Local Act Personal. Can the Minister tell us how that is being evaluated to ensure that holistic approaches reach the people on the receiving end of social care? Staff with skills need to be paid at an appropriate banding, with their managers also carrying a caseload so that they understand what is going on. Perhaps colleagues in health and management will then recognise the important job being done.

One thing I want to touch on in my closing moments is timely equipment. It can be essential to maintaining independence and decreasing the calls on hands-on care. What do the Government plan to do to decrease waste by recycling equipment such as mobility aids and so on? If equipment is not being recycled, could it then be sent to countries abroad as part of our aid programme? How much is wasted simply because things are not being used again and recycled in a timely manner?

Baroness Bennett of Manor Castle Portrait Baroness Bennett of Manor Castle (GP)
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My Lords, it is a great pleasure to follow the noble Baroness, Lady Finlay. Her phrase about services that empower is an excellent one which I may well adopt.

Like everyone else, I wish to thank the noble Baroness, Lady Andrews, and her committee for this brilliant report and for her compassionate, caring instruction. The focus on co-production with experts by experience is a crucial phrase. Given the lack of representativeness of your Lordships’ House, that should really be adopted by all your Lordships’ committees—particularly given that, the way politics is heading, it seems that the nature of this House is unlikely to change anytime soon. Our society is increasingly coming to recognise the importance of those experts by experience.

I would like to pick up the point made by the noble Baroness, Lady Andrews, by reflecting on the disappointment that the Government have essentially rejected all the recommendations of this report. If not now, when? The noble Baroness, Lady Fraser, said that we do not seem to be turning the dial, which was a similar reflection; she also noted that neither of the two largest parties’ leaders spoke about social care at their party conferences.

I am going to put a challenge to all the Front-Benchers who will be speaking shortly. I am well aware that they are not able to make up a social care policy on the Floor of the House, but I am going to challenge them to make a commitment that they will take into the election a social care policy that they plan to take forward—because surely this is so clearly desperately needed. As the noble Baroness, Lady Andrews, said, the delay in debating this report has not made it one iota less relevant because we have not made any meaningful progress.

In the interests of living up to what I am asking others to do, I am very happy to set out the framework of the Green Party’s social care policy that we will be taking into the next general election. It is free social care for all adults who need it in England. That policy was decided democratically at our conference in 2021, led by members who were affected by the need for social care—more experts by experience. This calls for all social care support and independent living services to be free at the point of use and fully publicly funded.

The guideline for this comes from—I ask any Front-Bench spokespeople who might like to respond if they acknowledge these standards—the UN Convention on the Rights of Persons with Disabilities. That should set the standards of what is available. The Green Party says that this should be

“accountable to local democratic bodies with a secure national framework of laws, guidance and funding … the services should be designed and delivered locally and co-productively, involving disabled adults, councils, the NHS, carers and unions”.

With that, I will raise a point that is implicitly referred to in the report, but developments have happened since it came out. Skills for Care, the workforce planning body for the sector, has noted that an estimated 70,000 people took up care jobs in England after arriving in the year to March 2023. That was after visa changes, and there were a further 30,000 to 40,000 people arriving between April and August. Despite that fact, the vacancy rate in the adult social care sector is still nearly 10%.

The noble Baroness, Lady Fraser, referred to difficulties in Scotland. I would point to the fact that Scotland, despite having about 8% of the UK population, took up only about 2.5% of those care visas. That reflects the fact that both Scotland and Northern Ireland have slightly raised the rate of pay already. Scotland is planning next April to raise the rate of pay to £12 per hour. In Scotland, carers are also employed by the local authority, unlike in England where authorities are forced to take legal responsibility for a market in care. Would the Minister acknowledge that the market as a model of providing care is one of our underlying structural problems?

Baroness Goudie Portrait Baroness Goudie (Lab)
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My Lords, I thank my noble friend Lady Andrews for the way she led this committee. She set out with us, working together, how we would put this report to the House and the Government. I thank the staff of the committee, who gave us expert advice. Having worked on other committees, I can say that the staff are amazing.

The hardest part was for all of those who gave us evidence. It was very difficult for them giving evidence to us, and for us to accept the kind of lives they were living. Those people are really alive; people forget that they are not just a number or a file but real people. I wish that those in local authorities, in government and in the health service would acknowledge this and not leave them out on the edge.

I support my noble friend Lord Davies. I have worked with him in the other place on the issue of women who end up being carers. It is taken for granted that they can give up work and put everything aside to do this. It is very difficult for them to return to work because they are not necessarily respected for what they have done, which is huge and is saving local authorities and the Government a huge amount of money.

Further, these women understand that the person they are caring for—in some cases, more than one—wants to live at home. Nobody wants to go into an institution or be taken into some place that is not what they like. They end up dying sooner, and it is so unfair. People have to understand that people want to stay at home. We, as a country, must insist that people are allowed to be cared for in their own home.

Moving on to the report, these are the most important points about adult social care in England. First, it is funded largely from the revenue of local authorities. Secondly, a major source of that funding is from central government grants to local authorities. Thirdly, this funding has been dramatically decreasing. Fourthly, this inevitably has had adverse effects on the delivery of social care services. Fifthly, it is also having adverse effects on forward planning for meaningful reforms. If you are not funding and looking to the future at what funding we need, it is impossible to make any reforms. It is now causing huge problems for the National Health Service, in bed blocking and in other forms, which then has a further knock-on effect.

Adequate government funding is essential. I hope the Minister will be able to tell us how the Government see this going forward. As I said earlier, we are dealing with people. Given the present financial constraints, as paragraphs 105 to 109 of the committee’s report observe, access to appropriate social care services is extremely difficult to achieve. Needs assessments are based on increasingly narrow eligibility criteria. It is never explained to people properly what is required. Needs become extreme and urgent before they are recognised as requiring support.

Also, we need to look at why planning to make adequate changes to the inside or outside of a house takes so long. It should be automatic, and you should not have to wait six months or for inspections. This should be done immediately. The cuts in resources and services are very painful. These problems must be urgently resolved and addressed. The Government must deliver realistic, predictable and long-term funding to allow adult social care and its workforce to be properly resourced and planned to thrive.

Baroness Hollins Portrait Baroness Hollins (CB)
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My Lords, I welcome this excellent report from the Adult Social Care Committee. I congratulate the chair and the members; I would have loved to be one. I declare my relevant registered interests: I manage a family member’s direct payment and I am a director of a not-for-profit support organisation. I will not have time to give examples from my professional experience or my experience as a family carer today.

The committee said that social care is often “invisible”, but the report draws attention to what good care looks like, and it deserves to be widely read. Some groups are more overlooked than others. I will focus my remarks on the social care needs of working-age adults with a learning disability. In 2021-22, the King’s Fund found that 69% of social care expenditure for those aged 18 to 64 was on learning disability support. The Health Foundation’s recent analysis calls for a staggering £18.4 billion to meet demand in the next 10 years.

The sheer scale of underfunding that the system faces has a direct impact on the lives of people in need of social care. Cutting an hour here may mean that a person with a learning disability cannot meet their family or friends for lunch. Cutting an hour there may mean that a young person with a learning disability has no choice but to go to bed at eight o’clock on Saturday night. People rely on social care to access ordinary life opportunities, to live the “gloriously ordinary life” envisaged in the report and to become part of their local community—not simply to survive but to live and thrive in meaningful relationships with other people, and to live a life of their choice, as the noble Lord, Lord Bradley, said, rather than one in which a social worker decides how Care Act-assessed needs will be met by a direct payment. Does the Minister agree with me that that is not the spirit of the Care Act?

I want to mention David Towell, whose work with colleagues at the King’s Fund in 1980 kickstarted the ordinary life movement. Their work was a response to successive scandals and inquiries which exposed cruelty and neglect for many of the 50,000 people with learning disabilities then living in long-stay hospitals. They wanted to provide an alternative vision and model of care. Dr Towell’s book, An Ordinary Life in Practice, was published in 1988. In it he said:

“We want to see people with learning disabilities ‘in the mainstream of life, living in ordinary houses and ordinary streets, with the same range of choices as any citizen, and mixing as equals with the other members … of their own community’”.

This philosophy went on to inform many initiatives, including the 2001 Valuing People White Paper and its principles of rights, independence, choice and inclusion. These values were strongly spelled out in the United Nations Convention on the Rights of Persons with Disabilities, which we ratified in 2009.

The report highlights some wonderful initiatives, such as the Wigan Deal and Think Local Act Personal, which genuinely understand coproduction. But the social care system struggles to have the aspiration of an ordinary life any more because of the systemic issues outlined in the report and the urgent need for reform and culture change. This means learning to listen, particularly to the most ignored and marginalised communities, where the path to tackling injustice is that much higher and more difficult. The true state of social care requires pausing to look deeply at the sector and identify what is working and what is not. A key part of that is looking at the issues facing the workforce. Skills for Care estimates that there are more than 150,000 vacancies in the social care sector, and I welcome the committee’s recommendation for

“a comprehensive long-term national workforce and skills plan for adult social care”.

Without this, how could the significant issues of recruitment and retention be solved?

Roles in social care are highly skilled and vocational. Pay rates and training have fallen behind other sectors, but look at how social care has become a valued profession in Germany. We could transform it if we wanted to. In this country, the invisibility of care as a valued profession, compared with similar roles in the NHS, is one significant reason why people cannot stay in the job they love. The Care Act sets out a good legislative framework, but its spirit is not being adhered to. An audit cycle needs to be used effectively in adult social care: implement, review and change. This is the only way to ensure that lasting and meaningful change can take place. Legislation is just the start. I fear that, without political will to tackle these thorny issues, social care will remain invisible and broken. Remember that better lives lead to better health.

Lord Weir of Ballyholme Portrait Lord Weir of Ballyholme (DUP)
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My Lords, I too commend this report and thank the noble Baroness, Lady Andrews, and the committee for producing it, not simply in my capacity as a Member of this House but as a former carer of my late mother.

The report is deeply prescient. For too long, the issue of the need for change in adult social care has been long-fingered, and it is understandable why parties of different complexions have not grasped the issue, given the toxicity particularly around how we pay for the additional needs of adult social care. But that luxury of putting things on the long finger is something that we cannot afford to ignore any longer.

Mention has been made of an estimated 10 million people in this country being impacted by adult social care, and that number is set to grow almost exponentially, particularly as we see advances in medical science which mean that people will die less of particular conditions but will have to live with them. Nowhere is that more pertinent than with dementia and Alzheimer’s, where the numbers are probably set to double in the next few years.

In the time available to me, I want to touch on three aspects of the report. The first is the need for codesign in any plan for care—codesign with carers and also those in receipt of care. If we simply look for a one-size-fits-all solution for individuals, it will not work; similarly, if we simply seek to impose it on people, it will be a recipe for disaster.

Secondly, we need a consistency of approach across the country. We are all too aware, as is highlighted by the report itself, that for many people the quality and quantity of availability of adult social care is a postcode lottery. I know that, even in Northern Ireland, where there is a greater level of co-ordination, because health and social care are within the same department, that is no guarantee of a perfectly consistent result. I was very fortunate in my own circumstances that the company providing the care for my mother was a very good one, but I know that if I was maybe 10 or 15 miles either side of where I live, that level of care might not necessarily have been available.

As indicated by the report, we need investment in the extent of training required for the workforce—and, frankly, we need to raise the salaries of the workforce to ensure that we attract and retain sufficient numbers to be able to provide that level of social care. On consistency of provision, we need to ensure that the pathways for carers are clear and that it is easy to obtain help. As someone who was an elected representative, filling in the forms and accessing the care was quite easy for me—but many others are left in a very difficult position. I also know that, perhaps because of the level of support that I and my family were able to give my mother through finances and savings, we were able to bridge the gap between what could be afforded and what was required. But for many families that is not available.

Thirdly, we need a level of co-ordination in the system. I have mentioned that in Northern Ireland health and social care are within the one system. That in itself is not a panacea for all issues—but we have seen in a whole range of health issues that within the broader health service there is a level of silo mentality that still maintains. A number of us had a meeting today about palliative care, where again the failure perhaps to realise where there can be investment to save and to ensure a co-ordinated approach damages what can be provided and the quality of that provision.

The report highlights a cocktail of measures that are required to improve adult social care. Ultimately, it requires all of us to commit to a step change in what we can provide in adult social care. I agree with the remarks of the noble Lord, Lord Polak, when he talked about the need to take the politics out of this issue. Rather than try to create a political football in which we blame one party or another, we need to work together to try to deliver a consensus. It is often said that we have a health service in this country that is in danger of being broken. If we do not tackle properly adult social care, it will not be a question of it simply being broken—it will be irretrievably and irreversibly unfixable.

Lord Dubs Portrait Lord Dubs (Lab)
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My Lords, I congratulate my noble friend Lady Andrews and her committee on producing such an excellent and thought-provoking report. I will add a bit of my own experience; in my family, there is a person in receipt of social care and an unpaid carer, so I have lived with this issue, as it were, over some years.

I will talk about invisibility in a minute, but first I make a plea: we need more hard data on the nature of the field. I talked some years ago to a professor who pleaded desperately that we need the data so that we can make harder decisions. Most of it is based on estimates and a bit of speculation. Hard data would be extremely helpful.

I approve entirely of the recommendation that there should be a commissioner for care and support. I know that the Government do not like it; it might make the task of the Government and the Minister a bit more difficult, but it would be very healthy to have someone who can pull this together and be an advocate as the Children’s Commissioner is for children, as my noble friend Lord Bradley said. That would be a good move forward.

I turn to the invisibility of unpaid carers. One reason why they are invisible is that they do not have a voice, because they are so beaten down by day-to-day pressures. They can hardly surface at all, even to lead their own lives for a few minutes every day, so they do not have a voice to speak up. If they could, they would say many things with a lot of passion and emotion. Some of the people they care for are also not very articulate; they are too ill and vulnerable. The professional carers are so busy and underpaid that they too are invisible, because they cannot speak up either. The people who speak up in our society are those who have some space in their lives. People who do not cannot speak up.

I think £76 a week for an unpaid carer is derisory. I know one person—there must be many—who has had to give up all work to be a full-time unpaid carer, so she will not have a pension at all. Can a person live on £76.75 a week? If I have got the figure wrong, the Minister will correct me. There is also the stress that unpaid carers have to undergo and the difficulty of getting a break. Maybe once every two or three years they get a bit of respite care; most of us get a good holiday and we do not even work under such pressure. Goodness me, unpaid carers do. Some of them work flat out virtually seven days a week, so it is no wonder that they need respite care so much, but they get it very seldom.

We need a workforce plan for professional carers. We need to make what they do a profession, with training and a decent level of pay. We need a plan to look at how the whole sector operates and why there is such a low rate of retention—at why it is easier for a paid carer to stack shelves in a supermarket because they can earn more money. Stacking shelves in the supermarket is important, but what sort of society are we when that forced preference is imposed on some unpaid carers? We need a workforce plan.

Finally, there is a need for independence. People can be properly independent by being at home as much as possible and by having the support to lead their lives there. Surely that must be the aim. It is a great report and I hope it will make a difference.

Lord Allan of Hallam Portrait Lord Allan of Hallam (LD)
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My Lords, I also congratulate the committee on a very comprehensive and useful report. My noble friend Lady Barker is very sorry that she cannot be here, due to family emergency—rather illustrating the point of the noble Lord, Lord Bradley, that caring affects all of us at various times in our lives. I am sure that she will listen to the debate later and certainly appreciate the comments of the noble Lord, Lord Polak, about the usefulness of her contribution to the committee.

I will pick up on three issues we need to hear more about from the Government. I agreed with the point made by the noble Baroness, Lady Andrews; I looked at the government response and it is very much, “We have got this; it is under control”. However, I do not think they have got this, and we need to hear more from them.

The first issue is around population care needs assessments. The point about data has been raised by the noble Baroness, Lady Fraser, and the noble Lords, Lord Polak and Lord Dubs. I do not think it is a data problem. We are swimming in data. We need the more useful offspring of data, which is information. The Government are, we think, about to spend £500 million to try and transform the health system’s data into useful information. The question has already been raised, however, about whether that will be integrated with care data and whether we can get useful care information out of that kind of project.

I hope the Minister can talk some more about what commitment the Government have to extracting useful care needs assessment information from the data that the ONS and others have already. For example, I saw in the report that the first projections are around people who do not have children; the Office of National Statistics already has that data, so we need to take that and transform it into something useful in the context of care. In doing that, the assessments need to be brutally honest. There is no room for fake optimism here. We need to know what the real needs are and those projections going forward. The old maxim of hoping for the best but planning for the worst is particularly relevant in these contexts.

Having done those population care needs assessments, the next stage is the workforce plan. Now we have a sense of how much care we are going to need, we can start to plan for the numbers of people we will need to meet those requirements. It is really important we are not overoptimistic, and visas for overseas care workers have been mentioned a few times. In an ideal world, it would be great if we were able to get the care workers we needed domestically, but we should be brutally honest if we are not going to meet the requirements. Let us not gloss over it: we should continually evaluate those needs and adjust the visa regime accordingly.

I know this is very sensitive, particularly in the Conservative Party, but we need those care workers. It is not like fruit picking. We cannot say, “We will just not grow the fruit any more if we cannot get the fruit pickers”. These are people who need care. We need to be honest about the balance between those we can train domestically and those we will need to provide visas for because the care needs delivering now; it cannot necessarily wait.

The ageing population is going to be a problem here. More and more people are going to do the informal care and, precisely because of that, be no longer available to enter the market as a paid-for care worker. Again, we need to be honest about the changing demographics and how they will change the availability of workers. It is not going to be like it is today in 10 or 20 years’ time. If there are more people in their 40s and 50s looking after people in their 70s and 80s, that may have an impact on the very workforce we are trying to target in our plans.

The third area is pay. Again, having worked out the needs assessment and the plan for the workforce we need, we need to think about how to attract people into the profession. This affects both paid and unpaid workers, as has been raised in the debate. Both the wage rates for the paid workers and the support available for the unpaid workers matter.

I am sure that the noble Baroness, Lady Bennett, will be happy when I say I am very confident that my party will have a proposal around care in our election manifesto. We have already said that we think there needs to be a higher living wage available for care workers, and we should be talking about that now because that is the only way we are going to solve the crisis. If we are going to will the ends, we have to will the means. I hope the Minister can say that. I have heard him say it all before and he will cite the big numbers the Government have already put in, but those numbers need to be set against inflation and other pressures that have been eating away at the value of those salaries. There needs to be something more fundamental than just saying, “Here is another announcement of a big number”.

The final area is one that has been raised with me, which is the question around who provides care to individuals. This is a question of the choice of carer gender for intimate personal care. It is a very sensitive issue and I do not want to go into the broader issues around gender and identity. Something very specific, though, that has been raised is that there are people—particularly those who have long-term intimate care needs, because they are often younger people with disabilities—who may not be able to choose the gender of the carer who provides that care to them.

I think we can all understand why that is a very sensitive area. Part of the solution is to have a bigger workforce available: if there is more choice of carers out there, it will enable people to exercise a choice over the gender of the person who provides personal intimate care. That is important because there have, sadly, been incidences of abuse. It is also a matter of the right of an individual and their own self-determination that they have some choice over who provides care to them.

I close by thanking the committee and the many members who are here today for a report that is of great benefit to anyone who is trying to understand and respond to the ongoing crisis in care in this country. The noble Lord, Lord Polak, talked about a guide: this is a guide for us as policymakers. I recognise the need for a guide for the person trying to employ carers, but this is a great guide for us as policymakers to the key questions we should be asking. I hope that the Minister will be able to offer some constructive comments on the points I have raised around population needs assessments, care workforce planning and ensuring that carers are properly rewarded.

Baroness Wheeler Portrait Baroness Wheeler (Lab)
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My Lords, we have had an excellent but very sobering debate, throwing the spotlight on the current state of adult social care, against the backdrop of the committee’s landmark report on what the service could look like now and in the future—if the people needing support and care were properly enabled to live the “gloriously ordinary life” which my noble friend Lady Andrews and the committee so expertly advocate.

The report was the central focus of Labour’s major debate on social care in March, and I am pleased committee members have again spoken in support of it today, across the range of vital issues the report addresses. They have all praised my noble friend’s expert chairing of the committee and her excellent introduction. As I have stressed, there is no better person to lead this authoritative cross-party group, and I pay tribute not just to that expertise and wisdom, but to the tenacity and determination she has shown ever since in making sure its key findings and recommendations have been disseminated and discussed across the sector and in Parliament.

I am also very pleased that the right reverend Prelate the Bishop of Sheffield has reminded us about the excellent report from the Church’s Reimagining Care Commission, which very much shared the values and principles espoused by our own committee. I again applaud the vital work that faith committees do to help plug the enormous gaps locally in social care provision, and welcome further discussion on how the proposed national care covenant could help reinforce making social care the national imperative it needs to be.

Before the March debate, we were still awaiting the Government’s formal response to the report, which, as we have now heard was wholly underwhelming and disappointing when it was finally published in May. We were also expecting what was heavily trailed in the press at the time as the imminent publication of the Government’s long-awaited 10-year social care plan, which we all recall had been supposedly scrunched up in Boris Johnson’s back pocket way back in 2010. The Government’s 2021 White Paper had been strong on a vision of what social care could look like, but only partial as a future plan and on the issues it actually addressed. It was also decidedly lacking on how today’s and tomorrow’s demands for social care could be met, addressed and funded, or how it fitted in with the then proposals on the care cap costs, or with the fair cost of care proposals. These were delayed a year later in the Chancellor’s budget until October 2024, with the spending reallocated to keep the social care system afloat and to finance reform.

What we actually got in the 2023 next steps follow up, published during the April Recess, was largely more of the same—baby steps, as they have been described—a two-year plan rather than 10 years or addressing the longer term, and cuts or doubts raised over some of the promised White Paper funding. We again had the welcome—but still unplanned—sticking plaster funding solution: disjointed, stop-start, short-term crisis reactions, which continued to fail to identify and deliver solutions to the root causes facing older and disabled people. The short termism was met with universal dismay by the sector, with ADASS lamenting that the reform vision was “in tatters”.

The urgent need for a comprehensive national plan is where the Lords committee report so strongly comes in. It is a major piece of work because it leads the way on reform and the clear stepping stones that are needed. The committee is to be congratulated on its depth of analysis and its understanding of the extent and reach of social care, impacting 10 million of us at any one time, including those receiving care and support, and unpaid carers and families looking after loved ones.

Its focuses—on giving disabled people and people with learning difficulties, drawing on care and support, the same choice and control over their lives as other people; on fair pay and recognition for care workers; and on support for unpaid care workers—are the key fundamentals for social care reform, which we fully support. It builds on the current legislative framework for care eligibility and entitlement, achieved through cross-party support for the Care Act 2014, and promotes social care’s positive benefits as an essential service benefiting people, society and the economy, not just as ancillary to the NHS, as my noble friend Lady Andrews so ably stressed.

Today’s reality remains that demand for social care is now hitting a record high—the current picture so expertly underlined by noble Lords. As the King’s Fund has summed up, the trends in social care are still all going in the wrong direction: demand is up and access is down; financial eligibility is tighter and charging reform has been put back; the costs of delivering care are rising, with local authorities paying more for care home places and home care support; the workforce is in crisis; unpaid carers are receiving less support; and public satisfaction with social care is lower than ever.

On unpaid carers, I again reiterate and endorse what all noble Lords have referred to on the urgent need for action on carer’s allowance, paid leave, respite care and pensions. In particular, I commend my noble friend Lord Dubs, who is not only a wonderful person but, as we heard, a carer for many years who has, like many of us, taken on the system and negotiated around it to try to get both the services our loved ones need and the practical recognition of unpaid carers. Carers UK has called on the Government to publish an updated and comprehensive national carers strategy, which has to be part of a comprehensive plan for social care. I look forward to the Minister’s response to that.

We know that the social care staffing crisis is worsening daily, despite the tiny drop—less than 1%—in overall vacancies, largely through the increase in the international recruitment that social care has always depended on and valued. Last week’s Skills for Care annual survey reinforced the overall picture all too dramatically. Of particular concern were the 390,000 social care workers leaving their jobs annually, with a third leaving the service completely—social care’s “leaky bucket” in urgent need of repair, as Skills for Care put it. That is why our shadow Health and Social Care Secretary Wes Streeting’s landmark speech at last week’s Labour Party conference, setting out detailed future plans for gripping the NHS crisis, so forcefully stressed that there is no solution to that crisis without an integrated plan for social care running alongside.

Our new deal for care workers is our essential first step for tackling the crisis by addressing recruitment and retention and giving social care workers the professional status that they deserve and the first ever fair pay agreement for care workers, collectively negotiated across the sector. Skills for Care sums up the essential steps to recruitment and retention as paying above the national minimum wage, ending zero-hours contracts and providing access to training and relevant qualifications—all of which Labour is pledged to address.

When the NHS Long Term Workforce Plan was finally published in July, my noble friend Lady Merron questioned the Minister as to why it did not cover the social care workforce, as the two services are so inextricably linked. His response was that, as the Government were not the overall employer,

“it is not for us to make that plan”.—[Official Report, 4/7/23; col. 1178.]

Does the Minister not recognise that an NHS-only plan is likely to exacerbate the social care workforce crisis and the number of vacancies in that sector? Is it not the Government’s responsibility to ensure that local authorities are properly funded to pay social care contractors in care homes and domiciliary services at least the minimum wage, and to monitor this so that quality care can be provided? The committee identifies a massive 29% overall reduction in local government funding since 2010 and the precarious position that local councils find themselves in as providers of domiciliary and community care and care homes. My noble friend Lady Goudie spoke very forcefully on that.

Labour has also made clear the need, if elected, for fundamental reform and change to the current business model for residential care, which sees many private equity care homes, despite getting around £314 million in public funding each year, spending hundreds of millions servicing debts, giving bonuses to shareholders and avoiding tax. It is hard to understand why hundreds of millions of pounds go out of the service in that way. According to the CQC, one in seven private equity-owned care homes is not providing good levels of care. How long do the Government think that this model of funding for care homes can continue to plough money not into the social care sector but into shareholder profits?

The key message to the Government from the committee and today’s debate is still that reform and change for social care has to be whole-systemwide, long-term, joined-up, comprehensive, integrated care at home in the community to tackle the myriad fundamental problems in the system and deliver a new deal for care workers and unpaid carers. Instead of just keeping the current system afloat with short-term funding, stop/start changes and delayed reform, social care deserves much better and the step-by-step investment and reform that the Labour Party is so strongly committed to.

Lord Markham Portrait The Parliamentary Under-Secretary of State, Department of Health and Social Care (Lord Markham) (Con)
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I add my thanks to the noble Baroness, Lady Andrews, and all the participants involved in putting together the reports of both the Lords committee and the Archbishops’ committee. I thank Members for an expansive and extensive debate today. We also had a good debate on this in the spring and a good round table on all this, where we were able to take to heart the point made by the noble Lord, Lord Polak, about taking the politics out of the debate. I commend all those speaking in the House on this today for having taken that approach. I know that in all our dealings, the noble Baroness, Lady Wheeler, takes that approach, and it is much appreciated.

I also say that the thrust of what we are trying to do is taking to heart the Archbishops’ report, where care is everyone’s business, whether that is citizens, families, neighbours or carers, and based very much, as the noble Lord, Lord Weir, said, on the concept of co-design, working with the local partners, the local authorities and integrated care system. I will also try to tackle head-on the challenge of the noble Baroness, Lady Bennett, about the policies we feel that, as well as implementing today, we plan to take into the next election as a whole-systemwide approach.

Of course, as mentioned by many noble Lords, this has to start with funding. We have made up to £8.1 billion more available over the next two years. To answer the point of the noble Lord, Lord Allan, I say that funding in recent years represents a real-terms increase of about 2.5% per annum. This will allow local authorities to buy more care packages, help people to leave hospital on time, improve workforce recruitment and retention and reduce waiting times for care. We are also trying to use the money to transform the adult care system, for which we have a £700 million targeted spend on improving care workers’ skills, supporting career progression and investing in technology in digitisation and adapting people’s homes to allow them to live more independently. I will give details on each of those as we go through it all. As mentioned by many speakers, key to that is our £2 billion market sustainability and improvement fund, which is designed to impact and work on reform and improvement of the whole workforce recruitment and retention. I will write to the noble Baroness, Lady Finlay, on how the funding is specifically distributed so that that detail is understood.

We really believe in this vision to transform social care in England. It is a long-term vision which puts people at the centre of adult social care, to make sure that we can draw on the care support and include the absolute necessity of unpaid carers’ role in all that. I say that as someone who was an unpaid carer to good, dear friends of mine for many years.

We want to make sure that people can access outstanding quality in tailored care and support and find adult social care in a fair and accessible way, try to make it joined up in how we do it all and, I think for the first time, really try to involve the CQC in making assessments and ratings to guide where local authorities and local ICBs are doing a good job and where there are areas of improvement. I know that there are many concerns about the burdens that sometimes puts on a system which is always stretched, but I think noble Lords would also agree that inspections are typically a force for good in analysing those areas that are good and those that really need more work and improvement.

Of course, all this would be backed by much better data provision. Therefore, we are investing about £50 million into this area. I will begin by talking more about career progression, to answer some of the staffing points raised by the noble Baroness, Lady Andrews. Key to improving workforce retention is better training, recognition and career progression. The £250 million spend that was mentioned by my noble friend Lady Fraser goes very much to the heart of the training and retention of these people.

As many noble Lords mentioned, fundamental to all that is a career structure that staff feel goes beyond the particular care home that they are in and which they can take forward. Key to that is the creation of a new care certificate qualification, allowing them to move from place to place without needing to retrain each time. It is a modular system, so if they want to they can build that into an overall nursing qualification. Alongside that, we are ensuring that we are providing subsidised training programmes to decrease the turnover. We have modelled that to show that we can improve this by about nine percentage points.

Many comments have been made about how we are going to fill these workforce vacancies. The current run rate in terms of international recruitment is about 150,000 a year. I know that many comments have been made about how good it is that these are filled largely by international people, but that is a function of having a successful economy with full employment—you look to fulfil that. This has been the background to the whole health and social care system, right back to its foundations and a substantial part of the recruitment in the 1950s and 1960s. It brought people to the UK who have been an asset to the life and society that we have today. I had better say that, being married to one of these people, but I feel and hope that this should be the backbone of it and a successful way forward.

Also, it is important to understand the key role that unpaid carers play in this all. We are trying to help in this space. I perfectly understand that whatever we do here will not take the place of a full-time wage. I accept that but I hope that noble Lords will see that we are trying to make steps in the right direction. To answer the question raised by the noble Baroness, Lady Wolf, about the ability to offer respite care, we have earmarked £327 million of the better care fund towards providing those breaks. It is £76 plus the ability to claim benefits on top of that. I will not pretend that this completely compensates for a national wage, but it is not £76 alone. On the point raised by the noble Lord, Lord Davies, about pension flexibilities, I hope that we showed in the case of the doctors that we could be quite creative in that space. I will take that back and ask people who are more knowledgeable in this space than I am to take a proper look at it.

Of course, in all of this, there is the importance of supporting all these people in terms of the digital side. We have invested almost £50 million in the last year to improve the level of digitisation. It now stands at about 55%. I freely admit that 55% is not 100% but it is a big move in that direction and, to answer the points raised by the noble Lords, Lord Dubs and Lord Allan, it is something that we see as critical to the planning and provision of care, where it really can provide that information so you can plan around it.

It can also provide information to make smarter planning decisions. Again, I have seen excellent examples of putting all this data together; places such as Redhill have used it as part of its preventive screening programmes. There is a tremendous opportunity, as we build these bigger databases and include social care, to use that as the key to the prevention programme in which I know noble Lords believe.

The point made by both the noble Baroness, Lady Goudie, and the noble Lord, Lord Polak, was how we can use that to allow people to stay in the place where they most want to be, their home environment. The answer comes from not just using the data and AI to look at prevention tools; the latest funding bid launches technologies that we want to use to help people stay in their home environments. One particularly good example I have seen is a very simple tool that looks at people’s electricity usage each day. They know from people’s patterns that there is a normally a big spike at 8 am, when they turn the kettle on. If they see that that is not the case one day, they know to make a call to that person and check whether it is not because they have had a fall; it could be because they have visited a relative. This can be done on a mass-produced scale, which would give people support and early warnings, when people are at the lighter end of the scale and do not need substantial support. Relatives, local authorities and local bodies would feel that there are those extra guard-rails around this.

I will address the point made by the noble Lords, Lord Bradley and Lord Dubs, about the champion role. This was considered as it was a large part of the report. We have a champion in place in the roles of the chief nurse and the Chief Social Worker for Adults. That is a key part of their roles. I am sure noble Lords will join me in thanking Lyn Romeo for the role she has played in the last 10 years. She retires towards the end of this year.

As ever, because of the brief time we have had, I plan to write in detail to answer all the points I was not able to cover. I have tried to set out what we see as the four pillars: stable funding, a stable workforce, digital enablement and the principle of coproduction in which everyone has a role, as was outlined in the most reverend Primates’ report—because care is everyone’s business.

Baroness Andrews Portrait Baroness Andrews (Lab)
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My Lords, I thank the Minister for his thoughtful reply. I should have thanked him at the beginning for making this time available. We had a good round table, and we share a huge number of concerns and an understanding of where things need to be done and can be improved. I will briefly come on to the points where we disagree.

I re-endorse the point my noble friend Lady Goudie made about the evidence we received. Some of the stories we heard about the daily lives of unpaid carers— and we heard a lot of them—were totally astonishing. I would have liked every Member of this House to have heard what people do as a labour of love and how modest their ask is. We should simply respect that they have an expertise that is often ignored. As was eloquently said by the noble Lord, Lord Polak, they do not know who to ask or where to go, and this becomes exhausting and defeating. If we have achieved nothing else from this excellent debate, I hope that any unpaid carer listening knows that we have the experience and empathy across the House to understand this and to want to change the conditions under which they are living and caring.

There has been an astonishing range of experience around the House tonight. There has been passion, of course, and a great understanding of what caring involves, because so many people have been involved. I pay tribute to my noble friend Lord Dubs and everyone else around the Chamber who has had that experience.

I think that what we have all been saying to the Minister is that we respect what the department has been trying to do; we know that it is an extraordinarily difficult task. It is always more difficult and slower to make policy than anyone anticipates, but we are not asking for a great vision; we are asking—without false optimism, with realism but with real urgency—that we step up. We cannot do the incremental thing anymore; it is not working, and it will not work for the future. We can use all sorts of expressions such as “turning up the dial”, but we are all saying the same thing: that there really needs to be a different energy and focus. That is why I return to the point about the champion, the commissioner—there is a lot of support for it around the House and there would be if the House was full. With great respect to the post of chief nurse, it does not do what we want. It needs someone to represent all that potential and frustration and to say, “There’s the good practice; that’s how you do it.” We have heard the example of Wigan from the noble Baroness, Lady Hollins, and there was much good practice referred to in the report.

We have heard some terrific ideas which we did not put into the report, such as filling in the pension gap, and we have heard a lot about the deep complexity. The reason it has not been resolved is that it is difficult, but recognising the difficulty, the realism, is not an excuse for not dealing with it. I sense around the House, and it is common to all parties, that the time has come to make this a national imperative.

I want to thank again everyone who has spoken for their wisdom and for their practical and inspirational contributions, in every respect. It will not be the last time we debate this subject. I just hope that by the time we debate it next we will have a clearer relationship between the vision and the practical implementation of what we would all like to see.

Motion agreed.
House adjourned at 9.12 pm.