Financial Guidance and Claims Bill [HL]

Baroness Buscombe Excerpts

Committee: 1st sitting (Hansard): House of Lords
Wednesday 19th July 2017 Lords Chamber

[Viscount Trenchard (Con)]

My Lords, I shall also comment on Amendment 1, proposed by the noble Lord, Lord McKenzie. I am not quite sure that I understand clearly everything it is trying to achieve.

I agree that to outline the business plans for a minimum of three years is a sensible move. Indeed, if that is not done and there is no requirement to outline the business plans, it is quite possible that those plans will not be adequately prepared. If they are prepared, it should also be clearer what efficiencies and savings could be achieved resulting from the merger of the three bodies. It is rather disappointing that the Government could say only that the costs and charges to the levies could be looked at and savings might be found in future, but in the short term the total charges to the levies would be roughly equivalent to what they are today. Perhaps the requirement to produce business plans would make it clearer where savings and efficiencies could be derived.

I am also not quite sure that the noble Lord’s amendment passes the necessary clarity test. In proposed new paragraph (b), “follow consultation” is a bit vague. What consultation and with whom? Proposed new paragraph (c) says it must,

“be informed by a comprehensive assessment of consumer need”.

Who provides such assessment, and in what detail? It is almost open ended. While I am sympathetic to the noble Lord’s amendment, I could not support it in its present form.

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

My Lords, I thank the noble Lord, Lord McKenzie, for tabling these amendments on the establishment of the body, and the noble Baroness, Lady Coussins, and my noble friend Lord Trenchard for their contributions. The approach we have taken to the legislation is to create a high-level framework that enables the body to be responsive in its focus. I welcome this opportunity to talk in more detail about the transition from the existing services and how the body will operate going forward.

Amendment 1 seeks to specify requirements that must be met in relation to the single financial guidance body’s business plans. Those requirements would be that business plans should cover a forward period of a minimum of three years and be updated annually; plans should be informed by an assessment of consumer need; and plans should be subject to public consultation.

The Department for Work and Pensions’ arm’s-length bodies are required to produce corporate strategies covering a forward period of three years. Corporate strategies must incorporate a detailed business plan for the first year. The business plan is then updated annually and discussed with the sponsor department before sign-off by the body’s board. Corporate strategies and annual business plans are published and placed in the Library of both Houses. These requirements reflect Her Majesty’s Treasury guidance that applies to all arm’s-length bodies across government. As for other Department for Work and Pensions-sponsored bodies, these requirements will be written into the framework document that will be developed in the run-up to launch and agreed with the chief executive officer of the body. It will be reviewed regularly thereafter and will be published by the body.

The other requirements specified in Amendment 1 would make it necessary for the body to carry out a comprehensive assessment of consumer need to inform its business plans, and to consult on its business plans. I agree it is important for the single financial guidance body’s plans and activities to be informed by robust data, and information about its customers and their needs. There will also be aspects of the body’s work on which consultation will be helpful. Indeed, existing services have been developed and evolved based on data, research and consultation. We will ensure that this intelligence and experience are not lost in the transition.

As part of its functions, the body will liaise with stakeholders at strategic and operational levels all the time. This will include partners across the financial services industry, the devolved authorities and the public and voluntary sectors, informing the body’s thinking as it puts its plans together. The existing services regularly consult on matters which seek to assess consumer need without a statutory requirement to consult; for example, this week MAS published a consultation on debt advice commissioning. The body will work in a complex landscape. Without consultation on its plans and assessment of consumer needs, it would be failing in its objectives, set out in Clause 2(8), if it did not continuously assess the needs of the public and consult widely on its activities.

--- Later in debate ---

[Lord Kennedy of Southwark (Lab)]

I have looked at the amendment and listened carefully to what the Minister said. I agree very much with the comments of the noble Baroness, Lady Coussins. Nothing that the Minister said on Amendment 1 leads me to think that the Government are particularly opposed to these provisions. Is she saying that they are not necessary, or that they will be dealt with elsewhere? They all seem perfectly reasonable points to make, as any sort of future body would want to do these things—to have a business plan, to consult properly and to make sure that it does proper updates and seeks to be informed. Is it the intention that these things in the amendment can be done elsewhere and are not necessary to include at this point, but the Government are not opposed in principle to what the amendment says?

[Baroness Buscombe]

I hope I have understood the noble Lord. Is he suggesting that we should include all of this in the Bill?

[Lord Kennedy of Southwark]

No, I am just trying to clarify for the noble Baroness. Is she saying that, in principle, she sees the points that my noble friend Lord McKenzie is making in the amendment but that she does not think they are necessary to include at this point in the Bill?

[Baroness Buscombe]

I accept what the noble Lord says but I am also saying that what is necessary is already either in the Bill or, as I explained, in the requirements reflected in Her Majesty’s Treasury guidance which apply to all arm’s-length bodies across government. As for other DWP sponsor bodies, those requirements will be written into the framework document that will be developed in the run-up to launch and agreed with the CEO of the body. It will be reviewed regularly thereafter and published by the body.

[Lord McKenzie of Luton]

I thank the Minister for that reply and all other noble Lords who have participated in this debate. I thank the noble Baroness, Lady Coussins, for her support—in particular for the concept that this is a chance to embed in the culture of the new entity good practices around consultation and proper planning. I think that the noble Viscount, Lord Trenchard, also supported the broad thrust of what the amendment is trying to do. Ultimately, we are trying to get on to the record some clarity about the process. That was a key objective in tabling the amendment in this form.

The Minister said that the Bill is a high-level framework document and although I thank her for putting on to the record some comforting remarks about the things we were pursuing, I am still at a loss to understand the scale or scope of the new body and whether, on day one, it will look like an aggregation of the three existing operations. Will it be half that size or twice that size? We have no sense of that from this debate and it is a germane issue. As she says, this is a very high-level framework Bill and our one chance to address it in this House will come over the next few months, and then it will be gone. There are no parliamentary processes genuinely attached to the processes that the Minister outlined. I do not know whether any more could be said on that, but the other part of moving this amendment was to see what the concept was.

Again, is it expected that the new body will have to operate within the levy base at the moment, or will it be constrained in any way? Can the Minister give us some sense of what the new body will look like in terms of scale?

--- Later in debate ---

[Baroness Buscombe]

I again thank the noble Lord for these amendments. It is helpful to have on the record a little more detail about how the three bodies will transfer into one. It is important to emphasise that we cannot predict exactly what the new body will look like, and it would be wrong to try to do so. Initially we will bring the three bodies together but, over time, the three will evolve into one. It is important to protect current services during transition. We do not want to pin down, constrain or compromise the CEO and his board in their ability to produce the most effective single body out of these three bodies. Therefore, we must trust in them to some degree, although there has to be a lot of consultation during the process to produce something that will be much more efficient and, we hope, practical, particularly for the consumer, than what we have at the moment.

It is hoped that we will have sufficient finances to cover the transfer. The money currently held in reserves when MAS closes down, and the SFGB, could be used for some of the set-up costs if that is necessary. At the point of transfer, the reserves will be transferred to the new body and should be used up in year. The new body will be a non-departmental public body of central government and will not hold reserves. It is impossible to predict exactly how large the funds will be, but that is something that the board and the department will stay in touch with as the transition takes place.

[Lord McKenzie of Luton]

I thank the Minister for that further explanation—I think we are almost there. Only that big question remains unanswered.

Regarding the appointment of the chair and the chief executive, will they go before the Select Committee in the other place?

[Baroness Buscombe]

That is a good question. I do not have the answer, so I will write to the noble Lord.

[Lord McKenzie of Luton]

I am grateful for that. I think we have taken this as far as we can go this afternoon. I beg leave to withdraw the amendment.

--- Later in debate ---

[Baroness Buscombe]

I thank all noble Lords who have taken part in this helpful debate, and in particular my noble friend Lady Altmann for raising these issues through her amendments. It is important to be straight about it: let us not get hung up on legal terms that we need to use in the Bill to ensure that the body can deliver the crucial support on problem debt need. How the sector and others promote the services is another matter. It needs careful consideration based on evidence and insight.

I thank my noble friend Lady Altmann for bringing forward Amendments 4, 12, 44 and 67, which replace references to “debt advice” with “debt counselling” or “guidance and counselling”. My noble friend has tabled a further amendment in this group, 21, which would add to the body strategic functions to improve public understanding of the distinction between certain personal finance terms and improve their knowledge of how to access relevant information and guidance. I also thank the noble Lords, Lord McKenzie of Luton and Lord Stevenson of Balmacara, whose Amendment 38 would establish a definition for the terms “advice” and “guidance” used in the Bill.

Regarding Amendment 38, I reassure noble Lords that the Financial Conduct Authority provides thorough definitions of guidance and advice in the relevant section of its handbook. The handbook includes examples which clarify how the distinction between guidance and advice works in practice, and the Government believe that such detail is best articulated by the regulator rather than through primary legislation. I also observe that through the specifications in Clauses 6 and 7, the FCA will have a formal role in ensuring that all the activities conducted on behalf of the new body are in line with its regulatory standards and guidelines.

The FCA has conducted a significant body of work in this area, providing clear definitions of the terms “guidance” and “advice”. The Government are grateful to it for these efforts and believe that any ambiguity over the use of these terms has been appropriately addressed. It is therefore not appropriate to insert definitions of these terms in the Bill.

As she did on Second Reading, my noble friend Lady Altmann raised the important point about language and its consequences, as have other noble Lords. I agree that it is important to ensure that the Bill’s wording accurately reflects the activities the new body will be undertaking, and that members of the public fully understand the nature of the support available to them. I have reflected on this point, take it seriously, and have therefore given it careful consideration. However, I have concluded that it would not be right to include these amendments.

The first reason for not including the amendments is that “debt advice” is the term that most appropriately reflects the provision that the new body will deliver in relation to its debt function, so it should be used instead of alternatives. There are two key reasons for this. First, “debt advice” reflects a broader set of activities than “debt counselling”, and this broader set of activities is precisely what the new body will have a duty to deliver. For instance, while “debt advice” can be said to cover providing recommendations for individuals about which debt solution they should pursue, as well as adjusting individuals’ debts through a debt management plan, “debt counselling” can be said to cover only the first of those activities.

Secondly, I should note that, like financial advice, debt advice is an activity regulated by the FCA. It involves advisers offering a personal recommendation to an individual which steers them towards a particular course of action. Under FCA rules, in giving this recommendation the adviser is required to make it clear that they are giving a consumer regulated advice. Only those providers who have been authorised by the FCA to deliver this service or who are exempt from authorisation can provide this advice. As such, this makes it different from the other functions delivered by the body and means that other previously been suggested terms—for instance, “debt guidance”—would not be an appropriate description. “Guidance” in this context refers to the provision of generic information about money matters without the inclusion of a personal recommendation. Authorisation is not required for guidance, so using a term such as “debt guidance” would, we believe, be equally misleading.

The second reason why I do not believe that we should amend the term “debt advice” brings me back to the underlying purpose of ensuring that the language we use is clear, accurate and consistent. We must ensure that the way we structure and label the services on offer to individuals reflects the way they use and understand these services. There is no compelling evidence that use of the term “debt advice” is an issue for consumers or that it affects their ability to access appropriate provision. Indeed, the term is almost ubiquitously used among leading debt charities. We also need to bear in mind that we have carried out three consultations covering this issue, among many others, and have found that to be the case.

[Baroness Kramer]

Perhaps I may ask the Minister for some clarification. My question relates to a point raised by the noble Baroness, Lady Altmann, the reply to which I did not clearly understand. If an adviser provides debt advice to an individual who has a debt issue but also belongs to an auto-enrolment scheme for a pension, is the adviser permitted to propose that the individual opt out of that pension or would they be violating their authority as an adviser if they did so? From looking slightly to the Minister’s side, I gather that they would, and therefore they would be unable to provide that advice, even if it was the correct and best solution for the individual. That is part of the complication that is coming out of this language.

--- Later in debate ---

[Baroness Buscombe]

I thank the noble Baroness. Looking behind me, and in order to be absolutely right on this, I would like to come back to it in a moment, if I may.

We must ensure that we do not make changes to the language we use without strong reason if there is a risk of confusing service users. For that reason, I believe “debt advice” to be the most appropriate term to use. An important point which I do not think I have made is that we must ensure that the way we structure and label the services on offer to individuals reflects the way they use and understand them.

Finally, I should like to reassure my noble friend Lady Altmann on a specific concern that she raised during Second Reading—that the debt advice the new body offers will not be holistic in nature. The Money Advice Service has recently launched a consultation paper entitled A Strategic Approach to Debt Advice Commissioning 2018-2023. It covers a range of things, including how best to deliver debt advice and money guidance in a blended fashion in line with the needs of the individual. This consultation will underpin the approach taken by MAS and later—towards the end of next year, we hope—by the new body.

Just as other forms of advice take into account an individual’s broader situation, such as their debt levels and spending commitments, debt advice will take into account an individual’s broader situation, such as their pension. I hope that that is helpful. Similarly, just as pensions advisers will not provide recommendations to individuals about specific debt solutions to pursue, debt advisers will not provide specific recommendations to individuals about which pensions options to pursue.

However, that does not mean that the support offered by the single financial guidance body is not holistic in approach. Ensuring that the new body offers joined-up, holistic support to members of the public who require help with overlapping needs is important. Indeed, one of the key aims of bringing the functions of the Money Advice Service, the Pensions Advisory Service and Pension Wise together was to improve the co-ordination of these services. The body will be well placed to deliver this seamless service, including through—this is the important point—warm handovers and signposting to the different functions it offers. This will be central to ensuring that members of the public receive the personalised, holistic support they need.

That brings me on to the wider strategic function of the new body. My noble friend rightly draws attention to the need for a greater public understanding of how to access information and guidance, as well as distinguishing between some of the key terms, such as education, information, guidance, counselling and advice. These are key elements in improving the financial capability of members of the public. The existing services are already doing important work in these areas, and we expect the body to pick that up and continue it in the future. Indeed, the recent report from the Financial Advice Working Group, which conducted research into the terms “advice” and “guidance”, concluded that there was no value in changing the terms. The key is to have agreed and easily understandable definitions. We know from this work that people draw on multiple sources of information for help with their financial decisions but typically do not think of these as advice or guidance.

It is important that the body and its delivery partners ensure that the person they are supporting is clear about whether they are being advised to take a course of action or being given a range of options. That is what we must bear in mind. It is also important to think about the set of skills and permissions that advisers have when considering whether they can give advice on certain ways forward. However, rather than specify these elements—important as they are—within the legislation, we expect them to be wrapped up as part of the body’s wider strategic function to improve the financial capability of members of the public. Not only will that ensure that we do not limit the body’s ability to tackle a range of priority concerns now, working with others in the industry, the devolved nations and public and voluntary sectors; it will also ensure that the body is flexible enough to respond accordingly to emerging issues in the future, including any potential changes to language.

I am grateful to my noble friend Lady Altmann, the noble Lords, Lord McKenzie and Lord Stevenson, and other noble Lords for giving me the opportunity to put on the record the Government’s view on these important matters. It is also worth saying that the Financial Advice Working Group has recently looked at the broad terms “guidance” and “advice” in relation to the Financial Advice Market Review. The Financial Advice Working Group conducted consumer research that tested alternative terms but none emerged as strong alternatives to “advice” and “guidance”. However, consumer understanding of these two terms significantly improved with concise, consumer-friendly explanations. That is at the nub of this question. Therefore, the Financial Advice Working Group recommended that the terms “advice” and “guidance” should not be changed, as there was no clear consumer preference for new terms to justify the cost of changing them. Instead, the working group recommended that the market should, subject to analysis, consultation and cost-benefit analysis by the FCA, adopt a consistent set of explanations for different types of service.

Turning back to the question raised by the noble Baroness, Lady Kramer, a debt adviser is only authorised to give debt advice. As to whether the body could give advice to members of the public with automatic enrolment issues, no, it could not recommend that they opt out.

--- Later in debate ---

[Baroness Kramer]

Perhaps I may add to that. Partly this is problematic because individuals receiving the debt advice may not understand that there is no discussion of their pension pot, because the adviser is unable to raise the issue and, therefore, they may not recognise that they are being offered a series of potential solutions within a limited framework that does not make use of the full financial resource that describes essentially who they are and what they have available to them. We use advice only in the regulated sense, but the person listening thinks that it is advice in common terminology, and that is why we end up with the problems that the noble Baroness, Lady Altmann, is trying to address.

[Baroness Buscombe]

This turns on the question of what we mean by seamless. The point is that this body will be able to signpost people. The most important thing about the use of language, in a sense, is the ability of the advisers to clearly signpost and explain who can advise on what. It is a question of who has the advice, the skills and permissions to give debt advice and who can only give guidance.

I am not sure why there is an issue about this. It is more about the ability to signpost people in the right direction. Certainly, all the analysis has shown that changing the terminology makes no difference at all. What makes a difference is the ability of people to understand what it is they are able to receive and from whom.

[Lord Sharkey (LD)]

Is it not the case that, if you can give only debt advice, that advice will be defective if you cannot take into account the pension liabilities and pension assets?

[Baroness Buscombe]

There is clearly an issue here. This question is being looked at, at the moment. As I explained before the noble Baroness, Lady Kramer, intervened, there is a consultation which covers a range of things, including how best to deliver debt advice and money guidance in a blended fashion, in line with the needs of the individual. This consultation has come about in recognition of the fact that there is no magic bullet at the moment for this issue. However, surely that should not prevent or preclude the creation of a body that will, to the best of its ability, signpost people in the right direction to receive the right guidance and advice as is appropriate.

I note what the noble Baroness, Lady Kramer, said about the name. I hoped that we had made it clear at Second Reading that the reason why we do not want to put the name of the body in the Bill is, unfortunately, we have every good reason to suspect that it could lead to other individuals holding themselves out and mimicking the body. It could lead to all kinds of problems if it was set up online as a spurious website, and so on. Call us cynical, but we have to be particularly cautious about that.

I am not convinced that politicians in Parliament are best placed to decide what the name should be. A lot of the terminology used within your Lordships’ House and beyond in our political lives, by those of us who are of a political leaning, no one understands. For example, when we talk about political wards, and so on, it sounds as though we are in a hospital. It is best left to the people who will be brought on board to run the single body to make those decisions and that that is done, therefore, through delegated legislation. On that basis, I hope my noble friend will withdraw her amendment.

[Baroness Altmann]

I thank my noble friend the Minister for her remarks and all noble Lords for their excellent contributions on these vital issues and for much of their support.

This debate gives a clear example of why these amendments are necessary. There is obviously immense confusion about what advice is, what guidance is, and how they work. If we are setting up one body, it is essential that we are able to have a holistic service. I reiterate that one of the issues at the heart of this, for me, is that the body needs to serve and think about people, not products. Currently, we have different bodies that are geared towards products, whether it is helping people with debt, pensions or other savings, or managing their money. However, we are setting up one body, which is being explained to the public as providing holistic help in one place.

If we continue to call this “debt advice”, I can imagine someone coming along to the body and saying, “Can you help me manage my debts?”, and the body saying, “Yes, go and get your debt advice”. The individual goes for the debt advice and then says, “I have got this workplace pension that I ought to enrol in, what do you think? Should I opt out or not?” The person giving the debt advice currently would have to say to them, “No, you need to get financial advice for that”, because that is what the other activity is called. The individual would say, “But I thought I was here for advice. You are giving me debt advice”. “Yes, I am giving you debt advice, but you need financial advice for the pension. I can only give you guidance on the pension”. So immediately it is not holistic and immediately the person is confused.

The official umbrella term for helping people with debt is “debt counselling”. Debt advice is a subset as a part of that. We have an opportunity now, when we are setting up a unified holistic body, to do something that is in the interests of the person who will come along with complicated circumstances. It would be a missed opportunity if we let this pass without clarifying it for ourselves and changing the words “debt advice” to something else. My noble friend mentioned that the Citizens Advice Bureau does not call it debt advice but “help with debt”. That is a clear indication that the people it serves do not like the term debt advice, which is what it has told me, too.

I accept completely and appreciate that my noble friend the Minister is looking at this and has spent time considering it, so I would ask her to please carry on doing so.

[Baroness Buscombe]

I am mindful of what my noble friend has said, and I hope that she is encouraged by my reference to the consultation that has been set up so that we can somehow overcome the issues around providing a truly seamless and holistic approach to giving people advice and guidance. We will think it through some more before Report, and I shall reflect on all that noble Lords have said. It has been very helpful to have this detailed debate.

[Baroness Altmann]

I thank my noble friend for those remarks and I beg leave to withdraw the amendment.

--- Later in debate ---

These functions relate to the debt advice function, but they represent the other side of the coin and therefore need to be reflected properly in the Bill, as Amendment 5 requires, so that it is explained to the wider world that the SFGB’s core functions are not just about advice and guidance but about moving people away from debt to a different arrangement which restores their ability to cope with credit. I have given in Amendment 42 an example of the work that it could do. I said that we had had trouble getting the amendment into scope. I would like the Government to commission action of their own to get such an insolvency review carried out. If it required the Minister to take away the Bill and change the Long Title slightly, it would make it easier for us to do it at later stages, and I commend that to her. I beg to move.

[Baroness Buscombe]

My Lords, I thank the noble Lord, Lord Stevenson, for his positive contributions so far on the Bill. He has raised an important issue regarding the status of current insolvency regimes available to members of the public in England and Wales.

Amendments 5 and 42 tabled by the noble Lord would introduce a new function to the body with regard to debt solutions in addition to requiring it to review the current insolvency regimes available for members of the public in England. This would also apply in Wales, as the insolvency regime is common across both nations.

The Government are committed to helping those worst affected by problem debt. I agree with the noble Lord, Lord Stevenson, that the insolvency regime for members of the public, including businesses, must be of high quality and be kept under review to ensure that it works as it should. It must provide essential debt relief for those who need it while offering those able to repay their debts the opportunity to do so. I commend the noble Lord on the work that he has done with StepChange and have listened with care to the examples that he gave, which are of course deeply concerning, in relation to debt and insolvency.

I assure the noble Lord that the Government are indeed committed to ensuring that we retain the best possible personal insolvency regime. The Insolvency Service, which is an executive agency of the business department, is charged with delivering economic confidence by, among other things, supporting those in financial distress. The service has implemented a number of changes to the personal insolvency regime to make improvements where they are required. For example, in April 2016, the Government removed the need for a person applying for bankruptcy to go to court. The Insolvency Service keeps the personal insolvency regime under review on behalf of the Government and works closely with the Money Advice Service and the wider debt advice sector.

Working with the Insolvency Service, MAS—the Money Advice Service—launched a consultation on improvements to the debt solutions regime across the country in February this year. This consultation followed a period of in-depth research with users of the main insolvency solutions across the UK and a review of each separate insolvency solution. All the major debt advice providers and many other stakeholders responded to the consultation. MAS will publish a response to the consultation later in the year. It is reviewing the responses with its debt advice steering group, which includes representatives of all the major advice providers and the largest creditors.

The single financial guidance body’s strategic function requires that it, too, works with others in the financial services industry, the devolved authorities and the public and voluntary sectors. The Government therefore expect that the SFGB will continue to work closely with the Insolvency Service to ensure that the insolvency regime in England and Wales meets the needs of members of the public.

The Government agree that the insolvency regime must remain fit for purpose and be regularly reviewed. That is why MAS, working closely with the Insolvency Service and the debt advice sector, has undertaken its consultation. However, the duty to review the regime remains the responsibility of the Insolvency Agency. Of course, there is a role for the new body to work with the Insolvency Agency on this matter, as MAS does now. My view is that this is captured by the strategic function set out in Clause 2(7). For these reasons, I ask the noble Lord not to press his amendments.

[Lord Stevenson of Balmacara]

I thank the Minister for her full response and recognise much of what she said about the work currently going on. We are back in the same territory. The body will not work as we are beginning to envisage it if at every turn blockages are put up. It will be an insolvency service behind a different departmental boundary—it is in BEIS and not in DWP—making decisions of primary importance about clients coming to the single financial guidance body and the debt advisers seeking help with a problem. I accept that it is way the world is, but if it became clear after the reviews and further consideration of the points made here—there are many other people who can send in evidence—we might want to change that, having missed the opportunity to do so in the Bill. I appeal to the Minister to think again about this and to see whether it might be sensible to have a power somewhere in the Bill giving the single financial guidance body the opportunity to make proposals at least. In my view, we have the power to change it to help the consumers that it tries to deal with, but I realise that may be a step too far at this stage. I beg leave to withdraw the amendment.

--- Later in debate ---

[Lord McKenzie of Luton]

My Lords, it may come as no surprise that we on the Front Bench support my noble friend Lady Drake, for all the reasons that she and others mentioned this evening. Certainly, if advice was not free at the point of use, it would undermine the function and could create conflicts of interest, as my noble friend said. Issues around independence and impartiality are absolutely crucial. I am delighted to hear that HMRC had to cough up for a fridge—it is not a usual occurrence and I congratulate my noble friend on engineering that.

I say to the noble Baroness, Lady Coussins, that we entirely agree with the point about the self-employed. We have tabled an amendment on that later in the Bill and I hope that we will be able to make common cause on that as well.

[Baroness Buscombe]

My Lords, I thank the noble Lords, Lord McKenzie and Lord Stevenson, and the noble Baroness, Lady Drake, for putting their names to the amendments in this group. They seek to amend the existing functions and objectives in the Bill to ensure that the body’s services are free at the point of use, that the guidance, information and advice provided is independent and impartial, and that the body provides its services broadly rather than focusing support in areas where provision is lacking.

Amendment 6, tabled by the noble Lords, Lord McKenzie and Lord Stevenson, specifies that any information, guidance or advice delivered by the new body or its delivery partners must be free. I note that this point was raised by the noble Baroness, Lady Coussins, as well. The Government absolutely agree that any help funded by the new body should be free at the point of use. The Government’s intention is to ensure that information and guidance are available to those who need it. We would not wish to prevent members of the public accessing help on the grounds of cost.

Pension Wise, the Pensions Advisory Service and the Money Advice Service currently offer free-to-client help and, as the Government noted in their consultation, the new body will do the same. Indeed, by bringing together pensions guidance, money guidance and debt advice in one organisation, the Government expect that savings will be made. As a result, we expect a greater proportion of levy funding to be made available for the delivery of front-line services to members of the public. I am grateful for the opportunity to address noble Lords’ concerns and will observe that Clause 5 confers on the Secretary of State powers of guidance and direction that may be used to prevent the new body entering into arrangements with fee-charging providers in the unlikely event that it should wish to do so.

Amendment 29, tabled by the noble Baroness, Lady Drake, would alter the wording of the Bill to remove the requirement for the body to focus its support for the provision of information, advice and guidance on areas where it is lacking. I understand the concerns that the noble Baroness raised, and it is right to make the point that the new body’s responsibilities and functions are not relinquished simply because provision of some kind is already delivered by a third party. That is a very important point to stress. However, with respect, I do not think that the amendment is required in this instance.

It is important that the new body uses the funds it receives in a cost-effective way, thereby achieving maximum impact for members of the public. The current wording of the Bill aims to achieve this by ensuring that the body targets its activities towards those areas where information, advice and guidance are lacking. It would be helpful to explain what we mean by “lacking”. For example, provision may said to be lacking where it is not of the right quality, lacks impartiality—or, indeed, where it is absent altogether. As such, the Bill’s current wording ensures that the body carries out its functions in the most effective way possible, delivering value for money from public funding and avoiding unnecessary duplication.

As noble Lords will be aware, duplication of services with other providers was a key criticism of the Money Advice Service, both from the Treasury Select Committee and from Christine Farnish’s independent review. The Government are keen to ensure that the new body avoids this issue and have drafted legislation to reflect this. However, the proposed amendment could increase the likelihood of the new body duplicating existing and already adequate provision rather than complementing it, thereby compromising its ability to deliver value for money. Not focusing its activities on areas where support is lacking would increase the risk of leaving gaps in provision, to the detriment of members of the public.

Amendments 28, 30 and 32, tabled by the noble Baroness, Lady Drake, would alter the wording of the Bill to include a requirement for the information, guidance and advice delivered by the body to be independent and impartial. The Government agree with the intent behind the amendments. Of course, it is important that information and guidance provided by the body is both impartial and independent from commercial interests. Members of the public must be confident that information and guidance provided by the body or on its behalf is trustworthy and accurate, and that it is not designed to sell particular financial services products—a point stressed by the noble Baroness.

--- Later in debate ---

[Baroness Buscombe]

I will certainly take the point away—it was well made. I assure the noble Baroness that this should be part of the whole development of the service, whereby there is very clear signposting on the part of the adviser when talking to any individual to make sure that they understand that it is about their personal finances; it is not about finances that are in any way connected with their business.

[Lord Sharkey]

Many of the jobs we have created since 2010 are sole-trader jobs. Is it not the case that there is no meaningful distinction in sole-trader jobs between personal finance and business finance?

[Baroness Buscombe]

As I just said, we will need to take back and clarify this point. My understanding is certainly that we should focus on an individual’s finances, as opposed to finances attached to their business.

Once again, I thank noble Lords for bringing forward these amendments. I hope they will agree that they are unnecessary in the context of the Bill. I am grateful to the noble Lords because we have had the opportunity to make it clear—it will be clear in Hansard—that it is unnecessary to put into the Bill additional terminology. I urge the noble Lords, Lord McKenzie and Lord Stevenson, and the noble Baroness, Lady Drake, not to press their amendments.

[Baroness Drake]

I thank the Minister for her reply. We are in danger of breaking out into agreement, because I agreed with a lot of what she said. However, the Bill does not state what the intention is. I completely agree with the body being cost effective. I do not want to engage in duplication. I agree with its focus on the front line and that it must identify and address where information and guidance are lacking. I do not believe that any of my amendments contradict any of those requirements or the desirable directions that the Government want to take. But when the body seeks to implement the objective of identifying where something is lacking—and therefore where it has a footprint and something to do—there is a test to be met, and there is no guidance or reference or indication of any kind in the Bill as to how that test would be met. My argument is that of course one would not want to be too prescriptive but that independence and impartiality must be the essential characteristics of any test.

This will be a controversial area. There are lots of private sector guidance and information functions. There will be contests over where the boundary of the footprint of the single financial guidance body ends and commercial practice begins. I do not want to detract from the Government’s aspiration for the body but I think there is a gap, because there is no legal or legislative guidance for the test to determine what is lacking. I ask the Minister to reflect on that. I said at Second Reading that if ever there was a word that needed testing, it was “lacking”. If something is lacking, there has to be a test to identify that. I beg leave to withdraw the amendment.

--- Later in debate ---

[Lord Kirkwood of Kirkhope]

My Lords, I do not want to delay this debate, which has been a very important one. This is the most important issue for me in the first 16 clauses. I share the frustration that has been reflected by powerful speeches from colleagues including my noble friend on the Front Bench, who made an excellent speech about the significance of the proposal in this group of amendments, particularly the breathing space provisions.

One of the reasons why this is so important is that debt, I think, is going to get worse, which is probably a realistic assumption to make, for the next four or five years. I have spent my entire life working on the benefits, social security and social protection side of state provision. It is increasingly untenable that the calculation of means testing takes no account whatever of levels of benefit. People might well be applying for universal credit now, and being allowed work allowances and tapers that are appropriate to a clean sheet of paper, but no question is ever asked of decision-makers about to what extent the household debt behind the application affects the family circumstances—which affects child poverty, as the right reverend the Prelate Bishop of Newcastle just pointed out to some effect. This is the most important part of the Bill for me.

This also puzzles me because I come from Scotland and absolutely endorse what the noble Lord, Lord Stevenson, said. For 10 years now, this system has been tried and tested there, and there is no doubt about the fact that it works. I know there are rumours that people in Scotland are particularly stingy and difficult when it comes to how they spend their money—particularly on the west coast of Scotland late on a Friday night—but it seems self-evident to me that consultations with jurisdictions in other parts of the country are part of what we should be doing in a new devolved United Kingdom. I would have expected the department to go across the border to make urgent and active inquiries into exactly what ingredients in Scotland have made this successful.

Indeed, you can argue it the other way round: it is not a good thing to have this level of disparity across the United Kingdom when the body we are setting up is UK-wide. The best practice that Scotland has demonstrated is being ignored—almost wilfully, if I can put it as strongly as that—through the position the Government are taking. Both the cold calling and the breathing space provisions are popular things to do. The Government would not be attacked by anybody I would think of as reasonable on either of these two important subjects. I do not understand why the Government are not being a bit more responsive to the unanswerable claims made in powerful speeches earlier this afternoon. I think the Government will lose in this House if they do not make some amendments, and solutions have been offered.

I know Governments do not like tinkering with Long Titles. I was a Whip for long enough to learn that, and it is not something I would want to start doing a lot myself. But there is a case to be made for my noble friend’s point about the small change needed to shoehorn these two important subjects into consideration so that they can be addressed more directly—and, if I may say so, in a more adult way than we are doing at the moment by trying to look round corners and use smoke and mirrors—to achieve an objective that we all think is sensible.

My plea to the Minister, who is very good at responding to these things and considering them further, is that she carefully consider particularly the breathing space proposal. It will dog the rest of the Bill’s proceedings if the Government and the department do not offer a compromise that enables one or both of these important issues to be addressed more directly.

[Baroness Buscombe]

My Lords, I start by thanking all noble Lords, including the noble Baroness, Lady Kramer, the noble Lords, Lord Sharkey and Lord Stevenson, and the noble Earl, Lord Listowel, for their positive contributions so far on the passage of the Bill, particularly in relation to this important debate. Noble Lords have raised important issues such as indebtedness, the introduction of a breathing space scheme and protecting individuals from pensions and debt-management cold calling. I welcome the opportunity to talk about these significant issues.

Clause 2 sets out the functions and objectives of the single financial guidance body. An important function of the new body is to work with others in the financial services industry, the devolved authorities, and the public and voluntary sectors, to support and co-ordinate the development of a national strategy to improve financial capability, the ability of people to manage debt and the provision of financial education to children and young people. I say that up front, because it is important when we are thinking about how this body will evolve that the strategic function means that the body will work with others rather than in isolation. That is why we refer to its “strategic” function.

The amendments tabled by noble Lords seek to specify in statute that the body, in discharging this function, will need to focus on reviewing the case for a breathing space. This would include considering the impact of not having such a scheme, reviewing the insolvency schemes available and considering the impact of not banning pensions and debt-management cold calling.

I will first talk about the breathing space issue, which probably all noble Lords who have spoken in the debate have raised. The amendment proposed by the noble Baroness, Lady Kramer, and the noble Lord, Lord Sharkey, seeks to give the single financial guidance body the ability to specifically advocate for the introduction of a breathing space scheme. The amendment proposed by the noble Lord, Lord Stevenson of Balmacara, and the noble Earl, Lord Listowel, seeks to give the single financial guidance body a specific requirement in respect of its strategic function, which is to review the case for the introduction of a statutory breathing space scheme.

The amendment proposed by the noble Lord, Lord Sharkey, and the noble Baroness, Lady Kramer, seeks to give the single financial guidance body a specific requirement in respect of its strategic function. It would require the body annually to assess the extent to which consumer detriment is caused by, or contributed to by, pensions and debt-management cold calling and the lack of a moratorium for debt recovery, also known as a breathing space. Both the noble Baroness and the noble Lord noted during Second Reading that the level of overindebtedness among the UK population is of increasing concern—a concern I share with all noble Lords this evening.

As I said at Second Reading, the Government recognise that the cost of living can sometimes become too great. Problem debt can be hard to escape and can compound family breakdown, worklessness, stress and mental health issues, along with other issues such as those raised particularly eloquently by the noble Earl, Lord Listowel. I understand that the breathing space is of particular interest to noble Lords and that some expressed disappointment that a breathing space scheme was not provided for in the Bill. But I would like to reassure noble Lords that the Government are committed to tackling problem debt. The Government’s manifesto, as noble Lords have referenced this evening, proposed the introduction of a statutory breathing space scheme and statutory debt repayment plan. This is an important and complex issue. It requires thorough preparation and consultation on details, such as who could be eligible, which debts could be in scope and how someone could enter into a breathing space.

--- Later in debate ---

[Lord Stevenson of Balmacara]

My Lords, every journey starts with a single step. We are not able to put in as an amendment the existing scheme—which has been through another Parliament close to here, has worked for 10 years and has answered all the questions that were on the lips of the noble Baroness—because the Long Title does not encompass it. We have put down a second-order amendment, but if we have to wait for an entire financial education edifice to be created and think about a cultural revolution in the way people deal with their credit card bills on 23 January, we will never get there. I urge her to think about taking powers now, so that in the future, where she does see this as a strong possibility, it becomes more real and tangible than it is at present.

[Baroness Buscombe]

I hear what the noble Lord says, but I want to assure noble Lords that, as I said, the Government are seriously considering this issue. I take slight exception to the inference from the noble Lord, Lord Kirkwood, that the Government are not doing anything. Why would the Government put this in their manifesto if they were not doing anything? The Government believe in this in principle; they simply want to get it right.

[Noble Lords]

Oh!

[Baroness Buscombe]

Noble Lords may laugh, but I have the advantage of having been at the other Dispatch Box in opposition when noble Lords opposite were in government. We suffered continually from the inability to get that Government to introduce and think about really important measures like this. That is why the situation has become so much worse over the past 19 years that I have been in your Lordships’ House. But we want to get this right.

[Baroness Kramer]

I think the Minister may have misread noble Lords’ tone and intent. As everyone has said, there is common ground on this issue across all the Benches. Everyone is attempting to put in a breathing space and everyone wants to stop cold calling. The Minister’s argument is that the amendments have been twisted to come into the scope of this Bill. They are not the ideal amendments and everybody has said so. But in response to the discussion that has taken place across this House—a discussion that these amendments enabled—would the Government look at making a small amendment to the Long Title to enable the introduction of powers through statutory instrument? This could introduce both the breathing space and the stop on cold calling, without describing exactly how that is done, so the Government would have the opportunity to think through those complexities.

This measure is being proposed because the legislative timetable means that no vehicle other than this Bill is available for at least 24 months to make those changes. The Government may be ready to make the changes three months from now, but will find themselves without any legislative vehicle to enable them to do so. A small change here could enable the Government to act on the timetable they have identified, but which they now have no mechanism for because of the way the legislative timetable is playing out. Perhaps I am being confusing, but I am trying to make the point clear.

[Baroness Buscombe]

My Lords, I understand entirely and accept what the noble Baroness is saying. Indeed I understand that that is the purpose of all noble Lords who have spoken this evening. However, I take issue with the idea that there is no legislative opportunity over the next two years. The Government have made it very clear that we will not be confining ourselves to Bills relating to our departure from the European Union. There will be other opportunities to legislate in these important areas, but we want to make sure that when we do it, we get it right. It is important that I address—

[Lord McKenzie of Luton]

Can the noble Baroness particularise for us the Bills mentioned in the Queen’s Speech for the next two years that might be used to this effect?

[Baroness Buscombe]

No, I cannot do that at the moment and I think it is unfair to ask me to set out the Bills that could be used at this time. What I am saying, though, is that noble Lords should not presume that there are no other opportunities to bring forward legislation over the next two-year period, other than those relating to the departure from the European Union—

[Baroness Kramer]

I am sorry, but other than a Private Member’s Bill—I think even all the Private Member’s Bills have been allocated over the next two years—I am not sure it is possible to identify such a vehicle. If it is, we would all feel much comforted. A reassurance that such a vehicle is coming within a reasonable timeframe would be very helpful, but we cannot see one.

[Baroness Buscombe]

I hear what the noble Baroness is saying, but I stick to what I said before: there may be opportunities in the coming few sessions or so. The important thing is that we want to take this forward with care, and we are very committed to it in principle.

I should also refer to cold calling and the question the noble Lord, Lord Sharkey, raised. We are consulting on pensions cold calling, but the situation is different from mortgages cold calling. We have consulted on banning pensions cold calling through legislation, while a ban on mortgages cold calling has been put in place through FCA rules. Legislating to ban cold calling makes the activity illegal and therefore sends a stronger message to members of the public to put down the phone.

There are already measures in place to tackle unsolicited calls more broadly. The Information Commissioner’s Office enforces restrictions on unsolicited direct marketing, and the Digital Economy Act, passed earlier this year, required it to issue a statutory code of practice on direct marketing activities. The code will include guidance for direct marketing organisations on complying with the law, including the Privacy and Electronic Communications Regulations (EC Directive) 2003, and the upcoming data protection Bill. Unsolicited direct marketing calls to a person who has not agreed to be contacted are illegal.

[Lord Sharkey]

In view of what the Minister is saying about the measures in place to reduce cold calling, does she think that they are a success so far, with a 180% increase in the past 10 months and now 2.6 million calls a month? Where are the signs of success in reducing cold calling?

[Baroness Buscombe]

The Government take the threat of scams and the whole issue of cold calling very seriously. On the specific issue of pension scams, the Government launched a consultation in December 2016, looking at three potential interventions. These included a ban on cold calling to help stop fraudsters contacting individuals. The Government plan to publish the response to that consultation shortly, which will set out the intended next steps—but, throughout the consultation period and during engagement with stakeholders, it became clear that this is a complex area. For example, where the consultation said that the ban would not extend to existing relationships, respondents highlighted the potential difficulty in defining existing relationships and ensuring that legislation is appropriately worded.

It is clear that this policy requires careful and detailed consultation as we further develop plans. We do not propose to extend this ban to debt management cold calling. We have focused on pension scams because they can have such a detrimental impact on individuals. Pension scams can cost people their life savings and leave them facing retirement with limited income and little or no opportunity to build their pension savings back up. I should add that, at the same time, we have sought to increase standards in the debt management sector by requiring organisations to be authorised by the FCA.

I assure noble Lords again that the Government take the issue of problem debt and cold calling very seriously. Work is ongoing in these areas. I do not think that the amendments would add value to the new body’s functions—and, although I appreciate noble Lords’ intentions, this is not the right time or the right place to amend the Bill, so I ask the noble Lord to withdraw his amendment.

The noble Lord, Lord Stevenson, referred to officials in the Box. They are doing a brilliant job. I took to heart his reference to them as if they are just there to be difficult. They are doing a superb job.

[Lord Stevenson of Balmacara]

I feel humbled if in any sense what I was saying was taken as a criticism of the wonderful work that is being done to make sure that the good things in the Bill get done. I in no sense intended to say that, and I hope that the officials will accept my apology, gracefully given. I was trying to say that there is a mentality growing about the tyranny of the Bill, which is set up in part because those who have responsibility for drafting it—not always Ministers—feel very attached to it, having gone through the process, done the consultations and decided things. It is inevitable and perfectly understandable that they do not want to see it changed. I was making a light quip at Ministers. If I were in their position, I would probably be saying exactly the same thing—but it does not make it right.

[The Earl of Listowel]

Before the noble Lord withdraws his amendment, I thank the Minister for her kind words to me. I gently remind her that the right reverend Prelate had her name attached to Amendment 41 as well. It has been a very difficult and bruising time recently, and we now have the breathing space of summer, so I welcome the Minister’s reaffirmed commitment to reintroducing breathing space eventually. It is reassuring that there is work going on to look at how these measures will be brought about. I hope that, after the breathing space of the summer, we may perhaps have a more fruitful conversation in the autumn. I thank her for her reply.

[Baroness Buscombe]

I thank the noble Earl. Of course, I take very seriously everything that noble Lords have said in this evening’s debate and will take it back to the department to think it through carefully between now and Report.

[Lord Sharkey]

I start by thanking all noble Lords who have spoken in this debate. I think it is true that all supported the general principles behind all three amendments. As I am sure the Minister will have expected, I am disappointed by her response. Both amendments are obviously entirely benign and useful, and I am disappointed that she has not taken up my suggestion of a meeting to discuss the Henry VIII proposal. I believe that the Government are seriously considering both a moratorium and how to deal with cold calling—I do not think that anyone in the Chamber would disagree with that. We believe that the Government are taking it seriously and are doing what they can. That is not the issue; the issue is timing.

I also agree that we need to proceed with care—as the Minister pointed out, these are complex issues—but, above all, we need to proceed. Giving the Secretary of State powers to institute by secondary legislation will significantly bring forward the point at which we can institute a debt moratorium and ban cold calling. The sooner we do that, the more people we protect and the more people we rescue from debt. The issue of timing is important.

I understand that it is difficult to answer the questions asked about legislative vehicles, but it would be immensely reassuring to the Committee to hear more specific answers to the questions, “Likely, when? Likely, how? Likely with what vehicle?”. In the absence of those answers, it is perfectly reasonable for us to say that we think we need more definite speed, which is what we propose.

I am sure that we will return to the issues on Report, when I hope that we can focus on producing a moratorium on debt and a ban on cold calling. In the meantime, I beg leave to withdraw the amendment.

Pensions

Baroness Buscombe Excerpts

Wednesday 19th July 2017 Lords Chamber

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

My Lords, with the leave of the House, I shall repeat an Oral Statement given in another place by my right honourable friend the Secretary of State for Work and Pensions on the state pension age review. The Statement is as follows:

“Last year the Government commissioned the Government Actuary and John Cridland CBE to produce independent reports to inform the first review of the state pension age required under the Pensions Act 2014. I am very grateful to John Cridland for his contributions to the evidence base. Over the course of his review, evidence was put forward by a wide range of people and organisations. I am grateful to everyone who took the time to engage.

Today I am publishing the Government’s report on this review. This Government are determined to deliver dignity and security in retirement, fairness across the generations and the certainty people need to plan for old age. In the review, I am setting out how we will achieve these things. As part of this publication, we have set out a coherent strategy targeted at strengthening and sustaining the UK’s pensions system for many decades to come.

This is about the Government taking responsible action in response to growing demographic and fiscal pressures. That is why today I am announcing the Government’s intention to accept the key recommendation of the Cridland review and increase the state pension age from 67 to 68 over two years from 2037. This brings forward the increase by seven years from its legislated date of 2044-46, in line with the recommendation made by John Cridland and following careful consideration of the evidence on life expectancy, fairness and public finances.

In 1948, when the modern state pension was introduced, a 65 year-old could expect to live for a further 13 and a half years. By 2007, when further legislation was introduced to increase the state pension age, this had risen to around 21 years. In 2037 it is expected to be nearly 25 years. As the Cridland review makes clear, the increases in life expectancy are to be celebrated, and I want to make it clear that, even under the timetable for the rise that I am announcing today, future pensioners can still expect to spend on average more than 22 years in receipt of the state pension.

However, increasing longevity also presents challenges to the Government. There is a balance to be struck between the funding of the state pension in years to come and ensuring fairness for future generations of taxpayers. The approach I am setting out today is the responsible and fair course of action. Failing to act now in light of compelling evidence of demographic pressures would be irresponsible and place an extremely unfair burden on younger generations.

While an ageing population means that state pension spending will rise under any of the possible timetables we have considered, the action we are taking reduces this rise by 0.4% of GDP in 2039-40—equivalent to a saving of around £400 per household, based on the number of households today. Our proposed timetable will save £74 billion to 2045-46 when compared with current plans, and more than £250 billion to 2045-46 when compared with capping the rise in the state pension age at 66 in 2020, as the party opposite has advocated.

It is the duty of responsible government to keep the state pension sustainable and to maintain fairness between generations. That is why the Government are aiming for the proportion of adult life spent in receipt of the state pension to be up to 32%. We believe that this is a fair deal for current and future pensioners. We will carry out a further review before legislating to bring forward the rise in the state pension age to 68, to enable consideration of the latest life expectancy projections and to allow us to evaluate the effects of rises in the state pension age already under way.

This Government have a proven record on helping people plan for their retirement. Alongside our automatic enrolment scheme, which has already brought the benefits of private pensions to nearly 10 million people since its inception, we have set out plans to enhance the availability of impartial consumer advice through schemes such as the single financial guidance body and the pensions dashboard. Today, people have a much better idea of what their pension will be, bringing more certainty and clarity. This is something the Government will build on, making it easier for people to seek advice and make effective financial decisions.

I want Britain to be the best country in the world in which to grow old, where everyone enjoys the dignity and security they deserve in retirement. At the same time, we need to ensure that the costs of an ageing population are shared out fairly, without placing an unfair tax burden on future generations. To deliver this, we need to make responsible choices on state pension age”.

I commend this Statement to the House.

--- Later in debate ---

[Lord Kirkwood of Kirkhope (LD)]

My Lords, I am grateful to the Minister for robustly repeating the Statement. My eye was drawn to the last phrase, which she read with a flourish: “and this is what the Government are doing today”. What are the Government going to do next week on some of these matters, particularly in relation to the triple lock? I support the questions addressed to the Minister by the noble Lord, Lord McKenzie. Most importantly—this was also addressed by the noble Lord, Lord McKenzie—if the Government are to secure dignity and security for retirement, at their next review they will need to look not just at average income data but at latter-day morbidity data as well.

The one thing that is missing from the Government’s Statement and response is the fact that the totality of the policy is missing. The Government need to move in a way that releases and uses the £74 billion that we will save by this move in the public policy field between now and 2045-46 to mitigate, as Cridland suggests, some of the transitional protections and to make it easier for those who are reaching retirement but who are less able to work—the disabled, carers and people of that kind. I hope the Minister will be able to say that by the next review these transitional and support questions will be addressed using some of the savings that we are obviously making from this important policy announcement this afternoon.

[Baroness Buscombe]

My Lords, I thank noble Lords for their response to the Statement. We believe it is really important that we have a seriously responsible approach to this. The Opposition’s wish to fix the state pension age at 66, even though they legislated to increase the pension age to 68, demonstrates a failure to appreciate the situation. Their approach would add £250 billion to national debt spending in 2040, which is equal to £20 billion a year borne by future generations. It is hugely important that we take these steps now, act responsibly and with care, and focus very much on intergenerational fairness.

The noble Lord, Lord McKenzie, asked about life expectancy. We will of course look at all life expectancy data very carefully, particularly following the report by Sir Michael Marmot. The current ONS projections are that life expectancy will continue to increase, but there is uncertainty around the rate of change in future life expectancy, which is why the state pension age review mechanism ensures regular six-yearly reviews. Long-term trends of increasing life expectancy mean we need to balance the needs of pensioners with the working-age generations who fund the pensions and health and care needs of an ageing population. As for the possibility that life expectancy may be falling, the latest ONS statistics show that 65 year-olds in the UK are expected to live over half of their remaining life in good health: 11.1 years for women and 10.3 for men. Healthy life expectancy has also been increasing over recent decades and, at age 65, has been relatively stable as a proportion of total life expectancy since 2000.

The noble Lord, Lord McKenzie, spoke about regional unfairness. John Cridland, in his report, concluded that there are no practical or workable ways to factor in variations in life expectancy, and there is no evidence of regional options being any fairer or more targeted at disadvantaged groups. Allowing early access to the state pension on a reduced basis would risk leaving people with an inadequate pension. Also, disadvantaged groups should be assisted, through working age, through the benefits system rather than through changes to the state pension age.

As for the triple lock, that will remain in place for the remainder of this Parliament. The noble Lord, Lord McKenzie, also asked about whether we are going to go ahead with this or not. We have said that the Government have decided that the rise in state pension age to 68 should take place between 2037 and 2039; however we will carry out a further review before legislating, to enable consideration of the latest life expectancy projections and to allow us to evaluate the current rises in state pension age.

In relation to carers, the new statutory entitlement to carer’s leave is a BEIS-led policy. The Government are reviewing long-term carers’ leave entitlements and will set out our plans in due course. Carers will not be disadvantaged by increases to state pension age. As society ages, and care needs increase, it is important that carers are able to combine caring with paid employment or to return to paid employment when their caring duties allow. We are working with employers nationwide to encourage the adoption of carer-friendly employment policies. Under universal credit, carers are provided with more flexible support, because their claims can remain open even when they move into work. The Government’s Fuller Working Lives strategy, published in February 2017, sets out proposals to help carers combine work and care. The Government remain committed to the provision of a safety net to support pensioners who, for whatever reason, do not have a full state pension.

We are very much focused on improving communications. The intention is to provide people with adequate notice to give them clarity and certainty over their state pension. People can now use the online Check your State Pension service to get a forecast of their state pension, find out when they will reach their state pension age, how they may be able to improve their state pension and view their national insurance contribution record. Indeed, since its launch in February 2016, over 4.5 million state pension forecasts have been viewed online up to the end of June 2017. But, for any future changes, we will seek to make the position clear at least 10 years in advance. We recognise the need to provide transparency for future pensioners to facilitate effective retirement planning. The Department for Work and Pensions is looking at how best to take advantage of emerging technologies in the coming years, to build greater engagement in financial planning for later life.

The noble Lord, Lord McKenzie, also referred to the state pension. We will be discussing that very issue later this afternoon when we are in Committee on the single Financial Guidance and Claims Bill. The Opposition Front Bench also asked whether we are supporting John Cridland’s proposal to increase the state pension age once per decade, which means the next increase would not occur until 2047-49.

We do not support John Cridland’s proposal to commit to only one year’s rise every 10 years, as this would limit the Government’s ability to respond to future changes in life expectancy and would go too far in removing the link between when we change state pension age and the proportion of life people can expect to spend in receipt of state pension. However, we recognise the need for appropriately spaced rises. In the past, the UK has been slow to take account fully of life expectancy increases. This has led to changes to state pension age in three Acts of Parliament in the past 10 years, as noble Lords will know.

Thanks to the action we have now taken, however, the UK state pension is now on a firmer footing. The state pension age review framework should maintain that position through its greater responsiveness to changing life expectancy projections. This will ensure a stable state pension system in the future. That is our focus: a sustainable pension so that future generations can enjoy state pensions.

Using the 32% proportion of adult life spent over state pension age as our longer-term benchmark balances the need to maintain an affordable state pension against the need to give people clarity about what they can expect from the state: security in retirement and confidence in the value of private pension savings. I hope this in large part covers the questions raised by the noble Lords opposite.

[Baroness Drake (Lab)]

My Lords, it is the role of the Government Actuary, as set out formally in legislation, to advise the Government on trends in life expectancy to inform the state pension age. His duties are quite clearly set down in that respect. The John Cridland review was intended also to embrace wider considerations, such as socioeconomic differences and other matters, so it is disappointing that the Statement does not respond on any such issues at all—not one. I was quite surprised by that, so I take the opportunity to raise one associated issue that was addressed by John Cridland and on which he made a recommendation.

We know that auto-enrolment has seen the rise of defined contribution workplace pension saving as a mass market, and it is anticipated that some £1.7 trillion will be held in workplace schemes by 2030, which is all good news for pension savings. However, as more workers save into DC schemes, the financial capability challenge gets greater, because millions have to manage more complexity and choices. I ask the Minister: will the Government take the opportunity of the Financial Guidance and Claims Bill, the purpose of which is to raise the capacity of people to make informed financial decisions, to implement John Cridland’s recommendation and put into legislation universal access for all those in their 50s to get a mid-life financial MOT?

[Baroness Buscombe]

My Lords, I thank the noble Baroness for her question. I am conscious that she knows an enormous amount more than I do about the whole issue of pensions. A number of wider recommendations were put forward by John Cridland, and the Government have been listening responsively to the whole question of a mid-life MOT. This will be part of an ongoing review process. Whether or not it is right for that to be in the legislation on the single financial guidance body is another issue, but I assure the noble Baroness that the Government believe that this, among other recommendations, is seriously worthy of further review and discussion.

[Baroness Neville-Rolfe (Con)]

My Lords, I welcome my noble friend’s responsible approach and agree on the scale of the financial challenge that we face and the need for a big shift in the interests of intergenerational fairness, especially given the problems that youngsters have in buying their own homes, which are of course another form of support in old age. My question is different: why are the Government not going faster, bringing these changes in more quickly and, perhaps, going further up the age range?

--- Later in debate ---

[Baroness Buscombe]

I thank my noble friend for her question. Together with my noble friend, I have the good fortune to have not so young children with young families. They are questioning how sustainable even our current proposal will be, given that the burden on the next generation of funding public services in this country is ever increasing. I have talked to some in their late teens and early 20s who seem surprised that the working age should cease at 68: they think it should go on rather longer. Indeed, your Lordships’ House is an example where people want to and are capable of working late into life. There is no question but that we should keep the whole issue of state pension age under review. That is why we have set out a clear pathway for the future.

[Baroness Hollis of Heigham (Lab)]

My Lords, I think we all share the Minister’s view that any future settlement needs to reflect life expectancy, fairness and public finances, but the fourth question, which she referred to briefly in response to the noble Lord, Lord Kirkwood, is not mentioned at all in the Statement—although John Cridland has tried to address it in meetings that we have had with him where some of us have pressed him on this issue—which is healthy life expectancy. We know that the gap in life expectancy between men and women is narrowing, which is good. We also know that the gap in life expectancy by social class—As and Bs as opposed to Ds and Es in the old census formula—is widening. For them, for every extra year of life expectancy, anything between six and 10 months of it will be in very poor health. In other words, every year gained in life expectancy for the bottom third of our population is a year in poor health. Therefore, people can leave their working life without a healthy year of retirement in their future: they will start with disability. The Minister mentioned that there would be responses in the benefit system to those in that situation. Will she move away from the concept of benefits and all the problems associated with universal credit, PIP and the rest of it, which are now coming through in horrifying forms, and instead think about the expansion of pension credit, which is much more closely connected to pensioner incomes rather than working-age incomes, as a way of ameliorating the situation of those who are unable to draw their state pension at an early enough age, denying them even a single year of healthy retirement?

[Baroness Buscombe]

I thank the noble Baroness for her question. We are trying to look at what a suitable state pension is that rises in line with life expectancy and is fair across the board. I know the noble Baroness is very keen on the whole issue of fairness across all the socioeconomic areas, as it were. We are quite clear in our minds, having studied Cridland, that the reality is that our strategy is built on a solid evidence base that has been aided substantially by the two contributions from John Cridland and the Government Actuary. In fact, Cridland’s review took into account evidence provided by over 150 stakeholders. The question of life expectancy has gone up for all socioeconomic groups over the last 30 years, and for all constituent countries of the UK over the past decades. As I say, John Cridland did extensive work on this and concluded that a universal state pension age remains the best system as it provides simplicity and clarity, which enables people to plan for their retirement. As I have said, Cridland concluded that there are no practical or workable ways to factor in variations in life expectancy, and there is no evidence of regional options being any fairer or more targeted at disadvantaged groups. Allowing early access to the state pension on a reduced basis would risk leaving people with an inadequate pension. We believe that disadvantaged groups should be assisted through the working-age benefits system rather than through changes to the state pension age.

It is important to add that we should not see the issue of increasing the state pension age as one whereby we are bringing in a situation that is necessarily making it more difficult for people as they grow older, given that older workers can bring decades of valuable knowledge and experience to the workplace. This is all seeming rather doomy, but actually we should celebrate the fact that life expectancy is increasing. There are now 8.7 million people aged 50 to 64 in work, which is a record high, and more than 1.2 million people aged 65-plus who choose to remain in work. In 2017, we launched the Fuller Working Lives strategy in order to encourage more employers to take advantage of the benefits that older people bring. We are calling on employers to boost the number of older workers, not write people off once they reach a certain age.

[Lord Boateng (Lab)]

My Lords, it may be that I am just getting older and more irascible and that I am just another angry old man, but I really do not see what there is to celebrate if you are old and poor and doing a manual job. It is perfectly true that life expectancy is increasing, but it is not getting any easier to get older. Surely we all understand that. What is lacking from the Statement and the Government’s response is any sense of justice around the process of being old, poor, disabled or a carer.

[Baroness Buscombe]

My Lords, I have to say I entirely disagree with the noble Lord. I listened to some of the comments made by his party in another place and I found them shocking in relation to the way that old people are referred to, as if old people are somehow rather useless and “worn out”—I think that was one of the expressions used at the other end. My young, who will be hitting retirement when this comes into fruition, would take that very poorly. We are looking for every opportunity to find ways to improve healthy working lives for everyone. If one was a little more positive about this, one would accept that it is totally unfair to ask young people today and tomorrow to be saddled with such an enormous burden as the party opposite want to impose on the young people of today and those who are very much in their youth. The idea of the party opposite is that we should add £250 billion to the debt because—even though it legislated to increase the retirement age to 68—it now says that, somehow, we are not being kind to people in poor health who are unable to work up to the state pension.

The welfare system provides a safety net for those experiencing hardship, with a range of benefits tailored to individual circumstances. Indeed, the Government are committed to supporting the vulnerable, spending around £50 billion a year on benefits to support disabled people and people with health conditions, which equates to more than 6% of all government spending. I recognise that this change will have a bigger impact on people with lower life expectancy, but we agree with Cridland that a universal state pension is important for simplicity and clarity for planning purposes. There have been substantial improvements in life expectancy at 65 across all socioeconomic groups over the last 30 years. This means that change is needed for fairness between the generations.

[Lord Kerr of Kinlochard (CB)]

My Lords, the Minister mentions “fairness between the generations”. Would she apply that eloquence to explain the retention of the triple lock?

[Baroness Buscombe]

My Lords, I simply repeat that we have decided to retain the triple lock for the remainder of this Parliament. I had rather hoped that noble Lords who take advantage of it would welcome it.

Financial Guidance and Claims Bill [HL]

Baroness Buscombe Excerpts

Thursday 13th July 2017 Lords Chamber

Moved by

[Baroness Buscombe]

That it be an instruction to the Committee of the Whole House to which the Financial Guidance and Claims Bill [HL] has been committed that they consider the bill in the following order:

Clause 1, Schedules 1 and 2, Clauses 2 to 13, Schedule 3, Clauses 14 to 16, Schedules 4 and 5, Clauses 17 to 20, Title.

Motion agreed.

Poverty

Baroness Buscombe Excerpts

Thursday 13th July 2017 Lords Chamber

[Lord Bird]

To ask Her Majesty's Government, further to the Written Answer by Lord Henley on 6 March (HL5600) concerning early intervention programmes, what steps they are taking to prioritise their focus on the root causes of poverty and disadvantage.

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

My Lords, tackling the root causes of child poverty and disadvantage includes taking action on parental worklessness. New analysis carried out by the Department for Work and Pensions shows that children living in workless families are significantly more disadvantaged and achieve poorer outcomes than other children, including those in lower-income working families. Improving Lives: Helping Workless Families, published on 4 April, provides a framework for a continued focus on improving children’s outcomes now and in the future.

[Lord Bird (CB)]

I thank the Minister very much for her reply. I would like to make the obvious statement that prevention—

--- Later in debate ---

[Lord Bird]

Oh! I am sorry. I will not make a statement; I will ask a question. Forgive me. Could Her Majesty’s Government move inexorably towards a situation where we could put prevention right at the centre of all the work we do? We know that prevention pays off. We know that when money is spent on prevention, it reaps enormous benefits. Could Her Majesty’s Government look at the possibility of creating a prevention unit across both Houses and all parties, so that we could at last make sense of the need to prevent people falling into poverty because too many people are stuck in poverty and are not getting out?

[Baroness Buscombe]

I thank the noble Lord very much for his question. I entirely agree that the focus must be on prevention. We strongly believe that it was right to replace the income-related child poverty targets, which we had until 2010, with statutory measures of parental worklessness and children’s educational attainment—the areas that can make the biggest difference to children’s outcomes. We believe that the way to help people out of poverty is through employment. A great deal of progress has been made and employment is now at a record high level. However, although record levels of employment are great, one in eight children across the UK still lives in a workless family, and we need to tackle that. A prevention unit is a great idea but the reality is that we can perform that function by working across government, as we are doing, on the strategy that we have now developed within Work and Pensions.

[Baroness Massey of Darwen (Lab)]

My Lords, the noble Baroness will know that the evidence on social mobility and what makes social mobility work is now very strong. Two of the factors are excellent childcare and excellent early years education. Why, then, do the Government not accept that and put more money into that kind of early intervention for children?

[Baroness Buscombe]

My Lords, we are working on our strategy for childcare because we understand that, if we are to have people in work, we have to have the right system in place supporting childcare that works for everyone. I know that colleagues across government are looking at this at the moment, improving on the support for young families that we already have. The reality is that we want to focus on prevention through getting more people into work, because we know that that increases people’s confidence and their health and well-being, and all that impacts on the child and their future levels of attainment and well-being.

[The Lord Bishop of Leeds]

My Lords, does the Minister agree that there is a problem here, in that we want to applaud the employment figures released today but, at the same time, we need to recognise that it is people in employment who are using our food banks, where the numbers have rocketed in the last few years? Therefore, the simple statement that we applaud the rise in employment disguises a deeper problem.

[Baroness Buscombe]

I entirely agree with the right reverend Prelate that it is not a question of just making statements; it is more about making sure that we do the right things from the bottom up. We have to take on board the fact that we continue to spend over £90 billion a year on benefits for people of working age but that targets to put more into that area have not worked in the past. The reality is that we know that children in families where no one works are significantly more disadvantaged and achieve poorer outcomes, and it is right that we focus on improving the long-term outcomes for those children. Improving Lives: Helping Workless Families provides a framework for a continued focus on tackling worklessness. For those in work, we have introduced major reforms to make work pay, and we are introducing universal credit to strengthen incentives for parents to move into and progress in work.

[Baroness Hussein-Ece (LD)]

My Lords, the Institute for Fiscal Studies says that the level of child poverty is rising and predicts that by 2020 5 million children will be living below the poverty line. Why does the Minister think that that is the case, and what strategies does she think need to be implemented to address it? These are serious matters. Do the Government have an overarching strategy that will tackle the root causes of child poverty?

[Baroness Buscombe]

Yes. I am sorry if I have not spelled it out but the reality is that we have a strategy for tackling child poverty. It is about putting more people into work so that children grow up in families where there is work, and educational attainment is also hugely important, but the rates of relative poverty are unchanged since 2009-10. We believe that employment is key to alleviating poverty. Children in workless households are five times more likely to be in poverty than those in households where all adults work. It is thanks to this Government’s actions that there are now 828,000 fewer workless households and 590,000 fewer children in workless households compared with 2010.

Pension Protection Fund and Pensions Regulator

Baroness Buscombe Excerpts

Thursday 13th July 2017 Lords Chamber

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

My Lords, the Government are determined to ensure that the entitlements of occupational pension scheme members are protected from the actions of unscrupulous employers. We published the Green Paper, Security and Sustainability in Defined Benefit Pension Schemes, in February this year, and consulted on changes to pension protection legislation, including those set out in the manifesto. I am pleased to tell noble Lords that the Department for Work and Pensions is today announcing plans to launch a White Paper on the future of defined benefit final salary pension schemes in the near future.

[Lord McKenzie of Luton (Lab)]

My Lords, I thank the Minister for that reply. We agree with the importance of sustaining confidence in the pension system, particularly DB schemes, and ensuring that the pension promises of employers are honoured. We look forward to seeing the White Paper in due course, whenever that might be. But, given the experience of U-turns on the triple lock and the lack of reference to the issue in the Queen’s Speech, we are entitled to check the status of what was promised to the electorate, especially as it is branded as a component of the strong and stable leadership and said to be protection from “irresponsible bosses”—not usual Tory language, but we know who they mean. Can the Minister confirm that it is government policy—which would have our support—to introduce for the Pensions Regulator a notification scheme for certain mergers and acquisitions; powers to block certain takeovers; punitive fines for those wilfully under-resourcing schemes; and powers to restrict dividends of irresponsible employers? Can she also say what changes the Government consider necessary to the powers of a pension protection fund?

[Baroness Buscombe]

My Lords, as the noble Lord will know, the Green Paper covered four key areas: funding and investment, employer contributions and affordability, member protection, and consolidation of schemes. It looked to examine and build on the discussion already taking place on what, if anything, should be done to ensure that the system remains sustainable while ensuring that members’ benefits are protected. It is really important to say that issues such as powers to block certain mergers and acquisitions should be thought through extremely carefully, not least because we want to ensure that any changes to the powers of the regulator do not trigger unintended consequences and act as an impediment to business and growth.

[Lord Cormack (Con)]

My Lords, my noble friend talked of the “near future”—is that soon, or shortly?

[Baroness Buscombe]

That will be shortly.

[Baroness Royall of Blaisdon (Lab)]

My Lords, will the Minister join me in welcoming the decision of the Supreme Court yesterday, which will enable lesbian and gay couples to have the same pension rights as heterosexual couples?

--- Later in debate ---

[Baroness Buscombe]

I of course respect the decision of the Supreme Court—

[Noble Lords]

Oh!

[Baroness Buscombe]

I want to be absolutely straightforward about this with noble Lords. We are reviewing the implications of the judgment in detail and will respond appropriately in due course. The Government affirm their commitment to same-sex marriage and are proud of the achievement of the coalition Government, who delivered the 2013 legislation. The Government are committed to equality, and that is why legislation was introduced whereby pensions are built up equally for all legal partnerships.

[Lord Flight (Con)]

My Lords, the main problem for defined benefit schemes is the rate of interest at which accounting standards require them to discount their future liabilities. This gives rise to arithmetic which shows a substantial deficit that is not likely to happen. I believe that a White Paper is coming, but can the Government get a move on and address this issue? It is causing problems where they do not really exist.

[Baroness Buscombe]

I entirely accept what my noble friend has proposed; I am very much hoping that this will be part of the many issues covered in the White Paper.

[Lord Stoneham of Droxford (LD)]

Surprisingly, the section of the Conservative manifesto on protecting private pensions did not mention George Osborne’s policy of enabling people to cash in their pensions, which was introduced without very much consultation. Today’s FT says that this change is not,

“a palpable fiasco, but the early signs do not look promising”.

So what are the Government doing to protect people from being duped—or was this simply a short-term measure to raise tax revenue?

[Baroness Buscombe]

My Lords, I too read the article in the Financial Times this morning. The truth is that these pension freedoms are proving very popular. However, they raise important issues around the operation of the market and how we support consumers, so we will be working with the Financial Conduct Authority on the next steps to address this issue.

[Lord Foulkes of Cumnock (Lab)]

My Lords, the mention by my noble friend Lord McKenzie of irresponsible employers reminded me of Sir Philip Green. Can the Minister bring us up to date on the position of the BHS pensioners and what the Government are doing to help them?

[Baroness Buscombe]

My Lords, the financial settlement regarding BHS is valued in total at £363 million, and £343 million has already been placed in a fully independent escrow account to fund a new scheme. The settlement with Sir Philip Green for the British Home Stores scheme is the largest of its kind the Pensions Regulator has reached to date. Indeed, in total, the Pensions Regulator has secured more than £1 billion for pension schemes through the use of settlement in avoidance cases. Existing members of the scheme now have three options: transfer to the proposed new pension scheme, opt for a lump sum payment, if eligible, or remain in their current scheme, which is expected eventually to transfer to the Pension Protection Fund. However, the new scheme will be a fully independent trust with independent governance and trustees. Neither Sir Philip Green nor the Arcadia Group will be involved in the management of the scheme. In the highly unlikely event that the new scheme fails, members can rely on the Pension Protection Fund.

[Baroness Altmann (Con)]

My Lords, would my noble friend care to agree with me that the Pension Protection Fund is performing a vital function very well? Its investment policies and levy management have achieved a significant funding surplus and tens of thousands of workers are receiving most of their promised pensions, whereas in the pre-PPF days, they would have lost the entire amount.

[Baroness Buscombe]

I thank my noble friend very much for her question. She is completely right. With regard to the British Home Stores financial settlement, the lump sum payment option will be available to members with small pots of up to £18,000 in value. Those who choose not to take a lump sum and opt to transfer to the new scheme will be entitled to the same benefit structure as all other members. The new scheme will also be eligible for the Pension Protection Fund.

Financial Guidance and Claims Bill [HL]

Baroness Buscombe Excerpts

2nd reading (Hansard): House of Lords
Wednesday 5th July 2017 Lords Chamber

Moved by

[Baroness Buscombe]

That the Bill be now read a second time.

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

My Lords, I take this opportunity to say thank you for the positive engagement and feedback your Lordships have already provided, particularly at the all-Peers session we held last week. It is my sincere hope that we can continue to engage in this way as the Bill progresses through this House.

The Bill is a relatively and deliberately small Bill, focusing specifically on two separate but important issues. The first part will create the framework for a single financial guidance body, ensuring that people have access to the information and guidance they need to make the important and effective financial decisions that we all have to make at some point in our lives. The second part will enable the transfer of claims management regulation from the Ministry of Justice to the Financial Conduct Authority, ensuring that there is a tougher regulatory framework in place and that people have access to high-quality claims handling services.

We believe that both measures will benefit members of the public and provide a sustainable legislative framework for public financial guidance and the regulation of claims management companies in the future. Both measures have received support from stakeholders in industry, from charities and from consumer groups. Since it was announced in Her Majesty’s gracious Speech that we would be bringing forward these measures, the response from stakeholders has been very positive. For example, Scottish Widows welcomed the Bill saying that it was,

“a major step in simplifying money management from the perspective of the public, where the full spectrum of support will soon be found in one place”.

Welcoming the claims management regulation measures, the ABI stated:

“Confirmation of tougher regulation of claims management companies cannot come soon enough for people who are plagued by unsolicited calls and texts. Disreputable firms are fuelling a compensation culture that contributes to higher insurance costs for many”.


I now turn to the clauses in the Bill and why we believe them to be important. Clauses 1 to 15 establish the new arm’s-length body that will replace the Money Advice Service, the Pensions Advisory Service, and DWP’s Pension Wise service. This builds on the Government’s commitment to ensure that people should be able to access good-quality, free-to-client, impartial financial guidance and debt advice.

The need to restructure and simplify the UK’s financial guidance landscape was confirmed in October 2015 when the Government launched the first of their three reviews into the provision of public financial guidance across the UK. The first two reviews established beyond doubt that there was the need for such a body, but we wanted to ensure that the right model was delivered, that it would work for those who needed to use it and that it had the full support of the financial services, pensions and charity sectors. In October 2016, in response to the feedback we received from stakeholders, we took the decision to create one single body and set out our proposals for a single body that could provide a more joined-up approach to financial guidance and debt advice. The consultation closed in February this year, and since it closed, the DWP and the Treasury have held discussions with interested parties to gain further insight.

The responses, from trade organisations, charities, and the financial services and pensions industries, were very positive and supportive of the Government’s proposals, and clearly expressed a wish to see the body focus on filling gaps in the current financial guidance provision. StepChange, one of the UK’s largest debt charities, commented:

“A single financial guidance body, backed by well-constructed legislation, can be a major plank in Government strategies on social justice and supporting families who are ‘just about managing’”.


The LV= insurance company strongly supported the proposals, saying, “We fully support the premise that people attach a greater value to ‘government backed’ and impartial guidance for many key financial decisions, particularly when making decisions about retirement income, and our own consumer research confirms this”.

Before I go on, I am very conscious of the concerns expressed by some of your Lordships about the difference between advice and guidance. It may help if I briefly outline where we see the distinction. Debt advice is a regulated activity. It is provided by an FCA-approved debt adviser who provides an assessment of an individual’s debt situation and makes a recommendation on a course of action. The Government currently fund free-to-client debt advice through the Money Advice Service. The key point here is that debt advice comes with a personal recommendation and action plan and is a regulated activity, so it is tailored to an individual’s needs. Financial guidance is the provision of more generic information about the various options open to an individual. No personal recommendation is provided, it is not regulated and it is not tied to selling a product as a result of the information provided. It is important that we understand that distinction as we go on to debate the Bill in more detail.

The measures in the Bill outline four functions for the new body. First, it will provide information and guidance on all matters relating to private pensions, covering both the basics as well as the more complicated issues. That will include matters such as pension schemes and how they work; general information about the state pension; transfers between a defined benefit scheme and a defined contribution scheme; and the options open to people as a result of the pension freedoms. Secondly, it will provide impartial guidance and information on money matters, including budgeting and saving, insurance, bank accounts, protection from fraud and scams, and planning for retirement.

Thirdly, a further function of the body will be to fund free-to-client debt advice for people in England with problem debt. Let me again be clear about what this means: the debt advice function that we are talking about here is targeted at people in crisis. It is essential that people in serious debt are able to access help that will provide them with a clear course of action. The Money Advice Service currently provides funding for advice of this sort, and it is vital that the new body continues that work.

Importantly, the fourth function of the Bill, its strategic function, requires the body to work closely with others in the financial industry, the devolved authorities and the public and voluntary sectors. This will enable the body to harness their knowhow, expertise and innovation, and to strengthen the co-ordination and development of a national strategy in three key areas, with the overarching aim of improving the ability of individuals to manage their finances. The strategy will aim to better identify the issues that people face and where there are gaps in provision. It will help to develop evidence-based solutions to these issues and ensure that the sector’s resources are used in a co-ordinated and effective way.

I shall touch briefly on the role of devolved authorities. In considering the functions of the new body, the Government have consulted with the devolved authorities on the delivery of debt advice and believe that decisions on the use of funds for debt advice are best made locally. The devolved authorities currently deliver a broad range of guidance services, including guidance on housing and welfare reform. By transferring responsibility for debt advice to them, the Bill will create opportunities to commission joined-up services that reflect the needs of members of the public in Scotland, Wales and Northern Ireland. That is why the Bill makes provision for the funding of debt advice to be delivered by each of the devolved authorities. It will of course be important for the new body and the devolved authorities to work together and to share learnings when commissioning debt advice. For that reason, the new body will be required to work closely with the devolved authorities in delivering its functions, and will collaborate with the devolved Administrations when developing a strategy to address financial capability, including the ability of members of the public to manage debt.

We want to ensure that everyone has the opportunity to take control of their finances, and being able to access the right guidance is an important first step. The noble Lord, Lord McKenzie, was right when he said during the debate on Her Majesty’s gracious Speech that,

“levels of financial capability in the UK are low and that many people face significant challenges when it comes to managing money, avoiding debt, building up savings in the short term and balancing this with”,—[Official Report, 29/6/17; cols. 640-41.]

saving money for their retirement. The first part of this Bill, and the creation of a single financial guidance body, will help people to move in the right direction and give them that opportunity. The clauses provide the legislative framework for the body that will allow it to respond to industry and policy changes and keep pace with technological advances.

One might ask: why now? The noble Lady, Baroness Drake, said at Second Reading of the Pension Schemes Act last November:

“I hope that it will not be long before the revised proposals for financial and pensions guidance are revealed”.—[Official Report, 1/11/16; col. 584.]


We have now consulted three times on how best to restructure the financial guidance landscape. We have listened and acted upon the views of the industry, charities, consumer groups and members of the public. There is a growing expectation of change, and continued delay will cause uncertainty for the three services involved and the 250 or so staff who work for them. We believe that now is the time to get things done.

I know that a number of your Lordships have raised questions about financial exclusion and the role of the new body. I put on record this Government’s appreciation for the excellent work that your Lordships’ Select Committee has done in preparing its report on this area. The new body will help to address some of the key issues that the committee raised in its report. It will continue to fund debt advice as well as fund and evaluate financial capability programmes, including financial education initiatives aimed at children. In this way, it will help people of all ages and backgrounds to manage their money well and make the most of financial services and products. However, the report made 22 recommendations, many of them outside of the scope of the body. The Government have been considering them very carefully and will publish a full response shortly.

I turn to the measures in Part 2. Clauses 16 and 17 will enable the transfer of claims management regulation from the Ministry of Justice to the FCA. This measure is intended to tackle a range of conduct issues within the market, ensuring a tougher regulatory framework and increased individual accountability.

We have put on record our commitment to clamping down further on some CMCs’ rogue behaviour by transferring regulatory responsibility to the FCA. We will all be aware of the type of complaints levelled at some claims management services companies. Many of your Lordships will have experienced them at first hand. They include poor value for money; misrepresentation of the service offered to consumers; reliance on nuisance tactics, such as unsolicited calls and texts; and the progression of inappropriate claims, either speculative or fraudulent.

Moreover, we know that 76% of the public are not confident that CMCs tell the truth to their customers. At the 2015 Budget, the Government commissioned an independent review to examine the CMC market and make recommendations to improve the regulatory regime. Following this review, undertaken by Carol Brady, we said in the March 2016 Budget that we would take action. The measures in the Bill honour that commitment.

Clause 16 amends the Financial Services and Markets Act 2000 to enable the FCA to regulate specified activities in relation to claims management services. It enables the transfer of CMC regulation by switching on FCA’s regulatory, supervisory and enforcement powers in respect of claims management services, so that the FCA can design and implement a robust regulatory regime.

Clause 17 ensures that the FCA has the necessary powers to restrict fees which CMCs charge in order to protect consumers from disproportionate fees. It also requires the FCA to make rules restricting charges for claims management services dealing with claims for financial services or products. This clause will help to ensure that the FCA has the necessary powers to restrict fees which CMCs charge, to protect consumers from disproportionate fees. Strengthening the regulation of CMCs in this way gained widespread support and is popular among consumer groups, insurers, lawyers and the financial services sector.

As I said at the start, the Bill is deliberately narrow in focus. Its purpose is to ensure that people—especially those who are struggling—are easily able to access free and impartial financial guidance to help them make more effective financial decisions. It will improve their confidence when dealing with financial service providers and is an important step towards improving their financial capability.

By transferring the regulatory responsibility for CMCs to the FCA, the Bill sends a clear message to CMCs, providing a stronger framework that ensures that individuals are accountable for the actions of their businesses, and it will provide the FCA with fee-capping powers to protect consumers from excessive fees.

We believe that this is a positive Bill and a fair Bill. It has the individual at its heart, and I look forward to the constructive engagement that we will have as it progresses through your Lordships’ House. I beg to move.

--- Later in debate ---

[Baroness Buscombe]

My Lords, I was expecting some excellent contributions to this debate, and I was not disappointed. I thank all noble Lords who welcomed me to this role. It is somewhat a baptism of fire, with such a technical Bill, but I look forward to further debate and to the opportunity to meet again with noble Lords between now and our first day in Committee. That would be most welcome.

I agree with the noble Lord, Lord Kirkwood of Kirkhope, that the presence of my honourable friend Guy Opperman MP from another place was most welcome. He brings considerable energy, experience and passion to his new role as our first Minister for Pensions and Financial Inclusion.

My noble friend Lord Trenchard was very much hoping to speak but unfortunately, due to pressures of time, he had to scratch. He looks forward to contributing to our debates in Committee.

I join noble Lords in acknowledging the excellent work done by TPAS, of which the noble Baroness, Lady Drake, is a board member. As she, my noble friend Lady Altmann and others said, it is concerning to know that the financial resilience of the public is getting weaker. That being so, as noble Lords have said, clearer signposting and an increased awareness of financial guidance is important. As the noble Baroness, Lady Drake, said, there is a real need for a single cohesive strategy, and we, the Government, must provide leadership of that strategy. As the noble Baroness, Lady Greengross, said, particularly with regard to retirement, we need to encourage more people to give proper thought to their financial future.

I agree with the noble Earl, Lord Kinnoull, about simplicity. If we can keep this simple, that will enhance accessibility and trust in the new body and increase rigour in the regulation of CMCs. I hear what my noble friend Lady Altmann says with regard to language and its consequences—we will need to give further consideration to advice versus guidance. The contribution of the noble Baroness, Lady Coussins, as president of the Money Advice Trust, accentuated the need for us to ensure that we can reach a consensus on the language that we use in the Bill.

A number of salient points have been made this evening and I hope that I will be able to cover as many of them as possible. There are many points that we need to consider with care, and I apologise up front if I cannot cover absolutely everything that was raised in the time available.

A number of noble Lords questioned the seamless transition to the new body of the existing services provided by the MAS, TPAS and Pension Wise. The Government want to build on those bodies’ wealth of experience. These services will continue to provide information and guidance until the SFGB has been set up, and this will allow for an uninterrupted service to the public. The DWP and the Treasury are working closely with the three bodies to make sure that plans to go live are reasonable and practical, and that existing services are maintained throughout the transition. A programme has been set up in the DWP with membership from the existing services to enable a smooth transition to the new body. TPAS services are covered by the SFGB’s pensions guidance function, and there is a specific requirement for the SFGB to include guidance on pensions flexibilities—a service currently delivered by Pension Wise.

Several noble Lords raised the question of the Government responding to the Select Committee on Financial Exclusion, including on the role of the FCA in promoting financial inclusion and the possibility of a duty of care by financial institutions towards their customers. The Government are planning to respond formally to the committee’s report in the very near future, with full responses to each of the committee’s 22 recommendations.

A number of noble Lords also asked why the Bill does not include a provision for a breathing space scheme. We recognise that the cost of living can sometimes become too great. Problem debt is hard to escape and can compound family breakdown, worklessness, stress and mental health issues, and this Government remain entirely committed to supporting people in problem debt. A breathing space scheme could help people affected by serious debt by stopping creditor enforcement and freezing further interest and charges on unpaid debt. However, breathing space legislation would be lengthy and complex. As such, any breathing space legislation would need to be properly prepared and consulted upon, and Treasury Ministers will outline further details in due course.

A number of noble Lords asked why the Government are not taking action to ban pensions cold calling through this Bill. The Government take the threat of pension scams very seriously. Such scams can cost people their life savings and leave them facing retirement with a limited income, with little or no opportunity to build up their pension savings again. That is why the Government launched a consultation in December 2016 looking at three potential interventions to tackle this issue, including a ban on cold calling in relation to pensions to help stop fraudsters contacting individuals. The Government plan to publish our response to the consultation shortly, setting out our intended next steps. It is a complex area that requires careful and detailed consultation with stakeholders during the year. In particular, there are questions of how to define existing relationships and how to deal with referrals and third parties. As such, we do not propose to include a cold-calling ban in the Bill at this time.

A number of noble Lords asked why the Bill does not include measures on preventing nuisance and cold calls from CMCs. We believe that strengthening the regulation of claims management services should reduce the number of nuisance calls made by CMCs, as they will have to comply with the FCA’s tougher regulatory rules on marketing and advertising. CMCs are already banned from introducing claims or details of potential claims to solicitors if these have been obtained through an unsolicited approach by telephone or in person. The Information Commissioner’s Office—the ICO—also enforces restrictions on unsolicited direct marketing calls, and the upcoming data protection Bill will include updated powers and sanctions for the ICO.

A number of noble Lords, including the noble Lord, Lord McKenzie, my noble friend Lord Hunt and the noble Baroness, Lady Drake, referenced a pensions dashboard. This is an exciting idea. The Treasury worked with industry to deliver a working prototype of the dashboard in April 2017 but it is still at a very early stage, with many policy questions outstanding. As the noble Baroness, Lady Drake, said, the purpose of the dashboard is to provide a clear picture of all your pensions entitlement in one place online. The successful demonstration of a prototype dashboard in April proved that providing pensions information from different schemes in one place is feasible. However, because it is still early days and work is needed to address the several outstanding questions before consumer-facing dashboards can be rolled out, we feel that we should proceed with this with care.

The single financial guidance body may choose to provide a dashboard or direct consumers to a reputable dashboard in the future if it deems that to be appropriate. Nothing in the Bill limits its ability to do that, but legislating for the SFGB to provide a pensions dashboard at such an early stage in its development and before it is possible for consumer-facing dashboards to be developed would, we feel, be a little overzealous and a little risky.

The noble Lords, Lord McKenzie and Lord Sharkey, particularly questioned what delivery channels the SFGB will use. Our response document, published yesterday, indicates that we do not wish to specify how the SFGB should deliver its functions. The SFGB will be best placed to design its own service delivery and to refine its approach over time based on evidence of what works best for people.

I turn to the question raised by the noble Lord, Lord McKenzie, about whether the SFGB’s capability function should be altered to give it a duty to develop and deliver a strategy. Through its strategic function, the SFGB will bring together interested partners with the aim of improving the ability of members of the public to manage their finances. The premise of the strategy is that one organisation working independently will have little chance of greatly impacting financial capability but many working together will—a point that the noble Lord, Lord Haskel, also touched on. As such, the new body will be responsible for bringing the sector together on a UK level but it will not attempt to deliver all the strategy, as this will be delivered through industry, the voluntary sector and the devolved authorities. The body may deliver some aspects of the strategy if it sees a gap, but this is very much a collective effort requiring the body’s support and co-ordination.

The noble Lord, Lord Haskel, also asked whether the SFGB will provide guidance and support for microbusinesses. The SFGB will provide information, guidance and debt advice for individuals who are struggling with their finances, not businesses—the focus is entirely on individuals. However, the Government recognise that microbusinesses often face financial difficulty and often need extra support. Support is currently provided by the Department for Business, Energy and Industrial Strategy.

The noble Lord, Lord Sharkey, and others asked whether the SFGB will monitor compliance with its standards on an ongoing basis. The answer is yes. We have set up a programme to develop the governance and accountability arrangements for the SFGB. This will include assessing the existing performance measures of MAS, TPAS and Pension Wise to develop a robust set of qualitative and quantitative indicators for the SFGB. These standards are likely to form part of those indicators.

Financial education, which I personally feel is incredibly important, was raised by a number of noble Lords. Under the strategic function, this refers to the co-ordination of projects and initiatives delivered by the private, public and third sector aimed at children and young people. Under the function, the body will promote the sharing of knowledge and will evaluate the impact of financial education initiatives to ensure that best practice is acknowledged and shared as widely as possible.

I take on board, however, the issue of what we do following the age of 18—a question raised by a number of noble Lords, including the noble Baroness, Lady Kramer. We need to consider this point further. It may be a fanciful idea that someone aged 16 would take their pension particularly seriously, but we all know, possibly from personal experience, that we have to consider how we can encourage people moving into their 20s and 30s to think much more about the future and, as the noble Baroness, Lady Greengross, so eloquently said, their retirement.

A number of noble Lords asked how people take up the opportunity of the financial guidance offered to them. At present, not enough people are aware of or taking notice of the signposting which I referenced earlier. They are not doing enough to avail themselves of the opportunity for guidance. I absolutely agree that nudges are an effective way of encouraging members of the public to use the services of the SFGB, as suggested by the noble Baroness, Lady Drake. As noted in their recently published consultation document, the Government expect the FCA to review its rules so that individuals are signposted by industry at moments when they are most likely to benefit from guidance.

The noble Baroness, Lady Drake, also asked why there is no criminal offence for imitating the SFGB, as there is for the Pension Wise service. The brand and service offer of the new body will be protected by existing stringent criminal offences under fraud and copyright laws. We believe there is no evidence to support the creation of a criminal offence for the SFGB. Existing offences will help protect people, and the SFGB, from those who seek to exploit the brand and name to commit offences.

In response to my noble friend Lady Altmann I touched very briefly on the difficult issue of language, which we may wish to explore further. Having set out what I believe to be the clear difference between advice and guidance in opening this debate, I take on board her questioning whether we should be using the word “advice” at all. I want to take that away and consider it further between now and Committee. I would also welcome the opportunity to speak with my noble friend and others about some of these issues in our meetings before we begin Committee.

My noble friend Lady Altmann also raised the issue of the secondary annuities market. The Government engaged extensively with industry and consumer groups on how they could establish the conditions for an effective secondary market in annuities to develop. Over the course of this engagement it became increasingly clear that creating the conditions to allow a vibrant and competitive market to emerge, with multiple buyers and sellers of annuities, could not be balanced with sufficient consumer protection. I have been reading up on this subject considerably and it seems that the risks attached are considerable. Allowing this market to proceed could have produced poor outcomes for consumers. As noble Lords have rightly said, we must remember that our focus must be the consumer. For that reason, we decided not to take this policy further, and this position has not changed. Therefore, the SFGB is not being required to give guidance on this market.

Further questions were asked by the noble Earl, Lord Kinnoull, and my noble friend Lord Hunt, on the idea of applying FCA regulations only in England and Wales, meaning that Scottish-based CMCs could cause consumer detriment across the UK. That is a very insightful question. We have engaged with both the Scottish Government and the Northern Ireland Executive at ministerial and working levels. Both have confirmed that they do not want the regulation to extend to Scotland or Northern Ireland as there is limited evidence of malpractice, they say, in these regions. The Bill gives the Treasury a power to define when a person should be treated as carrying on claims management activity in England and Wales. This gives government the flexibility to adapt the definition should the CMC market change. The Government will keep this position under review. The intention is that CMCs approaching consumers in England and Wales and taking forward their claims should be subject to FCA regulations as far as possible. However, I take on board the example given by the noble Earl, Lord Kinnoull, of what would happen if someone just north of the border were to make these calls and claims, and direct them to people living in England and Wales.

My noble friend Lord Hunt and the noble Earl, Lord Kinnoull, asked whether I would commit to examining whether the definition in any order could be extended to close loopholes, including credit hire, the commissioning of medical reports, holiday sickness claims and so on. The issues my noble friend raises concerning credit hire agreements and the commissioning of medical reports are separate to that of claims management regulation, although they are related through the impact they can have on the cost of insurance premiums and other fees for consumers.

The Government agree that these are important issues, and sought views on credit hire as part of the call for evidence on the whiplash consultation that was published in November 2016. Responses are currently being considered and the Government will respond in due course. MedCo, a not-for-profit company, was established to enhance the quality and independence of initial medical reports in support of whiplash claims. Good-quality medical evidence supported by the MedCo system is, and will continue to be, an integral part of the Government’s whiplash reforms going forward.

I want to quickly cover a few more points. The FCA will develop an appropriate, proper and tough regulatory regime, and will begin consulting on this in due course. It will undertake a full cost-benefit analysis before implementing rules. We do not want it to be handicapped by regulatory burdens.

What about CMCs that contact people from overseas? The Bill gives the Treasury a power to define when a person should be treated as carrying on claims management activity in England and Wales. The intention is that CMCs approaching consumers in England and Wales and taking forward their claims should be subject to FCA regulations as far as possible. Perhaps that begins to cover the question of the noble Earl, Lord Kinnoull.

I should make it clear that pension taxation is a matter for HMRC. The Pensions Regulator provides guidance to employers choosing a pension scheme for their staff. This guidance covers the choice between net pay and relief-at-source schemes, and the implications of net pay schemes for employees who do not pay tax.

There were several questions on the funding of debt advice. The SFGB’s debt advice function will be funded by the levy on the financial services industry. Free-to-client debt advice is currently provided by a range of organisations, mostly from the third sector. The debt advice levy funding currently makes up 40% to 50% of the free-to-client debt advice providers’ total budget, and the Government have no plans to reduce this funding contribution. The remainder of the budget comes from voluntary contributions made by organisations in different sectors. A levy-funded model remains appropriate, given the benefits that firms will gain over time from effective debt advice, money guidance and financial capability interventions.

The Money Advice Service is working closely with partners in the debt advice sector on the plans for an independent review of the funding arrangements for the sector. The development of a more coherent approach to funding from organisations that benefit from debt advice is expected to be within the scope of this work.

I hope I have covered the issue of the general funding of debt advice, a number of other questions and the questions raised by the noble Lord, Lord Stevenson.

There is no doubt that this small Bill contains a great deal of detail. In addition to ensuring that people are able to access high-quality claims-handling services, the Government are committed to ensuring that action is taken when markets work against consumer interests.

I again thank all noble Lords for their contributions. I commend the Bill to the House and ask that it be given a Second Reading.

Bill read a second time and committed to a Committee of the Whole House.

Grenfell Tower: Tenants

Baroness Buscombe Excerpts

Wednesday 5th July 2017 Lords Chamber

[Baroness Lister of Burtersett]

To ask Her Majesty’s Government, further to the comments by Lord O’Shaughnessy on 29 June (HL Deb, col 660), how they intend to ensure that no former tenants of Grenfell Tower are disadvantaged in terms of their social security if they are moved to larger, or more expensive, accommodation.

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

My Lords, I thank the noble Baroness for her insightful question. I put on record on behalf of the Department for Work and Pensions our heartfelt condolences and support for all those affected by this appalling tragedy.

To answer the noble Baroness, the Government are clear that there will be relaxed benefit rules for anyone affected by the Grenfell Tower fire, and our staff are handling people’s claims with sensitivity, understanding and flexibility. As part of this, our very recent guidance to local authorities makes it absolutely clear that they should treat these residents as a priority for extra discretionary payments to help with their rent if they are rehoused in a larger property.

[Baroness Lister of Burtersett (Lab)]

First, I welcome the noble Baroness to her new position. I thought that in the Statement later we would get a welcome assurance about rent protection, but she seems to be suggesting that the rules will still be applied—the bedroom tax and the benefit cap—but that the Government will look to local authorities to make discretionary housing payments, which are usually made on a temporary basis, on a discretionary basis, as the name implies, out of a limited pot. This is not good enough, as was made clear in the High Court judgment on the benefits cap last week, which said that it does not provide a satisfactory safeguard and gives no peace of mind. What the people who have been affected by this terrible tragedy need more than anything is peace of mind. Will the Government ensure that they will not rely on discretionary housing payments in this or any other situation of vulnerability, because they do not provide security and peace of mind?

[Baroness Buscombe]

First, I thank the noble Baroness for welcoming me to my new role. I entirely agree that peace of mind and reassurance should be at the forefront of our minds. That is why it is a priority for us to ensure that people affected by the tower fire get the financial help they need. Noble Lords may be aware that at the heart of the discretionary housing payments scheme, which is enshrined in primary legislation, is the principle that it is for local authorities to determine when an individual is eligible for extra assistance with their housing costs. That said, my department issued new guidance to local authorities on 23 June to ensure that residents affected by the tragic events of Grenfell Tower are treated as a priority for extra discretionary payments and advice. I quote the guidance:

“in these circumstances any requests for DHP to meet rent shortfalls should be treated as a priority”.

[Baroness Sherlock (Lab)]

My Lords, may I unpack this a little bit? I add my welcome to the Minister; I am just sorry that her first outing in this brief is in the circumstances, but I look forward to engaging with her on other subjects.

My noble friend is trying to explain that if, as the Government have promised, they rehouse families who were living in Grenfell Tower nearby at the same rent, because they are having to rehouse a lot of people very quickly in an expensive area, there is a reasonable chance that somebody will end up in a bigger house than they would normally have. At that point, the bedroom tax will kick in and they will end up having their benefit cut.

I understand the Minister wanting to say that local authorities have discretionary funds. The only problem with that is that they are temporary and discretionary. If the family is going to move into a permanent house, they want the reassurance that they can stay there for as long as they want—as long as the kids are in school—to carry on being able to make a new home. I know that her department is trying very hard to work with these families, but will she look again at this and try to find a permanent solution?

[Baroness Buscombe]

I thank very much the noble Baroness for her question and her welcome. I absolutely understand where she is coming from. First, I make it absolutely clear that all emergency and temporary accommodation is rent free for everyone affected. The noble Baroness will know that it is very difficult for us to compel local authorities to ensure that there is no shortfall but, that said, we are doing everything in our power to ensure that that simply does not happen.

As for the benefit cap and the removal of the spare room subsidy, it is for the Department for Communities and Local Government to manage the accommodation, but we can say that those placed in temporary accommodation are not subject to the removal of the spare room subsidy. We have already relaxed the benefit rules for anyone affected by the Grenfell Tower fire, and our staff are handling people’s claims with sensitivity. All I can say is that we are doing everything that we can in our power to ensure that people will not have to suffer a shortfall if they are moved on a permanent basis into a larger property.

[Lord Borwick (Con)]

My Lords, declaring my interests, I know that the Government have announced an indemnity for those tenants illegally subletting their social housing in this tragic block. How many such indemnities will be issued, and is subletting a general problem in council-run social housing?

[Baroness Buscombe]

My Lords, I do not have the exact answer on indemnities. All that I can say is that we are doing everything that we can to ensure that nobody suffers in any way from a financial standpoint as a result of this terrible tragedy. Indeed, as a department we are making sure that we have expert staff on site in the local community assistance centre and seconded into the victim support unit located there. We are working closely in providing every victim with a key worker to ensure that payments can be made immediately. Indeed, a number of payments have been made already—249 cash payments of £500 and 112 payments of £5,000—and 841 people have also received discretionary payments from the fund, which is a government grant.

Enterprise and Regulatory Reform Bill

Baroness Buscombe Excerpts

Thursday 31st January 2013 Grand Committee

[Lord Stevenson of Balmacara]

My Lords, we on this side will also be interested to hear the answer to that question, although I think I gathered from remarks made previously in Committee that that is the case. We will look forward to hearing about that. Other than that, we are very grateful to the Minister for bringing forward these amendments, which, as he says, go a step further than the DPRR Committee recommended, but are none the less welcome for that.

[Baroness Buscombe]

My Lords, I add my welcome for these amendments and thank the Minister.

[Viscount Younger of Leckie]

My Lords, I begin by expressing my thanks to my noble friend Lord Clement-Jones for the important part that he has played in the passage of the Bill so far. This is indeed a complex area and his contributions have demonstrated an unrivalled depth of knowledge and a robust grasp of the intricacies of this debate. I appreciate and respect the vigour with which he has presented his position to the Committee. The Government know that at the core of his work on the Bill is his determination to see a stronger and fairer copyright framework in the UK. In answer to his question concerning the affirmative procedure when the Hargreaves exceptions are implemented, I can confirm that we will use the affirmative procedure. This will, I hope, go some way towards answering the question raised by the noble Lord, Lord Stevenson.

I am pleased that these amendments have been accepted in the spirit in which they were intended. The Government recognise that the powers in these provisions could have a significant impact on creators and users of copyright works. I am confident that these amendments ensure that any use of those powers will be subject to significant parliamentary scrutiny.

--- Later in debate ---

[Lord Clement-Jones]

My Lords, I think we gave the issues a pretty good airing on Monday, so I will not tax the patience of the Committee for too long today. The Minister is well aware that there are many who think that we should align ourselves to the EU directive and that the extended collective licensing arrangements go well beyond where we should be at present, given that the digital hub could solve some of our problems.

The first thing I want to do is return the compliment to the Minister for the care and attention that he has given in his capacity as the Minister for Intellectual Property, and for listening to the arguments that have been made. I thank him particularly for his clarification and assurances and, latterly, for his letter which, although directed at the noble Lord, Lord Stevenson, seemed to encompass most of the questions that I had asked, so I was pretty satisfied with that way of dealing with things. In particular, I welcomed the assurances he gave about the ECL on Monday: the Government are clear that an opt-out must be as simple and as low-cost as possible for rights holders; and further safeguards to be drafted in the regulations will require the licensing body to set out the details of opt-out systems, why they are appropriate to meet the needs of rights holders and how it plans to publicise the scheme so that rights holders can opt out in advance. Moreover, the Secretary of State will be able to impose conditions on an authorisation relating to the opt-out if necessary. I found all that very reassuring.

Above all, I hope that the Minister recognises that many bodies and institutions—many of them represented by FOCAL and BAPLA—are still very unhappy about both ECL and orphan works. I hope he will continue to listen and engage with all those organisations. I also mention Stop43 in that context. There is certainly a very strong feeling that the impact assessment—particularly for orphan works, which have a range of 9 million to 91 million—is hardly credible as a business plan. I have made the point directly to officials that genealogy or genealogical services are not a great basis on which to work out a business plan. The Minister has answered many questions but there will be others coming down the track, such as whether the Copyright Tribunal is really suitable and exactly what a “diligent search” consists of, especially when there are several works by the same author. My wording might not have been as good as it should have been, but we were trying to get at the fact that care needs to be taken in respect of individual works and where there are multiple rights holders. What copyright items will be included in the definition of orphan works?

The EU directive does not include photographs, and for that very reason, photographers and the whole of that sector have become very exercised about the new provisions. Therefore, particular care needs to be taken in respect of that sector, as we heard from the noble Lord, Lord Greenway. I recognise that if the museums and universities and so on want to see ECL, then they have to justify how it is used and its impact on rights holders.

As regards ECL, the impact assessment states that the UK’s existing rights clearance system is complex, involving multiple users and rights holders seeking and granting permissions. Hargreaves recommended that it be simplified. Government intervention is required to introduce ECL as a tool for simplification. Is that not precisely what the copyright hub is designed to do? There is the concern very strongly held by foreign rights holders—I mentioned the letter from the US photographers to the Secretary of State—that they will have very inadequate means of monitoring what is happening in the UK.

There are many other questions and I do not want to prolong the session today. There is the whole question of what “substantial support” means for a collecting society in what the Minister said on Monday. What sums of money will be paid to copyright owners under ECL? What will be the duration of licences? Will ECL societies have the right to license just UK content or content from overseas? How will copyright owners know which of their works have been licensed, and so on? Considerable clarification is needed, not least that for the Association of Authors’ Agents. When we were talking about that, the Minister distinguished between certain warranties and other warranties. That was perfectly fair, but nevertheless clarity will be all when dealing with these matters.

The task of the Intellectual Property Minister, especially in these circumstances—holding the ring between different interests—is not easy, but I commend the newsletter from Victoria Espinel, who is the Intellectual Property Enforcement Coordinator in the States. As a statement of the balancing of intellectual property rights with innovation and growth, I cannot fault what she has said about the new United States-Russian Federation intellectual property rights action programme. How about that for a salient? She states:

“Strong IPR protection and enforcement are vital to promoting innovation and creativity by securing the rights of innovators and the creative community, attracting high-technology investment, and fostering the jobs necessary for long-term sustainable growth”.

That seems to me to balance very well the interests of all parties and I commend that to the Minister.

[Baroness Buscombe]

My Lords, I rise briefly to add a few words in support of everything that my noble friend has said thus far. I also want to refer to a letter addressed by the Minister to the noble Lord, Lord Stevenson, and thank the Minister because it addresses some of the questions which I raised in the Committee’s previous session.

The Minister and the Government agree that when licensing bodies operate ECL, they should do so transparently and should provide for fair treatment for non-member rights holders whose works are licensed through ECL. Any licensing body that wishes to operate a scheme will be required to have a code of practice that complies with the Government’s minimum standards for collecting societies. This will include specific protections for non-member rights holders. We welcome that statement and the statement about the applicability of UK ECL schemes for the use of works outside the UK. The Minister has said that the Government’s proposals would apply only to use within the UK. It is not possible to extend these provisions to other jurisdictions.

I thank the Minister for that but would just say that, where the Minister refers in response to a point raised by my noble friend Lord Clement-Jones about the operation of ECL in Nordic countries, while the Minister said that, since the 1960s, ECL has operated in the Nordic countries without challenge and is explicitly recognised in EU law, there is a difference. This is something to which we will have to give more thought between now and Report. In Nordic countries, the system operates against a background of legislation that guarantees remuneration for creators and the identification and integrity of works. I feel that we are making real progress on this Bill, and I support the Minister’s helpful responses to our concerns thus far.

Finally, I add my continuing concern in relation to photographers. A number of noble Lords spoke on this issue on Monday. It remains a serious concern, and it might be helpful if we could have more thought prior to Report about how the future viability of being a photographer in this digital age could be addressed in the Bill.

--- Later in debate ---

[Viscount Younger of Leckie]

The government amendments in this group are in response to the Delegated Powers and Regulatory Reform Committee’s 10th report of this parliamentary Session. Government Amendments 33A, 46A and 46B are intended to put additional safeguards into the Bill. In particular, Amendment 33A seeks to ensure that when a code of practice is put in place for a licensing body, it must comply with the criteria specified in the regulations. As the regulations will have been through the affirmative procedure, this gives parliamentary oversight of the code being put in place for a licensing body.

Amendment 46A makes it clear that all the provisions under sub-paragraph (1) are included, while Amendment 46B is intended to clarify that both the determination that there has been a breach and any related sanctions are subject to an appeal process. Amendment 46B, I should mention, gives effect to the intention behind Amendment 47, tabled by my noble friends Lady Buscombe and Lord Clement-Jones. Finally, Amendment 50A removes the power to make regulations which impose requirements on licensing bodies by reference to guidance.

I trust that these additional safeguards will reassure the Committee and demonstrate that the Government have listened to the recommendations of the Delegated Powers and Regulatory Reform Committee and have taken action. I will not at this point speak to the amendments in this group that other Peers have tabled. I will instead wait to hear what they say, but I beg to move Amendment 33A.

[Baroness Buscombe]

My Lords, I thank the Minister for bringing forward the series of amendments in this group and for his explanation. Although the government changes to Schedule 21 are to be welcomed, I suggest that the Government could edge even closer towards improving the Bill yet further. Briefly, I should like to respond to the government amendments and then introduce those in my name; namely, Amendments 34 through to 51, excepting Amendment 49, which is in the next group.

Amendment 33A responds to the concerns of the 10th report from the Delegated Powers and Regulatory Reform Committee. Its concern, as we have already heard, was that the Bill will allow the requirements of the default code, enforced by penalties, to be imposed or revised without parliamentary scrutiny, given that failure to comply may lead to sanctions. Equally important as parliamentary scrutiny, in my view, is the fact that it is indispensable that the code criteria should be subject to consultation by interested, informed parties. That would be the effect of my Amendments 43 and 51.

I very much welcome the Minister adding his name to Amendment 46, which I tabled. That will help to ensure that the regulations must now set out the process for determining non-compliance, determining the type or size of the sanction and for providing a right of appeal. I also welcome Amendments 46A and 46B. As financial penalties will ultimately be borne by the collecting society’s members, fines should be imposed as a last resort. A right of appeal is essential. Also Amendments 50A, 51A and 51B are welcome additions to the Bill.

I turn to the series of amendments that I have tabled. Although the government amendments put forward are very welcome and a big step in the right direction, my amendments address separate issues which, with respect, still need to be considered. The purpose of these amendments is to provide even greater clarity in the Bill for Schedule 21, which would help to ensure that the Bill meets the stated aim of fostering successful self-regulation. The effect of the changes would be to reduce the considerable uncertainties surrounding future regulations because the powers currently provided for by this legislation are simply too vague, even with the Government’s latest amendments.

Collecting societies have invested considerable time and money in adopting and operating voluntary codes of conduct. PRS for Music introduced a voluntary code of practice for licensees as far back as 2009 and then one for its members in 2010. Many other collecting societies have followed suit. The British Copyright Council’s Principles for Collective Management Organisations’ Code of Conduct, known as the BCC principles, are important to reference here, as many of these codes of conduct for members and users comply with these guiding principles, which have at their heart a commitment to transparency, accountability and good governance. I suggest that those are all good Conservative principles.

These collecting society voluntary codes also have regard to the Government’s recently published minimum standards for collecting societies and, therefore, include an independent complaints review ombudsman. Independent adjudication of a complaint is obviously an important feature of any sensible self-regulatory system. Those BCC principles also include provision for an independent code review process. This first such review is intended to start in November 2013. In short, the principles of good self-regulation are established and are generally being operated successfully by collecting societies.

Amendments are necessary to the Bill to make the path from voluntary to statutory regulation much clearer than is currently outlined in the legislation. It is only reasonable, I suggest, to give businesses the certainty that they deserve. After all, it is a big step to move from self-regulation to underpinning with state regulation.

First, it should be clarified that the majority of the powers in Schedule 21 are exercisable only in a scenario where it has been adjudged through a fair, robust and transparent process that there has been an unremedied failure of self-regulation. The imposition of a statutory code, and/or any statutory appointment of an ombudsman or code reviewer, will lead to significant additional costs and potential exposure to penalties, and should therefore be imposed only when it is clear that self-regulation has failed. Collecting societies need to have visibility of what triggers the imposition of statutory regulation so that they are not left in the dark about whether they are close to or far from crossing the line.

Equally, given that collecting societies are already offering, or on the point of offering, ombudsman dispute-resolution services and providing for a code reviewer, the regulations should also make it plain under what circumstances the Secretary of State would appoint a statutory ombudsman or code reviewer. Amendments 34 and 50 serve to clarify the processes and specific circumstances that would enable the Secretary of State to impose such regulation.

Improvements to the Bill can also be made so that the penalties for non-compliance much clearer and more proportionate. This is why I am proposing Amendments 44, 45 and 48. The Bill provides for sanctions in case there is failure to abide by a code. These sanctions include financial penalties that may be imposed on directors and other personnel. The highest fine stated in the legislation is £50,000. Under the Companies Act 2006, penalties on individuals arise in relation to very specific failures. Codes of conduct are typically of a general nature. I therefore believe it is unacceptable to impose personal liability and financial penalties for undefined offences that are less specific than UK company law.

Let us remember that all collecting society revenues are distributed to members after management costs are deducted, and fines are therefore a direct penalty on the membership itself. Any fines would be paid for by the members of the collecting society. There is a strong argument that fines on societies should be imposed only as a last resort. Instead, it would be more sensible to provide appropriate help or assistance to a society that has been deemed to have failed, as opposed to simply punishment.

I have also tabled Amendments 35 to 42, which are effectively technical. Paragraph 3 refers to a licensing code ombudsman. Codes of practice typically govern a collecting society’s relationship with its members and its licensees. I propose that the phrase “licensing code” should be deleted because it is not appropriate.

Let me conclude by saying that we should not forget that compliance with regulation is costly; and, ultimately, the resources which are devoted to regulation must in effect be paid for by the creator members themselves. It is entirely reasonable that the penalties for non-compliance are clearly set out and proportionate. This Government support the principle of good self-regulation; they should therefore take this opportunity to do just that and reduce the uncertainties provided for by the current drafting.

[Lord Clement-Jones]

My Lords, I rise briefly to support my noble friend Lady Buscombe. In fact, while she mentioned good Conservative principles, I can pray in aid of self-regulation good Liberal principles. The essence of the issue is that these should be backstop powers, and as she said, we should be fostering successful self-regulation. It is important that there is as much transparency and clarity about these rules as there is in UK company law. Some of the sanctions could be just as high as those in UK company law and, of course, they will ultimately be borne by the collecting societies’ members, and a right of appeal is essential in those circumstances. I thought that my noble friend argued eloquently for why we should be aiming for that kind of regime.

--- Later in debate ---

[Viscount Younger of Leckie]

First, I appreciate the general support of the noble Lord, Lord Young of Norwood Green.

On Amendments 34 and 50, there is already provision in the Bill for consultation before the appointment of a code reviewer. We have considered the proposals to put all processes for the appointment of an ombudsman and the implementation of a statutory code on the face of the Bill. However, the Government, together with stakeholders, need to learn how the schemes work in practice and respond as they evolve. This will help us quickly to remedy any unforeseen issues that result in problems or injustices for rights holders. We have considered Amendments 35 to 42 carefully and believe that the term “licensing code ombudsman” more accurately describes the functions of the role. That role is to investigate and determine disputes about a collecting society’s compliance with its code of practice.

On Amendments 43 and 51, as I noted with regard to Amendments 34 and 50, the Bill already makes provision for consultation when appointing a code reviewer. This is important to ensure independence of process. Codes of practice will be subject to specific criteria, which will be set out in regulations subject to consultation. Therefore, the Government do not consider that additional consultation is necessary.

We have spent some time looking at Amendments 44 and 45 on the power to impose sanctions on individual directors. Where it can be demonstrated that a director is responsible for non-compliance with a code, it is only right that they should be sanctioned. The default should not be to penalise collecting society members. The Government agree with the intent behind Amendment 46, which is consistent with the comments made by the Delegated Powers and Regulatory Reform Committee. Therefore we accept this amendment.

On Amendment 47, I confirm that an appeal mechanism will be available for decisions on non-compliance and for any resulting sanction. This was earlier clarified in government Amendment 46B.

Finally turning to Amendment 48, the Government can confirm that these fees will apply only to a licensing body being regulated. If a licensing body adopts a code of practice which complies with the criteria specified in the regulations, no fees arise in connection with paragraph 1 of the schedule. In addition, paragraph 6(2) of the schedule contains a protection for licensing bodies, limiting the aggregate amount of fees payable for administration and operation of the regulations.

I shall respond to a number of questions raised by noble Lords. In her general comments, my noble friend Lady Buscombe raised the code criteria, which should be subject to consultation. Although I may well have covered this in my previous speech, the code criteria will largely be based on minimum standards on which there will already have been consultation. Specified criteria will be part of the regulations and will be consulted on.

In her general comments, my noble friend Lady Buscombe also raised the work done by the collecting societies on self-regulation. The Government welcome the work they have done and what they have achieved. I repeat that self-regulation is the preferred option, but we need a back-stop if it fails, a protection for licensees and members when dealing with monopoly suppliers. My noble friend Lady Buscombe also said that fines should be used only as a last resort. I entirely agree that they should be a last resort. We do, however, need an ultimate sanction, and fines would provide that.

My noble friend Lady Buscombe also mentioned collecting society revenues which are distributed to members, who are affected by fines, instead of giving help to failing collective societies. I agree with her; this is why, if a director is responsible, he or she, rather than the collecting society members, should be held accountable. Finally, my noble friend Lady Buscombe asked what triggers statutory regulation. The provisions for an independent code reviewer, who will independently assess the performance against the code, are the trigger. I hope that I have answered all the questions raised by noble friends and, if not, I will certainly write to them.

[Baroness Buscombe]

My Lords, I thank the Minister for his explanation of the various amendments to which I have spoken today. Of course, I want to think about what he has said, but the confirmation of an appeal mechanism is very welcome. I am always concerned about leaving too much to regulations. I remember that when we were in opposition the previous Government too often left so much to regulation, and we always complained about that. I find now that we are in a similar situation. It all comes down to certainty and clarity, hence the main purpose behind the amendments we have tabled. It is a huge step to go from pure self-regulation to having a back-stop power. I think it is right to say that the industry in large part does not oppose that back-stop power in principle. It is asking for as much certainly and clarity as possible and for the Government to recognise the work the industry has done and is continuing to do to put and keep its house in good order, so that creators and the works that they do are protected, and properly so.

We welcome the Minister’s support and understanding of the position of creators and their concerns in this regard. For my part, I think that the key to successful self-regulation is that all the parties involved in it are positive and buy into the system. It works extremely well as long as there is no uncertainty or a spectre of what they would deem unfair or disproportionate state interference. So often, the bottom line is that state interference leads to delay and cost. Just as within any court of law, delay and cost never produce a happy outcome, even for the person who comes out on top. It is not a happy resolution, and that is why I also referred to dispute resolution. I am pleased that the Minister has said that the Government want to be seen to be helping the industry as opposed to coming in with something of a cosh to deter those working in the industry doing the right thing or feeling that what they are doing is worth while and is properly protecting their members.

I do not want to delay this further, so I thank the Minister for his supportive comments. I will take his thoughts away and consider further whether we should come back on Report with further amendments, just to provide certainty in the Bill.

Amendment 33A agreed.

--- Later in debate ---

Moved by

[Baroness Buscombe]

46: Schedule 21, page 256, line 39, leave out “may” and insert “must”

--- Later in debate ---

Moved by

[Baroness Buscombe]

49: Schedule 21, page 257, line 37, leave out first “or” and insert “, including provision”

[Baroness Buscombe]

My Lords, Amendment 49 relates to the jurisdiction of the Copyright Tribunal, which we feel needs attention. The Copyright Tribunal is a creature of statute; its powers and jurisdiction are defined in the Copyright, Designs and Patents Act 1988. It has the power to rule on private rights, so we believe that there should be full parliamentary scrutiny for changes to its jurisdiction. Paragraph 7(2) says that regulations may change the jurisdiction of the Copyright Tribunal, but it should be made clear that this is only in relation to the powers in the schedule and not more widely. I am proposing to tighten the drafting accordingly. I beg to move.

[Lord Young of Norwood Green]

These amendments, which relate to collecting societies, are sensible measures. Clearly, the bodies should act in the public interest and it would be outrageous if they did not have rights holders on their governing bodies. I am sure that the Government will say that this is detail for secondary legislation and they may be right, but for what it is worth we support the noble Baroness.

--- Later in debate ---

[Baroness Buscombe]

My Lords, I think the Minister said something slightly different at the beginning. Perhaps this is something I should take away and think about a little more, because I think I have been given different advice than the Minister. Rather than saying that I am grateful to the Minister and all is well, I hope he will allow me to take this away just to be sure that the advice I have received has clearly been wrong. It is important that we should make it clear that this change is only in relation to the powers in the schedule and not more widely. If that is not possible in the Bill, then I will accept what the Minister has said. I beg leave to withdraw the amendment.

Amendment 49 withdrawn.

Leveson Inquiry

Baroness Buscombe Excerpts

Friday 11th January 2013 Lords Chamber

[Baroness Buscombe]

My Lords, at last I have the chance to speak. However, there is little time and I hope that the Government genuinely want to take note of what we have to say. Having submitted written evidence to the Leveson inquiry, including a number of recommendations for change, I resolved to keep my powder dry, thinking that, as the immediate past chairman of the Press Complaints Commission, I would naturally be asked to give further evidence in person. In fact I had to chase the officials for the chance to speak at all and, when I did, I was cut short. As a lawyer, I was therefore reminded that you cannot tell the whole truth unless you are asked the right questions. I wondered, was I cut short on purpose?

So, how much should I reveal on this brief occasion? I have to remember also that it is not what you say; it is what people want to hear. Some might assume, having been misled by powerful representatives of the news industry, that I would advocate legislation. In short, my answer is no. While some in the press deserve to be heavily regulated, the public deserve a free press.

Nearly 15 years as an active Member of the House of Lords has shown me that you cannot begin to rely upon either politicians or indeed many in public life to root out wrong—there are too many vested interests and prestigious jobs at stake. Sometimes, to learn the truth, we need an open, partial, even offensive and investigative press that works within acceptable bounds of practice but is also free, at least in terms of the content it publishes, from any state interference.

I move on to the report itself. Given that the inquiry was called to put a stop to outrageous behaviour by some journalists and editors, much of it involving criminal behaviour, a stronger focus by Lord Justice Leveson on enforcement of the criminal law would have made sense. Also, a huge opportunity has been missed to rebuild public trust in the system by ignoring the obvious—the need to at least seriously consider how to future-proof compliance in an online, global world whereby you cannot and will not impose solutions. Here I entirely concur with the speeches of my noble friend Lord Inglewood and the right reverend Prelate the Bishop of Norwich.

Instead, in the report there has been merely a feeble proposal for voluntary compliance within a traditional system. So I fear that whatever is agreed now will not last long and may not be trusted. Indeed, I remember that when we were taking the Communications Act through this House in 2003 there was no mention of the internet. At the same time, Mark Zuckerberg was in the States developing Facebook. We have to be careful that whatever we introduce will, at least to some degree, take account of the ongoing revolution in communications.

The suggestion that self-regulation should be underpinned by statute and handed over to Ofcom is simplistic. What if Ofcom decides that this new regulator has failed? More than that, I know—I think most of us know—that Ofcom is not entirely independent of the state, and a comparison with Ofcom’s oversight of broadcast regulation is instructive. A recent report by the Lords Communications Committee confirmed my view that the BBC complaints system is a complicated, ineffectual mess with no powers to prevent harm—unlike the current PCC, which does have effective powers to desist and prevent harmful content being published in the first place. While fines are wrought following an Ofcom ruling against a broadcaster, in the case of the BBC, the licence-fee payer coughs up, not Jonathan Ross et al, and certainly not BBC executives.

Incidentally, a royal charter for the press is not the panacea or even close. The BBC, with its charter and its rules and its board, and now trust—the latter introduced a few years ago to suit another occasion for political expediency—cosseted Jimmy Savile.

What about the rather key question: who is a journalist? Whom would the new system capture? You and I can now become one—an online journalist—overnight, but does that give us the all powerful privilege in a court of law, the protection of sources?

A number of recommendations by Leveson for reform, while presented as new, are not actually new at all. In fact, they reflect to a large extent the existing work of the PCC. The PCC itself is already dominated by people entirely independent of the industry. There is a speedy, bespoke system of handling of complaints and a rigorous process for prominence of apologies—just some of the 76 reforms introduced on my watch in 2010 following a root-and-branch independent review of governance and structures chaired by a retired senior civil servant—reforms completely ignored by Leveson.

Please also note: almost all the evidence presented to Leveson from victims relates—with the exception of Jefferies, which concerned contempt, and that is a criminal matter—to events that took place well before our reforms were introduced in 2010.

In my view there can be no doubt that the Leveson process has been healthy in the sense of bringing greater scrutiny to the press, and there is a chance—a chance—here to ensure a proper mandate for the new body which will go further than the PCC ever could. I welcome that wholeheartedly.

However, there are more shortcomings—or is it blind faith? References to “investigative powers” sound good; however, there remains a fanciful assumption that a self-regulating body can investigate criminal activity. Also, who is going to take on the additional responsibilities and pay for this? In 2011 the budget was £1.8 million—Ofcom, I think, is on £117 million right now—and there were 14 staff in total, including the switchboard. I am glad that Lord Justice Leveson recognised the frankly absurd financial constraints placed on the PCC by the industry. Funding is a major issue and the lack of resource has always cramped sustained efforts to toughen the system. Some might say that they had us where they wanted us. But will this really change? Will the industry really accept more invasive powers of a full independent body?

In truth, changing the culture and thereby changing behaviour—for that is what this is all about—is much more of a challenge than changing the law. While Lord Justice Leveson talks tough about wrongdoing, it is striking that he attributes no real blame at any stage. For an inquiry heralded as an independent and fearless examination of those in power, its report is gentle on the powerful: the police, editors and politicians.

That brings me to my key point. Before I left the PCC, I tried to persuade the industry of the critical need to develop consistent, industry-wide protocols applicable to journalists and editors for news gathering and the dissemination of personal information. Saying “tried” is of course a giveaway because it was up to the industry to make those rules, not the PCC.

Who are the industry and who are the press? The Government keep referring to the press as though it were one collegiate body, yet there remains a huge gulf, particularly between the editors and another between editors and journalists, and then there are those largely ignored by Lord Justice Leveson: the men in charge—the proprietors and publishers. Was that deliberate? Indeed, when I gave oral evidence, I asked Lord Justice Leveson why he was not calling the body that represents those in the industry who hold all the cards, the Newspaper Publishers Association. Why was its chairman not called to account for the industry’s behaviour? For some reason, Lord Justice Leveson and now the Government have each preferred to deal with a sub-committee of that board—PressBof—together with some editors.

Change requires leadership. It is the proprietors and publishers who should be called in for meetings by the Prime Minister, not the editors and fixers. Unless the real decision-makers regarding independence, sanctions, remit and funding collectively commit to tackling behaviour in newsrooms and assume accountability and proper governance at main board level within their organisations, nothing will actually change. A huge opportunity will be lost and the Leveson inquiry will have been a total waste of time and a flagrant waste of taxpayers’ money. Can my noble friend the Minister confirm this evening that the Government will tackle those ultimately responsible?

If the public are to continue to enjoy a free press, they must be given good reason to trust what they read. So far, the jury is out.