Universities: Impact of Government Policy

Baroness Verma Excerpts

Thursday 13th October 2011 Lords Chamber

[Baroness Verma]

My Lords, I am grateful to the noble Lord, Lord Giddens, for giving this House the opportunity to discuss higher education once again. I feel quite a sense of trepidation, being surrounded by so many learned and well versed noble Lords. Clearly, the contributions that we have heard today from our colleagues, and the universities where they serve, serve this House incredibly well.

The first thing that I emphasise is that the Government value the autonomy and excellence of all our higher education sector. Allow me to quote my right honourable friend the Minister for Universities from last week. He said that universities were,

“amongst our greatest national assets”,

and said how we value how they change people’s lives. He went on to say:

“Our universities must always have space for the free spirit, the eccentric, the blue skies researcher … Without that our national life, however prosperous, would be grey and diminished”.

Universities are not just places of teaching and learning. I agree completely with the noble Lord, Lord Giddens. They are world leaders in innovation and research. Their breakthroughs regularly dominate the news. You may have seen the recent announcement on Beneforte broccoli, where research funded by the Government’s Biotechnology and Biological Sciences Research Council has led to the development of a highly commercial food product that will be both grown and sold in the UK. It will give a real boost to our agriculture, our personal health and, of course, the economy. Then there is graphene, the world’s toughest and thinnest substance, which was developed at Manchester University. To help to capitalise on its discovery, the Government announced earlier this month an investment of £50 million to develop a graphene global research and technology hub to translate this discovery into wealth and job creation for the UK.

Such achievements are vital to the reputation of our universities and the investment that they attract. Indeed, they represent a key export sector, worth around £8 billion, which lures business to the UK as well as the world’s most gifted researchers. According to the most recent international rankings, only the United States has more universities in the top 200, as has already been mentioned, but the UK has a greater impact relative to its investment. For all these reasons, the Government could not allow the financial crisis and the urgency of reducing the deficit to imperil these essential institutions. That is why we are introducing a different funding system.

The universities that we have today are teaching more than 2.4 million students, a substantial increase over the 171,000 students of 1962. From the next academic year, funding and more of it will flow into universities according to the choices made by students. Universities can go a long way to maintaining their incomes, provided that they remain attractive to prospective students—a point to which I shall return in a moment. Some talk as if the shift to student fees and loans will mean a loss of Exchequer support for our universities and, indeed, for beloved subject areas, but that is wrong. Even after 2012, the contribution from the taxpayer to the higher education sector will be very substantial. For one thing, it will cover the upfront fees for the vast majority of domestic students, as well as providing grants and loans. We are looking at around £6.5 billion in tuition loans on top of the £2 billion of remaining teaching grant going to subjects that are costly to deliver. We estimate that the cash going to universities in grants and fee loans combined could be 10 per cent higher by 2014-15 than it is now. We can afford this only because we will get a lot of it back, eventually, from higher paid graduates who will repay their loans.

In addition, the Government will spend £4.6 billion on research programmes every year until 2015 within a ring-fenced budget. We will spend over £600 million on capital for research in 2011-12. Shortly, we will also publish an innovation and research strategy to ensure that we maintain and strengthen our position as one of the most forward-thinking countries in the world. The strategy will set out how the UK can build on its existing strengths to become the most productive research base, globally, and high levels of investment in intangible assets to underpin sustainable private sector-led economic growth.

I return to the teaching mission of colleges and universities, which is sometimes overshadowed by the national interest in research. As we ask students to invest more in their personal futures, universities must focus even harder on the quality of the educational experience that they provide. The Government are introducing reform so that students can select the best institution for them from a sector which offers a greater range of provision, in which institutions are competing for applicants on both quality and cost. It will be vibrant, efficient and responsive—a sector with students at its heart. We want university to be available to the brightest, including those who can demonstrate that they have the potential to succeed. It has always been the case that not every applicant can secure a place. Going to university must remain a competitive process, with institutions retaining their autonomy and continuing to decide who they admit.

At the same time, the Government will always have to control the amount of public funding spent on higher education. In the past, they have done this by restricting the numbers of students each university can recruit annually. This has meant that there are lots of students every year who achieve the highest grades but cannot secure a place at the university of their choice. We want to change that, while ensuring that the overall cost to the public purse remains affordable. For university entry in autumn 2012, institutions will be able to recruit as many students as they can with the AAB grades or better at A-level, or the equivalent in other exams. This will allow more high-achieving students to attend the institution of their choice, and will allow institutions which can attract more of those students to expand. It will not prevent students with lower grades or alternative qualifications getting a place at university. This is simply the first step in freeing up student number controls.

Alongside this, we plan to create a flexible margin of 20,000 places in 2012-13, which will enable FE colleges and other providers to combine good quality with value for money. We know that there are providers which can offer a good learning experience for less than £7,500, and this will offer a wider choice for students.

Before concluding, I turn to some of the points that have been raised by noble Lords. I am mindful of the time, so if I curtail this I will write to noble Lords to whom I have not managed to respond.

In response to the opening remarks of the noble Lord, Lord Giddens, I agree that some things are yet to be seen through, reviewed and monitored. However, I dispute his point that the universities are becoming marketplaces for the sake of marketplaces. We are trying to ensure that, at long last, students have greater opportunity and choice in the sort of subject matters that higher education institutions are able to produce, and to enable those who have never thought of going into higher education to see it as a conduit to going in with those choices, knowing that their loans and student fees will be paid up front. The noble Lord failed to accept this in his speech. He is stuck with the concept that he has over the years. I am not trying to downgrade the noble Lord’s point. I am just trying to say that the world has moved on. The way in which institutions respond must also be more responsive.

My noble friend Lady Brinton reminded me and the House that I will arrange for her to meet my right honourable friend David Willetts to discuss the repayment of loans and fees for part-time students. I extend that invitation to noble Lords who have taken part in the debate today. My right honourable friend is very happy to meet people to discuss part-time students’ repayments.

A number of noble Lords mentioned social mobility. I accept that social mobility has stalled, as I know do most noble Lords. It had also stalled over the 12 to 13 years that the previous Government were in place. That is why we have to introduce this important programme of widening participation. We want to ensure that everybody is able to benefit from the great lifetime benefits that graduates can enjoy once they have participated in further education. The participation rate of disadvantaged young people at institutions requiring higher entry tariffs has remained almost flat over recent years. We need to see progress on fair access, especially at our most selective institutions. That is why the Government have introduced a new framework which places increased responsibility on universities to widen participation. It is extremely important to ensure that no person who has the ability and the potential should be deterred from going to university simply because they feel that they would not be able to afford it. The Office for Fair Access will be strengthened. Annual access agreements have been put in place and there will be tougher sanctions on universities that fail to meet the access targets that they have agreed with OFFA. From the first round of new access agreements for 2012-13, OFFA estimates that by 2015-16 universities will be spending around £600 million on supporting fair access and widening participation.

Noble Lords spoke about overseas lecturers and overseas students. My officials and I are working very closely with the Home Office and the UK Border Agency to ensure that the needs of both the public and private education sectors are fully articulated and their interests are properly represented in all immigration policy-making decisions. We have made good progress on tackling the hurdles that institutions can face in bringing foreign academics over as guest lecturers and external examiners by expanding the terms of the tier 5 government-authorised exchange scheme. We have had success in raising the status of scientists and researchers, many of whom will take jobs in universities. Exceptional academics can apply via the new tier 1 exceptional talent route—a route that takes account of the expert views of the national academies. Ministers will continue to work with the UK Border Agency and with universities on removing obstacles to the essential business of the global intellectual exchange.

The noble Lord, Lord Faulkner, asked about the numbers of midwives and nursing graduates. This is an issue for the Department of Health but I will take it back to that department for him.

Noble Lords talked about postgraduate study. We will continue to monitor the impact of our student finance reforms on postgraduate studies. In cash terms, HEFC is maintaining its research degree programme supervision funding, which will support the next generation of researchers, at £205 million for 2011-12. HEFC has recently consulted on its proposals for reforming the allocation method for postgraduate research funding from 2012-13 and aims to publish its response by the end of 2011.

A number of noble Lords, including the noble Baroness, Lady Coussins, spoke about modern languages. I will take back to my right honourable friend the Secretary of State her concerns about languages in schools. However, I can tell her that since 2005 in higher education modern foreign languages have been classified as strategically important and vulnerable subjects, which means that via the Higher Education Funding Council the Government have provided additional support to ensure the continued availability of language places. The European Commission’s Erasmus programme and fee waiver provided by HEFC will continue for 2012-13 but we are working on options beyond that. That discussion is still going on and if I hear any further progress I shall inform the noble Baroness.

Noble Lords mentioned the impact on ethnic minority groups and here the Government have a good story to tell. There is a higher proportion of students from minority ethnic communities going into higher education than is represented in the working population. Research indicates that coming from a minority ethnic group seems to have a positive impact on a young person’s aspiration to enter higher education, even compared with those with the same prior attainment. Minority ethnic young people are also more likely to enter higher education than their white peers.

BIS undertook an equality impact assessment of the higher education funding reforms and changes to student finance in November 2010. The overall assessment was that the proposals would not have an adverse effect on minority ethnic groups. Another finding was that we expected the changes to the maintenance packages to benefit those in low-income households. Therefore people from minority ethnic backgrounds were more likely to benefit from the more generous packages that we were proposing.

As for how much students will pay and access agreements, the Government have already agreed a £6,000 threshold from 2012, but we have also insisted that institutions do more to promote fair access and widen participation. Those universities wishing to charge up to the maximum threshold of £9,000 will have to work under some stringent and strict frameworks and ensure that they are doing everything possible not to exclude people from poorer backgrounds. We know that OFFA is going to be rigorous in ensuring that this happens, but the Government, as always, will monitor the outcomes and respond if we feel that progress is not being made.

I know there is some concern about arts and humanities. Humanities and social sciences are, in some cases, losing their teaching grant, but funding will flow into arts and humanities courses via student tuition fees and the Government-subsidised student loan. So even when there will be no teaching grant for a discipline, it does not mean that there will be no Exchequer contribution. There are some disciplines that are officially recognised as strategically important and vulnerable and HEFCE is consulting on how the remaining teaching grant should be allocated. We will present final proposals for this in autumn 2012-13.

I would like to congratulate the noble Lord, Lord Sawyer, on his university being awarded the university of the year title for 2010. I will read carefully the questions that he put to me, but I absolutely agree with him that universities change the shape the cultures of communities, and Teesside has shown that. It is a good model for universities to look at when they feel they are under threat. Teesside has changed to meet the evolving needs of the student population, but also that of the community of Teesside.

I say to the noble Lord, Lord Bew, that I am new to this department, so in some of my responses I might need to beg the patience of the House in taking away some of his questions. However, I agree that rigid equality assessments are needed and if they have been done, I will make sure that the information is passed through to the noble Lord. If they have not, I will make sure that I relay the question to my right honourable friend.

The noble Baroness, Lady Howells, asked about degree-awarding powers and university titles. The White Paper said that we would review the use of the title “university” so there are no barriers to smaller institutions being classified as a university. The White Paper also undertook to decouple degree-awarding powers from teaching in order to facilitate externally assessed degrees by non-teaching bodies. These proposals are currently being consulted on via a new fit-for-purpose regulatory framework for the higher education sector which will be due to close on 27 October. We will then consider the responses.

I say to my noble friend Lord Smith of Clifton that the Government will still achieve savings of £36 billion by 2014-15 from the HE budget to contribute to lowering the deficit. The long-term cost to Government of student loans depends on the average amount borrowed by students rather than the fees charged, and additional contributions by graduates who benefit from higher education will result in a long-term saving to the Government.

I have run out of time. I have several responses to get through, but I would like to finish with my conclusion, so I shall read Hansard and respond in writing to the points that I have not answered. Although our reforms are often presented in the context of serious financial challenges, they nevertheless represent a significant opportunity—the opportunity for the student to have a stronger voice. Over the years, universities have had such strong incentives to focus on research that we believe that the role of teaching has been undervalued. That has got to change. Putting financial power in the hands of students will help to put them at the heart of the system. I am sure that no one would disagree with that. It is our ambition to lift the burden of centrally imposed bureaucracy on the higher education system. Freeing up student numbers, for example, will give institutions more flexibility. We are also looking at other ways of removing impositions over time.

This has been a really important debate. Your Lordships have brought real wisdom, expertise and, of course, challenges to the discussion. That is right and necessary. I did not go to university because I was not allowed to. I have fought a lifetime to ensure that those who want to and are able to should be able to go. I hope that we will have constructive discussions in the future so that no one has to be in my position, where culture and not potential stops someone going to university. I thank the noble Lord, Lord Giddens, for this debate.

Malawi

Baroness Verma Excerpts

Wednesday 20th July 2011 Lords Chamber

[Lord McConnell of Glenscorrodale]

To ask Her Majesty’s Government how they intend to distribute United Kingdom aid in Malawi following their suspension of general budget support for Malawi on 14 July.

[Baroness Verma]

My Lords, the UK has indefinitely suspended general budget support to Malawi. We are determined to continue funding other programmes in Malawi that protect the poor. We will continue to work through specific government ministries like health and education and with trusted NGOs.

[Lord McConnell of Glenscorrodale]

My Lords, I declare an interest: I am engaged in a number of charities supporting development in Malawi. I thank the Minister for her Answer.

Over the past six years UK budget support to Malawi has contributed to a number of the most successful development programmes anywhere in Africa. The Malawi growth and development strategy has delivered growth rates among the highest in the world. The farm input subsidy programme has supported 1.6 million households and turned famine into food surplus in Malawi. Malawi has one of the best records in Africa for reversing the increase in HIV/AIDS.

I ask the Minister, first, for an assurance that overall aid to Malawi will not be reduced as a result of this decision on budget support; secondly, for an assurance that there will be speedy discussions with those government departments in Malawi to ensure the continuation of those programmes so that money is not underspent by the end of this financial year and these programmes can continue; and, thirdly, whether she would be prepared to meet the Scotland Malawi Partnership to discuss its interest in this very important subject.

[Baroness Verma]

My Lords, UK aid to Malawi has not been reduced; it has just been redirected through sector support now. We will look at ways of ensuring that the budget support that we are giving and our aid programmes do not fail the poor, which I think is what the noble Lord wishes to hear. I assure him that we will continue to work with those sectors and with NGOs to ensure that, whatever difficulties we are having with the Malawian Government, we work collectively to ensure that aid goes out to the poor. On his point about meeting the Scottish Malawi Partnership, I spoke to my officials yesterday and they would be happy to arrange a meeting.

[Lord Chidgey]

What element of general budget support was allocated to supporting good governance in Malawi? In DfID’s good governance fund for Malawi, what element will now be allocated to democracy and parliamentary strengthening, particularly scrutiny, monitoring and oversight of aid effectiveness by the Malawian Parliament?

[Baroness Verma]

My noble friend raises a number of key issues here. The support that we were giving was in order to have oversight of good governance and to ensure that economically the country was following the right paths for the delivery of budget aid. However, I bring the noble Lord back to the original Question, the answer to which is that we are continuing to work with the Malawian Government but we will need to direct general budget aid through programmes that we can have oversight of.

[Lord St John of Bletso]

My Lords, does the Minister agree that while it is vital that our Government continue to support Malawi through the aid programme, it is just as important in the medium and long term for our Government to assist the African Union as well as SADC to promote trading blocs to promote more trade and inter-African trade for sustainable economic growth?

[Baroness Verma]

The noble Lord is right. I know that he shares a great interest in that region with the Government. We wish to see greater economic development there, which is why we are encouraging private sector investment but also working with Governments to ensure that they are able to move much more strongly in revisiting their systems and ensuring that good governance overreaches all areas of their government as well as where the budget aid is going.

[Baroness Kinnock of Holyhead]

My Lords, is the Minister aware that in the DfID press release announcing the suspension of general budget support to Malawi there was an unexpected announcement? It says:

“This comes as the Government reduces general budget support across the world by 43 per cent”.

Will the Minister give us more detail on this announcement in the press release and say which countries are affected, by how much and over what timescale?

[Baroness Verma]

The noble Baroness will know that I am not able to answer on each individual country at this moment in time, but I will get someone to write to her. The reductions are a result of our bilateral and multilateral reviews, where we saw that we needed to ensure that whatever moneys we were giving through aid via DfID were being well spent. The noble Baroness shakes her head, but she will know that during her time she faced the same sort of difficulties in ensuring that such programmes were both fully funded and fully scrutinised by the programmes we had in place. Governments needed to build up on good governance, which some were failing to do.

[Lord Patel]

I am sure that the Minister is well aware that Malawi has one of the highest maternal mortality ratios and one of the highest incidences of obstetric fistula. What impact assessment have the Government made of how programmes to deal with these will be affected by the redirection of aid?

[Baroness Verma]

I come back to my original Answer. I reassure the noble Lord that we have not cut back on aid but are redirecting the aid that was going through budget support to the health and education sectors, so we will be providing even more support by directing the aid to those sectors and having better oversight of where that money is being spent.

[Lord Steel of Aikwood]

My Lords, I appreciate the real difficulty that the Government have with the increasingly autocratic President of Malawi, but can the Minister give us any indication of whether relations are on the mend following the expulsion of our high commissioner?

[Baroness Verma]

My noble friend knows that while we have difficulties, we are continuously working on improving relationships. It is key that our relationship with Malawi is maintained and strengthened. The negotiations will continue but we will not stop our programmes from being delivered, because at the heart of everything that we are doing is the delivery of aid to poor people.

International Development

Baroness Verma Excerpts

Monday 11th July 2011 Lords Chamber

[Viscount Craigavon]

To ask Her Majesty’s Government what priority they are giving in international development to population issues and to reproductive health and rights.

[Baroness Verma]

My Lords, the UN estimates that the world’s population will pass 7 billion this October. Most of the growth will be in high-fertility developing countries. Meeting the need for family planning and maternal and new-born health services would help avert 390,000 maternal deaths and over 50 million unintended pregnancies. The Government are playing a leading role and will enable at least 10 million more women to use modern methods of family planning by 2015.

[Viscount Craigavon]

My Lords, I am grateful for that positive Answer from the noble Baroness. Does she accept that it is very important to address the unmet need of more than 200 million couples who would like to be able to use contraceptive methods but do not have them available? Does she agree that funds invested in this field provide a return many times over, not only financially but also, more importantly, in terms of human well-being?

[Baroness Verma]

My Lords, the noble Viscount is right. If we fail to respond to the unmet need for family planning, the consequences of rapid population growth will impact on us all. Reducing unplanned births and family size would save on public sector spending on health, water and social services and reduce pressure on scarce natural resources. Reducing unintended pregnancies particularly among adolescents in developing countries would improve their educational and employment opportunities. This would contribute to improving the status of women, increasing family savings, reducing poverty and inspiring economic growth.

[Baroness Tonge]

The noble Baroness will know that Afghanistan, in particular, has faced civil war and political unrest for many decades. Forty-two per cent of the population live on less than $1.25 a day and three in five children are malnourished. Nevertheless, the fertility rate is 6.6 births per woman, many of them very young girls. With a rapidly rising population, only 15 per cent of women in Afghanistan can access contraception. Will she ensure that our Government’s programme to Afghanistan reflects these facts and prioritises maternal health and family planning?

--- Later in debate ---

[Baroness Verma]

I am most grateful to my noble friend for raising these issues. She is aware that at the heart of our programmes is the maternal health of women and girls. We have focused on ensuring that they receive education and the services that improve their own well-being. But this is also about ensuring that there are rights to access; if they are not available, they cannot be accessed. Therefore, through our programmes, we are pushing to ensure that they know where to get what they need.

[Lord Hughes of Woodside]

My Lords, while agreeing entirely with the sentiments expressed by the noble Baroness, can she say how much money has been spent, and how much increased money is to be available, to provide contraceptive services?

[Baroness Verma]

My Lords, the noble Lord will be aware that our programmes put women and girls at the heart of being able to access education, healthcare and maternity health. This is not about individual budgets but about programmes being delivered and making sure that part and parcel of our delivery is access to family planning.

[Baroness Jenkin of Kennington]

My Lords, can my noble friend confirm that aid is most successful when targeted, science-based, practical and measurable?

[Baroness Verma]

My noble friend is absolutely right, and that is why we have a relentless focus on results and achieving value for money. I would like to give two examples. Every year, nearly 2 million children die from vaccine-preventable diseases, so I am proud that this Government have pledged to vaccinate more than 80 million children over the next five years. Of course, she is also right that it is through education and research, and through ensuring that our aid is delivered in a focused and targeted way, that we will be able to receive the sort of results that we are looking for, and I hope that we will succeed.

[Baroness Flather]

My Lords, can the Minister tell me how DfID is counteracting the influence of the Vatican in this area? As we all know, the population of Italy has dropped like a ton, so they are not bothered about this issue, but it does affect developing countries.

[Baroness Verma]

My Lords, faith organisations play a very important part in working to ensure that we are able to give choices to women and girls on when and how they have their babies. It is not about the Government issuing edicts on how family planning should be accessed but about encouraging choice, so that women are able to make that choice and, it is hoped, have better control over their lives.

[Lord Anderson of Swansea]

My Lords, the effect on family spacing and women’s rights is fundamental, but, surely, also important is the effect of the growth in population on soil erosion, on deforestation, and on conflict over resources in so many countries. Why is it, then, that international donors and aid agencies are so coy about mentioning population increase as a factor in development?

--- Later in debate ---

[Baroness Verma]

I am not sure that I can agree with the noble Lord. Agencies accept that population growth is an issue and that it is through targeted programmes that we are going to achieve the reduction in birth rate that we need. But it is also about ensuring that those women and girls have options and are able to access family planning means, rather than us forcing Governments into taking action. This is not a place for Governments; this is for women to have choice and education.

[Baroness O'Neill of Bengarve]

Is the Minister aware that there is very good empirical evidence of the limitations of choice-based family planning initiatives, such as those that were extensively trialled under the Bush Administration, and is she prepared to put DfID’s commitment behind services that are not entirely choice-based but actually provide access to the sorts of contraception that young women need if they are to attain independent lives?

[Baroness Verma]

I will repeat that it is about choice; it is about being able to educate girls and women about what is available to them in their countries. We as a Government cannot dictate how people access family planning: they must be able to make the choices for themselves. But it is also about being able to tell them that through better healthcare and planning they will have less need to have more babies as, often as not, more babies are born is because of the belief that many of them will die.

[Baroness Kinnock of Holyhead]

My Lords, is the Minister aware that the newly independent state of South Sudan has the highest maternal mortality rate in the world, and that in a population of 8 million there are only about 10 midwives—and this when 3,000 midwives are needed to ensure safe motherhood? How will DfID ensure that the Government of South Sudan’s five-year health sector development plan prioritises the urgent need for obstetric care?

[Baroness Verma]

The noble Baroness is absolutely right. The onus will be on all donor countries to support South Sudan, particularly through its transient stages of being the newest country on the planet. Again, it is about partnership work and ensuring NGOs and donor countries work closely. It is also about ensuring that our programmes are targeted towards and reach those who we feel most need the help.

Distribution of Dormant Account Money (Apportionment) Order 2011

Baroness Verma Excerpts

Monday 11th July 2011 Lords Chamber

Moved by

[Baroness Verma]

That the draft orders and regulations laid before the House on 9 and 12 May be approved.

Relevant document: 23rd Report from the Joint Committee on Statutory Instruments, considered in Grand Committee on 5 July.

[Lord Higgins]

My Lords, might I raise a point that is perhaps of general interest? When a matter is debated in the Moses Room and the Minister is unable to give a full reply and promises to write and place a copy of the answer in the Library, should that not be done before the matter returns to the Floor of the House? Perhaps my noble friend the Leader of the House might consider that point, otherwise when the order comes back to the Floor, we will not know what view we ought to take on it.

Open Public Services White Paper

Baroness Verma Excerpts

Monday 11th July 2011 Lords Chamber

[Baroness Verma]

My Lords, this process is signed up to by all government departments and it has had wide consultation. We are building on what the previous Government were doing—ensuring that there was proper reform and that public services were able to deliver the best possible service and outcome to individual users. I do not accept the noble Baroness’s premise that the White Paper is going nowhere and that it has not responded to the needs of individuals. What we are trying to do is very significant. This is about building accountability and transparency into the processes. As with social care, which is a sector I know well, personal budgets are available to some but this is about ensuring that personal budgets are available to many more. It is also about making sure that people are aware of what they are buying into, and that process takes time.

I have not read the Guardian article so I cannot comment on it. However, I will say that for us it is really important that children who come from disadvantaged backgrounds and are followed by the pupil premium will be able to get better outcomes and go on to enjoy social mobility and rise up, rather than remain stagnated as some children have become through—I am sorry to say to the noble Baroness— policies that were not delivered well under the previous Government. We need to find a way of working together to ensure that our public services deliver the best outcomes for those who need them the most. We have to agree that this will not come through sitting doing nothing. We must ensure that delivery of our public services is done in a way in which everyone has choice and power over how their services are delivered, and this White Paper goes towards that.

[Baroness Royall of Blaisdon]

Before the Minister sits down, I remind her of the very important question that I asked towards the end of my response to her Statement about the fact that it is said that the Government are willing to allow educational and health establishments to fail. That cannot happen, and I would like a guarantee from the Minister that this will not be allowed to happen.

[Baroness Verma]

I apologise for not responding to that. I have not seen any evidence that we would allow schools to fail. It would not be in the interest of children who are growing up today for us to allow failure: they have been failed for far too long. We need to ensure that every child growing up in this country today has an opportunity to achieve their best potential.

[Lord Maclennan of Rogart]

My Lords, while I acknowledge the sense of many of the objectives spelled out in this White Paper, does my noble friend recognise that across the whole White Paper the proposals to achieve these ends raise far more questions than answers? The modes of delivery are very far from clear and this House needs to debate them serially and at length. For example, does my noble friend recognise that cuts in public expenditure are seriously diminishing the access of local people to central services? The closure of the income tax offices and the removal of visa and passport offices in the part of the country that I live in are examples of this. Although these are central services, they cannot be neglected as they touch upon the lives of people in the locality. Does she also recognise that there are big questions about who is going to make the decisions on the money that is to be dispensed by the public service locally—is it to be central, or local government, or some new sources of funding? How is the need of the particular person who is to enjoy the personal budget to be calculated if not by some local organisation which is very closely in touch with the specific circumstances of the individual? I repeat that the general objectives seem unchallengeable but the mode of delivery seems highly opaque.

[Baroness Verma]

I will reassure my noble friend. We are working against a really difficult economic backdrop, and we will have to make some incredibly difficult choices. Having said that, it is also an opportunity for us to open up to a variety of providers and see if services are then better delivered, with best value incorporated into how those services are delivered. As with personal budgets, delivery will not just be left to one set of providers. What is important is working in partnership—in this case, personal budgets and local government. It is about being able to deliver services far better and with greater choice. Those who have access to personal budgets have said to us in consultations that they feel relieved that they are going to be able to make choices on how their care is delivered.

[Lord Beecham]

My Lords, is it not ironic on the day that Southern Cross has collapsed—closing 560 residential homes, which account for over 30 per cent of residential care places—that the Government are proclaiming the virtues of diversity? How diverse is a system that allows a single private operator to provide such a high proportion of places, with the results that we can now see? In talking about diversity, how many organisations, particularly voluntary ones, have been contracted on the welfare to work programme? It seems to have been commandeered by a handful of national organisations.

Can the Minister also explain the relevance of the passage in the Statement that talks about,

“open, real-time data on road conditions, speeds and accidents along our motorways”?

Is she suggesting that motorists can then find another supplier of roads on which to travel or is this a question of diversity in the provision of satellite navigation?

More seriously, on the health premium paid to local authorities achieving the greatest improvements in public health, clearly one shares the objective of incentivising the improvement of public health. Is it not going to be difficult for authorities such as my own—the noble Lord, Lord Shipley, is also a member—to improve the very serious and long-standing conditions in public health? There are areas where it will be easier to do that and they will be rewarded for achieving targets while authorities that may need investment to secure improvements will presumably struggle to get it. Will that not have to be reconsidered to ensure that the investment goes in the right place to achieve public health objectives? Those are not in any event entirely under the control of local authorities.

[Baroness Verma]

My Lords, it is a great disappointment that Southern Cross has had to go down the route that it has gone in. The noble Lord is of course aware that many providers perform excellent work and have greater safeguards in place. We do not want to take one example and judge all private providers on it.

I am not quite sure that the significance of the roads question will be answered as fully as the noble Lord would like. I assume that those data are so that the public—the people who use those roads—are able to question why there is not greater improvement and how greater improvement can be brought about. It is not about avoiding roads but being able to say, “Where judgments are to be made about mapping on those roads, how do we deliver better services? Is it about speed or variable speeds”? I suspect that that is what it is, incorporated into that response.

On health premiums, it is absolutely right that those healthcare providers dealing with very difficult health issues in their areas should be given extra support and rewarded if they deliver better outcomes. It is only right that we work in partnership—sometimes with local authorities or across a range of providers. We must not put a full-stop block on this, so that we are driven by the same service that has gone on for many years and that has not delivered the sort of outcomes that we would like everyone to have—and not because they can buy it. It has to be available for everyone.

[Lord Ahmad of Wimbledon]

My Lords, as someone who works within local authorities and has local authority experience over 10 years, I welcome the Statement, not least because when we have looked at procurement of services we have, for far too long, seen a repeated reliance on what has happened before continuing. I welcome the White Paper because it opens up different channels, whether it is the state sector, the private sector or, indeed, as we have seen, the growing importance of the voluntary sector in delivering effective services at the ground level, as people desire. One-size-fits-all is not the way forward. Personalised budgets, services which matter to local people delivered by the best provider, are what is desired and this White Paper outlines those objectives. I also ask my noble friend the Minister to emphasise once again that while we have only seen the local DCLG budget being allocated in such a way, we see a relinquishing of Whitehall’s control on budgets and all budgets being delivered effectively by the right provider for local people at a local level.

[Baroness Verma]

I thank my noble friend for his warm welcome for the Statement and I absolutely agree that it is about decentralisation and being able to give more and more control over to local people and local authorities, so that we can actually get the sorts of services that local people need in those local areas. There is no point in trying to micromanage local areas when one does not have the special needs of those local areas within one’s own way of delivering. My noble friend is absolutely right that it is really important that the decision-makers are part of the communities that are being served.

Personalised budgets, which are something that I know about, are one very good way of being able to deliver. In her response to the Statement, the noble Baroness talked about personalised budgets. Not enough people are signed up to them; we want to deliver, we are building upon what the previous Government were doing, but, of course, it takes time to roll these things out and make people aware. It is about an awareness campaign as well to make people aware of what is available to them so that they will make informed choices.

[Lord Soley]

My Lords, I do not have a problem with the direction of travel that the noble Baroness is mapping out; indeed, as she said, it builds on what the previous Government were doing, and more acknowledgement of that might make it easier to reach agreement on some of these areas. The problem that the Government are not addressing—as far as I can see, although I will need to look at the White Paper—is the detail of it. I am very much in favour of co-opting mutuals, but I know from personal experience that, for example, setting up a housing co-op and making it work is very difficult and, frankly, it fails more often than not. That has been tried on many occasions.

On more personalised and individual budgets, again I am very much in favour of that. I have argued for children to have budgets enabling their parents to give them extra lessons in whatever they chose—music, or whatever—but that runs into the problem that every now and then a parent wants something which is not considered to be in the interests of the child. To take what is perhaps an extreme example, a parent might say, “I do not wish my child to be in a science lesson which teaches Darwinism; I want to take them out and give them lessons in creationism”. We will run into that problem, so we have to have managerial structures which decide how the money can be used, in what format and who says yes or no. It is not just an issue of money; it is an issue of management structures which allow us to do what I think most of us would like to do, which is to devolve downwards.

[Baroness Verma]

The noble Lord raises a number of interesting points. I did say that we are building on what the previous Government were doing. We are trying to make it a build-on that will be a bit more directed and focused on what the outcomes are going to be. I think that we are still in that mode of debating. It is important that we debate and discuss the best possible ways of delivering. These conversations do not stop just because a paper is produced. Consultation is an ongoing process, but it is also very important that we do not become so blinkered that we decide that the White Paper is not going to deliver anything. The White Paper is already able to deliver a lot, because we are building on what was already in place.

The structures will, of course, have areas that we will need to fine-tune and to look at how things can be made much tighter, but the Government are making sure that we have continuity plans and safety nets in place so that we can ensure that, when people make those choices, they are not left without support mechanisms. That is why we want to encourage champions to come forward through organisations such as Which? or HealthWatch and also make sure that there are ombudsmen for each sector, so that everyone knows that there is a line of recourse if they face difficulties.

[Lord Patel]

My Lords, on the face of it, allowing patients a choice as to where they wish their care to be delivered seems a good idea, except that there are several problems. One is the quality of information we have: if that choice is to be based on outcomes, it is pretty poor.

The second is that the outcome is not based on one treatment: it is the quality of the journey of care of a patient that delivers the best outcome. For instance, poor outcomes in cancer may well be, and are, related to late referrals of cancer patients. How does a patient know what quality of information they will be given that will allow them to make a choice as to how they wish their care to be provided, based on these outcomes?

Another issue is that the best quality might be far away from where the patient can go or have access to. So how would they make that choice? Most importantly, if we are going to do this—and the idea seems good—it should be based on what we have learned from pilots. Have there been any pilots done that will tell us how this will work?

--- Later in debate ---

[Baroness Verma]

The noble Lord has raised a number of detailed questions and I suspect that I will not be able to answer them today. I would like to take them away, write to him and place a copy in the Library, because it would be unwise of me to respond to him about outcomes without details of how those outcomes would be delivered.

[Lord Reid of Cardowan]

My Lords, perhaps I can assist on this. While not agreeing with everything that has been proposed, on the matter of choice there are difficulties in getting information, in travelling away from your local hospital, in transferring records, but that has never stopped the rich exercising their choice. They have always been able to overcome these difficulties. Therefore, if there are obstacles in the way of consumer choice for patients, the answer should not be to remove that choice; it should be to increase facilities for the provision of information. On outcomes, I would simply say that, since the introduction of choice in the National Health Service, hundreds of thousands of people have been taken off the waiting list and the maximum waiting time has been reduced from two years to six weeks from diagnosis to operation. That was due to the element of competition and patient empowerment which was introduced into the National Health Service through choice.

[Baroness Verma]

I thank the noble Lord for coming in and assisting me, but I will still follow it through with some letters.

[Lord Shipley]

My Lords, I declare an interest as a member of Newcastle City Council. There is much to commend in this White Paper in principle, insofar as it gives greater power and responsibility to groups of individuals and third sector providers. However, will my noble friend the Minister confirm that it is not just about sell-off to the private sector for profit and that the Government really mean that this is about groups of residents, individuals and third sector organisations? Secondly, will she comment on increasing choice? While theoretically a very good thing which I strongly support, there has to be spare capacity in a public service; otherwise, choice becomes a mirage. Having spare capacity is inherently more expensive when what people want is to have high-quality services available in their immediate neighbourhoods. At a time of declining public resource, ensuring high-quality services within neighbourhoods, close to home in order to minimise the need to travel, is more important than extending, at higher cost to the public purse, the choice in a wider area.

[Baroness Verma]

My noble friend should feel reassured first and foremost that it is not about just a sell-off. It is about introducing a much wider and more diverse provision of service so that people are able to enjoy a much more flexible response to their needs rather than, as so often, a stringent delivery of services through local authorities. Often as not, my noble friend will find that within an independent delivery service there is always capacity built in. It is often a prerequisite required of those who deliver services when they buy from the public sector to deliver, because it has to be delivered in their service plans in the first place. So I do not have a worry about capacity.

It is important that we are able to ensure that people who are going to use these services will be able to have a greater say in how those services will be delivered, whether those services meet their needs and, if they do not, how we can have recourse to get those services made better in responding to those needs.

[Baroness Armstrong of Hill Top]

My Lords, will the Minister accept that many of us are extremely disappointed with this so-called White Paper? It seems to be a Green Paper because it consults on a range of things without any precision on what the Government’s intent is. When I saw the coalition agreement saying that there would be an opportunity for millions of workers to be their own boss, I was expecting more from a White Paper than simply, “We will continue to support mutuals and the public sector workers in them”. The lack of ambition is staggering.

Will the Government now seriously address the manner in which they can reform and change public services? They are getting a bad name now for their lack of ambition on reform and their inability to deliver it. On things like mutuals, they need to answer the questions put by my noble friend on the Front Bench, particularly around pensions and pension entitlement.

[Baroness Verma]

I am sorry that the noble Baroness feels that this does not address public sector reform. Public services are being reformed. This is an exciting and comprehensive paper. I suggest that if she takes the paper away and looks at it in detail, she will see that we are genuinely working across government to ensure that there is a proper reform of public services so that they are delivered to ensure that people have choices, are able to have their needs met and have a say in how those choices are delivered. These reforms will take time because we want the process to be evolutionary and we want to get it right, but it is a build-on to what was happening already. I hope that I leave the noble Baroness assured that we will be working hard with public services to ensure the best delivery.

Overseas Aid: Famine Relief

Baroness Verma Excerpts

Wednesday 6th July 2011 Lords Chamber

[Baroness Tonge]

To ask Her Majesty’s Government what plans they have to provide famine relief to the people of Ethiopia, Uganda, Somalia and Kenya.

[Baroness Verma]

My Lords, my noble friend Lady Tonge will be pleased to know that on 3 July the Government announced significant funding for the World Food Programme to help feed 1.3 million people in Ethiopia. The UK is the second largest bilateral donor in Ethiopia. Additional responses are rapidly being prepared for Somalia and Kenya, and we are closely monitoring the situation in Uganda. We are vigorously pressing other donors to play their part in helping to prevent a major catastrophe.

[Baroness Tonge]

I thank the noble Baroness for that response. Is she aware that the population of the four countries currently threatened by famine has grown from 41 million in 1960 to 167 million now and that it is still rising fast? This huge rise is unsustainable and makes populations more vulnerable than ever to drought and crop failures. Will she now repeat the Government’s pledges to give more money to maternal health and, in particular, ensure that when we deliver food aid to starving populations we should also deliver contraceptive supplies and health education to try to ensure that the children whose lives we save today will not be bringing their children to the feeding centres in 10 or 20 years’ time?

[Baroness Verma]

My Lords, my noble friend is aware that the DfID programmes are concentrating on ensuring that maternal and reproductive health is at the centre of all our programmes. Of course, the noble Baroness is right that the populations in these particularly poor countries are growing far more rapidly than those in more developed countries. However, it is through education and supporting women to get better healthcare that we will be able to address this problem.

[Lord Judd]

My Lords, I declare an interest as a former director of Oxfam. Does the Minister agree that in their welcome response to this terrible crisis the Government must take care to ensure that, in the distribution of assistance, they do not inadvertently undermine sustainability in the area and that this will be done sensitively, in a way that enables people to build their lives again and build their sustainability? Is it not very important to co-operate with the NGOs, with all their insight into the situation, in achieving this?

[Baroness Verma]

The noble Lord is right. We have to work on a long-term plan, but we also have to react and respond to the crisis at the moment. The noble Lord will be aware that we have just had a review of the way we distribute humanitarian aid and we want to build on the recommendations of my noble friend Lord Ashdown so that there is resilience in the system as well as responding in the short term.

[Lord Patel]

My Lords, on the basis that famines do not occur overnight and that conditions exist for some time before the crisis develops, would it not be better if the Government were able to have some plans that they could put into action in order to be ahead of the curve, so that the effects of the famine, or other crisis, could be mitigated?

[Baroness Verma]

The noble Lord, Lord Patel, is right. Following on from the previous question, it is about ensuring that we have warning systems in place. We are also working hard to build long-term resilience by providing assistance on how to develop economic growth and by ensuring that populations are better educated in healthcare in order to be able to respond to the needs themselves.

[Baroness Trumpington]

Is the Minister aware of the proportion given by neighbouring African countries, such as Nigeria and Zimbabwe, to the total needed to help prevent this famine continuing?

[Baroness Verma]

My noble friend raises an important question. While we are world leaders, we are pressing Governments, not just from developed donor countries, but also from regional donor countries, to ensure that they are playing their part in responding to this crisis.

[Baroness Kinnock of Holyhead]

Will the Minister comment on the fact that we knew full well that the Horn of Africa was experiencing the driest year in six decades and the worst regional food crisis in this century, so it need not have been such a surprise to donors? Does she agree that, yet again, the response to what is clearly a desperately serious food crisis has come too late—indeed, only after disaster has struck and thousands of desperate people have been forced to seek food and refuge in refugee camps?

[Baroness Verma]

The noble Baroness is right: this was forecast. However, we in the UK are playing our part and pressing other donor countries to play theirs. We know that there is a shortfall and we are pressing other Governments to ensure that they respond. We are working very hard with agencies across the globe. Ultimately, it is about ensuring that we are putting long-term resilience plans into place, which take time to build up. At the same time, we will press for short-term responses from other Governments.

[Lord Avebury]

My Lords, my noble friend talked about the encouragement of other donor agencies. I am sure that she is aware that the Disasters Emergency Committee is still in discussion with the member agencies on whether the catastrophe meets its appeal criteria, although some of its member agencies such as Oxfam and Save the Children have already issued separate appeals. What can my noble friend and the Government do to encourage wider and more effective co-ordination of the voluntary agencies in responding to this and future disasters? In particular, will they encourage wider co-operation between our agencies and those of the Irish Government?

[Baroness Verma]

My noble friend is right: we need to have better co-ordination. We are working closely with the noble Baroness, Lady Amos. Ultimately, this is about us showing our leadership and pressing other donor countries and organisations to join in the response to this urgent crisis.

[The Earl of Sandwich]

Will the Minister confirm that, while the aid budget is ring-fenced, there are going to be cuts in the administration of our aid? How will these impact on the emergency services? Will they be protected?

[Baroness Verma]

I assure the noble Earl that we are looking at cutbacks only in back-office work. Our aid effectiveness will not be affected; in fact, we will be able to deliver better because it will be more focused on results. How we deliver our aid will be at the heart of what we are doing.

Ministerial and other Salaries Act 1975 (Amendment) Order 2011

Baroness Verma Excerpts

Wednesday 6th July 2011 Lords Chamber

Moved By

[Baroness Verma]

That the draft order laid before the House on 21 March be approved.

Relevant document: 19th Report from the Joint Committee on Statutory Instruments, considered in Grand Committee on 5 July.

Motion agreed.

Charities Act 2006 (Changes in Exempt Charities) Order 2011

Baroness Verma Excerpts

Tuesday 5th July 2011 Grand Committee

Moved By

[Baroness Verma]

That the Grand Committee do report to the House that it has considered the Charities Act 2006 (Changes in Exempt Charities) Order 2011.

Relevant document: 23rd Report from the Joint Committee on Statutory Instruments.

Motion agreed.

Distribution of Dormant Account Money (Apportionment) Order 2011

Baroness Verma Excerpts

Tuesday 5th July 2011 Grand Committee

Moved By

[Baroness Verma]

That the Grand Committee do report to the House that it has considered the Distribution of Dormant Account Money (Apportionment) Order 2011

Relevant documents: 22nd Report from the Joint Committee on Statutory Instruments

[Baroness Verma]

My Lords, this apportionment order marks the culmination of a long process to do something useful with dormant account money. The Dormant Bank and Building Society Accounts Act 2008 created the legislative framework required to use this money for the good of society while protecting the rights of account holders. In line with the original Act and in consultation with the Big Lottery Fund, which is the designated distributor of dormant accounts money, England, Scotland, Wales and Northern Ireland are all determining their own spending priorities for it. As the Prime Minister announced in July of last year, England’s portion will be used to set up a big society bank.

Current estimates suggest that there is about £400 million of eligible dormant accounts in the UK. Some of this will be kept back to meet claims from customers, as is right and proper. However, the Reclaim Fund estimates that between £60 million to and £100 million will be released for public spending over the course of the first year. Subsequent releases will be made according to the rate of reclaim.

This order sets out how the money available for public spending will be apportioned between England and the devolved Administrations. In accordance with communications at the time of the original Act in 2008, the order divides the money on a per capita basis; in other words, in line with the Barnett formula. Based on the latest population estimates by the Office for National Statistics, the percentages are as follows: England, 83.9 per cent; Scotland, 8.4 per cent; Wales, 4.9 per cent; and Northern Ireland 2.8 per cent. While the application of the Barnett formula to the apportionment of dormant account money is in line with previous expectations, the decision to use the formula was made only after a period of consultations with the devolved Administrations, as required by the Act.

Following the passage of the transfer of functions order on 31 January, the Minister for the Cabinet Office had responsibility for leading this process. Prior to the formal consultations, Cabinet Office officials informed officials in the devolved Administrations and territorial offices of the Government’s intention to use the Barnett formula, thereby preparing the way for the ministerial process.

The formal consultation process was conducted through an exchange of letters between the Minister for the Cabinet Office and his ministerial counterparts in the devolved Administrations during March and April. A number of concerns were raised about the use of the Barnett formula, principally revolving around the established criticisms that the formula is outdated and does not take into account the varying needs across the constituent countries of the UK. I can assure noble Lords that we have considered these concerns very carefully. However, based on advice from the Treasury and in line with normal devolved spending, we maintain that the formula remains the most transparent, robust and sustainable method of apportionment. This judgment was communicated to the devolved Administrations in letters from the Minister for the Cabinet Office on 6 April, thereby formally ending the consultation process.

While keeping within the constraints of the parliamentary timetable, we have been keen to ensure that the apportionment order is passed as soon as possible so that the dormant account money can be put to good use as soon as the first tranche becomes available later in the summer. While England’s portion will be used to establish a big society bank, which will help build a social investment market and broaden the finance options open to civil society organisations, with the passing of this order, Scotland, Wales and Northern Ireland will be able to use their portions to fund their own social and environmental programmes. I therefore commend the order to the Committee. I beg to move.

[Lord Higgins]

My Lords, I have a long-standing interest in the question of dormant bank accounts. Indeed, at one stage I was an arbitrator on the claims resolution tribunal for dormant accounts in Switzerland.

I have only one or two points to make on the order, the first of which concerns the question of distribution. As the Minister said, there were considerable discussions on this issue. She said that in the course of the discussions the devolved Administrations argued that the allocation of the money should be changed and that it should be distributed in relation to the various needs of the devolved areas, whereas the very good and helpful brief states that it does not take into account need. It is not the same thing. “Need” implies that certain groups of people have a need for money as against the overall allocation—which, presumably, will happen in the course of normal government decisions.

In all events, could the Minister say what evidence the devolved Administrations produced to argue that it ought to be done on the basis of need? Whatever one thinks about the Barnett formula—and many views have been expressed about it, not least by the noble Lord, Lord Barnett—I have come to the conclusion of the Treasury that this is probably right way of doing it.

The second point, which is interesting, is that this money is normally going to go, as I understand it, to the Big Lottery Fund. The money going to the devolved Administrations—I presume, the Minister will correct me if I am wrong—will be allocated by the fund. However there is also an intriguing passage in the Explanatory Memorandum, which states:

“With the Prime Minister’s announcement on 19 July 2010, England’s portion is committed to setting up a Big Society Bank, which will be a social investment wholesaler”.

I am not at all clear what a “social investment wholesaler” is—perhaps the Minister could clarify that. But in all events it looks as though England will have its chunk allocated to the big society bank, whereas the other devolved Administrations will not.

I understand and support the idea of a big society bank, and the idea of the big society, which the Prime Minister is understandably so enthusiastic about. But if that is so, why has an apparently arbitrary decision been taken, which I do not think is reflected at all in any of the legislation, that England’s portion shall go to the big society bank, rather than any of the other uses which the lottery fund might have used it for?

Although we have a Big Lottery Fund which is responsible for making this kind of decision, it is apparently to be overruled in this case by the Prime Minister’s statement. I am not the least bit clear what the financial and legislative basis is for his decision to overrule that, and why—instead of the normal process of going through the Big Lottery Fund—we suddenly find it is to be done by a big society bank. No doubt that has not been set up yet. I presume there will be some delay, whereas if it went straight to the Big Lottery Fund, the money would be allocated immediately, or at least much sooner than it would under the arrangements set out in the Explanatory Memorandum. I would be most grateful if the Minister could clarify those particular points.

--- Later in debate ---

[Baroness Royall of Blaisdon]

My Lords, I, too, am grateful to the Minister for her introduction. I certainly support the order and I am glad that the money will be distributed. I recognise that now is not the time to discuss how the dormant accounts money is to be spent, nor is it the time to have a discussion about the big society bank. However, I have reservations about the big society bank because, while I believe that it will help some people and organisations, it is a very small answer to the problems that they will encounter as a result of cuts in local authority services.

The noble Lord, Lord Maclennan, asked whether the noble Baroness thought that the £60 million to £100 million that it is estimated will come from dormant bank accounts this year will be a one-off, or if such an amount of money can go into the big society bank every year. If it is a one-off, my concern about the viability of the big society bank is exacerbated because, if there is to be a bank that will really fulfil what is likely to be an important role in supporting charities and civil society, it has to be more sustainable than something that will get possibly £60 million next year—or possibly not. Who knows? That raises some concerns.

I hear what the noble Baroness says about the Barnett formula. Discussions have taken place on whether or not there are other options and, clearly, the decision has been taken and has come down in favour of the Barnett formula. It would be interesting to know what discussions have taken place, and with whom, in order to reach that decision. I am concerned about its specific impact on Wales because it is widely recognised that Wales tends to lose out as a consequence of the Barnett formula.

As I said, I am glad that the money is to be distributed and welcome the order. However, it raises profound concerns which must be addressed, if not today then in the future.

[Baroness Verma]

I thank my noble friends and the noble Baroness, Lady Royall, for their broad warm welcome for the order. I expected the order to raise questions, on some of which, I am afraid, I shall have to write to noble Lords.

My noble friends Lord Higgins and Lord Oakeshott raised concerns around the use of the Barnett formula and asked why not other formulas. It was found that the Barnett formula was the most robust way of allocating the money. The Big Lottery Fund’s way of distribution is not a government formula and therefore does not have a wider standing beyond the distribution of lottery funds. The Government recognise that concerns have been expressed about the system of devolved funding; however, their position remains that the priority is to reduce the budget deficit and that any decision to change the current system must await the stabilisation of public finances. However, we have to find an alternative and, until we do, noble Lords will have to accept that the Barnett formula has its strengths.

My noble friend Lord Higgins asked about the term “social investment wholesaler”. The big society bank will be a social investment wholesaler. It is a term used in dormant accounts legislation and is one of three areas where English dormant accounts can be spent. The other two are youth provision and financial inclusion and capability.

My noble friend Lord Clement-Jones asked about public consultation on the distribution of dormant accounts. The Government carried out a public consultation on how the English portion of the dormant accounts should be spent prior to the 2008 Act. As a result, the dormant accounts Act allows the English portion to be used for youth provision, financial inclusion and capability or a social investment wholesaler.

I was asked about the monies going into the big society bank and whether this would be a one-off. We have £60 million to £100 million that we are going to allocate. However, there is a reclaim fund and we need to see how much of that is drawn on. Of course, if money is then still left, it is only right and fair that it is put to positive and good use through the big society bank so that people and smaller organisations can draw on it. The decision will, of course, be made after the independent reclaim fund has looked at how the progress of reclaim has worked.

The questions that were asked today centred basically around confidence in ensuring that the monies reach the right people and that we are making the best use of the dormant accounts. I think there is agreement over the framework that we are using, which was passed in 2008. Since taking office, the Government have worked hard, taking the necessary steps to make sure that money from dormant accounts made available for public spending is put to good use as soon as possible. A reclaim fund has been established by Co-operative Financial Services and authorised by the FSA. As I have indicated from the outset, the estimated £60 million to £100 million from dormant accounts will be released by the fund over the first year. It is imperative that we are able to spend this money as soon as possible.

In taking the decision, the Government have considered thoroughly some of the concerns that noble Lords have raised today. I stress to the Committee that we understand that there are criticisms of the formula we are using. However, it has proved to be currently the most transparent and easily understood formula of all those that are around. I hope noble Lords will be satisfied. I know I have not been able to respond to all questions but I undertake to ensure that all noble Lords are written to. On that basis, I commend the order to the Committee.

[Lord Higgins]

My Lords, I should like to seek a little further clarification. I stress that I am, despite all its imperfections, in favour of the use of the Barnett formula for the allocation of funds between different parts of the United Kingdom. However, that does not solve the problem of which formula is being used to distribute the money, as against distributing it between the regions. I am anxious to save my noble friend unnecessary correspondence. Why, instead of the normal procedure being used—whereby the money for each of the regions goes into the Big Lottery Fund—is the money suddenly being siphoned off into the big society bank? Apparently this is not happening in the regions, although one would have thought that the big society was a UK-wide concept. Why do we suddenly find the allocation of resources—apparently contrary to the Act, although I might be wrong about that—being left to the big society bank, rather than to the existing arrangements set out in legislation? Alternatively, why is it not all going to the big society bank? How do the criteria for these two bodies differ?

[Baroness Verma]

My noble friend of course wants far more detailed clarification than I am about to give him. I undertake to ensure that such clarification is passed to all Members. However, the devolved Assemblies and authorities can make orders to restrict the kind of purposes and people to which money from dormant accounts may be distributed. That comes under Sections 19 to 21 of the Dormant Bank and Building Society Accounts Act 2008; some safeguards are already in place. However, I completely understand my noble friend’s concern. Therefore, to ensure further clarity, I would rather undertake to write and give a much fuller explanation that will, I hope, satisfy him.

[Lord Higgins]

My Lords, I am afraid that an exchange of correspondence does not clarify something in the same way as having it dealt with on the Floor of the House. Can I be clear? What is the financial basis of the Prime Minister’s statement, allocating this money to the other fund, rather than to the Big Lottery Fund?

[Baroness Verma]

As I said earlier to noble Lords, the Prime Minister has made it clear that for him the priority in England is to be able to set up the big society bank to ensure that dormant accounts are used for the needs of organisations in England. My noble friend is now querying the needs of the devolved Assemblies. However, I would give justice to my noble friend only if I could write to him and to other noble Lords because I would not want to have something misread or misheard in giving clarification. I may be able to do so now but, then again, I may not.

Under the Dormant Bank and Building Society Accounts Act 2008, following the transfer of functions order the Minister for the Cabinet Office must give directions to the Big Lottery Fund on how the English portion should be spent. I am not quite sure that that will satisfy my noble friend and therefore I continue to say that I shall write to noble Lords.

[Lord Higgins]

I am most grateful to my noble friend. I look forward to her letter to see whether the Minister can, in fact, make such an order.

Ministerial and other Salaries Act 1975 (Amendment) Order 2011

Baroness Verma Excerpts

Tuesday 5th July 2011 Grand Committee

Moved By

[Baroness Verma]

That the Grand Committee do report to the House that it has considered the Ministerial and other Salaries Act 1975 (Amendment) Order 2011

Relevant documents: 19th Report from the Joint Committee on Statutory Instruments

[Baroness Verma]

My Lords, this is an order that my right honourable friend the Prime Minister has specifically requested to formalise in legislation the coalition Government’s policy on ministerial salaries, as announced on 13 May last year. The order was laid before Parliament on 21 March and agreed to in the Delegated Legislation Committee in another place on 21 June.

The order, which is intended to remain in force for the lifetime of this Parliament, will ensure that ministerial and other officeholder salaries are reduced in legislation as they have been reduced in practice since the coalition Government took office. The salaries and offices affected are specified in the amendment order and these salaries cannot be at any other rate during this Parliament without further amendments to the legislation. Lords Ministers can be assured that their salaries will remain as listed in the order until the Dissolution of Parliament.

The Government’s policy is that Ministers’ total remuneration is 5 per cent less than that claimed by equivalent Ministers in the former Government. In the case of Lords Ministers, “total remuneration” in the context of the order simply refers to their ministerial salary. For Commons Ministers, it refers specifically to ministerial and MPs’ pay taken together, with the reduction then applied solely to the ministerial salary element. Since entering office, therefore, Ministers have waived their entitlement to receive a full ministerial salary and have been receiving a reduced salary ever since.

The order also ensures that ministerial and other officeholder pension contributions and future accruals are brought into line with the reduced ministerial salary levels. Currently, Ministers and other officeholders receive reduced salaries but, because of the rules governing ministerial pensions, their contributions have to remain based on their entitled level of salary as set by the Ministerial and other Salaries Act 1975 as it stands. This has meant that departments have had to make up the shortfall in pension contributions between the reduced and the entitled levels of salary for Ministers and officeholders. The amending order will eliminate the need for departments to do this and will save the Government approximately £100,000 per year.

As I mentioned, ministerial and other officeholders’ salaries are currently governed by the Ministerial and other Salaries Act 1975, as amended. The salaries of all Ministers, the Speaker in each House and the six paid opposition officeholders fall under the remit of this Act. These individuals have been informed of this order and the changes that it will make to the Act. Currently, increases to ministerial salaries are linked to the average increase in the mid-points of the senior Civil Service pay bands. This order will effectively nullify the link during this Parliament but it will apply again after the Dissolution of Parliament.

I should point out that over several years ministerial salaries have not, in practice, remained in line with the legislation. Since 2008, Ministers in the former Government had waived any entitlement to increases in their salary. This order will therefore bridge the gap that has grown between the legislation and what is happening on the ground. Given the Government’s policy on a Civil Service and wider public sector pay freeze, it is right that Ministers show leadership during this time of financial constraint. Since taking office, this Government have saved around £700,000 on Ministers’ pay. Over a full five years, this will represent a £4 million saving. I commend the order to the Committee.

[Lord Maclennan of Rogart]

My Lords, I welcome the opportunity that the laying of this order gives to enable some scrutiny of the policy lying behind it.

The practice of making alterations to the levels of ministerial salaries is not new, and particular aspects of this order are worthy of consideration. It is perhaps remarkable that since 1975 there have been 30 previous examples of alterations to ministerial salaries. My noble friend the Minister has made it clear that to some extent this is, on this occasion, gesture politics. It is about signalling to those in the public sector that Ministers are also bearing some of the brunt of the financial situation that the country is in. It has to be said, however, that the savings to which my noble friend has referred are rather minuscule. It might reasonably be inquired as to whether such savings might have been better made by reducing the total number of Ministers, which seems inexorably to have increased over the past 100 years—notwithstanding the devolution of power and the apparent commitment of the present Government to decentralise power further. There has been no shedding of Ministers to accommodate that philosophy.

I wonder whether the setting of an example by Ministers will be regarded by those in the public sector as amounting to anything more than a row of beans, in the light of the fact that large cuts in the public sector are being made among civil servants and public authorities around the country. If savings of public funding can be made at that level, some thought ought to have been given to saving at the top in Whitehall. The question arises of why the Government have taken an inflexible view to this order, which does not match or mirror what has happened in the past? Circumstances change, and it is to be hoped that they will change within the lifetime of this Parliament. To set these proposals in stone, as apparently the Prime Minister has decided to do, does not seem to be a pragmatic approach to ministerial pay.

From the point of view of clarification, I should be interested to know what the true position is concerning the changes in the pension arrangements. My understanding is that this is not intended to be retrospective in its effect and that the raising of the contributions will take effect only when the order comes into force. I should be most grateful for my noble friend’s comments on some of these points.

--- Later in debate ---

[Baroness Royall of Blaisdon]

My Lords, I declare an interest as being in receipt of a ministerial or other salary. I have been for some time and I am very grateful to the Government.

I am also very grateful to the Minister for pointing out that the previous Government also had a policy of not increasing salaries. Of course, I am attracted—I would be, wouldn’t I?—by the idea from the noble Lord, Lord Maclennan, that, rather than reduce ministerial salaries, there should be a reduction in Ministers. I jest but I believe now, as I did when we were in government, that there are too many Ministers. I do not think that that should have an impact on salaries but I firmly believe that there are too many Ministers—in the other place, of course—although Ministers work phenomenally hard.

I am not sure what the noble Earl was getting at but I think that it is wrong in principle for there to be unpaid Ministers. A Minister is a Minister; they do a fantastic job and should be paid accordingly.

Of course, when everyone in the whole country is having to tighten their belts, it is right that those in receipt of ministerial salaries should do likewise. Resources are limited and we have to take our share of the pain. Although I would strenuously argue that the cuts to our public services in general are too deep and being made too fast, I do not think that that is the case in relation to ministerial salaries. The Prime Minister was correct when he acted as a sort of catalyst for this legislation.

[Baroness Verma]

Again, I start by thanking my noble friends and the noble Baroness for their broadly warm welcome for the order and for their questions about ministerial salaries. I should like to start by responding to the point made by my noble friend Lord Maclennan—whose name, I hope, I have got right this time—about it being gesture politics. The fact is that we need to show that we in government are prepared to take some of the bites that are going to affect every single citizen because of the financial difficulties that this country is in. I want to resist saying that it is gesture politics: we have a duty to show that we are willing to take some of the pain. It may not look as though it is a lot of the pain but those of us who work incredibly hard feel that it is only right that we all share in it, and the previous Government did the same.

I should also like to thank my noble friend for his kind words. Ministers in both this House and another place work very hard and often with gruelling hours on subjects that we have to get our minds around very quickly, as is the case today. This is not my normal remit—and I think that is true of the noble Baroness, too.

There are 13 unpaid Ministers in government, three in the Commons and 10 in the Lords. The former Administration had the same number of unpaid Ministers before leaving office, with nine from the Commons and four from the Lords. The Government believe that the number of Ministers should be dictated by need, and on this basis have carefully considered all the appointments that they have made. Because of the nature of the coalition Government and the challenge of delivering the programme for government, the Prime Minister did not think that it was possible to reduce significantly the number of Ministers at this time. However, the Government have reduced the number of Ministers who regularly attend meetings of the Cabinet. I hope that has answered my noble friend’s question.

[The Earl of Courtown]

Perhaps I did not explain well enough the point that I was really making. The Minister said that at the other end there are three Ministers not in receipt of a salary, and 10 noble friends at this end. At least down the other end they receive a parliamentary salary.

[Baroness Verma]

My Lords, I enter into territory that is way over my pay grade, and the safest option for me is now for me to retreat into a safer area. I shall respond to the question about pension contributions. It is correct that these measures are not retrospective; salaries in the amendment order come into effect when the order comes into force. On the question of unpaid Ministers who might be in receipt of pensions—no, it deals only with salaried Ministers. Unpaid Ministers are not entitled to a pension under the parliamentary pension scheme.

I am not getting much more inspiration from behind me on any further questions, so I undertake to write to noble Lords on any questions that have not been answered.

Motion agreed.