Grenfell Tower Inquiry: Phase 1 Report

Debate between Lord Adonis and Viscount Younger of Leckie

Thursday 31st October 2019 Lords Chamber

[The Parliamentary Under-Secretary of State, Ministry of Housing, Communities and Local Government (Viscount Younger of Leckie) (Con)]

My Lords, I am grateful to my predecessor in my role, my noble friend Lord Bourne, for initiating this debate on the Grenfell Tower inquiry phase 1 report. I, and the whole House, know that he understands these matters so well, and I am now honoured to respond.

It is fitting that my noble friend Lady Sanderson of Welton made her heartfelt maiden speech in this House today. I pay tribute to her for her tireless work in the aftermath of the tragedy, building a strong relationship with the Grenfell community on behalf of the previous Prime Minister and ensuring that those impacted received the critical support that they needed. I also thank the noble Lord, Lord Woolley of Woodford, a tireless campaigner for social and racial equality, and the noble Lord, Lord Hendy, a renowned QC in the field of industrial relations and employment law, for their maiden speeches in this House, which were both excellent and had some serious messages. We will no doubt hear much more from them in future, and from my noble friend, as they make their mark in this Chamber.

Over two years have passed since the tragedy that shook the nation, but the 72 people who died following those horrific events will for ever remain in our thoughts and prayers. All those who lost loved ones and their homes deserve to know why the Grenfell Tower fire happened. Yesterday’s publication of the report was an important step in this regard. I take this opportunity to thank Sir Martin Moore-Bick and the inquiry team for their work, both in producing this report and in preparing for the next phase of hearings. It provides some comfort that, as we have heard today, the report is widely regarded as thorough, informative and, as the noble Lord, Lord Stunell, said, forensic.

It was important for the Government to establish this as a full independent public inquiry. It has been able to establish, first, what happened on the night of the fire; secondly, how emergency services responded; and, thirdly, how the building was so dangerously exposed to the risk of fire. We were clear that the inquiry should leave no stone unturned, no matter how uncomfortable the facts. The people of the Grenfell community must be allowed to learn the truth behind that appalling loss of life and how it was allowed to happen. They deserve nothing less.

My noble friend Lord Bourne and the noble Lord, Lord Stunell, asked about criminal charges and how many people have been interviewed under caution. It is not for the Government to comment on an ongoing criminal investigation, but I can say that the Metropolitan Police continues to investigate the causes of this terrible tragedy, needing to take into account the work of the inquiry, including this report and the next.

I take a moment to commend the bereaved, the survivors and everyone affected by this tragedy. We will never truly understand all that the victims of this tragedy went through. My noble friend Lady Sanderson mentioned the essential need for change. She is right. Let there be no doubt: our commitment to ensure change is unwavering.

Noble Lords will know that the phase 1 report is focused on what happened that fateful night, and particularly on the response of the emergency services. Let me be clear in my message today, particularly to the noble Lord, Lord Kennedy, and my noble friend Lord Porter. I also pay tribute to the heroism and bravery of those who responded to the fire: running towards danger, some more than once, entering a burning building and saving lives that night.

Sadly, heroism alone could not counter a fire of this nature, and Sir Martin outlines several significant shortcomings in the London Fire Brigade’s response. Clearly, there are lessons for our fire services from this tragedy and from this report. Crucially, he identifies the failure to change the “stay put” advice once it became clear that it was no longer the correct strategy. However, as Sir Martin said in the report:

“Effective compartmentation is likely to remain at the heart of fire safety strategy and will probably continue to provide a safe basis for responding to the vast majority of fires in high-rise buildings.”


The Government already took action on this issue following the Lakanal House fire, in particular by working with the sector to review national guidance on high-rise firefighting, including the “stay put” policy and evacuation. This was carried out both before and after the coroner’s findings in 2013.

As my right honourable friend the Secretary of State highlighted in the other place, the Government, along with the National Fire Chiefs Council and others, will continue to review the “stay put” advice to ensure that lessons are learned. We have already completed a call for evidence and published a summary of the responses, which showed consensus that “stay put” was the right approach but for buildings correctly designed, built and maintained.

The noble Lord, Lord Harris, and the noble Baroness, Lady Pinnock, raised some important points about communications—the noble Lord particularly asked about mobile telephones. This must indeed be part of our work with the National Fire Chiefs Council. I will ensure that that issue is raised, if it is not already part of its considerations. I acknowledge those important points.

I am also acutely aware that the report concludes there were significant failings in both the construction and design of the building. I want to be clear today that we plan to accept in principle all the recommendations that Sir Martin makes for central government.

My noble friend Lord Bourne and the noble Lord, Lord Stunell, asked about legislation. We will work with stakeholders to deliver that. That will include proposing legislation ahead of the Hackitt reforms, if that would mean that the recommendations can be implemented sooner. Our task must now be to consider how we can best implement the recommendations quickly and build on the work we have already done to ensure that people are safe in their homes.

To answer my noble friend Lord Porter’s question about the decision for phase 1 to focus on the events of the night, I must stress that the order of the independent reports is very much a matter for the chairman. I can only point to Sir Martin’s statement, in which he said that,

“there is an urgent need to find out what aspects of the building’s design and construction”,

led to the disaster, and to,

“understand the chain of events”,

of the night,

“in some detail”—

and, as such, find out what steps must be taken so that those who live in other high-rise buildings are safe.

The noble Lords, Lord Adonis and Lord Stunell, and the noble Baroness, Lady Kidron, made points about timings and urgency. That certainly chimes with me. The Government did not wait for the publication of this report, or the hearings to begin on the phase 2 inquiry, to press ahead with strengthening building and fire safety measures.

My noble friend Lord Bourne asked about high-rise buildings. The department has already consulted on proposals to apply higher standards to new high-rise residential buildings, including on sprinklers, signage and communication systems, which are now also a recommendation of the inquiry.

My noble friend also asked about the height at which buildings are considered to be high-rise. Although the consultation proposes a height of 18 metres, the Secretary of State has been clear that the Government will follow the evidence, should the height threshold need to be changed.

[Lord Adonis]

The Minister mentioned my remarks and those of the noble Baroness, Lady Kidron. The House of Commons committee recommended:

“The Government should set a realistic, but short, deadline by which time all buildings with any form of dangerous cladding should be fully remediated”.


Can the Minister tell us what date the Government intend to set?

[Viscount Younger of Leckie]

There is a lot of detail in what I want to say; I will come on to cladding. I also point out to the noble Lord that much of what we are doing must be regarded as part of a holistic approach so, on timetables, there may not be one particular date by which everything is done. It is a very complex process.

Soon after the fire, in July 2017, the Government commissioned Dame Judith Hackitt to conduct a review of building and fire safety. Noble Lords will recall that we have already agreed to take forward the recommendations of Dame Judith’s report in full as the basis for regulatory reforms in building and fire safety. Our comprehensive building safety programme, announced in the recent Queen’s Speech in the form of a Bill, will bring about a radically new building and fire safety system by: establishing a new regulatory framework; creating greater accountability and responsibility; issuing sanctions to tackle irresponsible behaviour by those responsible for buildings; and giving residents a stronger voice.

The right reverend Prelate the Bishop of Durham referred to social housing. It is important that we improve quality and quantity, with a beneficial knock-on effect on health. We have committed to taking forward the social housing White Paper at pace. It will set out proposals for the standards that we set for social homes. We remain committed to increasing the supply of social housing, committing more than £9 billion as part of our affordable homes programme and delivering more than 250,000 homes by 2022.

Of course, we have had to take urgent steps in the interim to ensure that people are safe today. Much of this work has been around cladding. First, we have banned the use of combustible materials on high-rise homes and identified all buildings over 18 metres with unsafe ACM cladding.

The noble Baroness, Lady Finlay, asked whether gas should no longer be used in high-rise buildings. It is an interesting point. I cannot answer her question easily today, but I can say that the Government have signalled their intention to prohibit the use of fossil fuels such as gas in new homes by 2025 for reasons of environmental protection.

Secondly, we have established a comprehensive programme to oversee the remediation of unsafe ACM cladding, providing £600 million of funding to support this work. My noble friend Lord Young and the noble Lord, Lord Adonis, asked about the funding; it is beyond the £200 million that the Government are putting forward for private residential high-rise remediation. Both noble Lords asked what would happen if the costs go beyond this. I can confirm that the money set aside is an estimate and that plans are in place, should it become necessary, to revisit that estimate.

I am pleased that all social sector residential buildings with ACM cladding either have had the cladding removed, are undergoing work to remove it or, at the very least, have had such work scheduled. We have pushed on every front to ensure that the work is completed quickly, and today only a handful of building owners have yet to confirm their intention to remediate the ACM cladding on their buildings.

We have now completed remediation work on 61 buildings in the social sector, have begun work on a further 81 buildings and are working hard to ensure that remediation is completed on the remaining 16 buildings as soon as possible. My noble friend Lord Young asked about progress on this. As of October, only 10 of the 89 private sector buildings in scope of the fund have yet to engage. We will continue to put pressure on developers and building owners to get on with remediation. In response to a number of questions he raised, I will shortly provide a letter detailing the take-up of the private sector remediation fund and set out a fuller picture of the remediation figures, as well as the responsibilities of leaseholders and freeholders. As the Secretary of State for Housing, Communities and Local Government made clear yesterday in the other place, there will be consequences for any building owners not making clear progress, including naming and shaming and enforcement action.

Thirdly, interim measures are in place in high-rise buildings with ACM cladding to ensure that all residents remain safe. We are working at pace to review different parts of the building safety regime. We have now completed testing on non-ACM cladding panels and are analysing the results, which will be released in the coming months.

We have recently launched a consultation on the use of sprinklers in all new residential buildings over 18 metres—a point that was raised in the debate. It also seeks responses on evacuation alert systems and improved signage, which was raised by my noble friend Lord Bourne and others. The consultation will close in November. My noble friend Lord Bourne also asked about fire doors. On the advice of the independent expert panel, the Government conducted an investigation and testing programme of glass reinforced plastic composite fire doors, leading to their withdrawal from the market. Following this, the Association of Composite Door Manufacturers has committed to deliver an industry- led remediation plan, which has our full support.

The noble Lord, Lord Shipley, asked about product safety, which was part of my old brief when I worked in the former BIS, now BEIS. In May 2018, an independent investigation into the Whirlpool fridge-freezer involved in Grenfell Tower confirmed that there was no need for further action, and BEIS supports its conclusion that no product recall other than corrective action is required. People who own that particular model can continue to use it as normal. The noble Lord also raised a point about electrical safety checks. Existing legislation already requires landlords to keep electrical installations in safe working order. However, the Government have reviewed the issue and have now committed to introducing mandatory five-yearly electrical safety inspections. I am confident that these steps will help us boost safety and transform the way we build in the future.

We have also been working across government to co-ordinate action on fire safety. First, the newly established fire protection board provides a bridge across the Home Office, my department, MHCLG, local government authorities and the National Fire Chiefs Council. The board will provide greater assurance that fire safety risks in high-rise residential buildings with ACM cladding are being identified, managed and properly recorded. It will oversee an increase in inspections and audits of high-risk buildings, and we have already signalled our commitment to getting this right by pledging £10 million a year. As my right honourable friend the Secretary of State said in September in the other place, he expects,

“all high-rise buildings to have been inspected or assured by the time the new building safety regime is in place, or no later than 2021”.—[Official Report, Commons, 5/9/19; col. 373.]

Secondly, the Home Office has run a call for evidence, alongside MHCLG’s Building a Safer Future consultation, on the fire safety order. This consultation seeks to ensure that the order remains effective and works as a whole with the new regulatory regime and other existing legislation. The call for evidence closed on 31 July and we are now analysing the responses.

Thirdly, the Home Office has established an independent Fire Standards Board, which should not be confused with the FPB, and has provided £1.5 million of funding to support its work. The board is supported by the National Fire Chiefs Council’s Central Programme Office to support continuous improvement of fire and rescue services. The board will be responsible for the development of a high-quality useable framework of professional standards, aligned to the work of the National Fire Chiefs Council and its national initiatives. It is clear from the report’s findings that this Government need to be playing an active role in supporting the sector through the fire reform programme.

In July 2017, the then Home Secretary expanded the remit of HMIC to establish Her Majesty’s Inspectorate of Constabulary and Fire & Rescue Services. This move sought to highlight areas for continuous improvement of good practice for fire and rescue services and to increase transparency for the communities they serve. The inspectorate has now completed inspections of all 45 FRSs in England and has published reports on 30 of them. We expect reports on the remaining 15 to be published shortly, alongside the inspectorate’s first “state of fire” reports.

Neighbourhood Services: Government Support

Debate between Lord Adonis and Viscount Younger of Leckie

Thursday 24th October 2019 Lords Chamber

[The Parliamentary Under-Secretary of State, Ministry of Housing, Communities and Local Government and Wales Office (Viscount Younger of Leckie) (Con)]

My Lords, I thank the noble Lord, Lord Greaves, for securing this debate and all noble Lords for their remarks. This is my first debate in my new role, although I have covered the department in the past as a Whip. I am, however, only too aware of the experience of the noble Lord in local government. If there is a verb “to Pendle”, the noble Lord could be described as a “much-Pendled” Peer. I am also aware of the experience and knowledge of the noble Lord, Lord Kennedy, in this sector and the length of time that he has spent in his role on the Front Bench.

All types of local authorities play a central role in supporting communities, including the most vulnerable, across the country, and district councils are at the heart of delivering many of the key services that matter to communities. We have heard a lot about that today. We are grateful for the transformative changes they have championed and for their continued commitment to providing the day-to-day services that their residents rely on. The Government make it a priority to visit councils—including, I understand, Pendle this month—in order to see the issues and opportunities at first hand.

I want to be clear that it is not only upper-tier authorities that are a priority for this Government: we want all authorities, regardless of size, to know that their concerns are being heard. However, while we seek to understand and address the daily issues faced by councils, it is right that we step back and ask ourselves some strategic questions. What is the best model to serve local needs, especially for the most vulnerable groups? How do different authorities best work with their communities to meet the needs and priorities of local areas, which will no doubt differ across the country? The noble Lord, Lord Goddard, alluded to this in his remarks. What is the right balance between state intervention and support and the power of local democracy for local decision-making and authorities?

These are big questions and we must raise them. Indeed, it is not only me asking questions about the role of local government; the sector itself, including the Local Government Association, is constantly challenging itself to do better for all the people it serves. As my noble friend Lady Redfern said, there have been tough times. There continue to be challenging issues to address, but authorities are being innovative.

Social care services are essential to protect our most vulnerable. This is a priority for this Government. The Prime Minister has been entirely clear on this matter and I am keen today to dedicate some time to how we are supporting district councils and the universal services which neighbourhoods rely on. I will also be reflecting later on the important issues of empowerment and community—which I feel strongly about and which was a major theme in the speech of the noble Lord, Lord Greaves.

I turn first to the spending round. This Government understand their responsibility to make sure that local authorities are adequately funded. I was pleased—as I am sure were all noble Lords—with the positive outcome of the spending round. Core spending power, the measurement we use for local government funding, is expected to grow by £2.9 billion for England, which is an estimated 4.3% real-terms rise. I know that the Secretary of State was delighted to have secured the largest year-on-year increase in spending power since 2010—a package which will allow councils to,

“provide more support for areas such as adult and children’s social care and make sure that we are supporting the most vulnerable people in our local communities”.

Beyond social care, we are protecting vital front-line services by increasing the biggest elements of core settlement funding in line with inflation, and we are consulting on a 2% core council tax principle for all councils next year. I take account of the remarks made by the noble Lord, Lord Greaves, on that issue. This significant result is a testament to what happens when we work together with the sector. I am grateful to councils up and down the country which fed into our preparations. The LGA has said that we provided local authorities with,

“much of the funding certainty and stability they need for next year”.

I shall address the point raised by the noble Lords, Lord Greaves and Lord Kennedy, on the new homes bonus. The Government have previously noted that 2019-20 was the final year of new homes bonus funding as agreed in the spending review 2015, and that any funding beyond 2019-20 would need to be agreed as part of the next spending review. I understand that the new homes bonus represents an important part of district council budgets and can form a large percentage of core spending power. We have listened to requests from local authorities to honour previously announced legacy payments totalling £624 million. As part of the roll-forward settlement, the Government are minded to make a new round of allocations for 2020-21, and I would welcome views on our proposals.

The noble Lord, Lord Adonis, raised a point on the Public Works Loan Board. I am not particularly familiar with it, but I hope I can reassure him that the Treasury recently increased the margin that applies to new loans from the PWLB by 100 basis points on top of the usual lending terms. The Government also successfully legislated to increase the lending limit of the PWLB from £85 billion to £95 billion to reflect their commitment to ensuring that local authorities can continue to access the financing that they need to support their capital plans. Since this change took effect, my department has been engaging with the sector to understand the potential impact that it could have on its capital plans and strategies, especially with regard to housing and regeneration.

[Lord Adonis]

The Minister has not addressed my point about the substantial increase in the interest rate. I am not expecting him to be able to do so across the House, but will he write to me about it? Would he be prepared to meet me and other noble Lords to discuss this issue, which I understand is central to the ability of local authorities to borrow to build new housing?

[Viscount Younger of Leckie]

I was coming on to address some of the other points on the subject of housing. I will come to the noble Lord’s point in a moment. He raised a number of questions and I want to be sure that he receives full answers.

The Government remain committed to business rates retention, which is yielding strong results, including for district councils. We are aiming to increase the level of retention from 50% to 75% from 2021 to give councils greater flexibility over their funding and to reward authorities for generating economic growth.

I now move on to the important issue of relative needs and resources. The noble Lord, Lord Goddard, warned against an easy formula of salami-slicing as opposed to better targeting. That is a very good point. The Government understand that demographic pressures have affected local areas in different ways, as has the cost of providing particular services. Councils told us that they wanted a simpler, up-to-date funding formula based on the best available evidence, and that is exactly what we are working to deliver. We are working closely with local government representatives to consider the drivers of local authorities’ costs, the resources available to them to fund services and how to account for them in a way that draws a more transparent and understandable link between local circumstances and local authority funding. This is a thorough, evidence-based review of the costs faced by all authorities. We have confirmed that we now aim to implement the review in 2021-22 so that the sector has the certainty that it needs to plan for 2020-21. It is important that we get direct feedback from local authorities, and we are grateful for the trusted links that we have across the sector. The more that we can consult, the more likely it is that we can get it right.

In looking ahead to the upcoming local government finance settlement, we have set out our proposals in a technical consultation which will close on 31 October. It sets out the package for local government in more detail and responds to the calls from the sector for certainty and stability. We will listen closely to the views and contributions from representatives of local government and aim to publish a response in the provisional local government finance settlement in early December.

I shall now address a number of questions that were raised. The noble Lord, Lord Greaves, mentioned the critical services on which all communities rely. He mentioned street cleaning, recycling, community services, libraries, housing and many others. I, too, recognise the critical role that all local authorities play in delivering these services. The noble Baroness, Lady Pinnock, is right that parish councils play an important part in local services. I reassure her that we want them to grow and expand and that we are doing our best in our communities brief to do that. Councils have managed reductions in funding and people’s satisfaction with waste collection and libraries has largely held up. Satisfaction levels are high—but that does not mean that we are complacent.

The noble Lord, Lord Greaves, spoke about provision of park and community services. We continue to support parks and community spaces. In fact, I am looking at this area particularly strongly at the moment to see what more can be done. In 2018-19, we invested £15 million in an innovative parks programme, and we will launch a new £1.35 million programme to support the next round of pocket parks very soon. Working with our partner, Pub is the Hub, we have funded almost 200 pub diversification projects, introducing new services that are of value to the community. The noble Lord spoke about waste management and climate change. He was right to raise these important global issues. Like the whole of government, my department supports the objectives of the Environment Bill. Local authorities, as local leaders, experts, place shapers and convenors of local communities, are empowered to play a fundamental role in delivering the environmental action needed in their areas.

My noble friend Lady Redfern, the noble Lord, Lord Adonis, and the noble Baroness, Lady Pinnock, referred to libraries. I thank them for that. I have spoken on libraries in the past. I recognise the work of staff and volunteers. I know that the Department for Digital, Culture, Media and Sport is working closely with the noble Lord, Lord Bird, to look at the future of libraries in the 21st century. I understand that it is called the libraries task force. Many innovative approaches are being taken across the country, for example in Warrington, to bring services together in communities. My noble friend Lady Redfern and the noble Lord, Lord Kennedy, spoke about libraries having to innovate, and they are right.

Councils across the country are transforming not just how they work but their role in leading local places, strengthening local infrastructure and reinventing localities. Many areas are achieving fantastic results, such as district councils in former coalfield areas collaborating on First Art.

The noble Lords, Lord Adonis and Lord Kennedy, spoke about social housing. I shall make a few remarks about housing; there is a lot more I could say, but I am not sure I shall have time. I am delighted to accept the invitation to visit. I think there were probably two visits, one with the noble Lord, Lord Kennedy, and one with the noble Lord, Lord Adonis. We have announced a comprehensive package of reform, which will support our ambition to raise housing supply by 300,000 per year by the mid-2020s. We are driving the delivery of affordable housing through measures such as the £9 billion affordable homes programme, abolishing HRA borrowing caps and setting a long-term rent deal for social landlords from 2020. This Government have seen housing supply increase by 1.3 million since 2010. We have also backed schemes such as Help to Buy and Right to Buy, which have supported more than 566,000 households to purchase a home.

The noble Lord, Lord Adonis, raised a number of questions. I shall look at Hansard to make sure that his questions receive detailed answers.

I shall pick up on what the noble Earl, Lord Listowel, said about homelessness. It is an issue that we take incredibly seriously in the department under my honourable friend Luke Hall. I thank the noble Earl for his contribution, and I was saddened by the stories he shared with us. He is right that funding is needed alongside community support. That is why, alongside the additional £2.9 billion for local government, this Government are committing over £1.2 billion to tackle homelessness and rough sleeping, and a flexible homelessness support grant of £670 million. The Chancellor also announced an increase in the level of funding for public health grant so that local authorities can continue to invest in prevention, which, as I am sure the noble Earl agrees, is most important.

I now turn to the communities section of my remarks —an area I regard as very important. The Government are committed to continuing to build strong communities where people feel proud of their neighbourhoods and are actively involved in local decision-making. As my noble friend Lady Redfern said, local government, including the district councils that provide important neighbourhood services, is a vital partner in supporting communities across the country. We also want communities themselves to take an active role in changing their area for the better, because there is much power and potential in our communities. Across the country we see examples of local people coming together and leading change, from community clean-ups and community groups running valued front-line services, to volunteers in libraries, mentioned by my noble friend Lady Redfern. The Government want to continue to unlock that potential and help create an environment where all our communities feel empowered.

That mission is at the heart of the Government’s approach to communities, and, in case there was any doubt, I can say that I am involving myself with great enthusiasm in this area. As the noble Lords, Lord Goddard and Lord Kennedy, said, it is a question of collaboration and integral working to achieve more. As we have discovered, when organisations work together, they are better placed to apply for specific new funding.

This summer my department published a new communities framework, setting out a vision of how we can strengthen our communities with four areas of focus. The first is building trust and local pride. High levels of trust and social capital are a crucial building block for a thriving integrated community and for our nation’s well-being and economic prosperity. We want people to feel a sense of pride and connectedness in where they live and to build strong local relationships. That is why my department is supporting work to overcome barriers to integration and help bring people together. That work includes the Near Neighbours scheme, which has supported over 1,600 local community projects, bringing together people from different backgrounds to tackle local issues; programmes to help people improve their English skills, which I believe was mentioned this afternoon, so that they can become part of community life—some people who have been in this country for decades have not addressed that, so we have high hopes—and the Integration Area programme, which is working with five local councils to overcome integration challenges and share their learning, with an additional £10 million announced for the second wave of areas in 2020.

Secondly, I want to focus on active citizenship and giving communities control over local decision-making. This Government are focused on pushing power down and enabling decisions that affect local people to be made at the local level. We will continue to support the community rights and powers established under the Localism Act, such as neighbourhood planning, which enables communities to develop a shared vision for their area for the future.

The third area is shared community spaces. In our busy world, it is becoming increasingly challenging to connect with one another, but shared spaces such as our parks, which were referred to this afternoon, community centres, pubs and libraries provide the vital community infrastructure that brings people together. We have provided additional funding for our parks, which I mentioned earlier, with a new £1.35 million programme, working with our partner Pub is the Hub, which I also mentioned earlier.

The fourth area is shared economic prosperity, with no community left behind. We know that some communities have not shared in the wider economic growth experienced in the UK. The Government are committed to building strong communities that help create a thriving and inclusive economy, and to ensuring that prosperity is shared.

The noble Lord, Lord Greaves, spoke about towns and high streets. He will know about this but we have committed to a £3.6 billion towns fund, and local people will have a say in how that money is spent. He spoke about competition but it is right that there is a competitive approach. Towns are being invited to approach us and to put in, in effect, business plans setting out how they can reinvigorate their high streets. We want to work closely with them to make sure that funding is directed to the right place. I hope he will forgive me when I say that, in this area, I think competition is a good thing.

Through our support for those four areas of work—trust and local pride, active citizenship, community spaces and shared prosperity—the Government will continue to work to empower communities.

I recently visited Walsall, which is one of our integration areas, and met several community groups and organisations doing amazing work to support local people. I met groups running English classes to enable people to increase their confidence, make the most of the opportunities available, and play a full and active role in the local community. I also heard about the Places of Welcome scheme, which tackles loneliness and social isolation by providing places where people can go simply to see a friendly face or have a cup of tea and connect with others. This is an example of what can be achieved when local government works in partnership with local actors to build stronger and more integrated communities. It is one thing that I will definitely continue to press ahead with.

In conclusion, I assure noble Lords that this Government are committed to providing local government with the funding it needs and to ensuring that the funding is both flexible and proportionate to an area’s demographic needs. The noble Earl, Lord Listowel, spoke about homelessness and I want to write to him on that specific point.

Northern Ireland (Executive Formation) Bill

Debate between Lord Adonis and Viscount Younger of Leckie

Committee: 1st sitting (Hansard): House of Lords
Monday 15th July 2019 Lords Chamber

[Viscount Younger of Leckie]

My Lords, the noble Lord, Lord Adonis, has raised important issues and I am grateful to him for doing so. I appreciate having again a short debate with him on higher education matters, here on a very specific issue. I recall from previous debates that the noble Lord has visited Northern Ireland, so it acts as a bit of a link when he raises these matters today.

Higher education, and indeed education services as a whole in Northern Ireland, have been raised in various debates in the House over the past two years. It is clear that education is an important area that needs strategic decisions on future reform. That is vital to ensuring that all children and young people in Northern Ireland have the opportunity to fulfil their full potential. On the issue of establishing a university in Derry, I am aware that the city and the wider north-west has a pool of talent to be nurtured, and I know of the excellent University of Ulster Magee campus in Derry city centre. I am also aware, as I believe are a number of noble Lords, of plans potentially to establish a medical school in Derry, as mentioned today. I am keeping a close eye on the progress of this proposal in the context of delivering the Government’s commitment to a Derry and Strabane city deal. However, while I know that the noble Lord, Lord Adonis, knows this, measures to improve higher education, such as to invest in a new medical school or university anywhere in Northern Ireland, are devolved matters. It is this Government’s fervent hope that Northern Ireland’s political leaders can see their way to agreeing to restore the devolved institutions so that locally accountable leaders can take the strategic policy decisions needed to make progress. The noble Lord, Lord Murphy, has spoken eloquently on these points. Perhaps I may reassure the Committee that the Secretary of State is making every effort to ensure that the ongoing talks process is a success.

The noble Lord, Lord Adonis, made a point about there being not enough university places in Northern Ireland, a point of which I think the Committee has taken full note. I am grateful for the views put forward about the situation on the ground by the noble Lord, Lord Empey, and the noble Baroness, Lady O’Loan. That has been helpful to the Committee. Higher education provision is crucial to ensuring that we have the skills for the future and opportunities for our young people. They should have the choice to study at universities across to UK.

As the noble Lord, Lord Murphy, pointed out, there are two universities in Northern Ireland: Queen’s and Ulster. Ulster University has several campuses, including the Magee campus where a range of courses are offered, including in professions such as law and accountancy. As mentioned, Queen’s University runs a medical school, and discussions on a medical school at Magee are ongoing.

Decisions on places are a matter for the government department in Northern Ireland. As this is a devolved matter, I will not purport to be able to significantly enlighten the Committee on the substance of the important issue that the noble Lord, Lord Adonis, has raised. But in light of its importance—here I am for once on the same side of the fence as the noble Lord, Lord Adonis—I am happy to accept the amendment and to commit to reporting on progress on the issue.

[Lord Adonis]

My Lords, that is an extremely constructive response on the part of the Minister, and I welcome it. It is a significant step forward and gives us the opportunity, on the basis of a good, factual account of the situation, to debate the future in autumn in the event that there is not an Assembly and Executive. If there is, that report will no doubt be useful for them too. However, may I just clarify a point of some significance? In the event that there is not an Executive or Assembly in the autumn, under this Bill and the continuation of these powers do the Government have the power to proceed with the establishment of the medical campus in Derry on their own account?

[Viscount Younger of Leckie]

My understanding is that they do not, but I will write to the noble Lord to clarify that matter.

[Lord Adonis]

I would be extremely grateful if the Minister could do that. In the light of the assurance he has given, I do not feel the need to prolong the debate any further. I beg to move.

Universities: Financial Sustainability

Debate between Lord Adonis and Viscount Younger of Leckie

Monday 11th February 2019 Lords Chamber

[Viscount Younger of Leckie]

There are a lot of uncertainties around, and the noble Lord makes an extremely good point. One of the most important points coming through, perhaps as a result of the reforms that we are making, is the opportunity for current and new providers to market themselves effectively. There are a lot of issues connected to this, including the teaching excellence framework. As we know, we are beginning to look more at how subjects can be assessed, so that students from abroad can see with much greater transparency and clarity what courses are available and what their ratings are like, and hopefully choose Britain rather than other countries to come to and study.

[Lord Adonis]

My Lords, two very specific questions were asked by my noble friend on the Front Bench which the noble Viscount did not reply to. When precisely will the Augar report be published, and can the noble Viscount give an undertaking to the House that its recommendations will not diminish funding for our universities?

[Viscount Younger of Leckie]

I answered the question by saying that I cannot give a precise date for when the Augar review will report, but I have said consistently that it will do so very shortly, and here we are early in 2019. I am not going to be drawn into speculating on what the Augar review will say; we will have to wait. When the report is published, the Government will want to make a full response.

Northern Ireland (Executive Formation and Exercise of Functions) Bill

Debate between Lord Adonis and Viscount Younger of Leckie

Committee: 1st sitting (Hansard): House of Lords
Tuesday 30th October 2018 Lords Chamber

[Viscount Younger of Leckie]

My Lords, for clarity, we should allow the noble Lord, Lord Adonis, to finish his speech. There have been a number of interventions and I am sure other Peers will have a chance to intervene afterwards.

[Lord Adonis]

My Lords, my response to the noble Lord, Lord Alton, is that of course the devolved institutions are not even sitting in Northern Ireland at the moment, so we face two issues in this respect. The first is that the Northern Ireland Assembly should be given an opportunity to address this matter. Clearly, it does not have that opportunity at the moment because it is not sitting. The Bill seeks to ensure that the Northern Ireland Assembly does sit and is sustaining an Executive by the end of next March. The second point concerns the situation if the Assembly is not, even when it is sitting, able to address this issue, I do not believe it is consistent with the poll that the noble Lord has just cited that the people of Northern Ireland would regard it as satisfactory for the Assembly in Northern Ireland not to address this issue of fundamental rights. One way or another, in a short time, this issue must be resolved. It will not be satisfactory either for the Assembly in Northern Ireland to fail to address this issue or for this Parliament to allow fundamental breaches of civil rights to take place in a substantial part of the United Kingdom. I beg to move.

Higher Education and Research Act 2017 (Cooperation and Information Sharing) Regulations 2018

Debate between Lord Adonis and Viscount Younger of Leckie

Tuesday 24th July 2018 Lords Chamber

[Viscount Younger of Leckie]

They have gone through the scrutiny procedure, as mentioned.

Let me continue. These regulations and the enabling primary legislation provide greater protection, scrutiny and control over information sharing than before. The regulations replicate, and in some cases improve on, the arrangements that HEFCE, OFFA and the DfE had in place for sharing information with other bodies. As HEFCE’s and OFFA’s enabling legislation did not place controls around co-operation and information sharing in the same way as the Higher Education and Research Act 2017 does for the OfS, the legal framework around information sharing has actually been strengthened. The parliamentary process for the regulations, including this very debate, also means that there is more scrutiny and oversight of the information sharing than before.

I should now like to address the concerns raised by the noble Lord, Lord Watson, in turn, starting with his question about the consultation with UCAS and universities, and, in particular, students’ concerns regarding access to their data. As the noble Lord may know, officials and Ministers have regular meetings and interactions with universities, and they work closely with UCAS. On student concerns regarding access to their data, I reiterate that personal data would be shared only if there were serious concerns and if it were necessary to share that data.

[Lord Adonis]

The noble Viscount always uses these weasel words. He says, “if it was necessary to share that data”. What does that mean? In what circumstances would it be necessary to share that data?

[Viscount Younger of Leckie]

I think that it would be wise if I continued with my remarks and then, if there are further concerns, I shall be happy to listen.

First, the noble Lord, Lord Watson, referred to the “single commercial provider” within the regulations, which is Pearson Education Ltd. To reassure him and the noble Baroness, Lady Garden, I emphasise that Pearson is included in these regulations solely in its capacity as the awarding body for HND and HNC qualifications. This is in the same way as other awarding bodies have been included in the regulations—namely, the Scottish Qualifications Authority, Gateway Qualifications Company Ltd and the Vocational Training Charitable Trust.

The OfS would share with Pearson only information that related to the provision of HNDs and HNCs. For example, as happens now between the DfE and Pearson, the OfS might wish to alert Pearson to an issue around the quality of this provision or suspicions of wrongdoing relating to HND or HNC provision. This sharing would be done in the interests of students and the taxpayer. Any data sharing would be underpinned by a data-sharing agreement stating that Pearson could not use that data for any other purposes. This is just one of a range of strong safeguards and protections that will be in place, as I will set out shortly.

The noble Lord, Lord Watson, raised a question about Sir Michael Barber and his potential conflict of interest. There are already information-sharing agreements between the DfE and Pearson. Sir Michael Barber no longer works for Pearson and, in any case, he was not involved in the drafting of the regulations. Therefore, I reassure the noble Lord that there really is no conflict of interest. In addition, if it emerged in the future that the OfS wished to share information or co-operate with any other organisation not currently included in these regulations, and this was to fulfil a function of that other body, I make it clear that this would be possible only by amending the regulations.

The noble Lord, Lord Watson, and my noble friend Lord Lucas asked why Pearson is included and whether awarding the HNC and HND makes it unique. They also asked about transparency surrounding what they can do with the data. I reiterate that Pearson is included only because it owns, designs and awards HNDs and HNCs. The collaboration agreement with Pearson will be published—there is transparency. Data-sharing agreements will not be published, as they may contain commercially confidential information about the circumstances that have led to the concerns that are being shared with the other party.

The noble Lord, Lord Watson, asked whether Pearson can sell on data. The answer is: absolutely not. The information sharing will be underpinned by data-sharing agreements which will specify the purposes of the data sharing, and these purposes will not include selling data. If Pearson did so, it would be in breach of the data-sharing agreement and subject to sanctions by the Information Commissioner—a serious matter.

The noble Lord, Lord Watson, asked about parliamentary scrutiny, and I would like to add to the words that I used. The regulations were scrutinised by the JCSI before they came into force, and there was a debate in the Commons in Committee on this very matter. The inclusion of any new body in the regulations would therefore be subject to the same parliamentary scrutiny and oversight as these regulations have received.

Secondly, the noble Lord, Lord Watson, was concerned about the sharing of students’ confidential data. Data privacy is a particularly pertinent topic in the current climate, and this is precisely why the Government have strengthened the legal framework underpinning data sharing by the OfS compared to the previous regime. I emphasise, however, that the main purpose of these regulations is to enable information sharing at a provider or course level. Personal data would be shared only if there were serious concerns—for example, around fraud or malpractice—and there was a specific need to share personal data to investigate a specific issue.

The noble Lord, Lord Watson, also raised concerns that students’ confidential information will be shared without the consent of those to whom it refers. I reassure noble Lords that any data sharing will be subject to data protection legislation. While consent is one lawful basis on which information may be shared, there are other bases for data sharing; the circumstances will dictate which is most appropriate. The OfS will always seek consent where it is appropriate to do so. However, where data sharing is to investigate wrongdoing or fraud, for example, and seeking consent would jeopardise the investigation, the OfS may rely on another lawful basis for information sharing.

In addition, I reassure noble Lords that these regulations do not oblige the OfS to share any information or to co-operate with any of the bodies in the regulations, including Pearson. They simply make this possible where appropriate. It will be for the OfS, or in some cases the Secretary of State, to decide when to do this, and this will be decided in the context of the general duties and functions of the OfS as set out in primary legislation.

I would like to go further. I reassure all noble Lords that there will be strong safeguards for any data sharing that is carried out with all bodies included in the regulations, including Pearson. For example, any information sharing will be subject to strict data protection laws governing its use, as stipulated by the primary legislation. These regulations do nothing to undermine data protection law. The OfS will also publish its collaboration agreements with other bodies online, including stating where data sharing agreements are in place.

It might happen, for example, that the OfS needs to share information with another body as part of a joint investigation. In this case, the OfS would also create a bespoke data sharing agreement. This agreement would state what data will be shared, with whom and why, on what legal basis, and how it will be processed and kept secure. This would also set out individuals’ rights in relation to their data. The OfS would only ever share data with precisely who needed to see it and only ever precisely what they needed to see to resolve the issue. A data sharing agreement is binding: if any organisation breaches this, the OfS as the data controller would stop this arrangement and, where appropriate, inform the Information Commissioner, who could then take action. Make no mistake: this would apply to every organisation in the regulations, and Pearson would be no exception to this.

I now turn to the final point from the noble Lord, Lord Watson, in which he called on Her Majesty’s Government to carry out a privacy impact assessment on the regulations. I thank the noble Lord for raising this point, because data privacy impact assessments are indeed a useful tool. Under GDPR, however, the Government are not obliged to conduct such an assessment. Furthermore, it would not be appropriate to do so. While the Government, in writing these enabling regulations, have identified the overall situations and reasons where the OfS may wish to share information, the need for a data privacy impact assessment should properly be considered by the organisation that will be sharing the data, once the specifics are known. Much of the data sharing would be in response to emerging concerns: for example, where there are suspicions of wrongdoing. It is only at this point that the nature and extent of privacy risks can be properly assessed and fully effective solutions put in place. The OfS is aware of the sensitivities around the sharing of personal data and takes its responsibilities to safeguard personal data extremely seriously. It will consider whether a data privacy impact assessment is needed, and will carry this out where appropriate, before sharing information that could impact on personal privacy.

I hope that, having put a lot of emphasis on these safeguards, I have reassured the House that data sharing—in particular with non-government bodies, including Pearson—will be undertaken in an appropriate way and for the right purpose, with strong protections in place.

Higher Education (Fee Limits and Fee Limit Condition) (England) Regulations 2018

Debate between Lord Adonis and Viscount Younger of Leckie

Tuesday 24th July 2018 Lords Chamber

[Viscount Younger of Leckie (Con)]

My Lords, I thank the noble Lords on the Secondary Legislation Scrutiny Committee for their scrutiny of the fees regulations laid before this House in July and considered in the 36th report from the committee.

My purpose here today is to speak to the fees regulations that require approval. They support our aim that anyone with the talent and potential to benefit from higher education will be able to do so.

UCAS data show that we have made good progress on this. In 2017, 18 year-olds were more likely to enter full-time higher education than ever before, with disadvantaged 18 year-olds 50% more likely to enter full-time higher education than in 2009. The most recent UCAS data on application rates for English 18 year-olds show an increase by 0.2 percentage points on last year’s deadline to 38.1%. This is a record high.

However, as I have said before, we know that there is more to do. That is why the Government are currently undertaking a major review of post-18 education and funding to ensure we have a joined-up education system that is accessible to all and encourages the development of the skills that we need as a country. We expect to conclude the review in early 2019.

Turning to fees, the Government announced on 2 July in a Written Statement that maximum fees for students undertaking undergraduate courses in the 2019-20 academic year would remain at 2018-19 levels for the second year running, saving students up to £255.

This is not the only change we have made to help students. From the tax year 2018-19 starting in April 2018, we increased the repayments threshold above which graduates are required to make repayments on their loans from £21,000 to £25,000, rising by average earnings thereafter. We have also taken the opportunity to review policy for EU students. The Written Statement of 2 July I mentioned earlier also announced that existing eligibility rules for students from the European Union, and their family members, who start their courses in England in the 2019-20 academic year will remain unchanged. This means that EU nationals will remain eligible for home fee status, undergraduate, postgraduate and advanced learner financial support from Student Finance England for the duration of their course under the current eligibility rules.

Why are these regulations important? I turn now to the details of the fees regulations being considered today. They are made under Section 10 and Schedule 2 of the Higher Education and Research Act 2017. They will ensure that the Office for Students, the new regulator for higher education since 1 January 2018, has the powers to set maximum fee limits for home students studying at providers in England that are subject to a fee limit condition in 2019-20. These regulations will also ensure that the Government can implement the new regulatory framework under HERA in full; in particular, the requirement for providers to submit access and participation plans to the OfS in order to charge fees above £6,165 for a full-time course.

The existing fee caps, made under Section 24 of the Higher Education Act 2004 will be revoked automatically on 1 August 2019, as a result of Schedule 11(30)(2) of HERA. It is therefore essential that new regulations are made under HERA to ensure that fee caps continue and that students benefit from the freeze in maximum fees. Under HERA, providers can choose to register with the OfS in one of two categories: either the Approved (Fee Cap) or Approved categories. Providers registering in the Approved (Fee Cap) category will, for 2019-20, be eligible for OfS grant funding and will also be subject to maximum fees set through the regulations being discussed today: £9,250 for a full-time course offered by a provider with a teaching excellence and student outcomes award. Students attending Approved (Fee Cap) providers will be able to access loans to cover the full costs of their fees. Providers registering in the Approved category will not be eligible for OfS grant funding or subject to maximum fees. Students attending those providers will be able to access lower rates of loans towards the costs of their fees.

Under HERA, the OfS will be able to limit fees charged by Approved (Fee Cap) providers once these regulations come into force. So without these regulations, providers would be free legally to charge whatever fees they wished. In addition to setting maximum fees for the 2019-20 academic year, these regulations also amend another set of regulations that will allow the OfS to operate under HERA. The Fee Limit Condition Regulations, which came into force on 1 April 2018, deliver the framework for the capping of student fees for qualifying students and courses at providers registering in the Approved (Fee Cap) part of the OfS register. These regulations amend the Fee Limit Condition Regulations so that persons who have a current grant of stateless leave, and their family members, who are undertaking qualifying courses in the 2019-20 academic year are defined as qualifying persons. This means that they will benefit from the same maximum fees that currently apply to other qualifying persons, such as persons who are settled in the United Kingdom.

These regulations also amend the Fee Limit Condition Regulations so that students already holding an equivalent or higher level qualification who are undertaking pre-registration, nursing, midwifery and other healthcare courses will be defined as qualifying persons and will benefit from maximum fee limits. With those explanations, I beg to move that these regulations be approved.

[Lord Adonis (Lab)]

My Lords, I am grateful to the Minister for introducing the regulations so lucidly. He referred to the review that is taking place on student finance, which is of huge importance, of course, to students and their families and to universities. He said that the report would come in early 2019 but he said nothing more about it. I have three specific questions about the review. First, will it be publishing either an interim report or any interim statements or summaries of evidence taken? I think that could be quite useful in stimulating the public debate that needs to take place around the future of the higher education funding system.

The second point is about consultation. Which groups of students and young people are the Government consulting, because a big and controversial issue has been the failure to include young people in the review team? The one group that is not a part of the review team directly is the group of very young people and students who are directly affected by this. That is a big mistake. The right thing to do, particularly if we are to win support from the generation that is paying these fees in a reformed system, is to have some buy-in from them at the beginning. The failure to put those arrangements in place will cost the Government dear. It would be good to know what consultation is taking place with young people.

Thirdly, what polling among the public and young people is the review doing to ascertain the attitudes of the public at large to the sharing of the burdens of paying for higher education and the attitudes among young people? My view all along, having played a part in the introduction of the original scheme in 2004 but having been opposed to the trebling of tuition fees in 2010, has been that students recognise that in order to be responsible and constructive members of society, particularly in the current climate, where they are very focused on getting jobs and making their way in the world, they need to make some contribution to the higher education system, but they resent the fact that all the costs of the higher education system have been moved to the students and the graduates. Polling might bring that out and might help to establish a basis of agreement on public attitudes, which might make a burden-sharing approach possible which, to be blunt, might mean cutting the level of fees from £9,500 but not eliminating them entirely.

My party’s official position is now to eliminate fees entirely. The noble Viscount’s position is to have them at £9,500. There is quite a big space between zero and £9,500. Being, as ever, moderate and constructive, I am quite keen that we come in somewhere in the middle of that space. That might be sustainable among the public, rather than doing what I fear may happen, which is lurching from a very high level of fees by international standards to no fees at all.

Finally, when I read the debate in the House of Commons Delegated Legislation Committee on these regulations, the Minister for Higher Education said that he was conducting a listening tour around the country. I am strongly in favour of listening tours; I wish the Government would conduct them on many other issues, too, including Brexit, but that is for a later debate. However, he gives an extraordinary figure for the number of students he has met, which I am hugely impressed by. He said that on his listening tour so far he has met more than 1,500 students. I am not sure whether those 1,500 have been in the hall with him as he has been going around or whether he has personally conducted conversations with them.

I would be very grateful if the noble Viscount could tell us whether he has any findings from the Minister’s listening tour or whether the Minister might publish findings from his tour when he has finished it, because knowing that he has conducted a listening tour but not knowing what he has heard is not of great use to Parliament when we come to consider these significant student finance and funding issues after the review reports in the early part of next year.

--- Later in debate ---

[Viscount Younger of Leckie]

My understanding is that it covers England only. I understand that discussions are going on with the devolved Administrations, but the review focuses on England only.

[Lord Adonis]

I am sorry to interrupt the noble Viscount, but the situation of Northern Ireland is therefore very serious because there is no other means of conducting a review or introducing changes in the current climate. When the review was set up, it looked as if the Northern Ireland Executive might be re-established. That has not happened. Is he in a position to inform the House further about the Government’s attitude in respect of Northern Ireland?

[Viscount Younger of Leckie]

I think I will add that to the letter that I will write to the noble Lord specifically about Northern Ireland. I remember what he said in the previous debate.

The noble Baroness, Lady Garden, and the noble Lord, Lord Watson, asked about progress in appointing an independent reviewer of the TEF. The recruitment of the independent reviewer is under way and an announcement will be made in due course. I have taken note of the comments the noble Baroness made about the TEF and the feelings that were expressed in this House about it last year. If they have not gone away, it is an issue that will be addressed.

I reassure the House that this is a devolved matter—this is going back to the question raised by the noble Lord, Lord Adonis. The review covers England alone, but it comes back to the point that I was making that I will write to him about matters relating to Northern Ireland.

The noble Baroness, Lady Garden, asked whether we can continue to take part in Erasmus. An announcement on the Erasmus programme will be made in due course, particularly to take account of the planning needs of students and universities.

The noble Baroness, Lady Garden, also asked about ELQ exemptions and part-time study. The ELQ rules have been relaxed to support students who already hold an honours degree qualification and who wish to retrain on a part-time basis in a STEM subject. The review of post-18 education and funding will look at how we can encourage learning that is more flexible. This takes account of comments that I made in a recent debate on this important subject, particularly relating to the Open University.

The noble Lord, Lord Watson, and the noble Baroness, Lady Garden, asked about the decrease in part-time study, particularly in the 30 to 49 age group. In this academic year, part-time students will, for the first time ever, be able to access full-time equivalent maintenance loans, as I think the House will be aware.

The noble Lord, Lord Liddle, raised some interesting points about the perspective from universities, and I took note of what he said regarding Lancaster University. It is a fair point, because if fees are capped, less money goes to universities. We are obviously aware of that and will take account of it as part of the 18-plus review. It is part of the overall view of how the future of tuition fees will pan out. That includes the points he made about the means-tested maintenance grant.

My final point is aimed to address something said by the noble Lord, Lord Adonis. He was talking about a range of where tuition fees might be from £0 to £9,250. I took it that the £0 meant that it was still Labour Party policy that, if it were ever to come into government, it would offer free education to students.

[Lord Adonis]

I do not speak for the Labour Party—that is for my noble friend on the Front Bench—but that was the policy at the last election.

[Viscount Younger of Leckie]

My point in raising that was to say that this 18-plus review is also looking at these matters. Nothing is ruled in and nothing is ruled out and the independent panel will be looking at it. With that, I commend the regulations.

Higher Education (Transparency Condition and Financial Support) (England) Regulations 2018

Debate between Lord Adonis and Viscount Younger of Leckie

Tuesday 24th July 2018 Lords Chamber

[Viscount Younger of Leckie (Con)]

My Lords, my purpose here today is to speak to draft regulations that encompass two keys elements of the Higher Education and Research Act, or HERA, as I shall refer to it, which require approval. I turn first to Section 9, the transparency condition.

There has been considerable progress in widening the access and success of students from disadvantaged and underrepresented groups into higher education. University application rates for 18 year-olds to full-time study remain at record levels, according to data published by UCAS earlier this month, and the proportion of disadvantaged 18 year-olds entering full-time higher education has increased from 13.6% in 2009 to 20.4% in 2017. However, there is more that could and should be done to fulfil our aim that anyone with the talent and potential to benefit from higher education will be able to do so, particularly on the progress of students from disadvantaged backgrounds to the most selective institutions, and the outcomes, including the retention and attainment of some groups of students. We want to see progress made and have charged the new regulator, the Office for Students, to lead that.

The introduction of the transparency duty through Section 9 of the Higher Education and Research Act is a key measure that will support the OfS in making the further progress we wish to see. This duty requires certain higher education providers to publish information on application, offer, acceptance, completion and attainment rates of students, which can be broken down by ethnicity, gender and socioeconomic background. The duty will apply to all providers registered with the OfS, including both those in the approved and approved fee cap parts of the register. It will ensure that data, similar to that released by the universities of Oxford and Cambridge on admissions recently in anticipation of this duty, is available from August 2019. That greater transparency will shine a spotlight on where higher education providers need to do more to widen the access and success of students from disadvantaged and underrepresented groups.

The duty also requires that the information is provided to the OfS. That will help the OfS to assess the performance of providers in terms of access, student success and progression. To ensure that we see progress, the OfS will be able to take action if a provider does not comply with its obligations, including on the access and participation of students from disadvantaged and underrepresented groups. The OfS has access to a range of interventions and sanctions which incentivise improvements. This can include placing additional registration conditions on providers, suspending providers from the OfS register, and, if necessary, imposing monetary penalties on a provider.

I recall that the duty was broadly welcomed by noble Lords during the passage of HERA. At that time the Government gave a commitment that the OfS would be asked to undertake a consultation in respect of additional data it might request on applicants and students with additional protected characteristics, such as disability and age. I am pleased to be able to report to the House that we have asked the OfS to undertake that consultation, and it has announced that it will do so through publishing a formal consultation and holding consultation events later this year.

[Lord Adonis (Lab)]

I understand that there is great concern in the student world about the sharing of this data with third parties. Can the Minister tell us which third parties this information will be shared with?

[Viscount Younger of Leckie]

If the noble Lord will allow me to finish the speech, we can have the debate then, and I will certainly bear in mind the point that he made.

The consultation, which is part of a wider consultation on the OfS work on access and participation, is intended to be published at the end of August, and consultation events will be held during September, with findings available early in 2019. The implementation of the duty through these regulations will help ensure that we can make further progress on the access and success of disadvantaged students, as well as supporting informed choice for all.

On the second part of these regulations, Section 39 of HERA, these powers allow the OfS to provide financial support for higher education. These funding powers broadly replicate the funding powers conferred by Section 65 of the Further and Higher Education Act 1992 on HEFCE, but have been expanded so that the OfS can fund any eligible higher education provider. Eligible providers in this new system are those subject to a cap on the fees they can charge, and thus are in the approved fee cap part of the OfS register. Such financial support is important because it gives the OfS the ability to provide financial support to providers to support a range of different delivery models, such as part-time, and to promote student choice, competition and value for money. It also permits the OfS indirectly to fund qualified schools, colleges or other institutions that are connected to an eligible higher education provider.

Furthermore, these powers ensure that the OfS can continue to provide funding for subjects which cost more to teach than can be met solely from tuition fees, such as those science and medicine courses that are so crucial to the economic and social future of the country. These powers also make it possible for the OfS to provide funding to incentivise and support providers’ work on widening participation or to meet the unavoidable costs of small and specialist provision, such as performing arts courses.

I turn to an issue involving the Joint Committee on Statutory Instruments, which has drawn the special attention of both Houses to this statutory instrument in its 30th report. It has stated that there is doubt that there are adequate vires for the regulations. I appreciate that some of what follows may seem rather technical. However, it is important that I put the Government’s interpretation of the relevant provisions on the record, given the strength of the committee’s views.

Before turning to the detail—which is important—I want to be absolutely clear that I greatly appreciate the invaluable work the Joint Committee does in holding the Government to account for the secondary legislation that they produce. I am especially grateful for the clear way the committee has expressed its views in its recent report and, indeed, for the extensive engagement between its officials and my own during the drafting of these regulations.

The committee’s conclusion, as I understand it, is on the basis that the regulations involve subdelegation to the Office for Students and that this is not adequately authorised by the parent Act. Having carefully considered the concerns raised by the committee, and having again consulted those who drafted the provisions, the department respectfully disagrees. The Government’s view has always been that the Act was deliberately designed to enable regulations to refer specifically to named categories of registered provider, as created by the OfS.

In technical terms, that was achieved by the inclusion of a specific provision—Section 119(5)(d), which states that regulations made under HERA may,

“include provision framed by reference to matters determined or published by the OfS (whether before or after the regulations are made)”.

The division of the register into different categories is then expressed by the Act to be precisely such a matter that the OfS “determines”. That is clear if one reads the words of Section 3(2), which uses the word “determines” when it gives the OfS the power to divide the register into categories.

--- Later in debate ---

[Lord Adonis]

My Lords, I hope that the Minister will forgive me, but I am somewhat confused by the procedure. My noble friend has tabled a Motion to Regret on one of the sets of regulations even though the Minister introduced all of the regulations in his opening remarks. Perhaps I may make a few remarks now on the first of these sets of regulations concerned with transparency before we come on to the data sharing issues in a moment.

No one could have anything against these regulations. It is vital that there is transparency and the Office for Students, which got off to a terrible start in terms of its reputation, the appointments to the board and so on, is at long last starting to concentrate on some of the issues for which it was set up. One of those is to ensure fair access and to encourage universities to publish appropriate data on this. It is an important point, and the Minister’s remarks on that at the outset were well made and I support them entirely.

The essential thing to understand is that the publication of data itself will not improve access. It is a tool to that end, but the critical development is what happens university by university and community by community. My concern with the OfS is that, in setting up this new body and getting into a big exercise in establishing systems, protocols and data arrangements, it will concentrate too much in its first year or two on getting the systems in place and not on actually changing the behaviour of universities. There is some evidence for that already.

The first big announcement the OfS has made is to parade, as if it was some enormous achievement in the history of higher education, a register of providers. A register of providers in itself is an entirely neutral thing. No additional provider has been made available simply by the publication of a register. The fact that this may be the first such register is an interesting proposition but it is not a great development in the history of higher education in this country.

As a former Minister in this area, everywhere I go around the country I can see the enormous challenges involved in widening access. I want to bring the Minister’s attention to one area which I hope he might be able to write to me about after the debate. I do not expect him to be able to respond to my remarks now, but it is an issue of immense concern which does not come to the attention of this House because of devolution. I spent most of last week in Northern Ireland, where the shortage of higher education places is a very big issue. Northern Ireland exports a very large number of students to universities in the UK because there has been proportionately a much lower cap on places in Northern Ireland than has applied in Britain.

I turn to a subject that was raised with me almost everywhere I went, particularly at Queen’s University Belfast. Students and academic leaders told me in graphic detail about the brain drain from which Northern Ireland is suffering as a result of the shortage of higher education places. That in itself is a matter of concern. A large number of students in Northern Ireland are studying in Britain and then not returning home, which is very damaging to the economy and probably also to the wider society of Northern Ireland. However, there is an additional dimension that was forcefully made clear to me: this is a particular issue in the nationalist Catholic community in Northern Ireland because of a decision taken by the Stormont Parliament a generation ago not to establish a university in Londonderry. I looked into the history of the decisions that were taken in the 1960s and 1970s. It was decided to set up a new higher education institution in Coleraine rather than Londonderry which, amazingly, still does not have a proper higher education institution. That is greatly resented by the community in Londonderry and acts specifically against the interests of the Catholic community.

Normally this would be a matter for the Northern Ireland Assembly to concern itself with, and indeed part of the reason the Assembly exists is to address issues like this. However, it has now been more than a year since the Northern Ireland Assembly met. The two leading parties in Northern Ireland have conspired to keep the Assembly from sitting. There is no Government in Northern Ireland. Therefore, in this as in other areas such as equal marriage and abortion, this Parliament must surely start addressing these issues if there is no other democratic outlet for Northern Ireland to make its views heard, and for them to be addressed as they should be by Parliament.

This issue of higher education places in Northern Ireland, which goes directly to the issue of access, looks to be of fundamental importance. Will the Minister undertake to do two specific things? First, will he let me know what the powers of the Office for Students are in Northern Ireland? Does it have powers in Northern Ireland equal to the rest of the United Kingdom? Can it get into these issues of access? Secondly, will he ask the Office for Students to look, if it can, at fair access not regarding the number of places, but between different parts of the community in Northern Ireland, because it is clearly an issue that is very strongly felt there?

[Viscount Younger of Leckie]

My Lords, I thank all noble Lords for their broad acceptance and approval of these regulations. I thank my noble friends Lord Lucas and Lord Lexden, the noble Baroness, Lady Falkner, and the noble Lord, Lord Adonis. I will cover all their questions in turn.

On the big picture, these transparency regulations are very important as part of the setting up of the OfS and its very remit. The whole point is that there should be transparency and universities should be seen to provide value for money for all students. At the end of the day, outcomes are also important: students going in, what they do when they come out and where they go. Linked into the LEO figures we can then better know who is coming in, who is coming out and how they get on. Ultimately, that helps to market our universities at home and abroad, particularly, as I said at the beginning of my speech, looking at social mobility and disadvantaged students who—for first time in some cases—have the chance to go to university and a great opportunity for a career.

The noble Baroness, Lady Falkner, made an interesting point about elite universities and sharing data. That leads into something that the noble Lord, Lord Adonis, will feel strongly about, which is transparency at vice-chancellor and senior leadership level at university. He and I agree on this. He knows, as I do, that we are putting as much pressure as we can on all universities, including the elite ones, to act with restraint. They obviously have a duty to publish certain figures relating to their salaries. I will not go into the details of that; I think that the House knows about it. That will help to lead to that restraint, but it will also help to raise the profiles of the universities abroad. People will be able to look at the figures and at what the universities do, how they operate and how they manage themselves. I hope that it will be a good story and that more people will come to university. There is a linkage there.

My noble friend Lord Lexden asked about the current position of the OfS register. I reassure him that it now exists. The OfS recently confirmed that the first 42 providers have been officially registered. The OfS register is now available for anyone on the OfS website. The OfS will continue to populate the register over the forthcoming months.

The noble Lord, Lord Adonis, asked early on in the debate about the sharing of data. Maybe I can give him a little bit more information. The information-sharing regulations enable the OfS to share information with a range of bodies as set out in the regulations, where this is for the purpose of performing the other body’s functions. The OfS will also be able to share information with third parties where it is appropriate to do so and where this is part of an OfS function. There are specific regulations laid down with restrictions for that.

My noble friend Lord Lucas, in welcoming the regulations, asked about the research and evaluation by universities and their sharing of expertise in tackling underlying problems. We have asked the Office for Students to develop an evidence and impact exchange to identify and share good practice on what works and what has the greatest impact.

The noble Lord, Lord Watson, and the noble Baroness, Lady Falkner, spoke about Oxbridge and ethnicity. Wadham was mentioned. “If Wadham can, then why can’t the others?”, one noble Lord asked. I think I said at the beginning that 18 year-olds from disadvantaged backgrounds are entering full-time higher education at record rates, including the most selective universities, which is positive news, but we have asked the OfS to challenge for and encourage more progress, particularly at our most selective institutions. The publication of transparency data by ethnicity will shine a light on where they need to go further, so I hope that provides some reassurance.

The noble Lord, Lord Adonis, asked about the powers of the OfS in Northern Ireland. I listened carefully to his latter remarks and am grateful for his observations. The OfS is a regulator of higher education in England only but, having said that, let me write to the noble Lord, because his remarks were quite expansive and extended to the difficulties that Northern Ireland is facing at the moment. I will read his remarks in Hansard and write a letter to him to clarify that.

The noble Lord also asked about the OfS concentrating too much on setting up and systems, and not on changing behaviours. I do not agree with him. Yes, a key focus this year is for the OfS to register providers, but it has a wide range of other priorities as set out in the Government’s strategic guidance to the OfS published in February, and set out in the OfS’s strategy and business plan. On the back of the Higher Education and Research Act, the OfS is very much up and running. The noble Lord mentioned certain problems that arose, but I am glad that he acknowledged that it is moving forward and making progress on a range of matters.

I hope that I have covered the questions asked. Noble Lords have a keen and understandable interest in the implementation of HERA. There is no doubt that today’s scrutiny plays a vital role in ensuring that the reform promised by that Act is achieved.

Review of Post-18 Education and Funding

Debate between Lord Adonis and Viscount Younger of Leckie

Tuesday 20th February 2018 Lords Chamber

[Viscount Younger of Leckie]

The noble Lord again raises the issue of the DSA. I know that he has done a huge amount of work over many years for the disabled and disadvantaged sectors. I reiterate that the Government are very much committed to ensuring that all students with disabilities receive the very best possible support to enable them to study alongside their fellow students on an equal basis. Disabled students have access to a package of support to cover additional costs that they may face to participate in higher education. I reassure the noble Lord that this is in scope, but I do not want to prejudge the outcome of the review. I am certain the panel will want to look at it. Beyond that, I cannot really comment because the panel is independent.

[Lord Adonis (Lab)]

My Lords, this is a review of the burdens being placed on students and young graduates, so can the Minister tell us what is the age of the youngest person on the review? Looking down the list of the six members, it does not look to me as if any of them are under the age of 50. Does he think it a good idea that there are no students on the review? Will he explain why there is no current student experiencing higher education and paying these fees on the review? Could he undertake that the Secretary of State will meet members of the Youth Parliament with me to discuss their views on student fees and loans and how the system should be reformed, given that they have no membership of this review?

[Viscount Younger of Leckie]

On the noble Lord’s first question, I will not be drawn on the ages of the members of the panel. I think that was the gist of his question. Even if I knew the ages, I would not wish to be drawn on that.

[Lord Adonis]

Will the Minister write and tell me the ages? It is a material factor given that this is a review of student finance.

[Viscount Younger of Leckie]

I am certainly not going to commit to that. I do not feel terribly comfortable giving out the ages of the panel. It may well be in the press, but I am not prepared to do that. We have a very strong panel.

On his second question, which was to do with the representation of students, he is absolutely right, but the point is that this panel will deliberately be kept small to make it more manageable. They will be engaging with a complete range of stakeholders, including students and student representatives, business and many other areas. I hope I can reassure the noble Lord that this is a wide-ranging stakeholder engagement process with a small and neat panel.

[Lord Adonis]

Will the Secretary of State meet members of the Youth Parliament with me to discuss their views on these matters?

[Viscount Younger of Leckie]

On that third question, I am very happy to pass that on, but I do not want to give any guarantees that he will agree to do so.

Student Loans Company

Debate between Lord Adonis and Viscount Younger of Leckie

Tuesday 21st November 2017 Lords Chamber

[Viscount Younger of Leckie]

I do not agree. For some time, the Student Loans Company has had a strategy that includes an initiative to improve the SLC performance across the board and with a focus on user experience for borrowers and staff engagement. The DfE and the SLC are working very hard on this.

[Lord Adonis (Lab)]

My Lords, do the Government have a response to yesterday’s report by the Higher Education Funding Council for England into the governance of Bath University, which found very serious failings? Does the Minister agree that the position of the vice-chancellor—paid this year £468,000—is now untenable after the findings of HEFCE?

[Viscount Younger of Leckie]

The noble Lord has raised the issue of Bath on a few occasions and I understand his concern. However, this is not something for the Government to iterate too much on—the House will remember the point made about institutional autonomy during the passage of the then Higher Education and Research Bill. However, we say very strongly that universities must look carefully at what they pay not just their vice-chancellors but their senior leaders. That is something that the Office for Students will be looking at earnestly when it is set up.

Student Loans: Interest Rates

Debate between Lord Adonis and Viscount Younger of Leckie

Monday 11th September 2017 Lords Chamber

[Viscount Younger of Leckie]

That is because it is not necessary to do so. The proportion of borrowers liable to repay when the £21,000 threshold took effect in April was significantly lower than could have been envisaged when the policy was introduced. The threshold would now be set at £19,000 if it were to reflect the same ratio of average earnings.

[Lord Adonis (Lab)]

My Lords, does the Minister think there are any circumstances—

--- Later in debate ---

[Viscount Younger of Leckie]

We believe that RPI is more appropriate than CPI for student loans. It takes account, among other things, of changes in mortgage interest payments and council tax, which, I may say, are typical expenses for graduates that are not included in the calculation of CPI.

[Lord Adonis]

My Lords, I am not sure about reforming universities but I certainly think we should reform the way in which we conduct Question Time in this House.

[Lord Adonis]

Does the Minister think it justifiable for any vice-chancellor to be paid more than £300,000 a year?

[Viscount Younger of Leckie]

I made the position clear on vice-chancellors’ pay the other day in the House. Although the Government do not wish to interfere, my colleague in the other place, Jo Johnson, has made it quite clear that universities must have restraint in the pay offered to vice-chancellors and, indeed, to other senior positions.

Higher Education and Research Bill

Debate between Lord Adonis and Viscount Younger of Leckie

Committee: 5th sitting (Hansard - continued): House of Lords
Monday 23rd January 2017 Lords Chamber

[Lord Adonis (Non-Afl)]

My Lords, I can see that under Schedule 1 the OfS must prepare a report on the performance of its functions during each financial year in any case. Given the magnitude of the decisions to which my noble friend Lord Liddle referred, it would be a very straightforward and simple amendment to require that annual report to have regard to the exercise of the functions under this clause.

[Viscount Younger of Leckie]

I note the point the noble Lord, Lord Adonis, has made and that will definitely be part of our general reflection.

I now turn to the processes and safeguards. The OfS, as an independent regulator, will be best placed to make decisions on whether to vary or revoke an authorisation to grant awards or revoke a university title. However, there is a statutory process that must be followed. Clauses 44 and 54 provide that the OfS give appropriate notice to the governing body of the provider, set out its reasons why it considers it necessary to take the step of variation or revocation and must have regard to any representations made by the provider before proceeding. I agree that the OfS should be able to draw on all relevant information, including from other parties. Clause 58 enables that already.

Turning to Amendments 282 and 347A, we want to move to a system where quality, rather than the age of an institution, will be the yardstick and where the OfS has powers to vary or revoke degree-awarding powers and to revoke the university title of any institution, no matter how they were obtained. This is essential to achieve a level playing field among providers.

Amendment 282 would unlevel the playing field for revocation of degree-awarding powers. We included a right of appeal for any revocation decision because we felt that this was the most appropriate and independent review, and that it would therefore be the best way to safeguard the interests of the provider, including its institutional autonomy. An appeal to the First-tier Tribunal is an opportunity for a provider to present evidence to support its case. It provides for a politically neutral and objective judgment of the merits of the case. I see the logic behind these amendments and we value the expertise of Parliament, as well as the important scrutiny functions. However, on matters of regulation, we believe such scrutiny and safeguards are better provided by the courts, rather than by Parliament. The regulatory framework will apply to all providers equally. If we accept this principle when it comes to other rights and obligations, I find it difficult to justify treating a provider that got its degree-awarding powers in the 1970s—such as the University of Buckingham, for example—differently from one that gets them in 2020.

Before I finish, let me briefly address the amendment of the noble Lord, Lord Judd, which would allow for appeals against unsuccessful degree-awarding power applications. There currently is no such provision and the appeals provision in the Bill has been drafted to cover scenarios where the OfS makes a decision that deprives providers of a status or powers, or imposes a monetary penalty. I can provide some reassurance: we expect that there will continue to be internal complaints mechanisms similar to those run by the QAA at present. The amendment is therefore not needed.

I am afraid there is no time to address the thoughtful points raised by the noble Lord, Lord Judd, on the path universities are travelling down. I say only that there is undeniably an important, international market where we are in the business of attracting students who realise that they have a choice. We have to be realistic and remember that.

As I said, we appreciate the need to get the safeguards right. While we feel we have struck the right balance, we will continue to reflect on any areas of improvement. In the meantime, I ask the noble Lord, Lord Watson, to withdraw Amendment 282.

Higher Education and Research Bill

Debate between Lord Adonis and Viscount Younger of Leckie

Committee: 2nd sitting (Hansard - continued): House of Lords
Wednesday 11th January 2017 Lords Chamber

[Lord Adonis]

My Lords, I turn to the issue of geographic diversity. One of the prime areas where there has been collaboration is in creating campuses and a university presence in areas of the country where it otherwise would not have been either an economic or a prime mission of a university to seek to make such provision. The example that comes to mind from my time as a Minister, and where quite a lot of work was done by government bodies to foster collaboration, was in Medway. As I recall, that was a collaboration between the University of Greenwich, the University of Kent and, I think, another institution to enable higher education provision to be made in a very challenging and deprived area. A sole provider would not have been prepared to move in there. The same was true of the creation of higher education provision in Cornwall, which, as I recall, was a collaborative vision on a similar basis. Looking at the need to spread geographical provision more widely, fostering collaboration between institutions, and further education institutions where necessary, will be very important to making any provision at all.

Collaboration is not only between prestigious institutions, although I should add that in my experience the Government can foster collaboration of any kind where they are prepared to sign very large cheques, which has a large part to do with Crick. However, where we want to see more provision in areas of the country where it is not at the moment in the prime mission of any institution to provide it, collaboration between different types of institution may be a prime way to see that come about.

[Viscount Younger of Leckie]

My Lords, I assure the noble Baronesses, Lady Wolf and Lady Brown, and the noble Lord, Lord Stevenson, that I fully understand the principles they seek to address here. To reassure the noble Baroness, Lady Brown, on the new duties for collaboration and innovation, we are wholly supportive of collaboration and innovation where it is in the interests of students. I hope I can go some way to answer the question raised by my noble friend Lord Willetts on how collaboration and competition will work. I will say a little more about that later. For example, providers could share services to generate efficiencies that allow more resources to be focused on teaching, offer courses in partnership, or design new styles of degree programmes to meet differing students’ needs. These are essentially non-competitive ways to enhance the offering from both or more institutions should they decide to collaborate.

I will start by saying a little more about collaboration. The general duties of the Office for Students are absolutely consistent with the idea that providers should continue to collaborate and innovate in the new regulatory system. There should be no conflict with the OfS’s duty to have regard to encouraging competition between higher education providers where it is in the interest of students. My noble friend Lord Jopling is right in his assessment that the OfS is already required under Clause 2 to have regard to,

“the need to promote quality, and greater choice and opportunities for students”.

Such collaboration and innovation is implicitly and undoubtedly in the student interest. To pick up on the question asked by my noble friend Lord Willetts, there is nothing inherent in that “have regard to” duty that would prevent the OfS also supporting collaboration between higher education providers if it considers it is also in the interests of students, employers or the wider public—for example, by supporting the merger of two providers.

The noble Lord, Lord Winston, asked in his thoughtful, brief intervention how the OfS would enforce collaboration. We do not wish to create an expectation that the OfS should be formally or actively regulating this type of activity. That would be unnecessary.

On innovation, we concur with the noble Lord, Lord Stevenson, about a lack of innovation in the higher education sector. It is important for the OfS to have a focus on supporting a competitive market. That means it must regulate fairly and allow all providers to operate under the same set of rules. This will make it simpler for new high-quality providers to enter and expand, help to drive up teaching standards overall, enhance the life chances of students, drive economic growth and be a catalyst for social mobility.

Competition will incentivise providers to raise their game, fostering innovation. New providers can respond innovatively to what the economy demands and equip students with the skills needed for jobs of the future. So promoting innovation, like collaboration, does not require a separate duty. When it is in the student interest, the OfS will be fully able to support it because the student interest is at the very heart of the OfS. Requiring the OfS to have regard to encouraging competition only where it is shown to be in the interest of students, employers and the wider public would be unnecessary, burdensome and inflexible to implement. The current wording already limits the promotion of competition to where it is in the interests of students and employers. The amendment would mean that the OfS would have to demonstrate that in some way that these various interests were met, placing an unnecessary evidential burden on the regulator and, in turn, on higher education providers.

I now turn to whether the OfS should have regard to encouraging competition where this is in the interest of the public or of wider society. The Bill makes explicit the general duty to encourage competition,

“where that competition is in the interests of students and employers”.

In doing so, it emphasises that the student interest is at the heart of the OfS and recognises the wider public benefits associated with maximising choice and competition in the higher education sector.

As I set out in the previous debate, operating in the public interest or that of wider society is implicit in the role of the OfS as a public body that is accountable to the Secretary of State and to Parliament. The noble Baroness, Lady Wolf, spoke of the conflict between the roles of the CMA and the OfS and asked me to provide further detail. As I said on Monday, I look forward to discussing this matter later in Committee, when we will consider the noble Baroness’s proposed new clause. I hope that she will have a little patience and that we can discuss that at more length later on in the Bill. In the meantime, I hope that I have been able to reassure the noble Baroness, Lady Wolf, and the noble Baroness, Lady Brown, who spoke at the beginning of this debate, that we have struck the right balance—and it is a balance. I hope that she will not press her amendment.

Growth and Infrastructure Bill

Debate between Lord Adonis and Viscount Younger of Leckie

Monday 22nd April 2013 Lords Chamber

[Viscount Younger of Leckie]

I disagree entirely with the noble Lord because the employee shareholder will decide for himself. If he does not like the terms of the shares being offered, he does not have to enter into this particular agreement. It is wholly voluntary. He may be well advised to get some advice. He may decide himself to get some advice. That is not an issue.

[Lord Adonis]

My Lords, could the noble Viscount explain to us how jobseekers, who may have no resources whatever, will be able to get the advice that he has just told the House they would be well advised to get because of the very complex nature of the agreements and shareholding options into which they will be obliged to enter?

[Viscount Younger of Leckie]

Yes, I can answer that. However, the issues may not be that complex. It depends entirely on the agreement between the employer and the employee shareholder who is considering the new job. As the noble Lord well knows, a variety of sources such as lawyers and accountants can give this sort of advice to a prospective employee shareholder.

[Lord Adonis]

How do these jobseekers pay for this advice? Does the noble Viscount have a special fund which will be available to them? I know that plenty of people offer this advice but I am not aware that many of them offer it for free.

[Viscount Younger of Leckie]

To clarify what I said to my noble friend Lord Forsyth a minute ago, legal advice is clearly available for settlement agreements and compromise agreements. However, we have made it clear that it is not available at this time for those entering into a new employment contract.

Growth and Infrastructure Bill

Debate between Lord Adonis and Viscount Younger of Leckie

Wednesday 20th March 2013 Lords Chamber

[Lord Adonis]

My Lords, I am sorry to disagree with the noble Lord, Lord Stewartby, but to my mind when you have a totally mad idea like the one before us the best thing is not to test it out but to kill it at birth, and I hope that is what we are going to do in the debate that is to follow.

In response to this amendment I should say that never in my life, at least knowingly, have I been in such agreement with the noble Lord, Lord Forsyth—and we look forward to his contribution in the debate that follows. As he says, Clause 27 is ill thought through, confused and muddled. The amendment proposed by the noble Lord, Lord Flight, achieves the remarkable feat of making it even worse, on which I congratulate him. However, I think that the mood of the House is that we should get on to the substance as soon as possible, and I hope that we can now do so.

[The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Viscount Younger of Leckie)]

My Lords, I thank my noble friend Lord Flight for raising this matter, and for his general support for the principle of the clause.

I would now like to speak to Amendment 49C. As noble Lords have said, we will have a chance to debate the fuller aspects of the clause under the next amendment. In effect, this amendment calls for up to £25,000 of share value received by employee shareholders to be free of income tax and national insurance contributions. I note my noble friend’s considerable knowledge of this area from his time shadowing Treasury Ministers and from his chairmanship of the Enterprise Investment Scheme Association, but on this occasion his proposals are not in tune with the underlying aims of the policy. The employee shareholder status is not a new tax-advantaged employee share scheme or an investment incentive, although it may be used alongside existing reliefs in these areas.

In practical terms, the cost to the Exchequer of pursuing this amendment would be prohibitive. A tax relief of that sort of magnitude would make it necessary to attach a great many prescriptive rules to ensure that benefits were targeted and to prevent abuse: for example, by businesses using it as a means of transferring taxable income into employee shareholder shares. I acknowledge that my noble friend Lord Forsyth of Drumlean made these points rather eloquently. This would have the effect of introducing considerable complexity to the new status, working against our stated aim of offering a new option that is flexible and accessible to a wide range of companies.

Of course, tax policy has a part to play in this new employment status. We have listened carefully to concerns that the income tax position could be a significant disincentive for some individuals. We recognise that this could be an issue for a very few and have addressed it. It is a long-established fact, and certainly not unique to employee shareholders, that when a person receives shares as part of their employment, they may be liable for income tax and national insurance contributions on those shares. This is a consequence of the normal tax rules and the way in which income gained from employment is taxed. We must also remember that when an employee shareholder sells their shares, gains from the first £50,000 of shares given to an employee shareholder will be free from capital gains tax, which is part of the wider aspects of the scheme.

I informed the House that the Government were considering an option which would allow the first £2,000 of shares to be given to employee shareholders without incurring income tax or national insurance liabilities. The Chancellor announced in his Budget earlier today the decision to proceed with that option. This means that, typically, if an employee shareholder were to receive shares worth £2,000, no income tax or national insurance contributions would be chargeable when they received them. If they received £2,500 worth of shares, any tax would be due on the £500 excess.

The Finance Act contains several measures that will prevent misuse of the employee shareholder employment status.

--- Later in debate ---

[Viscount Younger of Leckie]

It is indeed voluntary, but I would like to clarify that when it comes to a jobseeker seeking a job, they are treated in exactly the same way as other statuses. That is because we believe it is important to move jobseekers into work as quickly as possible, just like other statuses. Periods of unemployment, as we know, can have a most damaging effect on individuals’ long-term employment prospects and indeed earnings. That is why the jobseeker allowance regime focuses on moving claimants into any work as quickly as possible. This remains the case for the employee shareholder should they be mandated and reach the point when they are offered this particular position. We think it is right that they should not be treated any differently in this particular respect.

[Lord Adonis]

I am having some difficulty following the Minister's argument. He says that the acceptance of these posts is indeed voluntary, even though the individual in question stands to lose a substantial part or the entirety of their income if they do not accept the post. Could he explain to the House in what meaningful sense that is voluntary?

[Viscount Younger of Leckie]

It is voluntary in that the individual can decide whether he or she wants to take this particular role. If it has got to the point where they are mandated and there is an issue as to whether they take it or not, there are processes in place to work out how to go forward. That is the process that the noble Lord, Lord Adonis, will know is set as part of the guidance. The decision makers and the jobcentres know how to deal with it on a case-by-case basis.

[Lord Adonis]

This is a really crucial point in our deliberations. The guidance that the Minister circulated to your Lordships says:

“Employee Shareholder vacancies should be treated in the same way as any other vacancy. If a claimant … fails to apply for or accept if offered an Employee Shareholder vacancy … the DM”—

the decision maker—

“will consider a higher-level sanction in the normal way”.

It could not be clearer that those not accepting these posts will be subject to sanctions. Therefore, in any meaningful sense, their decision is not a voluntary one.

[Viscount Younger of Leckie]

I can only reiterate that employee shareholder status is being treated in the same way, and that if in a specific case an issue arises, that is down to the discussions and decisions made at the local level in the jobcentres and with the employees who are seeking work. It is not just work for an employee shareholder as it may be that they are looking at a number of other positions at the same time.

The noble Lord, Lord Pannick, asked why we do not compel legal advice such as compromise agreements. Again, in the same bracket, we would say that this is to do with individuals looking at and accepting employment; it is not to do with departure from employment. We do not wish to treat the entry into employment in a different way. That is where we are.

The right reverend Prelate the Bishop of Bristol raised a number of points concerning whether this scheme is morally wrong. I think he used the expression “the thin end of the wedge” and that it was the beginning of the end for employment rights. I would reiterate that this is a new employment status which offers a different set of rights and mandatory share ownership. The status is not compulsory for companies to use and it will be suitable only for those companies that want to share ownership with their workforce. We must remember that employee shareholders will retain the majority of employment rights, including, for example, automatic unfair dismissal rights and the right to be paid the national minimum wage. As I said earlier, we have been consistent that the new status will not suit all people or all companies, but for those who choose to use it, the employee shareholder status offers more flexibility and allows greater risk and reward sharing between people and companies.

The right reverend Prelate also asked about flexible working. The statutory right to request flexible working creates a structure for conversations between employees and employers about changes to the ways of working that will be mutually beneficial. Employee shareholders will have a greater interest in the performance of their employer as it is linked to the value of their shares. We consider that employee shareholders are more likely to request flexible working if they think it will help them and the company, and do not need the statutory right to request. Further, employee shareholders can still make non-statutory requests for flexible working.

The Government want a labour market that works for employers and individuals. We want flexibility so that it is easy for people to find work that suits them and we want to help employers manage their staff more effectively so that they can focus on running and growing their businesses. We want to give individuals more chances to share in the growth agenda and to own shares in their employer. It is the Government’s belief that with this new status we are offering companies more choice and more flexibility. It is a new way of attracting high-calibre talent to growing companies. It may provide a boon to companies and improve UK competitiveness. This status offers individuals something new: employment with favourable tax treatment.

We all recognise that this may not suit everyone, and I have listened carefully to all the comments this afternoon. However, we should not deny people the opportunity to use this status or deny companies in the UK that are striving to grow and are looking for innovative and modern ways of taking people on. We want the House to embrace the opportunity and flexibility that this new status presents, and I would therefore ask the noble Lords, Lord Pannick and Lord Adonis, my noble friend Lady Brinton and the right reverend Prelate the Bishop of Bristol to withdraw the amendment.

Growth and Infrastructure Bill

Debate between Lord Adonis and Viscount Younger of Leckie

Wednesday 6th February 2013 Lords Chamber

[Lord Adonis]

The noble Lord therefore proposes a system that is even more complex and onerous than is envisaged. Such advice should be paid for by the employer, and there should be an explicit agreement between employer and employee stipulating the employment rights that are being foregone and the value of the shares being allotted.

When similar amendments were debated in the Commons, the Minister, Michael Fallon, said that they would impose,

“an unnecessary cost and burden to the employer”.—[Official Report, Commons, Growth and Infrastructure Bill Committee, 6/12/12; col. 484.]

However, this is not a new principle. As the noble Lord, Lord Pannick, said, it is, in fact, a principle accepted by previous Conservative Governments. The great noble Lord, Lord Tebbit, was Secretary of State when this principle was enshrined in law. Under the legislation of the previous Conservative Government, there are minimum independent legal advice requirements on the surrender of unfair dismissal rights in what are now called compromise agreements—a key element of which is a written agreement upon which the employee has received advice from an insured independent legal adviser or other specified and qualified person.

The noble Lord, Lord Pannick, also quoted the advice and recommendations of the Equality and Human Rights Commission, which could not be clearer. Let me read the recommendations to the Committee. They state that,

“the mere fact of a choice having to be made on which type of employment status to accept could indirectly discriminate against those less likely to be able to make a properly informed or truly ‘voluntary’ decision. This may include those whose first language is not English, those with learning disabilities, or young workers”.

The commission’s recommendations continue:

“In order for objective justification to be established, it is likely to be necessary for the individual to have a right to receive appropriate advice and for the employer to be required to draw this to his or her attention”.

We agree entirely with the Equality and Human Rights Commission’s recommendation. It is now up to the noble Viscount to say why it is wrong.

[The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Viscount Younger of Leckie)]

Noble Lords will not be surprised to know that I was expecting a somewhat lively debate on this general issue of shares for rights. I very much appreciate noble Lords’ contributions. Before I turn to the amendments in the group—Amendments 81D, 82A, 82B, 91 and 92—I should take this opportunity to inform the House about the clause. I will have the chance to expand on this during a stand-part debate, but the House might like to understand why the Government are creating the new employment status and what it is aimed to achieve.

The Government are creating a new form of employment contract that companies limited by shares can use. This new status will be known as “employee shareholder”. The employee shareholder will be granted shares in the employing company or the parent company but will not have all the rights of an individual with employee status. The Government are taking this action to offer companies and people more choice, and are giving choice to companies on how they structure their workforce to ensure maximum growth and flexibility, more choice for people in the type of jobs that are on offer to them and new opportunities to benefit from growth and meet their long-term aspirations.

This Government, from the outset, have committed to reforming employment laws, and are doing so through the employment law review. Establishing the employee shareholder status is different. With this change, the Government are creating a new type of employment relationship. It is an employment relationship where both the company and person share the risk and rewards for business more than any other employment type.

I now want to address the amendments tabled by my noble friend Lady Brinton and the noble Lords, Lord Adonis and Lord Pannick. This clause is not about making a new employment status compulsory for all. It is about adding to the employment statuses that already exist. It sits alongside existing employment statuses such as employee and worker.

Employment law does not stipulate that individuals should have legal or financial advice before accepting a job with the employment status of either employee or worker, or taking up share ownership possibilities. It would be anomalous to impose these requirements for the new employee shareholder status. Neither do we want to stipulate that employers must pay for legal advice. Noble Lords will appreciate that legal expenses can be high, which would be a burden both in administrative and cost terms, in particular for the type of fast-growing company to which this is most likely to appeal.

There is nothing in the clause that prevents individuals from seeking independent advice. This is about creating a new voluntary employment status and not about creating additional burdens for employers.

As for employment contracts, it is important to leave these to employers and individuals to negotiate, discuss, and agree to, although employees are entitled to receive a written statement of employment particulars within two months of the start of their employment. Government are committed to reducing burdens arising from regulation and therefore wish to keep administration requirements to a minimum.

The status, as we have already said, will be most attractive to fast-growing businesses, which will spend time looking for and investing in the right people to help their business grow, and will be willing to give fully paid up shares to the right candidate. These employers will have to invest in employee shareholders by giving them shares, which is a cost to them. It is likely that they are exactly the type of employers who would then struggle to find the additional cost and time to fulfil the amendments my noble friends and the noble Lords are suggesting.

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[Viscount Younger of Leckie]

Indeed, it may well be the case, but it is not my position to stipulate exactly which particular companies would be right for this particular scheme; only to say that we are offering this as an incentive and an opportunity for business to help the company grow. If it is not suitable for particular companies, that is absolutely fine—it is not suitable.

My noble friend Lady Brinton also asked why we were removing the statutory right to request time to train. The Government recognise that training in the workplace is important and acknowledge the concerns raised. There is currently no reason to suggest that removal of the statutory right to request time to train, which at present is available only to employees of large organisations—that is, those with more than 250 people—would result in employee shareholders being unable to access training or request it if needed. Larger employers tend to have established appraisal and development processes. On that basis, we do not believe that this proposal will adversely affect future employee shareholders. Employee shareholders can still make non-statutory requests for time off to train.

[Lord Adonis]

Did I understand the Minister to say in response to the noble Lord, Lord Flight, that these shares, including the first £2,000-worth, would be taxable? That is quite an important change in the policy announced in the other place.

[Viscount Younger of Leckie]

Yes, indeed, I can confirm that the shares that are received are taxable, so tax would be payable in the first available pay—

[Lord Adonis]

Tax payable at the point of receipt?

[Viscount Younger of Leckie]

Yes, it would be in the month following receipt of the shares.

[Lord Adonis]

Is the noble Viscount aware that he has made quite a significant change in government policy in the past few moments?

[Viscount Younger of Leckie]

I shall come back to the noble Lord very quickly if what I have said is incorrect, but I am pretty certain that it is correct.

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[Viscount Younger of Leckie]

I would like to think that I could say yes to that. However, it is up to the company to decide, and it is something that I cannot stipulate or guarantee.

I should like to address the question raised by the noble Lord, Lord Adonis. I can confirm that the shares are taxable, but the Chancellor is considering making the first £2,000 tax-free.

[Lord Adonis]

My Lords, with great respect to the noble Viscount, he is trying to say that the shares are and are not taxable. Which is it? Is the first £2,000-worth of shares taxable or not?

[Viscount Younger of Leckie]

I think that I have made the position very clear. The Chancellor is looking at this but I have said that it is taxable.

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[Lord Adonis]

My Lords, the purpose of Amendment 82 is the same as that of the amendment in the name of the noble Lord, Lord Tope, and the noble Baroness, Lady Brinton. I hope that we can unite across the House on the simple and fundamental proposition that shares-for-rights contracts should be voluntary, and that individuals on benefits should not be forced to accept them for fear of losing their benefits if they do not.

Before getting to the substance of the amendment, I will raise with deep concern a point of procedure fundamental to the issue of what benefit claimants will or will not be required to do, which is the guidance given to DWP decision-makers where appeals are made against the docking of benefits in cases where a claimant has failed to accept an appropriate job or attend an interview. The Government have said repeatedly through the passage of this Bill through the other place and the earlier stages of our debates in this House that they will amend the guidance so that it is fair. This revised guidance is vital to understanding what will or may happen in practice. I have repeatedly asked that noble Lords see the revised guidance or at the very least a draft of it before we consider this clause. We cannot properly consider it without the revised guidance because the issues at stake are so fundamental. For example, will carers be able to decline to take shares-for-rights jobs, or to attend interviews for them, because they may want to request flexible working? Will a youngster with few or no qualifications be able to decline a shares-for-rights job or an interview for one, since under these contracts they will not even have the right to request to undertake study or training?

I wrote to the noble Baroness, Lady Hanham, about the guidance on 9 January. By the time the Committee started I had not even had the courtesy of a reply. I raised this issue on the first day in Committee and the noble Baroness apologised for the absence of a reply—she did so very graciously—and, when I asked whether we would have the guidance by today, she said that she would seek to make sure that we did. We still have not got it. Instead, I have since had a letter from the noble Viscount which is wholly unsatisfactory. He wrote:

“Where necessary, revisions will be made to the guidance. It is important that the guidance is clear and fit for purpose—

it is, indeed, important; it is absolutely vital that it is clear and fit for purpose—

“and this task is ongoing. I will share it with the House when it has been drafted but undertake to keep you informed of progress”.

However, we need the guidance today. I took the noble Baroness to be undertaking that she would at least seek to ensure that we had it today. In view of the fact that we have not had it, I now take the noble Viscount’s letter to me to be intended to resile from the commitment to give us the guidance before we debate this clause.

When are we going to see the guidance? Do the Government really intend that we should debate this clause without seeing it? The noble Viscount owes the House an explanation of what is going on and, before I proceed with my speech, I invite him to give us one so that we know the basis on which we are intended to proceed in debating this clause. Is the noble Viscount not intending to explain to us why we have not had the DWP guidance?

[Viscount Younger of Leckie]

I will be speaking at the usual moment. I would like to hear the speeches of other noble Lords first.

[Lord Adonis]

My Lords, I note that the noble Viscount is not even defending the fact that the guidance was not sent to us before this debate started. The first issue he needs to address is why we have not had the guidance before us in Committee even though we were given assurances that the Government would seek to get it to us; and we need to know precisely when the guidance will be forthcoming. I give him notice that if we do not have that guidance by Report there will be significant arguments about the way in which the Government have treated the House. I have been on that side of the Dispatch Box and I regard it as wholly unsatisfactory that we should be expected to debate a fundamental change in the way benefits claimants are treated without knowing what it will mean in practice.

[Viscount Younger of Leckie]

The noble Lord makes a very good point. I stick by the words in my letter that further guidance will be forthcoming. We have some guidance already but we are working hard to improve and expand it. I will come back to the noble Lord as soon as I can to explain when it will be available.

[Lord Adonis]

My Lords, I am grateful to the noble Viscount, but can he tell us whether that will be before Report, when we will debate and, I suspect, vote on the substance of the matter before us?

[Viscount Younger of Leckie]

I will obviously need to return to the noble Lord with a clear answer on that. Right now I cannot give him that answer, much as I would like to.

[Lord Adonis]

My Lords, the House needs to be aware of the situation that we are in at the moment. The defence that the Government make in respect of the proposal that benefits claimants will not be treated unfairly is that the DWP guidance will be redrafted. That is what the Minister, Michael Fallon, said in the other place and what the noble Baroness, Lady Hanham, said at earlier stages of our debate. We are now being told that the Government are not even prepared to undertake to allow your Lordships to see that guidance before we debate amendments which go to the heart of whether or not claimants will be required to take jobs.

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[Viscount Younger of Leckie]

To be fair, I did not precisely say that. I said that I would get back to the noble Lord as soon as possible: I did not say that I would not get the guidance to him before Report. I stick by what I said, both in my letter emphasising that the guidance notes are extremely important and are being worked on at the moment, and, secondly, that I will come back to him as soon as possible—possibly even this afternoon—to give him a time for when the guidance notes will be available. I hope that it will be before Report.

[Lord Adonis]

My Lords, with each intervention the noble Viscount is more forthcoming. Now it is possibly later this afternoon. I know the Box is working hard and I hope that “possibly” later this afternoon becomes “definitely” later this afternoon.

[Viscount Younger of Leckie]

That is not a guarantee. I am saying that I am hopeful that the information will be available this afternoon.

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[Viscount Younger of Leckie]

I have not seen the guidance but I do not believe that it will say that.

There are two further safeguards for jobseeker allowance claimants. Should a claimant refuse to apply for a job after mandation, a sanction will be imposed only if the claimant does not have good reason. A decision-maker within DWP will be responsible for making that determination. In reaching a determination, they will take into account the claimant’s circumstances, the specific job and the terms and conditions on offer. Again, the Government will supplement the DWP decision-makers’ guidance around any particular issues with the employee shareholder scheme that need to be considered.

[Lord Adonis]

Several times the Minister has said that the guidance would be updated with regard to any particular issues that arise from employee shareholder contracts. The particular issue that arises is precisely the issue raised by the noble Lord, Lord Pannick, which is that these rights are being withdrawn. If that is not the issue that arises, could the Minister tell the Committee what the issue is that arises which the Government are going to seek to address in the revised guidance?

[Viscount Younger of Leckie]

As I explained earlier, I am not in a position to give the Committee that information just at the moment. The issues will be outlined when the guidance is available. That is the only answer that I can give at this stage.

[Lord Adonis]

My Lords, the Minister has come to the Committee to tell us that he cannot begin to tell us the basis on which the guidance is going to be revised, which is his own defence in response to the arguments that the guidance itself will not be reasonable in the circumstances.

[Viscount Younger of Leckie]

I can only reply to the noble Lord that I am not in a position to explain the guidance because I have not seen it because it is being revised. That is the only answer that I can give at the moment.

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[Viscount Younger of Leckie]

I can only re-emphasise that when a case is taken on a case-by-case basis, this means that, if an individual is seeking a job and an employee shareholder position comes up, the Jobcentre Plus and the officials within the system will be looking at the individual’s case. It is their job to determine the way forward in relation to the employee shareholder position that has arisen.

[Lord Adonis]

My Lords, the noble Viscount ended by saying that he hoped that I would withdraw the amendment in light of the reassurances that he had given. With great respect to the noble Viscount, he gave no reassurances whatever. Though I am not intending to press the matter today, the Committee will have to draw its own conclusions from the total absence of reassurance which the Government have provided so far. Not only have they not provided any reassurance, but they have not even given the Committee the basic information that we need to be able to make a judgment as to whether there is any validity in the statements that the Government have made to the effect that issues relating to the new employee shareholder status will be taken account of by DWP decision-makers.

The noble Viscount has a disarming manner, and we commiserate with him for having to defend this proposal to the Committee—I would not wish to have to do so myself. However, when he says that we need to be sympathetic to the Government’s position because this guidance is 3,000 pages long, I feel bound to point out that it is the Government who are seeking to change the law; it is not Members of your Lordships’ House who are seeking to do so. The fact that the guidance is 3,000 pages long is not a defence for the Government not having prepared for changes which they are proposing to inflict on the country and declaring them to Parliament before we change the law. They say that changing 3,000 pages of guidance is a laborious job. I am sure that it is: I spent a good part of this morning trying to read the guidance and to make sense of it. Goodness, even legal eminences of the height of the noble Lord, Lord Pannick, would struggle with the complexity of the guidance which the DWP issues. If the Government are saying that they need more time, your Lordships would be very happy to give it to them if they wish to withdraw Clause 27 from the Bill and then bring it back when they have got their guidance in order so that we can then look at it with the clause to which it refers. There would be a generally warm reception to such a proposal from the noble Viscount.

[Viscount Younger of Leckie]

I just want to re-emphasise what I was trying to say about the document being 3,000 words long. I wanted to reiterate that this is no small task. One may well say, “You should’ve done it before Committee stage today and certainly before Report”, but as the noble Lord knows, I cannot at the moment give a guarantee that it will be ready by Report. I simply wanted to state that this is a major document, a lot of detailed work is going on, and it will come.

[Viscount Younger of Leckie]

I stand corrected—it is indeed 3,000 pages long.

[Lord Adonis]

My Lords, I repeat: it is the Government’s responsibility to prepare the changes to the law and the guidance that they wish to make and to present them to the House before we change the law. The fundamental point is the one that the noble Lord, Lord Pannick, made—the difference in respect of these contracts is that employment rights are being withdrawn. The fundamental question, on which we need to see the guidance, is whether the withdrawal of these rights is itself a reason why unemployed people are permitted to decline to attend interviews or accept jobs. If it is not a reason then nothing has changed. This clause therefore flatly contradicts the assurances that have been given to Parliament that the new employee shareholder status is voluntary. I think that that is a very significant point which your Lordships will wish to take into account when we get to Report. I beg leave to withdraw the amendment.

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[Viscount Younger of Leckie]

I re-emphasise that the Government stick by their idea and plan that the provision will suit small start-up companies, but not exclusively those. However, from my noble friend Lady Brinton’s comments, it certainly does not seem to suit the companies that she has been in touch with, and I thoroughly respect that. I say again that this will not suit every company, but I have given quotations from individuals who seem to think that this is a good, innovative new scheme, which I very much welcome. I hope that it will take off, despite the fact that it is obviously quite contentious.

[Lord Adonis]

My Lords, we are full of admiration for the way the noble Viscount seeks to defend these proposals before the House. However, I am afraid that I find myself with the noble Lord, Lord Deben, who said that this was a mystifying moment in a mystifying Bill. The mystification gets greater the longer the Government seek to defend the proposal, and does so in three respects. The first is the figure of 6,000, which is in the impact assessment and which the Minister has undertaken to write to noble Lords to defend. However, I have read the impact assessment and the figure appears to be simply plucked out of the air. There seems to be no justification whatever for a figure of 6,000, as opposed to—

[Viscount Younger of Leckie]

I apologise for interrupting and thank the noble Lord for giving way. I made it absolutely clear that this was a guesstimate. When pressed by the noble Lord, Lord Pannick, on the figure, I felt it appropriate to give a figure to the House, and I am quite prepared to come back to the House on it. That figure may indeed change, but I reiterate it and suggest that it is not worth going further on this particular issue.

[Lord Adonis]

My Lords, all I need to do to let these proposals collapse is allow the noble Viscount to carry on speaking because, proposal by proposal, his case disintegrates. It turns out that the 6,000 figure is indeed a mystifying figure that has no basis in fact. I am thinking of why he might have chosen that figure—it appears to be twice as long as in the guidance for DWP decision-makers. Perhaps that is the basis on which the figure has been devised. We look forward to hearing the justification for it, and therefore whether this measure is incidental or fundamental.

The truth is that the Government cannot possibly know. However, so far as your Lordships are concerned, we have a responsibility not to put on to the statute book provisions that could be seriously detrimental to the health of the nation. No part of the health of the nation is more significant than people at work and their rights there. It is not satisfactory simply to proceed with the provisions on the basis of figures that have been plucked out of the air.

The second thing that has become clear is that the Government suffer from two fundamental problems of schizophrenia. They want more entrepreneurial zeal in the economy, as we all do, but almost none of the entrepreneurs to whom it looks to generate new companies, new ideas and new ventures supports the proposal and believes it will have the effect that the Government state. A number of noble Lords with a great deal more experience of business ventures than me have made that point. I think I quote the noble Lord, Lord Deben, correctly as saying that he could not imagine “any circumstances whatever” in which he would seek to offer these contracts to employees in a small start-up company as a way of motivating them.

The fundamental problem that the Government have with the proposal—the basis upon which it has been put forward is that it will stimulate in the context of the lack of growth new, vitally needed entrepreneurial zeal and companies—is that the entrepreneurs and companies to which he is looking to provide that energy do not believe that this proposal is necessary. On the contrary, almost all of them are critical because they believe that the reputational damage that it will create may undermine the cause that the Government are seeking to promote.

However, a third big tension that has come through clearly from the noble Viscount’s remarks is that the Government speak with two voices. One part of the Government celebrates the extension of employment rights and says that that is a fundamental objective of the coalition Government established in 2010, at the very same time as another part of the Government celebrates the withdrawal of those rights as being necessary to stimulate the economy in a period of economic downturn. I have a view on these matters, but surely the Government should make up their mind which is true. Is the extension of employment rights essential to stimulate the economy to provide greater flexibility and protection for those at work, or is the withdrawal of those rights necessary to spur economic growth? At the moment, one Minister comes here on one day and says that it is the withdrawal of rights, and another Minister comes here on another day and says that it is the extension of rights.

The noble Baroness, Lady Brinton, referred to the Deputy Prime Minister. At the very time the Bill was going through the House of Commons, he made a speech entitled, “Greater equality for a stronger economy”. That was the title on his website. He said:

“I can also confirm today that the Government will legislate to extend the Right to Request Flexible Working to all employees”.

At precisely the same time, this legislation was brought forward: legislation that withdraws the right to request flexible working from employees who are on these employee shareholder contracts.

Are the Government not aware that there is a fundamental problem when one Minister says one thing and another Minister says another, and the two are totally at variance?

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[Viscount Younger of Leckie]

My Lords, first, I am most grateful to my noble friend Lord Deben for extolling the virtues of employee ownership, which is very much part of the debate today.

This amendment stipulates that the clause should come into effect only once an independent assessment, conducted by the Office for Budget Responsibility, is laid before both Houses setting out the impact on the Exchequer for each financial year between 2014 and 2030.

The OBR’s role is to provide independent scrutiny and certification of the Government’s policy costings ahead of the Budget and the Autumn Statement. The OBR certified the costing of this measure submitted by HMRC using the methodology set out in the policy costings document published at the Autumn Statement, which is available on the HM Treasury website.

The main duty of the OBR is to examine and report on the sustainability of the public finances. The OBR performs this duty independently, with complete discretion to determine the content of its publications and its work programme of research and analysis.

The Government do not publish annual breakdowns of the cost of operating specific tax measures beyond the end of the forecast period, and this has been the case for some time. This will apply to the employee shareholder status in the same way as it applies to the cost of operating any other specific tax measures.

The noble Lord, Lord Adonis, is understandably concerned about the need to support the Government’s agenda for fiscal sustainability. I emphasise that we believe that investment in policies such as this one—aimed at reducing costs on business and increasing productivity —is exactly what is needed at this time. Strong, sustainable and balanced growth is the key to long-term fiscal sustainability. However, I assure the noble Lord that if further provisions are needed to limit its overall costs, we will have the opportunity to include these at a later date.

At this stage, I think it is worth picking up some points that the noble Lord, Lord Adonis, raised concerning the OBR. The OBR, with its responsibility, is right to note that predicting the take-up of new policies such as this one is very difficult. We recognise that, but its comments need clarification. First, the OBR refers to tax planning and not avoidance. Encouraging take-up of this targeted employment policy should not be misconstrued as encouraging avoidance. Secondly, any rise towards £1 billion is estimated to occur well beyond the end of the forecast period—in fact, beyond the 2020s, when national income is likely to be more than twice as high in today’s money. Finally, the draft legislation published on 11 December includes a number of anti-avoidance provisions. If further provisions are needed to address particular avoidance risks, we will have the opportunity to include them at a later date with a view to ensuring that this policy does not become disproportionately costly to the taxpayer.

[Lord Adonis]

Could I ask a specific question? The OBR said that it expected the cost of this policy to rise towards £1 billion beyond the end of the forecast horizon. Is that a figure that the Government accept?

[Viscount Younger of Leckie]

It gives me the opportunity to answer the noble Lord’s question by saying that the OBR has stated that in the long term this policy could cost up to £1 billion. That figure relates to the future period beyond the 2020s. However, there are uncertainties associated with costs so far into the future and I am sure that the noble Lord will appreciate that. The Government expect that the new employee shareholder status should help to stimulate business and entrepreneurial activity by affording businesses greater choice on the contract that they can offer to individuals while ensuring that appropriate levels of protection are maintained. If the policy achieves this aim, the cost, which is expected to reach £8 million in 2017-18, is proportionate. The draft legislation published on 11 December sets out a number of anti-avoidance provisions to prevent the manipulation of the capital gains tax exemption on shares received under the status. If further provisions are needed to address particular avoidance issues, as mentioned earlier, the Government will have the opportunity to include these at a later date with a view to ensuring that this policy does not continue.

My noble friend Lady Brinton raised the issue of whether the tax incentives were in effect a tax avoidance scam, if I can put it somewhat indelicately. She did not put it in that indelicate way. The Government have already included provisions to deal with various types of possible abuse in the draft legislation on capital gains tax exemption. If other forms of abuse come to light, the Government will make the necessary changes to combat that with a view to ensuring that the policy does not become disproportionately costly to the taxpayer.

Some concern has been raised, notably by my noble friend Lady Brinton about the capital gains tax exemption. This relates particularly to people taking up this new employment status, and although I touched on it slightly earlier, I shall address it directly. We believe that employee ownership is a good thing. We want people to become employee shareholders and to benefit from the exemption provided. Where it is used properly it should be seen as a measure of success and people should take advantage of this particular exemption. However, the draft Finance Bill published on 11 December takes a robust line on the potential misuse of the exemption and provides several measures that would prevent the misuse of employee shareholder employment status. There are rules to prevent those who control a company, such as company directors, holding exempt employee shareholder shares if they control 25% or more of the voting power in the company. Similarly, rules will prevent people connected to those who control the company, such as spouses or children, benefiting from the exemption. We will prohibit employees from benefiting from multiple £50,000 limits by entering into multiple consecutive employee shareholder contracts with related companies. Instead when related companies are involved, an employee will have a single £50,000 limit applying to all shares received by related companies. We will also ensure that those looking to get around the limit by using company liquidations to dispose of and then receive new exempt shares cannot do so. We will require two years to pass between the liquidation of the company and the employee receiving further exempt shares. This treatment strikes the right balance between preventing abuse and ensuring that genuine entrepreneurs are not unfairly hit.

Finally, the legislation will prevent the manipulation of share values, for example, by placing restrictions on them so that an employee can receive shares that are in fact worth more than £50,000. For the purposes of the capital gains tax exemption the value of shares will be based on an unrestricted market share. Taken together the measures and the safeguards outlined in the draft legislation will ensure that the tax benefits of a new employment status can be misused. I hope that that goes some way to satisfying the noble Baroness, Lady Brinton.

[Viscount Younger of Leckie]

I am grateful to my noble friend for clarifying that and, of course, he is absolutely right. I felt that it would be helpful to the House to outline the safeguards and to reiterate that the Government have thought very carefully about these issues. Taking up some of the comments made by my noble friend Lord Deben, I emphasise again that it is a risk-reward status as the employee shareholder. The award is: yes, the opportunity is there to be given from between £2,000 and £50,000 and to be aware that if it is £20,000, £30,000, or whatever the figure might be, and the share price happened to double, the total amount, including the doubling would be free from capital gains tax. That is the reward bit, but equally, I am also realistic enough to say that it is possible that the shares might indeed be worth nothing. That is the risk, and it is best to be quite straight and open about that particular issue. With that in mind I hope that the noble Lord is willing to withdraw the amendment.

[Lord Adonis]

My Lords, I do not intend to press the issue today. Let me be brief in response to the noble Viscount. We face a straightforward case of schizophrenia here. One part of the Government tells us that the biggest problem facing the country is debt and another part of the Government produces a proposal, which we are debating today, for a new tax break for substantial shareholders that the Office for Budget Responsibility estimates will ultimately cost up to £1 billion a year. When we debate the entirety of Clause 27 on Report, this latest example of schizophrenia will be one of the reasons why we will seek to delete it. I beg leave to withdraw the amendment.