(10 years, 9 months ago)
Grand CommitteeMy Lords, like other noble Lords, I join in praising the Minister for all his efforts on this Bill. Without his leadership, we simply would not have this legislation on which we can debate these regulations.
When I was praising the Minister, I wanted to say that, of course, he built on the foundations created by my noble friend. I hope that he will also accept the gratitude and praise of the Committee and everybody in a much wider community who have been concerned about the predicament of mesothelioma sufferers.
My noble friend is too kind, but I am conscious of the fact that this Bill has been forged in very difficult economic circumstances, and it is a splendid result that we are where we are. Like others, I also welcome the increase in the level of payout. As I remember it, when we were discussing this during the passage of the Bill, there were two versions of the gross tariff: one from the ABI and one from the DWP. I think the difference between them was based on the projections of the age profile of those who contract mesothelioma. We focused on the higher, DWP, one. Will the Minister confirm that this is still the gross tariff that we are working to and that it will be 80% of that?
A number of noble Lords have raised the 3% of gross written premiums. I am not sure that I heard the Minister actually say that this is where the levy is going to start, and it will be helpful if he could confirm the position. I thought his expression was “within that 3%”, but it would be good to know when we will see the levy regulations and whether the expectation is that it will be fixed, initially, and thereafter, as my noble friend Lord Howarth said, at 3% of gross written premiums. Obviously, this is to the extent to which they did not produce more than a 100% payout.
The Minister confirmed that the legal fees at £7,000 per case would be paid on top of that. I am not quite sure that I followed the reasoning of how that will be dealt with in alternative regulations. I would appreciate it if the Minister reiterated what he said. The noble Lord, Lord Alton, has been steadfast on the issue of research. Will the Minister take the opportunity to tell us where he thinks the insurance industry now stands, and what the prospects are of getting extra funding from it one way or another?
I have a couple of technical questions. Can we have an update on the oversight arrangements? I do not think there is a specific reference in these regulations to the oversight committee and whether there should be any obligation on the administrator. I should say that the Minister has been true to his word in terms of the process of appointing the administrator of the scheme, but I do not think there is anything in these regulations which requires co-operation and engagement with the oversight committee. Perhaps the Minister will say how he sees that working.
There was an issue over Schedule 3 to these arrangements, which deals with the application. This sets out all the information that needs to be provided and includes the names of all the person’s employers and the description of the arrangements under which the person was engaged by each employer. One of the issues that cropped up just at the tail end of the Bill’s consideration in the other place was HMRC policy on work histories and the extent to which a court order is now necessary for HMRC to provide them. I hope that this issue has gone away, but I would appreciate an update from the Minister on that point.
On a smaller point, will the Minister clarify where the administrator can impose conditions on a claimant? I think we understand why that would be but, as I understand it, there seems to be some differentiation. Conditions can be imposed where a dependant is an applicant, but where the applicant is deceased and the payment goes to the personal representative I am not sure that the constraints or conditions on that payment would apply. Maybe that is not necessary because it would be the role of the personal representative to make sure that that was effectively dealt with. Can the Minister confirm that?
Finally, I just ask about the Ministry of Justice procedure for reforming mesothelioma claims. In a sense, the Government backed up what was originally proposed but paragraph 39 of their response to the consultation on these proposals states:
“The stated purpose of the Secure Mesothelioma Claims Gateway was to support the proposed Mesothelioma Pre-Action Protocol. As the Government has declined to take forward the MPAP supported by a fixed recoverable costs regime, the ABI will no doubt want to consider whether and how it would wish to take forward its proposal for funding and hosting a SMCG and how claimants and defendants might voluntarily make use of it”.
Could the Minister give us an update on that and what it means in the current situation?
(11 years, 6 months ago)
Grand CommitteeMy Lords, as the Minister will be aware, while I am supportive of the scheme that he brings forward, there is a need for key improvements. Foremost among these is the proposed level of scheme payments. We have seen nothing definitive, but the impact assessment suggests that it could be pitched at 70% of the tariff. The tariff will be set in age bands of one year and it is understood that it will be based on average compensation awards of claimants and dependants, in respect of those diagnosed with diffuse mesothelioma. The impact assessment also states that by linking payments to age, the overall cost of the scheme will be reduced because of the rise in age of those diagnosed.
The suggested likely level of payout of 70% is the component of the scheme which most noble Lords at Second Reading considered unacceptable. An increase in this level of payment is the most important change we can make to the Bill. It is difficult to pin this down in the primary legislation but we need to have something clear in the Bill. What levels of payment are actually made depends upon the computation of average compensation claims as well as the percentage award.
As to average compensation claims, we need to be assured that this is a fair basis for constructing the tariff and that it does not unfairly depress the amount of compensation claims which would have been payable to scheme beneficiaries had they been able to access compensation on an individual basis. There is no inherent reason why the cohort of scheme claimants should not reflect the average of those accessing compensation in the usual way.
We have seen the national institute’s statistical note, which merits more detailed scrutiny. However, we have not seen that translated into a tariff schedule which supports the impact assessment levy calculations. When might this be available? The national institute note sets out various measures of average compensation, including the arithmetic mean, the median and a variety of trimmed means. Which average is to be used?
Table 3.4 of the paper sets down some average compensation tabulations but it is unclear whether either of model 2 or model 4 will be adopted. Further, it would appear that in Scotland, for example, actual awards are on average some £60,000 higher than in the rest of the UK. Is this right and are there any other large regional disparities of which we should be aware?
At Second Reading the Minister referred to setting payment figures at 70% as a “real juggling act”. The argument runs that if the levy is small, in a reasonably competitive market providers will absorb it and not seek to pass the cost on to British industry. The impact assessment points to research both ways on this matter, although it also suggests that it is worth noting that even if insurers did pass the costs on to employers the impact on employer customers is likely to be relatively low.
The argument being used to significantly depress payments to sufferers of mesothelioma is thin to say the least. Where is the evidence that at a 3% level they will absorb the costs but above that they will not? Is it not the case that there is a variety of issues and costs which will feature in employer’s liability insurance pricing and that these policies might anyway be bundled with other insurance products? Even taking the Government’s argument at face value, their position cannot be justified.
Taking into account the government contribution in year one, the levy on insurers is, on average, estimated to be 2.24% of a 70% level of payment. This would imply an average level of some 3.2% if the payment were set at a 100% level, an extra 1% of gross written premiums, or £15 million per year over the 10-year period. From the point of view of the insurance industry, this would not appear to be an unmanageable additional amount.
It should be borne in mind that the industry is still not bearing the costs of other asbestos-related and long-term diseases where employer’s liability policies cannot be traced. The Minister has suggested that the diffuse mesothelioma scheme covers 70% of the payment amount that would fall due if there were full coverage, so there is benefit still accruing to the sector just because old policies have been lost or destroyed.
However, this aside, we should not be looking at this only from the point of view of the insurance sector. We need to give full consideration to those affected by this terrible disease. If their condition is a result of negligent workplace practices, why should support for them be discounted by 30%? Indeed, on a matter that we have to pursue in the future, we remain to be convinced that the scheme payment could not be subject to greater benefit recovery than a composite level of compensation payment. However, we will return to that issue.
If it is right—and it is—that payments should be made, they should be the full compensation equivalent. It has taken a long time for a scheme to be developed and we continue to pay tribute to the Minister for advancing this, but there is no excuse for now short-changing those who, we all agree, should get justice. I beg to move.
My Lords, my Amendment 18 is grouped with Amendment 15, just moved by my noble friend Lord McKenzie, and it drives at very much the same purpose. Both of us seek to ensure that the scheme payments will match the average of court awards for people in comparable circumstances, thereby lifting the figure from 70% of the tariff to 100%.
I have not been able to discern any principled basis for this figure of 70%. I think that it was the best deal that the Minister could secure. I do not underestimate his achievement in securing that deal against an insurance industry that for decades fought a rearguard action to try to escape from its proper liabilities. At Second Reading, the Minister told the House of the press investigations into the mesothelioma scandal in its various dimensions from 1965 onwards. As time went by, we understand that policies went missing wholesale. As the Minister also told us at Second Reading, it was not until 1999 that the industry created a code of practice for the better tracing of employer’s liability policies.
As I said in an earlier debate, I do not think that Parliament needs to feel that it is bound by the deal that the Minister has secured with the industry. We respect the Minister’s efforts in securing that deal but it is our duty to take a view on where the public interest lies, and I do not believe that it lies in palpable injustice or in the convenience of the insurance industry at the expense of mesothelioma victims. It is surely unacceptable that mesothelioma victims should be penalised because, through no fault of theirs, documents have gone missing, and it is unacceptable that the insurers, whose duty it was to keep proper files, should benefit to the tune of 30% in precisely those cases where they failed in their responsibilities.
The Minister will argue to us again, I think, that there needs to be a discount in order to incentivise claimants to go to the courts first. However, I am not persuaded by that argument because it seems to me that the procedures of the scheme—the portal and the remit of the technical committee—will all ensure that they do go to the courts first if they can and that they pursue that avenue until they find that they cannot proceed satisfactorily or successfully along it. Be that as it may, in any case a 30% discount is simply too large. The Financial Services Compensation Scheme provides cover for 90% of the liabilities of insolvent insurers where insurance is compulsory. That 90% should be the very minimum and 100% would be right.
My Lords, I shall speak also to Amendment 2. These two amendments provide that a relevant order may be made after the commencement of the Act and that the Secretary of State must, within three years, publish criteria that will apply for a replacement order to be made. Noble Lords will recognise that this is a narrowly drawn amendment in that a relevant order is one in respect of which proposals have been received by the Secretary of State before the commencement of the Act.
It might be helpful if I explain that our intent to have a broader requirement imposed on the Secretary of State to report within a period of time on whether any further proposals for unitary status will be considered, and on what basis, is sadly outside the scope of the Bill. However, we consider that the Secretary of State should have a positive duty to report, after a period, on whether he will entertain any further unitary proposals and on what basis. This is not about going over old ground and seeking to reopen the quashing of the Exeter and Norwich orders, and it is not about challenging the constitutional propriety of what has ensued. We accept that we are where we are on these matters. However, it is about keeping alive the prospect of revisiting opportunities for a single tier of government generally and specifically for Norwich, Exeter and Suffolk. It is also not about requiring the Secretary of State to invite any proposals, but about causing him at some point in the future to publish the basis on which, if at all, he might invite proposals.
As we have discussed at earlier stages of our deliberations on this Bill, the 2007 Act continues to give the Secretary of State the power to invite proposals for a single tier of government. This amendment neither seeks to expand nor curtail that power. We have heard from the Minister before that it is unlikely that the Secretary of State will wish to invite further proposals during the course of this Parliament. It is that absolute, dogmatic position which this amendment seeks to qualify. It would require him to justify continuing with that stance throughout the Parliament.
We know that these are going to be exceptionally tough times for local authorities, made worse by the macroeconomic policy of the Government, who are intent on cutting public expenditure deeper and faster than is necessary to address the challenges of the public finances. Some principal authorities will face those challenges as unitary authorities, and some under a two-tier system. The need to find new ways of working, embracing area-based budgeting—Total Place, if you will—and developing broader partnerships, will be essential. The Government’s position seems to accept that the current configuration of local authorities is the best way to move forward on these issues. In the case of Exeter and Norwich, the Minister asserts in her letter of 22 July that savings that could be achieved under unitary status can be achieved, and indeed exceeded, by collaborative working between the two tiers of local government, although no detailed analysis or independent review underpins that assertion. Even if it is right—we do not necessarily accept that it is—what work has been undertaken to say that the same runs true for what we might describe as the extra challenges engendered by the cuts coming down the track from the public expenditure review? If there is a requirement for new thinking, new ways of working and different models of commissioning, is it not reasonable that along the way there is the opportunity for an update on the current divide between unitary and two-tier status?
In essence, that is what this amendment seeks, specifically in the cases of Norwich, Exeter and Suffolk because those are the constraints of the Bill, but the same runs generally. At a point in the future not more than three years away, the Secretary of State should report on whether he plans to consider further proposals for single-tier local government. He will be able to do that with the knowledge of what has happened in the interim, how local authorities are coping with the new environment, and whether the structure of local government—unitary or two-tier—is a significant factor in driving better outcomes. He should hear the voice of local authorities and communities in undertaking that analysis.
The amendment should not be difficult for the Government to accept. It is about looking to the future, and about a medium-term opportunity for local councils to get an update on whether structural change—if it is in the interests of their communities—is available or off the agenda for the remainder of the Parliament. Given the huge uncertainties of the economic landscape, made much worse by this coalition Government, that is not an unreasonable proposition.
If the Minister cannot support the amendment, what alternative arrangements does her department have or will it put in place to keep under review the availability and potential use of the powers in Chapter 1 of the 2007 Act? What plans are there for reporting to Parliament on these matters? If we may not have provisions in the Bill, I hope that she can at least give us some assurance on the subject.
My Lords, I wish to speak in support of Amendments 1 and 2. These amendments invite the Government to reintroduce principle into their consideration of local government restructuring. The Secretary of State would be obliged by 2013 to consider whether further unitary reorganisations might in principle be permitted, and to state his criteria for deciding for or against such reorganisations. I will, if I may, explain some of the principles to which I believe the Government at that time should have regard. I will illustrate them by reference to Norwich and Exeter, as it is those cities with which the Bill is concerned. The principles illustrated in relation to Norwich and Exeter should be taken, however, as models for general application as and when the Government abandon their present unreasoning hostility towards creating new unitary local authorities.
There is, of course, a very strong case in principle for unitary local authorities. Unitary local government can be expected to lead to better provision of services in terms of quality, efficiency and economy, arising from closer local knowledge and responsiveness and better adapted service models. In the case of Norwich, a local authority dedicated to serving Norwich, its members all local people, would have intimate knowledge of the issues and needs in Norwich which, in a complex and sizeable urban community, are very different from those of rural Norfolk. Cities such as Norwich and Exeter need their own distinct policies and distinct administration if their distinctive problems and opportunities are to be addressed to best effect, and to enable such cities to realise their full potential, economically, culturally and socially. Unitary local government that enabled Norwich and Exeter to maximise their economic and cultural success would of course be to the great benefit of Norfolk and Devon.
It is plain common sense that unitary government will be more economical, having no duplication of staff, no fragmentation of functions, no complex procedures for co-ordination and no opacity in accountability. Unitary local government is also good for democratic culture. It provides for clear and accountable local political leadership. Norwich councillors and Exeter councillors would be straightforwardly answerable to Norwich people and Exeter people.
In a two-tier system, there are two councils, two sets of councillors, two sets of policies and two sets of service delivery arrangements. County and district are conflicted and confused between the competing demands of rural and urban needs. Some responsibilities are split; for example, housing and social services. Some overlap; for example, planning, with businesses having to negotiate two overlapping bureaucracies. In a two-tier structure, there can be no clear focus in policy-making, no clear strategic direction, no clear political leadership and no clear political responsibility.
The Conservative Party used to understand that local government was the seedbed of our democratic culture—a culture that has become all too withered. One cannot overstate the importance of reviving our democracy from its local base. It is a consideration of principle that should recommend itself to the Conservative Party, if it still has a sense of history, that the structure of local government should enable communities to be proud communities. Many of the cities that have become unitary authorities within the past 20 years were historically proudly self-governing county boroughs independent of their surrounding counties—some of them, like Norwich and Exeter, with charters going back many hundreds of years. For them, the 1974 reorganisation was an historical aberration.
No one recently has better described the importance of place than the noble Baroness, Lady Eaton, whom I am very pleased to see in her place. She comes from Bradford, like Mr Pickles. She has been chair of the Local Government Association. In a SOLACE Foundation pamphlet in January 2009, she wrote about,
“the more difficult agenda—the holistic agenda of growing a place’s unique character. This is where the true genius of local government really lies. Not just being the deliverer of a Whitehall agenda but by being the champion of a locality … Pride in place is not just about good services and sound finances, critical thought these are, but it is also about being the guardian of an area’s character, knowing and reflecting its personality and preserving its identity. It is to protect and enhance its story and this is best achieved by those who, day by day, walk local streets, suffering with the electorate their traumas and sharing in their achievements”.
The noble Baroness expressed it extremely well.
I ask noble Lords on the Benches opposite to understand just how demeaning it is when, without any consultation whatever, the county, none of whose cabinet members represent Norwich wards, decrees that the street lights in Norwich should be switched off at night, when it seeks to impose closure of cherished daycare centres, when it imposes a restructuring of children's services, or when it refuses to permit the locally desired pedestrianisation of an historic street. A two-tier structure invites that kind of arrogant and improper behaviour by the county.
The Conservative Party in truth has no objection in principle to unitary local government. Indeed, the previous Conservative Government created unitary local authorities wholesale. That Government were in deep difficulty, as was the whole of local government, as a result of the crass misjudgments of the 1974 reorganisation, the anomalies left by the abolition in 1986 of the metropolitan counties, the chaos created by the poll tax and the progressive erosion in the 1980s of local government powers. The noble Lord, Lord Heseltine, as Secretary of State for the Environment, trying to recoup something from this crisis of local government, decided to review not just the financing of local government, but its structure and management. A consultation paper in 1991 proposed,
“a move towards unitary authorities where these do not already exist”.
The Conservative Government set up a new quango—the Local Government Commission for England—to undertake a review and make recommendations. The criteria given to it for evaluation were not just those of financial costs and benefits, but to strengthen identity, accessibility, responsiveness and democracy.
My Lords, I shall speak also to Amendment 3. Before addressing the detail of these amendments, I should register our concern at having reached Committee stage without having had sight of the transcript of Mr Justice Ouseley’s pronouncement at an oral hearing on 5 July. We take it from the communication that we have received from the Minister that the effect of the pronouncement was to quash the orders with effect from 5 July, nullifying from that date the full effect of the orders and, in particular, causing the term of office to come to an end of those councillors who remained in office as a result of Article 11 of the two orders. Should our understanding be changed by eventual access to the transcript, we reserve the right to return to certain matters on Report.
However much we deprecate the current situation, we have to accept for the purposes of the Bill that the quashing of the two orders obviates the need for Clause 1(3) and that the proposals for unitary government for Exeter and Norwich, which were the subject of the orders, are brought to an end. Furthermore, Clause 1(1) will, if enacted, preclude the current proposals for Exeter, Norwich and Suffolk from being taken forward at all.
However, as we have discussed previously, the provisions of the Local Government and Public Involvement in Health Act 2007 are being left intact by the Bill, so the opportunity for the Secretary of State to invite principal authorities, including Exeter, Norwich and Suffolk, to bring forward proposals in the future for unitary status remains. Of course, we can take no encouragement from what the noble Baroness said at Second Reading about the likelihood of that happening. She stated that,
“it would also be fair to say that the Government have no plans to issue further invitations for unitary authorities and, if there were applications, they would be viewed against the serious economic situation we are in at the moment and consideration would be given to whether they offered any value for money whatever”.—[Official Report, 30/6/10; col. 1832.]
Value for the money is, therefore, at the heart of the Government’s concerns.
The impact assessment for the Bill is essentially the mirror image of the impact assessment for the original orders. We are faced with three scenarios: the status quo; the value for money arising from unitary Norwich and Exeter; and value for money from the Boundary Committee proposals. The latter two have been the subject of detailed work and independent review. I believe that the Minister now accepts that the transition period costs and savings, for example, from Norwich and Exeter unitaries were broadly equivalent and that ongoing savings could amount to £6.5 million per year.
All that we have for justifying continuing with the current arrangements is the assertion that the savings achievable through restructuring could be made by the councils working more closely with each other. We do not know whether the savings that the Government have in mind reflect the level of savings that would flow from the Boundary Committee proposals or from the Exeter and Norwich proposals. The Minister might take the opportunity to say which. No detailed figures have been presented to us; no explanation of the basis on which the Government are making this judgment has been given; no independent verification of the judgment has been done; no assessment of what history tells us about the propensity of the councils to co-operate has been made—hence our amendments.
Amendment 1 would simply extend the reference to the 2007 Act to the whole Bill, not that there will be much of it left. Amendment 3 gives us an opportunity to test the Government’s assertion around the savings that they believe are possible without restructuring. It would require an independent report to be prepared to determine whether value for money is being delivered for each authority whose unitary proposals are stopped by this legislation.
What do we mean by “value for money”? Value for money is about offering efficient, effective and joined-up public services, delivered through maximising collaboration and technology. It is about services that are effective, responsive and best suited to meet the needs and preferences of local and business communities. It is ultimately about services that people use because they value them, not because they have no alternative. Those services should reflect consideration of demand and other factors in the area, including areas of deprivation, transport links and travel to work, and shopping and leisure patterns. They should involve communities playing an active role in influencing and shaping both their planning and delivery. The coalition Government’s programme proposes to abolish the comprehensive area assessment and to cut local government inspections, so whatever performance framework will be left intact or will be introduced to see what progress any council is making is a matter of uncertainty.
In light of this, the amendment represents an extremely modest proposal. It would give the principal authorities at least two years to make progress. It does not seek to direct the Secretary of State to any course of action should the review show the status quo not to be delivering value for money. However, it would provide an opportunity for some reflection on the decisions that prevent Exeter, Norwich and Suffolk from attaining unitary status—reflection that, regrettably, the impact assessments make clear is not otherwise to be done. I beg to move.
My Lords, before I speak to Amendment 3, perhaps I may apologise to the House for being unable to be present for the Second Reading debate and explain that I was chairing a trustees’ meeting and the annual general meeting of a charity in Brighton. I gave my apologies to the noble Baroness, Lady Hanham, but, until now, I have not had an opportunity to explain and apologise to the House.
The independent report that Amendment 3 would require the Secretary of State to lay before Parliament would hold both Norfolk and the Department for Communities and Local Government to account in a useful and appropriate way. In the past, certainly in the case of Norwich, whenever proposals for unitary local government have been made, Norfolk has promised to work in better partnership with Norwich City Council and to achieve economies, but in practice nothing effective has been done. These have been empty words intended to fend off the threat of unitary status. If we were to have the report proposed in this amendment, it would put the county on the spot.
CLG produced its impact statement of the costs and benefits of its policy to abort unitary status for Norwich and Exeter to accompany the Bill when it was introduced. As my noble friends explained at Second Reading, that was a shabby piece of work. The Government contended in the impact statement that the scale of efficiency savings that had been forecast to be achieved through unitary status could be achieved by other means and without the disruption of reorganisation. However, the evidence basis for that assertion has not been presented. On the first page of the impact assessment, the question is asked, in the format of these assessments:
“When will the policy be reviewed to establish its impact and the extent to which the policy objectives have been achieved?”.
The Government answered, in the box opposite that question:
“It will not be reviewed”.
Then this question follows:
“Are there arrangements in place that will allow a systematic collection of monitoring information for future policy review?”.
“Not applicable”, say the Government. It is clear that they do not want the cost-effectiveness or the value-for-money implications of their policy to be analysed and reviewed in the future.
A section of the impact statement provides a checklist of specific impact tests that the Government might have applied as they prepared the policy. However, they did not take the trouble to carry out any of these specific impact tests, whether on,
“Statutory equality duties … Economic impacts … Environmental impacts … Social impacts”,
or,
“Sustainable development”.
The Government simply put “No impact” in each of the boxes opposite those tests. It therefore appears that CLG might be rather embarrassed if there were to be any systematic audit of the value for money and the administrative and economic consequences of the policy of retaining the status quo as opposed to going to unitary status.
As the document continues, it asserts:
“Stopping these unitaries … is good value for money … there is no need for forced amalgamations to achieve efficiencies of scope and scale, and the way forward is to reform and improve local government from within”.
That begs the question. How do you reform and improve local government from within? One of the options would be a post-implementation review plan, the possibility of which is contemplated in Annexe 1 to the impact statement, but the Government have declined to bring one forward. In the box that inquires of the Government’s views about,
“Success criteria … Criteria showing achievement of the policy objectives as set out in the final impact assessment”,
the Government’s answer is, “Not applicable”. Then there is the question of what “Monitoring information arrangements” are to be provided; again, “Not applicable”.
Finally, the Government are invited to answer the question in the impact statement on reasons for not planning a post-implementation review. Their answer is:
“We are not proceeding with unitary councils in Exeter and Norwich. As these unitaries have not yet been created, the proposal is in effect remaining with the status quo of two-tier authorities in Exeter and Norwich. As such it is not appropriate to evaluate it”.
That seems to me the most extraordinary and irresponsible approach to the responsibilities of government. In the impact statement, the Government have concealed and conjured figures to disguise the fact that the preservation of the status quo with the two-tier system of local government is the most expensive of the three options before the Secretary of State. The other two options were a unitary Norwich and Exeter or unitary counties of Norfolk and Devon. Both those options would have been administratively cheaper than preserving the status quo.