Europe: Youth Mobility

Lord Watson of Invergowrie Excerpts

Thursday 30th January 2025 Lords Chamber

[Lord Watson of Invergowrie (Lab)]

My Lords, it is an honour and a particular pleasure for me to follow the maiden speech of my noble friend Lord Moraes. We share something, inasmuch as we spent our early years in the fine city of Dundee. I notice that the noble Earl, Lord Dundee, is here today. I am not sure that he can say he spent his early years in the city of Dundee, but there we are.

My title, and that of my noble friend Lord Moraes, reflect that city’s heritage. For those noble Lords who do not know, although it is not visible, his title is Baron Moraes, of Hawkhill in the City of Dundee. Hawkhill is one of the longest-established thoroughfares in the city and contains much of his alma mater, the University of Dundee. It also contains a lot of hostelries in which he and I—at different times and at different ages, because we were a decade apart in our early years in Dundee—found much pleasure and often had some raucous nights out.

As my noble friend said, after he left university he came to London. It is important to note that he is qualified to practise in Scots and English law, which is not something that all that many people accomplish. He has achieved a wide experience over the years. I think it is appropriate that, having come here to act as a humble researcher to two MPs—now the noble Lords, Lord Boateng and Lord Reid of Cardowan—he now enters your Lordships’ House on an equal basis with them. It is very well merited.

My noble friend outlined his work, particularly as a national officer with the Trades Union Congress. This is nothing to do with my noble friend, but he mentioned an anecdote about the noble Lord, Lord Kirkhope, effectively being on two sides of the fence. It reminds me of the time when I was a full-time trade union official. One of my colleagues submitted a claim for pay and conditions to a particular company. Soon after, he joined that company in the department where he had to answer his own claim—which he did not do in full. It was similar to the situation with the noble Lord, Lord Kirkhope.

My noble friend Lord Moraes has gained many awards for the work he has carried out—most notably, of course, the OBE. He mentioned having been warmly greeted by many Scottish Members of both Houses in the months since he joined us. It is appropriate to say that not many of them realised his Scottish roots until they heard his dulcet tones. It brings to mind the phrase, “Ye can tak’ the laddie oot of Scotland, but ye cannae tak’ Scotland oot of the laddie”. That is very much the case as far as my noble friend Lord Moraes is concerned. It is a pleasure to have him here. I am sure that noble Lords will join me in looking forward to the many powerful contributions he will make to debates and to the wider work of your Lordships.

I commend the right reverend Prelate the Bishop of St Albans on securing this important debate. As he said in his comprehensive opening speech, this is a topical subject that I sense is beginning to gain some traction. Last year, as we know, the European Commission announced a proposal to open negotiations with the UK on a youth mobility scheme for all EU citizens, which would give 18 to 30 year-olds the opportunity to work or study in the UK for up to four years and offer the equivalent entitlement to young people from the UK. The Commission stated that the proposal would not be a return to free movement because it would be time limited, but it would enable studying, training, working and travelling. However, that proposal did not get very far. Although the previous Government rejected it, it is only fair to say that the EU was insistent that it must apply to all EU member states and not just be on an individual basis. That was the rock on which it foundered at that time.

Young people who become involved in exchanges with EU countries would return home at the end of them. That is the purpose of these exchanges: to gain experience of living and working in another country but then, at the end of it, to return home and bring what experience they gain into their working life in this country. That is a straightforward premise and it is disingenuous, to say the least, to portray it as somehow amounting to freedom of movement, as some do. Those who do so are, I believe, fully aware that that is not the case, yet they continue with what is, in effect, a distortion to fan the flames for those who are naive enough to believe that there is some nefarious attempt to reintroduce freedom of movement by the backdoor.

Let us be clear: the EU has not approached the UK with a formal proposal regarding a reciprocal youth mobility scheme. Rather, it should be our Government making the approach, because to do so would benefit thousands of young people in the age group characterised as Gen Z. It was rather dispiriting to hear my noble friend say earlier today, during Oral Questions, that the Government have no plans to seek a youth mobility scheme. No doubt she is duty bound to repeat that at the end of this debate, which is regrettable. To maintain such a cautious stance is to dance to the tune of those who want to feed the fears of those willing to buy fake news about some form of weakening of our current position vis-à-vis the European Union.

As noble Lords may know, the Prime Minister is meeting EU leaders next week and No. 10 has briefed that it is an opportunity to discuss “enhanced strategic cooperation” with the EU. I suggest that a youth mobility scheme should be part of that and should be less complicated to agree than other areas, such as dismantling trade barriers.

Maroš Šefčovič, the European Union’s new trade chief responsible for post-Brexit negotiations, said recently that a pan-European customs area

“is something we could consider”

as part of a reset in discussions between the UK and the EU. That might enable the UK to join the pan-Euro-Mediterranean convention. That created quite a bit of media stushie—as we say in Scotland—but such an idea is, I believe, non-threatening to the outcome of the 2016 referendum. That is underscored by the fact that the noble Lord, Lord Frost, who is with us today, has effectively given it the green light. I do not think that it is in any way a threat.

That may help to open up possibilities for an EU-UK youth mobility scheme but, even it does not, it is not as though youth mobility schemes are in any way unusual for this country. We of course had them when we were part of the EU, as my noble friend Lord Moraes mentioned, and today the UK has a youth mobility visa open to people from 12 different countries, which involves a quota system for each. In 2023, the last year for which figures are available, about 23,000 people came to the UK under these agreements.

These youth mobility schemes provide valuable cultural exchange opportunities for Generation Z to experience life in another country for up to two or three years and then return home. Those participating in schemes are able to work if they wish to do so, which provides valuable opportunities that help to prepare them for working life. The schemes involve countries some distance from these shores; there should be an equivalent for countries nearer to home, including countries in the European Union.

For the benefit of journalists, some of whom seem to be easily alarmed, these schemes are not designed, nor intended, to be a route for economic growth or to address specific labour shortages. They are about giving young people the best early chances in their life and working life. Recent polling for Best for Britain showed that 59% of UK citizens thought that the Government should prioritise negotiating a reciprocal relationship with the EU for Gen Z, with only 15% disagreeing with that proposal.

Although the EU Commission proposal was for any new scheme to involve all member states, as I said earlier, this need not be a deal breaker. EU member states can reach bilateral agreements on labour mobility with non-EU countries, and it is surely much easier and swifter to strike a deal with one country than with the whole EU. The key will be the limits to any such agreement, but that would be the subject of negotiations. Surely, with good will on both sides, a suitable arrangement could be achieved.

The Government should review its position on this, develop a policy that stops finding reasons for not doing it and search, together with EU member states, for reasons for doing it. I urge my noble friend to convey this view to fellow Ministers, potentially as a first step towards the change that our young people need and deserve.

Civil Servants: Compulsory Office Attendance

Lord Watson of Invergowrie Excerpts

Thursday 9th January 2025 Lords Chamber

[Lord Watson of Invergowrie (Lab)]

My Lords, I thank the noble Lord, Lord Farmer, for enabling us to discuss this topical issue, though I am unable to endorse the approach that he adopted in introducing it. The noble Lord brought to my mind the First World War generals fighting the last war rather than the current one. I do not recognise the hostile environment to which he referred. To advocate 100% workplace attendance being compulsory suggests a lack of trust in staff, which can hardly improve productivity.

I declare an interest, about which the noble Lord, Lord Farmer, will perhaps not be surprised, being in my 50th year as a member of Unite the Union and a former full-time official with one of its constituent unions. My instinct has always been to support workers who vote for industrial action, because no union member does so, particularly as regards strike action, without careful thought, due to the obvious personal financial implications.

That said, with regard to the Land Registry, the basis on which the PCS union feels that it has a case in terms of employment law is not clear to me. Unless someone explicitly has a home working contract—which I understand virtually nobody in the Civil Service does—then the employer is within their rights to say that they want staff in the workplace. Given that hybrid working was almost unknown prior to the pandemic, most civil servant contracts presumably say that they are expected to attend the department to work, unless they are out and about as part of their responsibilities.

However, people now expect flexibility from their employer in terms of working arrangements, a trend given impetus by the Employment Relations (Flexible Working) Act 2023 introduced by the previous Government. That legislation does not specifically involve home or hybrid working, but hybrid working can be a useful retention tool for employers who cannot simply throw money at staff in response to pay demands. Cutting commuting costs can be an indirect boost to an individual’s disposable income.

I have arrived at a position where a requirement to attend the workplace three days a week does not seem excessive and seems to offer considerable flexibility, and I support the Labour Government’s decision to maintain their predecessor’s 60% office attendance mandate for the Civil Service.

However, we should be aware of the potential discriminatory outcomes from the attendance issue. Flexible working arrangements can offer people with disabilities and those—mainly women, inevitably—with caring responsibilities opportunities to work in both the public and the private sector that were previously denied to them. The noble Lord, Lord Farmer, referred to that being part of the Civil Service people plan. It is of course much more likely that people with disabilities and working mothers will simply not apply for jobs where attendance criteria are at their tightest, so this has been recognised within the people plan.

Those arguing for 100% workforce attendance seem to be unaware of its potentially damaging effects, focusing as it does on inputs—where and when the work is done—rather than outputs, which is what use is made of the work done, and most important of all, outcomes, what benefit results from that work. It begs the question: what is work? Is the employee’s job to get something done or to be seen to be getting something done? Monitoring office work in too rigid a way surely runs the risk of creating distrust, which can lead to anxiety and stress, undermining job performance.

There are legitimate concerns about the impact of relatively empty workplaces on such things as collaboration, sparking ideas, culture and professional development—all these, I acknowledge. Opportunities for networking and learning directly from more experienced work colleagues bring many benefits, but that does not mean that having some kind of hybrid system leads to an absence of those benefits. A balance needs to be struck, and where that balance falls will depend on the individual workplace, its employers and its employees.

The world is a very different place today from what it was five years ago, and the world of work no less so. Attitudes and expectations have moved on, something that the vast majority of employers and employees have recognised. Responsible employers will ensure that they facilitate a regular discourse with their employees and their representatives, a role most effectively delivered by a trade union. I hope the dispute between the Land Registry and the Public and Commercial Services Union will soon be resolved and that it will point the way to further development of modern working practices, not just throughout the Civil Service but across the public sector—and, indeed, the private sector.

Extreme Weather: Resilience

Lord Watson of Invergowrie Excerpts

Wednesday 24th January 2024 Lords Chamber

[Baroness Neville-Rolfe (Con)]

The noble Baroness makes a very good point about insurance. We do have discussions with the insurance industry on resilience. Of course, in recent years we have developed Flood Re, which is a very important reinsurance scheme that makes flood cover more widely available to households that are particularly vulnerable to flooding so that people can get insurance. Another part of the picture is the compensation schemes that are part of the flood recovery framework. In England, for appropriate events, there was £500 per affected household and £2,500 for affected businesses provided through the local authority, and some temporary council tax and business rate relief. The arrangements in the devolved nations are a bit different and, in some cases, more generous.

I think we must look at it in the round. How can the Government help? How can they prevent this? Can they communicate much better to make sure that people are not harmed and are kept safe? Where, sadly, there is damage to property, can we make sure that the insurance system helps to minimise government expenditure, which is occasionally necessary?

[Lord Watson of Invergowrie (Lab)]

My Lords, the Minister said in her opening remarks that the problems in the last few days were such that we had not seen before, but is that the case? This is the ninth season that the so-called European windstorms have been sufficiently serious for them to have names attached. On each occasion, we see apparently more serious effects in the UK than in other countries—electricity supply off for days on end, trains and other forms of transport severely disrupted. It is fair to ask why that should be. Do the Minister and her Government not believe that more resources need to be given to local authorities, and indeed to rail companies and other forms of transport, to enable them to prepare more effectively? These windstorms will not go away; they will increase in severity.

[Baroness Neville-Rolfe (Con)]

My own view on resilience is that it has to be a whole-of-society effort; I was trying to explain that point in relation to the previous question. Therefore, local authorities play an important part. Clearly, this is part of local authority funding in the broadest sense, and there has been some further assistance for local authorities, although I know that difficulties remain. We have tried very hard to focus attention on the local resilience forums; DLUHC agreed an extra £22 million three-year funding settlement for them in England. That followed a pilot, and the good news—I think it has probably been announced before—is that there will be stronger local resilience forum pilots in eight areas, going live in June. They will be in London, West Mercia, Suffolk, Gloucester, Cumbria, Greater Manchester, Thames Valley and Northumbria—so this is investment in the local effort in different sorts of areas. I am a great believer in piloting because you can then share that elsewhere and make things better.

On funding, obviously we need to spend enough on flood protection and resilience, but we also need to try to do it in a better way and with the help of all parts of society. I mentioned earlier the efforts that have been made—by power companies, for example—to improve things and get electricity out much more quickly. We have had a lot of storms; the weather is perhaps getting worse, but we are trying to learn from that and to perform better in these sometimes very tragic situations.

Wellbeing of Future Generations Bill [HL]

Lord Watson of Invergowrie Excerpts

2nd reading
Friday 25th June 2021 Lords Chamber

[Lord Watson of Invergowrie (Lab) [V]]

My Lords, I congratulate the noble Lord, Lord Bird, on reintroducing this Bill on hardwiring into policy-making the future interests of generations. As he said, we cannot have the future continuously put off. Of course, the fundamental question is how to overcome the short-termism in policy development that is inherent in democracies. Perhaps it is simply human nature for Ministers to give limited consideration to making decisions in the now that may not come to fruition until long after they have left office. If that is indeed a natural human trait, for the sake of the well-being of future generations it is one that absolutely must change.

The Bill would place a duty on public bodies to produce future generations impact assessments and would give the Office for Budget Responsibility a wider remit to publish a future generations risk assessment, effectively placing a cost on not taking the necessary action. The Intergenerational Foundation, a non-party political charity that works to protect the interests of younger and future generations, recently reported on how government spending is skewed against the young. It found that the gap in the amount of money that Governments spend on an older person compared to that spent on a child has doubled in this century; almost £20,000 is now spent annually on each pensioner, but less than £15,000 on each child. Compounding this disparity is the wealth of evidence that investments made in a child’s first five years improve their health, well-being and economic future throughout their lives. The noble Lord, Lord McColl, said that the main cause of ill health was obesity. I hesitate to contradict an eminent physician, but the main cause of ill health is poverty; obesity is largely a symptom of poverty. Without high-quality early years care and education available to all three and four year-olds, the Government risk the future of the youngest children, creating issues for them that will be costly to put right in later life. That does not make good economic sense.

In March, the Government commissioned the Leadsom report, to which my noble friend Lord Blunkett, referred, highlighting six action areas which it said were key to improving the health outcomes of babies and young children. Crucially, however, it made no mention of the additional resources required to achieve those outcomes. If a preventive approach to policy-making was taken by government, children up to five would be well-supported, with their future well-being and economic success greatly enhanced. If they supported early years adequately, the futures of two generations could be secured. The Government know what is needed to solve this problem and are simply choosing not to do so. Perhaps if the growing calls, including by my noble friend Lady Massey and the noble Lord, Lord Moynihan, today, for a Minister for Children with the right to attend Cabinet were answered, that message might be not simply heard but understood.

I doubt that the call from my noble friend Lord Hendy for an increase in workplace collective bargaining will find favour with the noble Lord, Lord Moylan, who remarkably claimed that capitalism is the answer to the issues identified in the Bill. Were that the case, there would be no need for the Bill. I endorse my noble friend’s words: dignity at work and fair pay are vital aspects of helping people to help themselves, which is why collective bargaining is one of President Biden’s priorities.

Some 1.5 million people in England had less than £100 in savings prior to the pandemic, so it is critical that we support the next generation to develop positive savings habits and money mindsets by investing in and prioritising financial education in primary school. Money habits and financial attitudes are generally formed around age seven, but financial education is still not a compulsory part of England’s primary school curriculum. The KickStart Money financial education programme has reached over 20,000 primary age children, with independent evaluation showing that two out of three have now begun working towards a savings goal after the lessons. There is surely a lesson there for the Department for Education.

There is also the critical issue of children’s mental health, with the pandemic having taken a heavy toll among school-age children. In January this year, the Government published a White Paper called Reforming the Mental Health Act, containing a summary of proposals that could constitute the first changes to that Act in four decades—but none of the proposals aims to provide support for children and young people before they reach a point of crisis.

The voice of children should be heard in debates such as this; they are not slow in letting us know their views on the issue overarching literally everything else when considering the future well-being of generations—and that is, of course, climate change. Many noble Lords have made the case for action and have done so powerfully and convincingly. I want to signify my own support for their urgings and to highlight the fact that I am not alone in being extremely concerned at the lack of urgency shown by the Government. That was emphasised as recently as yesterday, when their own independent advisers, the Climate Change Committee, chaired by the noble Lord, Lord Deben, scored the Government nine out of 10 on their targets but somewhere below four out of 10 on their efforts to meet them.

A new net-zero strategy was expected earlier this year but has been delayed until the autumn, leaving little time before the COP 26 conference. A new heat and building strategy is also promised but has also been delayed. I believe that the Government also need to demonstrate how their environment and planning Bills will help to cut emissions. Every new government policy should be subject to a net-zero test to prove that it is compatible with the overarching climate target. No doubt the Minister will rebuff such calls on the grounds of cost, but my response to that would be to ask whether he has examined the cost of not taking effective action.

The Welsh Government became the first part of the UK to enshrine the rights of future generations into law, which led to Labour’s 2019 manifesto containing a commitment to introduce a future generations well-being Bill. When answering a debate proposed by the noble Lord, Lord Bird, in your Lordships’ House in March 2020, the Minister said that the Government must examine the Welsh model. Have the Government done that?

[Baroness Scott of Bybrook (Con)]

My Lords, I remind the noble Lord that there is an advisory speaking time of three minutes—he has done double that.

[Lord Watson of Invergowrie (Lab) [V]]

I was informed by the Whips’ Office that I had seven minutes. I shall finish in one sentence. The Bill proposed by the noble Lord, Lord Bird, offers England the opportunity to build on those experiences. It is heartening that, with very few exceptions, noble Lords in today’s debate all heartily support its ends. I wish the Bill well.

Budget Statement

Lord Watson of Invergowrie Excerpts

Friday 12th March 2021 Lords Chamber

[Lord Watson of Invergowrie (Lab) [V]]

My Lords, I welcome my new noble friend Lord Khan and commend him on an excellent speech, not least his nod to Kamala Harris.

I would like to address my remarks to the measures in the Budget impacting education, but if I did it would not require anything like two minutes—this despite schools and colleges having faced excess costs associated with the pandemic which they have had to meet from their own resources. They deserved government support not only to get children back to school but to ensure they stay there safely. They got none. Teachers have been working flat out for the past year and deserved to have that recognised. Instead, the public sector pay freeze means that 94% of teachers will not receive a pay increase, which is shameful and will be demoralising for many.

The Budget might also have delivered desperately needed support for the early years sector; many nursery providers have stated that they do not expect to be in existence by the end of this year. Despite having remained open to assist the economy during school closures, early years settings have received no help. As my noble friend Lady Andrews said, it is investment in public services that makes us resilient.

The noble Lord, Lord Bilimoria, mentioned apprenticeships. The one education-related measure announced by the Chancellor seems to be an attempt to kick-start them. Certainly, they have declined alarmingly during the pandemic, but if employers were not willing to take on a young apprentice with a 13% wage subsidy, it seems unlikely that they will do so with the subsidy increased to 20%. Labour has proposed funding to create up to 85,000 new opportunities, with half of a new young apprentice’s wages in the first year of their apprenticeship paid by the Government, saving employers more than £3,500 per apprentice. We have costed this subsidy at around £300 million—precisely the unspent apprenticeship levy funds from 2019-20, which the DfE returned to the Treasury.

As a former Education Minister, perhaps the noble Lord, Lord Agnew, might care to address the absence of measures to support that sector in his closing remarks.

Statistics: Accuracy

Lord Watson of Invergowrie Excerpts

Monday 1st July 2019 Lords Chamber

[Lord Young of Cookham]

My noble friend tempts me to reach for my folder which has a 20-minute speech in response to his debate, which is shortly to begin, on the use of the retail prices index and the role of the UK Statistics Authority. If he can contain himself until then, he will get a very full reply.

[Lord Watson of Invergowrie (Lab)]

My Lords, “lies, damned lies and statistics” is a phrase generally accepted to have been coined by a former Tory Prime Minister. Modern Tory Ministers seem to have misinterpreted it, because Benjamin Disraeli was not advocating it as party policy. The UK Statistics Authority’s latest rebuke of the Department for Education over misleading statistics to support claims of generous funding for schools is the fifth since the Secretary of State for Education took up his post in January 2018. The facts are that £2.8 billion has been cut from school budgets since 2015, leading to 91% of schools having less per pupil in terms of funding. Can the Minister say what it will take for the Government to heed the advice of the UK Statistics Authority that, for a “meaningful debate” on any aspect of public policy to take place, there is a requirement for trustworthy data?

[Lord Young of Cookham]

I agree with that. If any Minister misuses statistics then, under the Ministerial Code, as I said, he should put the record right as soon as possible. As I also said, the UKSA covers not just Ministers but all those in public life. We all have a duty to use statistics responsibly, because if we do not, it just debases public confidence in our profession.

Higher Education and Research Bill

Lord Watson of Invergowrie Excerpts

Report: 3rd sitting (Hansard): House of Lords
Monday 13th March 2017 Lords Chamber

Moved by

[Lord Watson of Invergowrie]

145: After Clause 84, insert the following new Clause—
“Financial support: loans
(1) In section 22 of the Teaching and Higher Education Act 1998, after subsection (5) insert—“(5A) No provision may be made relating to the repayment of a loan that has been made available under this section which would change the repayment conditions of that loan once the first payment has been made to the borrower or directly to the institution to whom the borrower is liable to make payments.(5B) No provision may be made relating to the repayment of a loan that has been made available under this section, and under which any payments have been made prior to the commencement of section (financial support: loans) of the Higher Education and Research Act 2017, which would make any further changes to the repayment conditions of that loan after the commencement of that section.”(2) In section 8 of the Sale of Student Loans Act 2008 (consumer credit), for subsection (1) substitute—“(1) Loans made in accordance with regulations under section 22 of the Teaching and Higher Education Act 1998 are to be regulated by the Consumer Credit Act 1974.””

[Lord Watson of Invergowrie (Lab)]

My Lords, Amendment 145 is in my name and that of my noble friend Lord Stevenson. Students beginning their university courses after 2012 were told that if they took out a student loan, they would be required to repay it at the rate of 9% of future earnings above £21,000 a year. The Government repeatedly promised that the £21,000 would be uprated each year from April 2017 in line with average earnings. Indeed, that was confirmed in a letter to parents by the then Minister for Universities and Science, who is now the noble Lord, Lord Willetts. That letter contained no caveats, so students and their families knew where they stood on repayment of their loans—at least, they thought they did until the 2015 Autumn Statement, when the then Chancellor announced that the repayment threshold for student loans was to be frozen at £21,000 from April 2017, instead of being uprated in line with average earnings.

This is fundamentally a question of broken faith: of trusting what the Government say proving ill founded. Quite apart from the substantive issue in the amendment, that question of trust is, we believe, far from insignificant.

This issue is being revisited following debate in Committee, when the noble Lord, Lord Willetts, used his ministerial experience to explain that when the decision was taken in 2011 to freeze the repayment threshold, the figure was based on 75% of projected average earnings in 2017. Earnings in the intervening period having risen by less than anticipated, the noble Lord told us that,

“as a result … the repayment threshold has become significantly more generous relative to earnings than we expected when we set it”.—[Official Report, 25/1/17; col. 729.]

Unfortunately, that possibility was not mentioned in his aforementioned letter to parents.

By the logic of that argument, had earnings risen more than anticipated, students would be facing an increased threshold next month. Noble Lords will forgive me if I cast some doubt on that being allowed to occur. Nor should it, because an agreement is an agreement and should be respected as such by both sides. The Government’s action amounts to breach of a contract, with one party unilaterally changing the terms of the student loan. In any other context, it would be open to legal action to have the contract enforced and that action would succeed.

When the Bill was considered in the other place, the Minister for Universities and Science, Mr Johnson, called on universities to redouble their efforts to boost social mobility. He was right in his exhortation, although wrong to suggest it was solely the responsibility of institutions. When Labour left office in 2010, 71% of state educated pupils went to university. By 2014, that figure had fallen to 62%. This change will have a disproportionate impact on graduates on modest incomes and will act as a disincentive to young people from less well-off backgrounds to take up a place at university, because they will know that a previous cohort of students were misled by the Government over the repayment term of their loans. The parents of that cohort were also misled, and some of the financial impact may well follow them.

Amendment 145 would prevent any changes to the repayment of a student loan, irrespective of whether that benefited students, after the terms and conditions of repayment had been agreed. This would apply to existing loans after the commencement of the Act and ensure that such a situation would not recur by bringing loans under the regulation of the Consumer Credit Act 1974—which, many people were surprised to learn, does not apply at the moment.

Some regulation of the student loan market is needed to provide the protection that students need. In replying for the Government in Committee, the noble Baroness, Lady Goldie, told noble Lords:

“On the matter of student loan terms and conditions, I share your Lordships’ desire to ensure that students are protected ... However, it is important that … the Government retain the power to adjust terms and conditions”.—[Official Report, 25/1/17; col. 732.]


How are those two statements capable of reconciliation? They are not, because only the Government are protected, not students—the very people that the Minister has consistently said throughout our deliberations are at the heart of this legislation. The unilateral reneging on loan agreements demonstrates that in fact, students’ interests can be dispensed with whenever the Government deem it necessary. That is unacceptable and is one more reason why the amendment should be adopted as a new clause. I beg to move.

[Lord Willetts (Con)]

I shall very briefly comment, as I have had my arguments referred to by the noble Lord opposite. The graduate repayment scheme is neither conventional public spending, nor is it a commercial loan. All three parties, when faced with the question of how you finance higher education, have concluded that the best way forward is through such an arrangement. If it is public spending, it will be a low priority, and the funding of universities will suffer. If it is a commercial loan, which now appears to be what the Labour Opposition are calling for, and if we really were to have it regulated under the terms of the convention on private loans, one of the first requirements would be the requirement to know your customer—to make an assessment of an individual recipient to see whether they have the capacity to repay a student loan. The agencies would have to decide whether to lend to any one individual or not, and disadvantaged students would certainly lose out from such an assessment. That is why this scheme is a midway house between two unpalatable alternatives, and why all three parties have backed it.

As part of that arrangement, it seems legitimate that Governments should be able to decide—I have always thought every five years, in an explicit public review—the balance between repayments by graduates and the remaining burden being borne by the generality of taxpayers, as the loans are paid off. That seems a sensible arrangement, bringing necessary flexibility into the system, and it is why it has always been made clear to students that Governments have the right to change the repayment terms as they wish. That seems a sensible feature—and if we go down the route of treating it like a private contract and repayment, it will have consequences which all of us in this House, particularly the party opposite, will come to regret.

[Lord Young of Cookham]

My Lords, I share the concern of the noble Lord, Lord Watson, that students should be entitled to protection when they take out student loans. Protections are already available in law and take account of the particular nature of these loans. Student loans are not like the commercial loans of the sort regulated under the Consumer Credit Act; they are not for profit and are universally accessible. Repayments depend on the borrower’s income, not on the amount borrowed, and the interest rate is limited by legislation. I am grateful to my noble friend Lord Willetts for summarising the excellent speech that he made on this subject in Committee, and putting forward powerful reasons for not treating these as commercial loans.

I turn first to the issue of the threshold freeze. To put higher education funding on to a more sustainable footing, we had to ask those who benefit from university to meet more of the costs of their studies. This enabled us to remove the cap on student numbers, enabling more people to get the benefit of a university education. When the current system was first introduced, the threshold of £21,000 would have been around 75% of the projected average earnings in 2016. Since then, updated calculations, based on ONS figures for earnings, show that figure is now 83%, reflecting weaker than expected earnings growth since 2012. Uprating the repayment threshold in line with average earnings would cost around £5 billion in total by April 2021 compared with the current system. The total cost of uprating by CPI would be around £4 billion over the same period. The proportion of borrowers liable to repay when the £21,000 threshold took effect in April is therefore significantly lower than could have been envisaged when the policy was originally introduced. The threshold would now be set at around £19,000 if it were to reflect the same ratio of average earnings. The current £21,000 threshold remains higher than the £17,495 threshold that applies to loans taken out under the system left behind by Labour in 2010. Low earners remain protected. Borrowers who earn less than £21,000 a year repay nothing, while borrowers earning more than this repay 9% of their earnings above the threshold, irrespective of how much they borrowed. Any outstanding balance on the loans is written off after 30 years with no detriment to the borrower and no effect on their credit rating. This Bill makes no changes to any of these arrangements.

It is important that, subject to parliamentary scrutiny, the Government retain the power to adjust the terms and conditions of student loans. As I said a moment ago, I fully share the noble Lord’s desire to ensure that students are protected and that is why the loan terms are set out in legislation.

[Lord Watson of Invergowrie]

If the situation had been reversed, and earnings had risen by more than had been anticipated, would the Government’s ability to vary the loans have been carried out in a manner which benefited students, rather than as has happened on this occasion?

[Lord Young of Cookham]

Perversely, the noble Lord’s amendment would prevent the Government making any changes to the loan agreement that would favour the borrower. In other words, one of the effects of the amendment would be that we would not be able to alter the terms to the advantage of the borrower if the situation changed.

[Lord Watson of Invergowrie]

As I said earlier, that is what the amendment is designed to do. The point is, when you reach an agreement you stick by it; you do not vary it either way. I am certainly not advocating that it should be varied the other way. My question was whether the noble Lord and his Government would be prepared to vary it the other way, had earnings risen by more than had been anticipated.

[Lord Young of Cookham]

My response was that we would not be allowed to under the terms of the amendment. We have flexibility, which the noble Lord would deny us. The amendment would mean that future cohorts of students and taxpayers would have to bear the risks of the scheme, because it would insulate current students from any change. Perhaps that is why the Labour Party did not legislate to prohibit changes to the terms and conditions of existing loans when they introduced the system of income-contingent loans in the late 1990s. As I said, his amendment would prevent the Government making any change to the loan agreement that would favour the borrower, were this ever to be necessary.

It is also important that the Government should continue to be able to make necessary administrative amendments to the terms and conditions to ensure that the loans can continue to be collected efficiently. An example of this was the repayment regulations having to be amended in 2012 to accommodate HMRC moving to an electronic system to collect PAYE income tax through employers. Not being able to make this type of technical change to the regulations would eventually affect our ability to collect repayments through the tax system.

Having reflected on the question that the noble Lord asked me twice, the best answer is that I am reluctant to comment on a hypothetical question.

I turn to the regulation of student loans. The current student loan system is heavily subsidised by the taxpayer, and is universally accessible to all eligible students regardless of their financial circumstances. As my noble friend has just reminded us, taking out a student loan is in no way the same as taking out a commercial loan, and it should not be regulated as if it was. This fact was recognised by Labour when it legislated to confirm this exemption in 2008.

The key terms and conditions are set out in legislation and are subject to the scrutiny and oversight of Parliament. Extending a system of regulation designed to regulate a competitive market in personal finance to a system of subsidised loans whose terms are set by Parliament would be impractical, expensive and fundamentally ill conceived. The additional costs of the regulation would need to borne by borrowers and taxpayers and would not be in their interests.

I return to the point that this is a heavily subsidised government loan scheme, and it remains right that Parliament should continue to have the final say on the loan terms and conditions, as it is best placed to balance the interests of taxpayers, borrowers and students. We are committed to a sustainable and fair student funding system. Our system allows the Government, through these subsidised loans, to make a conscious investment in the skills of our citizens. We are seeing more young people going to university than ever before, and record numbers of 18 year-olds from disadvantaged backgrounds. Our funding system has enabled us to lift the cap on student numbers and, with it, the cap on aspiration.

I hope that this addresses the concerns raised by the noble Lord, and I therefore ask him to withdraw Amendment 145.

[Lord Watson of Invergowrie]

My Lords, I thank the Minister for that reply. Some of his comments about the Government’s commitment to student loans would have carried more weight had they extended as far as sharia-compliant loans; we know from the previous debate that that is not the case. Although I take on board the points made by the noble Lord, Lord Willetts, he did not address the major point of this amendment: challenging the fact that the Government have changed the rules of the game after the game has begun, leaving a huge number of students worse off financially as a result of their actions. That is not acceptable. I have heard nothing from the Minister that suggests that the Government regret the move that they have made. In fact, they have said quite clearly that it was done for financial reasons. Those financial reasons are impacting on students. We believe that is unacceptable, and I wish to test the opinion of the House.

--- Later in debate ---

I would make one final point. Why do students cheat? Why are they forced into going down this path? It might sometimes be from the pressures they find themselves under. It might sometimes be from mental anxiety. As well as making the practice illegal and dealing with those despicable companies that provide this service and obviously want to make a profit, we need to support students as well. I beg to move.

[Lord Watson of Invergowrie]

My Lords, I support the amendment in the name of the noble Lord, Lord Storey, and I spoke in support of the same amendment in Committee. This is a problem of some seriousness and I think it is understated. We heard in the previous debate that the QAA was not taking it particularly seriously and had no legal or regulatory powers to take action against an individual student who was found to have cheated in whatever way. The noble Lord, Lord Storey, told us at that time that it was rather offhand about the fact that only 17,000 students had been caught cheating. The fact that that was the tip of the iceberg seemed not to be a major issue.

It is a major issue if there is such an amount of this going on that Professor Newton—to whom the noble Lord, Lord Storey, has referred in the past—has carried out a survey by interviewing students and those providing such services, which came up with a whole list of how long it took for an essay, a dissertation or whatever. If it is even worthy of academic study, it has to be a problem of some substance. The noble Lord quoted Professor Newton and said that he had been advised that if the word “intent” had been taken out of the amendment it would have strengthened it. I am not quite clear about how it would have strengthened it. I think the noble Lord said it would have given it more power, but that has not been done. Will the noble Lord explain why the amendment has been submitted in the same form?

The noble Baroness, Lady Goldie, is in her place. She was the Minister who responded to this debate in January. As we were together in the Scottish Parliament many years ago, I hoped that she might respond to this debate, but I see that—forgive me—silence is Goldie and the noble Lord, Lord Young, will respond. Will he pick up the point that the noble Baroness, Lady Goldie, made in her response in January that the Government were on the point of announcing a new initiative on this? The noble Baroness, Lady Goldie, said it would be with us,

“Within the next few weeks”.—[Official Report, 25/1/17; col. 765.]


Seven weeks have ticked by since we last discussed this, so we must be very close to it now. Perhaps the Minister will tell us whether he has a date for the publication of this new initiative, which I think was to involve the QAA, the NUS, HEFCE and UUK—a whole lot of acronyms. It would helpful and would perhaps deal with this issue, at least in the interim, as I accept that we are short of a position where legislation is required.

[Lord Young of Cookham]

My Lords, I am grateful to the noble Lord, Lord Storey, for his extensive work on this issue. I am grateful for his contribution to the round-table discussions with the QAA and his continued engagement on this matter. He touched on the problem of foreign students. The evidence presented in the QAA’s report on plagiarism indicates that cheating may be more prevalent among international students. However, we recognise that plagiarism is a wider issue, so our approach is to look at the sector as a whole. We will be working with the QAA and other sector bodies to develop a co-ordinated response across all students and providers.

As my noble friend Lady Goldie said in Committee, plagiarism in any form, including the use of custom essay-writing services, or essay mills, is not acceptable and the Government take this issue very seriously. Having said that, I am afraid that I am going to plagiarise much of the speech which my noble friend made in Committee when she dealt with this amendment. My noble friend announced that the Minister, my honourable friend Jo Johnson, would be launching a co-ordinated sector-led initiative to tackle this issue, working with the QAA, UUK, NUS and HEFCE. In response to the question just posed by the noble Lord, Lord Watson, this initiative has now been launched.

The Minister has asked sector bodies to develop guidance with tough new penalties as well as information for students to help combat the use of these websites as well as other forms of plagiarism. This new guidance for providers should ensure that a robust approach with tough penalties can be embedded across the sector. In developing the guidance, the Minister has asked sector bodies to bear in mind that, for any enforcement to be effective, the penalties imposed must relate to both the gravity of the offence and the likelihood of an offence being discovered. The new sector guidance and student information is expected to be in place for the beginning of the 2017-18 academic year.

As part of this initiative, the QAA has also been tasked with taking action against the online advertising of these services and to work with international agencies to deal with the problem. The QAA has already started to progress these actions, including making a formal complaint to the Advertising Standards Authority, asking it to investigate the essay mills sector on a project basis.

We believe this sector-led, non-legislative initiative is the best approach to tackling this issue in the first instance. We will, of course, monitor the effectiveness of this approach and we remain open to legislation in the future should the steps we are taking prove insufficient. If legislation does become necessary, it would be crucial that we get the wording of the offence right. In the amendment tabled, it is unclear who would be responsible for prosecuting and how they would demonstrate intent to give an unfair advantage. As currently written, there is also a risk that the offence could capture legitimate services, such as study guides, under the same umbrella as cheating services.

The effectiveness of a legislative offence operating as a deterrent will depend on our ability to execute successful prosecutions and we would need to take care to get it right. This was acknowledged by the noble Lord, Lord Storey, in Committee, who said that,

“this should not be rushed and we should get it spot on”.—[Official Report, 25/1/17; col. 766.]

We do not believe that legislative action is the best response at this time, and I have outlined the steps that are being taken. Against that background, I hope that the amendment will be withdrawn.

Higher Education and Research Bill

Lord Watson of Invergowrie Excerpts

Report: 2nd sitting (Hansard - continued): House of Lords
Wednesday 8th March 2017 Lords Chamber

Moved by

[Lord Watson of Invergowrie]

124: Schedule 5, page 89, line 22, at end insert—
“( ) the suspected breach may constitute fraud, or concerns serious or wilful mismanagement of public funds,”

--- Later in debate ---

[Lord Watson of Invergowrie (Lab)]

My Lords, the amendment standing in the name of my noble friend Lord Stevenson is really a probing amendment, designed to ask the Minister why we have Schedule 5 and why we need it. We have more than five pages on powers of entry and search, from the power to issue search warrants to those of inspecting, copying, seizing and retaining items. It all sounds terribly dramatic, and the reasons for it are not at all clear. Such a power was not in the 1992 Act and has never, as far as we or those connected with the higher education sector are aware, been necessary before. Perhaps the Minister can say whether there are problems that we are not aware of which are so serious that they demand a schedule all to themselves.

When it comes to Schedule 5, the Explanatory Notes refer us to the commentary on Clause 56. That does not enlighten us all that much, although it goes into slightly more detail:

“The warrant may permit or require a constable to accompany an authorised person and that constable may use reasonable force if necessary”.


That all sounds as though something serious is envisaged by the Government. Three-quarters of the Technical and Further Education Bill currently before your Lordships’ House is taken up with insolvency procedures—something that the Government do not envisage happening other than in extremely rare circumstances. Perhaps the Minister will say the same about Schedule 5. We certainly hope so, because we do not want these powers to be used at all, but certainly only sparingly. If entry and search is deemed to be required, it should happen only after a serious breach of a registration condition is suspected. That is why we set out fraud or serious or wilful mismanagement of public funds as conditions that must be met. Short of that, the vague conditions of the schedule do not meet the test. Can the Minister explain why this is necessary and in what situations he envisages where it might be necessary? I beg to move.

[Lord Young of Cookham (Con)]

My Lords, I am grateful to the noble Lord for the way that he posed his questions as to why we need these powers, and I agree that we hope that they will be used rarely. We are revisiting a debate that we had in Committee, and I am grateful to those who participated in that debate, particularly my noble and learned friend Lord Mackay.

In the light of the debate that we had in Committee, we have carefully reflected on the schedule, but remain of the view that it should stand as drafted. This will ensure that the Office for Students and the Secretary of State are able to investigate effectively if there are grounds to suspect serious breaches of funding or registration conditions at a higher education provider.

The proposed amendments would narrow these powers so they could be used only where there are suspicions of fraud, or serious or wilful mismanagement of public funds. We believe that most, but not all, cases where these powers would be used would fall into that category. However, narrowing the powers in the way proposed could affect our ability to investigate effectively certain cases where value for public money, quality, and the student interest was at risk, but where these might not clearly constitute fraud, or serious or wilful mismanagement of public funds at the time of the application for the warrant.

Higher education providers will be subject to OfS registration conditions. As an example, the OfS could put in place a condition to limit the number of students a provider with high drop-out and low qualification rates was able to recruit: for instance if the OfS considered that those performance issues are related to the provider recruiting more students than it can properly cater for.

[Lord Watson of Invergowrie]

My Lords, I hear what the Minister says. He is talking about low-qualification and high drop-out rates. Could it be that we have never needed this power until now because of the present university architecture, but given the expectation that there will be new arrivals on the scene, the Government are implicitly saying that they foresee dangers in future that have not been considered a threat hitherto?

[Lord Young of Cookham]

I will come in a moment to why at present there is not provision for these types of institutions, where there is for every other, and I hope that that may answer the noble Lord’s question.

I was explaining that a breach of such a condition may not clearly constitute wilful mismanagement of public money if the provider was using the tuition fees in line with their purpose—the provision of a designated higher education course to an eligible student. However, there is a significant risk that value for public money, quality of provision and the students’ experience will be seriously negatively affected. If the OfS has grounds to suspect that the provider is in any case undertaking an aggressive student enrolment campaign, it is important that evidence can be found swiftly to confirm this, and to prevent over-recruitment.

If the amendment were made, a warrant to enter and search may not be granted in cases such as that. The amendments would also amend the powers so that the search warrant must state that all the requirements for grant of the warrant specified in Schedule 5 have been met. My noble friend Lord Younger wrote to Peers at Committee stage to clarify that it is not usual practice within powers of entry provisions for the magistrate to certify that conditions for grant of the warrant have been met, and we are not aware of any examples of this.

Schedule 5 sets out the conditions that must be met for a warrant to be granted, and we have full confidence that this constitutes a strong and sufficient safeguard to ensure a warrant would be granted only where necessary. This is a standard approach used in existing legislative provisions relating to search warrants and powers of entry. Examples from recent legislation include the powers to enter and search within Section 39 of the Psychoactive Substances Act 2016 and the powers to enter within Schedule 5 to the Consumer Rights Act 2015.

To be clear, a requirement to state that conditions have been met would not provide an extra legal safeguard. The requirement for these conditions to be met already exists in the schedule as drafted. There are strong safeguards in place to ensure these powers are used appropriately—and, I hope, rarely. A magistrate would need to be satisfied that four tests were met before granting a warrant: that reasonable grounds existed for suspecting a breach of a condition of funding or registration; that the suspected breach was sufficiently serious to justify entering the premises; that entry to the premises was necessary to determine whether the breach was taking place; and that permission to enter would be refused or else requesting entry would frustrate the purpose of entry.

These criteria will ensure that the exercise of the power is appropriately limited. Further limitations are built into Schedule 5, including that entry must be at a reasonable hour and the premises may be searched only to the extent that is reasonably required to determine whether there is or has been a breach. Powers of entry, such as these, already exist for a wide variety of other types of education. Ofsted has inspection powers in respect of schools, colleges, initial teacher training, work-based learning and skills training, adult and community learning and education and training in prisons.

Local authorities have powers to enter the premises of maintained schools. Regulators of qualification awarding bodies also have powers of entry. So, to answer the noble Lord’s question, currently HE providers are an exception as neither the Department for Education nor the Higher Education Funding Council for England has a statutory right to enter an HE provider if serious wrongdoing is suspected. To that extent, we are bringing these institutions into line with other institutions in education, and indeed other fields. I therefore ask the noble Lord to withdraw this amendment, against the background of the reasons I have given for the schedule remaining as it is at the moment.

[Lord Watson of Invergowrie]

I thank the noble Lord for that, but I have to say that I am even less reassured than I was before moving the amendment. The Minister mentioned, as I did earlier, low qualification levels and high drop-out levels, and he then went on to talk about aggressive student enrolment campaigns. That conjures up images of press gangs going round the bars in ports and people being carried off, never to be seen again—or, in this case, to be seen again in a new higher education institution near you. It is a rather bizarre concept that I cannot quite picture in my mind.

The question is basically, “Why now and why not in the past?”. As far as anyone is aware, and the Minister has not suggested it, there has been no lacuna. The Minister said he is bringing this sector into line with parts of other education sectors. I do not know the detail on that, but my basic question is: where did the demand come from? Five pages in a schedule does not exactly suggest a tidying-up exercise, if we are allowed to use that phrase. It seems rather odd. However, I shall leave it at that. It does seem rather odd but in the circumstances, none the less, I beg leave to withdraw the amendment.

Amendment 124 withdrawn.

--- Later in debate ---

[Lord Young of Cookham]

My Lords, might I respond to the points that my noble and learned friend has raised? In so doing, perhaps I will respond very briefly to the point made by the noble Lord, Lord Watson, in concluding the previous debate about why these powers were necessary and where the demands came from.

As I said, at present, neither HEFCE nor the Secretary of State has the statutory right to enter a HE provider to investigate if serious wrongdoing is suspected. This compromises investigators’ ability to obtain evidence of what may have happened and makes it harder to tackle rogue providers.

In its 2014 report on alternative providers, the National Audit Office said that the department has no rights of access to providers and that this affects the extent to which it can investigate currently. Therefore, we believe that these powers are needed to safeguard the interests of students and the taxpayer and to protect the reputation of the sector.

I apologise to my noble and learned friend, but I tried to address Amendment 125 when I—

[Lord Watson of Invergowrie]

I thank the noble Lord for giving way. I appreciate that he is taking the opportunity to clarify that last point, but to some extent he has stirred the pot again. He is talking now about rogue providers. My point was that, up until now, we have not been aware of rogue providers. There is clearly a fear that in the not too distant future there will be rogue providers, and that surely is a bigger issue than the question of having five pages in Schedule 5 to deal with them.

[Lord Young of Cookham]

No, the provisions are not required for the reasons that the noble Lord has suggested but because we believe they are necessary for the current institutions and in the light of the NAO report, which was written before these new providers came on to the scene. The department has no right of access to the providers. This affects the extent to which it can investigate currently rather than in future.

I turn to my noble and learned friend. I am not sure that I can usefully add to what I said earlier. I would not of course challenge for a moment what he said about practice in the judiciary. My understanding is that it is not usual practice within powers of entry provision for the magistrate to sign a certification document, and we are still unaware of any examples of this. The relevant clause in the Bill, as I think I said a moment ago, sets out the considerations that magistrates would have to take into account when making their judicial decision to grant a warrant, and we have full confidence that this constitutes a sufficient safeguard to ensure that a warrant will be granted only where necessary. For that reason, we are not persuaded that his amendment, in saying that it would have to be signed, constitutes an extra safeguard to ensure that a warrant would be granted only where necessary. I hope that, against that background, my noble and learned friend will feel that he does not have to press his amendment.

--- Later in debate ---

Moved by

[Lord Watson of Invergowrie]

131: Schedule 6, page 94, line 27, at end insert—
“( ) a number of persons that, taken together, appear to the OfS to represent, or promote the interests of, higher education staff,”

[Lord Watson of Invergowrie]

My Lords, Amendments 131 and 132 mirror those that we brought forward in Committee. They concern the entitlement of higher education staff to be consulted prior to the OfS making a recommendation of a body suitable to perform the data functions. In such situations, this schedule provides for a number of registered providers of higher education, covering a broad range of different types of providers, a broad range of students on higher education courses and a broad range of employers of graduates, which is perfectly understandable and acceptable.

That is it, apart from the catch-all,

“such other persons as the OfS considers appropriate”.

In Committee, the Minister said that the Government did not think it appropriate to restrict the ability of the OfS to consult such other persons as it considered appropriate. These amendments do not do that. If we had extended them to delete the reference in the schedule to “such other persons”, that would have closed things down. However, we are not doing that; we are leaving it there and suggesting that we should add another provision to ensure that staff working in higher education are part of the process. That does not mean only academic staff but includes all categories of people who contribute to making the experience of students fulfilling in every way possible. These people know higher education and the way in which institutions work, and so caretakers, catering staff, IT support, technicians and other categories should be asked to bring the benefit of their experience to bear in the decision either to designate a body or to remove that designation.

The Government do not give adequate consideration to the role that staff working in higher education can play. They have a contribution to make and they should be enabled to make it. This is not a radical suggestion—it certainly ought not to be—and adding one more category to those who must be consulted would certainly not be onerous for the Office for Students. I beg to move.

[Lord Young of Cookham]

My Lords, I repeat what I said in an earlier debate: we appreciate the role of all HE staff and there should be no imputation to the contrary.

This is another issue which we discussed in Committee. The amendments would require the OfS to consult HE staff on designation of the data body and would require the Secretary of State to consult HE staff before removing such a designation. We are committed to a system of co-regulation for the designated bodies, and this means that both the OfS and the sector should have confidence in the designated data body. Therefore the Bill already contains a requirement for the OfS to consult a broad range of registered HE providers on designation of the data body, and the Secretary of State must also consult before removing such a designation.

Providers are, of course, made up of HE staff, and in consulting HE providers we would expect their responses to be inclusive of the views of their staff, not only the academic community at that institution but the administrative and support teams, who in many cases directly gather and then submit the data required. So we expect that the views of staff on data and designation will be represented in their institution’s response.

However, there is nothing in the Bill to prevent direct consultation with staff groups. The OfS and the Secretary of State will have the discretion to consult any person, including a staff representative body. We would expect it to adopt an open approach, and we bear in mind the remarks that have just been made by the noble Lord.

The legislation must be broad and flexible to stand the test of time and therefore, despite the urging of the noble Lord, we should resist specifying this sub-group, or any other group with an interest, in the list of consultees when the current drafting of the Bill is sufficient to ensure that the views of HE staff will be represented both in the designation process and in the removal of designation. Against that background, I ask the noble Lord to withdraw his amendment.

[Lord Watson of Invergowrie]

My Lords, I find that partially encouraging. The Minister’s initial remarks will be noted by those who represent staff—trade unions and other organisations—and in future will be shown to the management of higher education institutions when the time comes for them to be consulted on designation or “dedesignation”, if there is such a word, in this context. I am sure the Minister did not mean to be disparaging, but for the staff to be described just as a “sub-group” undervalues the role they play in the running of an institution. That is why we believe there is a case to add one more provision, while still leaving it open for anybody else to be included.

However, the Minister’s remarks have been helpful. It would be even more helpful if at some stage they could be issued as some form of guidance to higher education institutions, but it is up to staff representatives, trade unions or whoever to use those remarks and ensure they are turned into meaningful representation within higher education institutions. On that basis, I beg leave to withdraw the amendment.

Amendment 131 withdrawn.

Higher Education and Research Bill

Lord Watson of Invergowrie Excerpts

Report stage (Hansard - continued): House of Lords
Monday 6th March 2017 Lords Chamber

Moved by

[Lord Watson of Invergowrie]

55: Clause 18, page 11, line 24, at end insert—
“( ) specify what happens to existing students during the suspension period as documented in a provider’s student protection plan.”

[Lord Watson of Invergowrie (Lab)]

My Lords, we come to Amendments 55, 56 and 57, all of which concern protection for students. We are to some extent returning to an issue touched on in Committee although the specifics vary somewhat.

We have heard often enough that it would be a very rare occurrence for any institution to go bust and drive itself into the sand. Of course, we are ready to believe that. We desperately hope that that is the case. However, it could happen and at some stage it is pretty much certain that it will. When it does, the people who must be everyone’s main concern are the students, those men and women who have taken out student loans to study at the relevant institution, identified that as the place they want to be, commenced their studies and, in some cases, nearly completed them. These three amendments deal with various scenarios that students might face if their institution gets into grave difficulty or perhaps folds completely.

Amendment 55 proposes that when the Office for Students suspends a registered higher education provider’s registration, various provisions have to be specified in relation to what the notice of suspension must promote. Various provisions are specified in subsection (6) of Clause 18. However, none of them mentions what happens to existing students during a suspension period. The purpose of Amendment 55 is to put that right. The Minister has mentioned on several occasions, and specifically in relation to amendments earlier today, the proposal to change the name of the Office for Students. He said that that was not possible because students are right at the centre of this legislation and the Government want that to be very clear. If that is to be clear, students must surely be accommodated within the clause to which I referred.

Amendment 56 seeks to ensure that students at an institution that becomes deregistered are fully notified about when that will happen. This issue was covered in Committee. It seems to me self-evident that that should take place. I cannot conceive of any reason why that would not be the case. They should also be told the expiry date of any access and participation plan.

In many ways I think that the most important of these three amendments is Amendment 57, which is about ensuring that where a higher education provider ceases to be able to provide courses for its students, the Office for Students must seek to place those students on similar courses at another provider. As I said, if the Government are committed—as I believe they are—to having students at the centre of the legislation, why should they be left to suffer through no fault of their own when a higher education provider is no longer able to deliver the service for which they signed up? If another course cannot be found for them, they will probably be left out of pocket over fees because loans have to be repaid. We believe that the Office for Students has a duty to assist them in every way possible and ensure that they can complete their studies. That is what Amendment 57 is about. However, overall, these three amendments are about protecting students, which I think is a cause to which everyone in your Lordships’ Chamber would be happy to subscribe. I beg to move.

--- Later in debate ---

[Lord Watson of Invergowrie]

I thank the Minister for that, but he rather gave the impression of a man thrashing around in a deep pool, desperately trying to find something to cling on to. I did not find his arguments convincing. When I moved the amendment I said that it has been stated time and again that the Government want students at the centre of the Bill. I did not quote Clause 18, but I will now. It says:

“Where the decision is to suspend the provider’s registration, the notice must …specify the date on which the suspension takes effect … specify the excepted purposes … specify the remedial conditions (if any), and … contain information as to the grounds for the suspension”.


It does not specify what happens to existing students during the suspension period, as documented in a provider’s student protection plan. Why not? How will that hinder any institution if that were to be placed in the Bill? Surely it is the sort of thing that students are entitled to know when their institution is getting into severe difficulty. I do not see why that should provide any difficulty at all.

I enjoyed the analogy drawn by the noble Baroness, Lady Wolf, between this Bill and the Technical and Further Education Bill, which, as she said, is substantially about the insolvencies of further education colleges. For the avoidance of any doubt, the Minister in charge of that Bill, the noble Lord, Lord Nash, assured noble Lords that that will never happen either. We are to believe that insolvency has no greater a chance of happening in the further education sector, yet three-quarters of the Bill is about insolvency.

It would have been helpful if the vehicle used for dealing with insolvencies in the further education Bill—the special education administrator—had had some equivalent in this Bill, because situations will arise where that kind of role will be necessary. It cannot be carried out just by the Office for Students. That section of the further education Bill concerns further education students getting into difficulty having a special education adviser. With no such equivalent person for higher education provided for in this Bill we are left with a section that is rather like “Hamlet” without the prince. No one will be appointed by the courts in this section. That is the difference between this Bill and the further education Bill.

The Minister talked about draft guidance for consultation with staff and students on when a student protection plan becomes effective, but the amendments here are not about pre-empting. We are saying something different. We are talking about a situation after the college has got into difficulties. It is about reacting to that, not anticipating it. It is important that that difference is understood.

I say to the Minister, particularly in relation to Amendment 57, on which we welcome support from the Cross Benches and the Government Benches, that we would make it easier for the Office for Students. The amendment says that,

“the OfS must, as promptly as possible, seek to make arrangements for the students of that provider to be offered places on similar courses with another higher education provider”.

We could have omitted the words “seek to”. We have been helpful to the Government by suggesting only that the OfS should seek to do that. I take the Minister’s point that some students would not like to be told by the Office for Students, “Very sorry, your university is closed. Here is where you will go as of next week”. That is not the way I would envisage it happening. It would be about choices. The Minister talked about student choices. Student choices should, as far as possible and practicable, be provided by the Office for Students, because it will have overall responsibility as the regulator. It should be able to say to students, “You are without a class at the moment. Here’s what we suggest”.

I acknowledge, as the noble Baroness, Lady Wolf, said, that there will be some cases where colleges are very local and students are unwilling to travel to the next town or, if it were London, to another part of the city to complete their studies. On that basis, they may decide that completing their studies is not possible, but they should be offered choices. That is what we are suggesting. Students are at the centre of the Bill yet the OfS is not to be allowed to provide options for them to continue studies. Again, I find that very surprising. That is a real failing of the Government’s commitment. We should ask what their real commitment is to the interests of students. That should be the test, and the test to which we should put it is that of the opinion of the House.

The Deputy Speaker decided on a show of voices that Amendment 55 was disagreed.

--- Later in debate ---

Moved by

[Lord Watson of Invergowrie]

57: After Clause 22, insert the following new Clause—
“Duty of OfS to seek to place students whose provider ceases to offer courses
If a higher education provider ceases to be able, or eligible, to provide higher education courses for its students, the OfS must, as promptly as possible, seek to make arrangements for the students of that provider to be offered places on similar courses with another higher education provider.”

[Lord Watson of Invergowrie]

I apologise for the previous confusion. On this amendment, I wish to test the opinion of the House.

Charities (Protection and Social Investment) Bill [HL]

Lord Watson of Invergowrie Excerpts

Monday 20th July 2015 Lords Chamber

[Lord Watson of Invergowrie (Lab)]

My Lords, nobody can dispute—

[Lord Lucas (Con)]

My Lords, I am loath to interrupt the noble Lord, except I think he is bringing matters to a conclusion. I want to express my congratulations to the previous Government on putting some steel into the Charity Commission in the process of recalling to independent schools what their charitable status means and what it takes to live up to the—in many cases—very clear opinions of their original benefactors. That process gathered considerable momentum, and many protests, under the previous Government, and I am delighted to see that it is continuing under this Government with cross-party support. It is enormously important that we find a way of reducing the exclusivity and divisions in our current system and that we find ways of reuniting it. On the side of this debate—I know it is not central to it—I very much hope that this Government will take seriously the proposals developed for the reintegration of independent schools and the state system. Some key schools, such as Westminster and St Paul’s, have expressed a willingness to engage. If we can get to a system where the independent schools have a role looking after foreigners and the thick sons of the rich, then we will have achieved a lot for this country.

[Lord Hodgson of Astley Abbotts (Con)]

My Lords, we had a long debate on this and I do not intend to detain the House long. This amendment is, at first sight, exceptionally attractive. Who can object to close engagement? The issue before us tonight is whether this is best achieved by the relative inflexibility of statute or the more flexible approach that can be achieved by guidance. My concern about this and the proceedings during our debate in Committee is that this is a Pandora’s box which, once opened, runs in all sorts of directions.

The issue of public benefit came centre stage because of the changes quite reasonably introduced by the previous Labour Government. The noble Lord, Lord Bassam of Brighton, sat through many hours as the Minister in charge. The decision on the way the public benefit test should be set was agreed as being the least worst option, being via the independent Charity Commission, and making sure that the Charity Commission was free from political interference was written into the Bill. Once you move away from that decision, you need to be very careful about where you end up. The debates we had in Committee on 6 July started with an amendment from my noble friend Lord Moynihan about sport. He was followed by the noble Lord, Lord Wallace of Saltaire, on music and arts. At the end of the debate the noble Baroness, Lady Jones, winding up for the Opposition, said:

“Amendments 23A and 23B provide a start by identifying at least three areas”.

She also said:

“Furthermore, we believe that the Local Government Act 1988 should be amended so that private schools’ business rate relief becomes conditional on passing that new standard”.—[Official Report, 6/7/15; col. GC27.]

So we moved quite a long way in the course of one single debate. There is a perfectly respectable argument that nearly 10 years after the noble Lord, Lord Bassam, and I discussed this in the Moses Room there should be a review of what constitutes public benefit. However, as I have explained, this is a big topic with many implications and unforeseen and indeed unforeseeable consequences. In my view, it needs to be looked at thoroughly in the round, not tacked on to a Bill that is concerned with improving the regulation of the charity sector and enhancing the development of the social investment movement. As the noble Lord, Lord Wallace, referred to in his remarks, that is a view with which the NCVO agrees.

My review of the sector revealed gaps in the Charity Commission regulatory powers that the Bill will remedy. It is that on which we should be focusing, not trying to find other issues that may cause difficulties and unforeseen consequences. I very much hope that the mover of the amendment will not put it to a Division tonight.

[Lord Watson of Invergowrie]

My Lords, various noble Lords have mentioned in the debate today that there are good examples of private schools sharing their facilities with state schools and other community organisations.

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Is it not through such an approach, backed and reinforced by new non-statutory guidance from the Charity Commission and other measures, that steady progress can be made for the benefit of all three partners—local communities, state schools and independent schools themselves—in this vital area? They all need to be willing partners. Compulsion is inappropriate both in principle and in practice.

[Lord Watson of Invergowrie]

My Lords, I have the greatest respect for the noble Lord, Lord Moynihan, especially on sport-related matters, so it was a little disappointing to hear him repeat the suggestion made in Committee by the noble Lord, Lord Lexden, which he stated again this evening: that the amendment seeks a one-size fits all solution. That is absolutely not the case. Precisely because of the sort of reasons the noble Lord, Lord Lexden, just outlined, schools vary greatly in size; therefore, what they can be reasonably expected to do in terms of community engagement will also vary. If a large private school has state-of-the-art sports facilities, it may reasonably be expected to invite pupils from state schools to use them—not just the pitches and courts, but coaching from the staff. In all probability a smaller school would have much less extensive facilities, so it might be appropriate for that school to send one or more coaches out to local state schools to engage directly with them. The same would be true of the assistance with learning issues raised by the noble Lord, Lord Wallace of Saltaire, be it Mandarin or music tuition using instruments perhaps not available in local state schools. To be most effective, the approach would necessarily vary, but it is entirely unacceptable for any school to say, “We cannot do anything because we’re simply too small or too remote”.

The noble Lord, Lord Wallace, referred to the “agreement” reached between the Charity Commission and the ISC. Unknown to anyone else, secret meetings have been taking place while the Bill has been progressing through your Lordships’ House; indeed, only yesterday we became privy—if I may use that contentious term in the context of the Bill—to the outcome. This private agreement was finalised without any discussions with representatives of state schools or local government education authorities; nor were some noble Lords whose names appear on the amendment consulted or even informed, which would have been courteous, if nothing else. Is it not bizarre, to put it no more strongly, to allow the umbrella body for private schools to help write the rules by which it will be judged? Perhaps the Minister can answer that point.

The agreement could result in some limited progress, but it means private schools being allowed to retain an entirely voluntary approach. The ISC says it hopes that the agreement demonstrates that the body is taking steps towards further encouraging engagement between independent schools, state schools and local communities. I suppose it does, but the key word is “encouraging”. Up to now, encouraging has brought us only to the point where the noble Lords, Lord Moynihan and Lord Wallace of Saltaire, felt compelled to spell out in their contributions in Committee why much more needed to be done and why they believed that statutory backing was needed to make it happen.

Further, the website that various noble Lords referred to this evening, Schools Together, which will go online later this year, will merely “request” that member schools provide contact details of the co-ordinators of partnership work at their schools, finishing with the telling statement, “such information to be provided voluntarily”. So there are get-outs at each end, and it seems that the ISC clearly has no intention of forcing its members to do anything they do not want to do. It is difficult to imagine a weaker form of wording, as the noble Lord, Lord Wallace of Saltaire, said himself.

We also learn that the Charity Commission is to commission a research report 12 months from the introduction of the agreement. Crucially, it seems that only the commission and the ISC will have detailed discussions around the terms of this research project in advance. Again, there will be no input from the state schools this is meant to assist. Will the Minister insist that state schools and local authorities be involved in the discussions relating to this research report? I very much hope that he will acknowledge the importance of that happening.

In Committee, the Minister said:

“Most of the Bill is about giving the Charity Commission the tools it needs to do its job”.—[Official Report, 6/7/15; col. GC17.]

The talks we have heard about between the Charity Commission and the ISC apparently suggest that both organisations were intent on avoiding compulsion in any form. If, as has been suggested, one of the reasons why the Charity Commission did not want that to happen was that it does not feel it has the necessary resources to enforce it, I suggest that that is not a reason of any substance. We were told the same about compulsory registration with the Fundraising Standards Board, and it is just not good enough. If that is the case, the Government are preventing the Bill bringing about meaningful change in these two areas, contrary to what the Minister said, because they will not give the Charity Commission the tools—that is, the resources, which I suppose are largely financial—to do its job effectively.

Currently the onus is on state schools to apply for support, and the agreement would maintain that position. If, as the noble Lord, Lord Wallace of Saltaire, said, this amendment is carried, private schools will have to be proactive and seek out nearby state schools and say, “How can we help you share our facilities and our expertise?”. It would put the responsibility on charities, which gain from charitable status, to go out and abide by the terms of that status by sharing their resources. How can that be seen as objectionable? Private schools would have to report on their success with such outreach initiatives, enabling the Charity Commission to check that they were observing the terms of public benefit effectively. Currently, as has been said, schools mark their own homework on their charitable work, which the figures show is not sufficient. Surely that is not acceptable.

It is important to have a strong regulator to ensure that standards in public trust and confidence are maintained, and enforcing the public benefit requirement is surely a key part of this. The amendment does that, and I welcome the fact that these important issues have been debated by noble Lords this evening.

[Lord Bridges of Headley]

My Lords, I start by saying that I remain strongly in sympathy with the aims of the noble Lords whose names are down on this amendment. Before I address the amendment, I will make a general observation. Charitable status confers on charities a number of benefits, and that is right. Charities deserve our support in fulfilling their purposes. However, those benefits come with responsibilities, which trustees must ensure their charity fulfils. A core purpose of the Charity Commission, helped by this Bill, is to ensure that every charity fulfils those responsibilities and obligations. How they do so is up to them, but do so they must. I repeat: every charity must fulfil them, no matter what they do. It is important that law and regulations be applied and enforced without favour or prejudice to any one sector of the charitable world. There must be no light touch or heavy hand towards schools with charitable status as opposed to religious groups, or towards animal charities as opposed to environmental charities. They all—I repeat, all—must abide by the law and fulfil their obligations.

With that in mind, I turn to the issue raised by the amendment. To fulfil their charitable purpose, many schools have forged partnerships with state schools, enabling the latter to share private schools’ facilities. This has brought huge benefits, as a number of your Lordships have mentioned. It has widened access to first-class sports facilities, for example, and extended the use of music and drama facilities which might otherwise be unavailable to local state schools. Such partnerships are to be strongly encouraged. I agree with noble Lords that, while there are many terrific examples—and these should be applauded—we could certainly see a lot more of them. A strong nudge to those who have not yet given genuine consideration to the potential for such partnerships to further their charitable aims would surely be widely welcomed.

Where I differ with the amendment is not, therefore, in the aim but in the approach, for it proposes not a nudge but a legislative requirement which would severely limit the charitable purposes that charities which are independent schools can pursue, and I cannot agree that that is the best way forward. There are some important issues of principle here. First, the amendment would single out charitable schools in legislation. As has been mentioned, no other type of charity is treated in this way. Secondly, it would single out only one way in which schools could demonstrate public benefit. Again, no other charity is treated in this way in legislation.

In practice, charitable independent schools can demonstrate their benefit, and satisfy the “public benefit requirement” for the purposes of the Charities Act 2011, in a wide range of ways, including through bursaries—one-third of ISC school pupils receive help with fees—outreach teaching or sponsorship of an academy. Other options include sharing their curriculum or putting on summer schools for state pupils and so on. An important principle of charity law is in operation here. The law places the decision on which approach, or combination of approaches, the charity should take in the hands of the charity’s trustees. That is how it should be, and it should not be for government or the regulator to interfere. Setting particular duties or minimum standards around one particular form of public benefit by one particular type of charity would set a dangerous precedent. I am sure there are those who might like to see particular duties placed upon religious charities, for example, and others who might take a different approach to NGOs from the one they would take to domestic charities, and so on.

Given what I said at the very start, I think it is clear that this is very dangerous territory to get into. Furthermore, it is contrary to the spirit of charity law, which has been tested in the Upper Tribunal. Public benefit must be real and not tokenistic, but it is not for the Charity Commission to dictate to schools, or to any other type of charity, the type or amount of provision they make. That should be a matter for the trustees of the charity concerned, taking into account the circumstances of their charity.

Alongside that are issues of practicality. Some schools’ circumstances may mean that it is not appropriate for them to share facilities. Some may not have sports or arts facilities or expertise that they can share, or local state schools may simply not need their drama facilities. Overriding the discretion and judgment of trustees, who are acting in the interests of the community as a whole, as to what is the most practical option in their area seems an odd thing to do if genuine local partnership is what we are aiming at.

As well as impinging on the discretion of trustees, making this a matter of law and regulation impinges on the discretion of the regulator, the Charity Commission. Of course, where the commission doubts that an independent school really is serving the public benefit, it can already step in, but it should be allowed to make that judgment in the round and not be required to give special attention to any one particular means of fulfilling a school’s charitable mission. In some cases, I fear that a statutory approach could be positively counterproductive.

As I have said, I am greatly in favour of encouraging more partnerships for the purposes of sharing facilities, but I am not keen to champion that ahead of, for instance, academic partnerships. Singling out one form of public benefit for special treatment in law rather implies a hierarchy in which this particular approach is elevated above others. I am all in favour of nudging schools towards the sharing of facilities, but inadvertently nudging them away from other means of helping the education of others could be counterproductive.

There is another unintended outcome which would, I fear, be very likely if we were to move to legislation, and that is the loss of good will among the very community we are hoping to influence. I have been quite struck by the significant good will from the independent schools sector in relation to partnerships with state schools of this sort. The ISC has made it clear to me that it is in fact very keen to do more to promote best practice in sharing facilities and expertise—for example, in sports, music and the arts. This enthusiasm has, I am delighted to say, been translated into action through a very welcome dialogue with the Charity Commission, which recognises the spirit of and intention behind the amendment. As has been mentioned, this dialogue has resulted in a package of measures, agreed by the two organisations, which will provide just the “nudge” that I think we are all looking for

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[Lord Hodgson of Astley Abbotts]

My Lords, I shall be exceptionally brief. I hope that my noble friend will be able to reassure us when we come to the next group that government amendments largely cover the points that the noble Baroness has made in her amendments, all of which are very worth while. We may be able to probe a bit further to ensure that we are getting where we think we are on that group, rather than at this point, but her amendments are interesting.

[Lord Watson of Invergowrie]

My Lords, given that this is the first time that social investment has been defined in statute, perhaps it was not surprising that considerable time was spent in Committee in pursuit of its meaning. I am not certain that we nailed it down effectively. Indeed, some, including Social Enterprise UK, continue to argue that the Bill fails to differentiate between financially motivated investment which also happens to be in line with the charity’s social purpose and consciously or explicitly socially motivated investment.

All investment has some kind of social impact and much financial investment produces positive social returns. In Committee, the Minister avoided giving a clear answer as to how social investment is to be differentiated from financially motivated investment; rather, he pointed to the Charity Commission and the courts making such judgments. Only time will tell whether that proves to be the case. For that reason, it is to be welcomed that the Bill will be reviewed after a period of three rather than five years. In the mean time, the amendments in this group offer some clarity in the Bill’s provisions on social investment and we are content to offer them our support.

[Lord Bridges of Headley]

I thank the noble Baroness, Lady Barker, for tabling Amendments 20 to 24. Taking time to consider the definition of social investment used in the Bill has been a valuable exercise and I have no doubt that we are all much the wiser for it.

I will deal with the amendments in turn, but I should make it clear that the Law Commission recommended these powers, the Law Commission drafted these clauses, and the Law Commission has been consulted on the amendments. So I am not sure that I totally agree that the Bill does not accurately reflect the Law Commission’s recommendations.

Amendments 20 and 21 would change the definition of social investment such that directly furthering the charity’s purposes must be the primary consideration over achieving financial return. The range of social investments covered by the Bill would be restricted only to those where directly furthering the charity’s purposes is the primary aim. It would thus exclude those investments where achieving a financial return is the primary aim, as well as introduce a definitional issue around how to determine which of the two purposes is primary.

This is contrary to the intention of the Bill, which deliberately aims for a wide definition of social investment where neither the furtherance of the charity’s purposes nor the financial return should be required to take precedence. Some social investments place emphasis on charitable purpose, some on financial return; in other cases, the trustees will be motivated by financial return and furtherance of purposes in equal measure. None of these cases should be excluded from the statutory definition of social investment and from the scope of the new power; all investments right along the spectrum should be included. To hold one above the other would potentially restrict the breadth of investments that fall under the power thereby making it less likely to be used. In order to maintain as wide a scope as possible for the power’s use, so that the power may have the largest possible impact, it is important that the definition of social investment remains suitably inclusive.

As to Amendments 22 and 23, let me state for the sake of clarity that the definition of social investment used in the Bill covers anything short of a total loss of funds. It includes both a neutral and a negative return, short of such total loss. In this way, repayment of any part of the capital invested would be a “financial return” within the definition. The amendments seek to include cases where the expected financial return may be equal to, rather than greater than, a total loss of the investment. This would move us firmly into grant-making territory and mean that grants and other spending, where there is no expected financial return, would fall under the category of social investment. I do not think that this would be a desirable change to the Bill.

The third and final amendment in this group would delete new Section 292A(6), which is a necessary counterpart to the definition of an act of charity used in new Section 292A(4)(b). These parts of the clause are, I recognise, a little cumbersome, but they are necessary to deal with the so-called Rosemary Simmons problem, a case which was raised during the Law Commission consultation. It makes clear that giving a guarantee can count as a social investment despite the fact that money is only put at risk and not actually paid over. As such, it is a necessary inclusion to cover the full breadth of potential social investments. Deleting this subsection would leave the Bill deficient.

The noble Baroness will be aware that the Government have put proper time and effort into getting a definition of social investment that is fit for purpose. As she said, we have been dancing on the head of a pin for some time. I will address this at greater length when I cover government Amendments 25 and 29, referred to by my noble friend Lord Hodgson. I hope on this basis that the noble Baroness will be content not to press her amendments.

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[Lord Hodgson of Astley Abbotts]

I rise briefly to thank my noble friend for the trouble that he has taken over this. The sector said to me: “These are the three things we’d like him to say”, and I am glad to say that he has nailed all three issues, so I thank him very much for that. It greatly reassures us and clarifies the situation, which was somewhat obscure when we left the Moses Room a couple of weeks ago.

One hesitates to take on a legal brain like that of the noble and learned Lord, Lord Hope of Craighead, or indeed, the noble Lord, Lord Cromwell, but new Section 292C(2)(c), where the trustees,

“satisfy themselves that it is in the interests of the charity to make the social investment”,

is good enough. If you go beyond that, you will put in an additional inhibition about making a social investment.

The trustees have a duty. They have responsibilities and obligations, and there will be legal consequences if they fail to follow them. I hope that the Minister will continue to resist that further inhibition, which does not add much and has the chilling effect of lawyers saying, “Either way you need to have particular regard, if you’re going to make social investments”. I think that that is a mistake as we are trying to slowly and carefully see the emergence of this new movement. I thank my noble friend for his three reassurances.

[Lord Watson of Invergowrie]

My Lords, on the first day of this month in Committee, I said:

“It is important for the Bill to be as clear as possible and I hope the Minister … will give an undertaking to bring forward his own re-wording to improve this section on Report. We have a singular aim: to make this section of the Bill as effective as possible. It would be in the interests of everybody, not least the charities themselves, for the wording to be tightened up”.—[Official Report, 1/7/15; col. GC 191.]

The section was on the meaning of social investment, so it is pleasing that the Minister has heeded my words and has indeed strengthened the Bill both in terms of the government amendments in this group and in the group that follows. I thank him for that.

We also believe that the two amendments in the names of the noble and learned Lord, Lord Hope of Craighead, and the noble Lord, Lord Cromwell, would enhance this clause, but the Minister has already set out his stall on these matters, so there is not much more that I can say on that.

[Lord Bridges of Headley]

My Lords, first, I apologise for getting carried away with excitement so that I gave my answer before the noble Lord had even posed the question. It is a novel way, especially for the noble and learned Lord, Lord Hope, who knows far more about most of these matters than me.

I entirely agree with what the noble Lord, Lord Watson, and my noble friend said about the need for simplicity and clarity in these matters. I also think we all agree that this is a new area of the law and we need to proceed carefully, cautiously and make sure that what we are doing meets the needs of the sector and that we do not land up in a world with unintended consequences.

In response to the noble Lord, Lord Hodgson, who asked whether I would consider what he had to say on the amendment, I am perfectly happy to reflect further but I am sorry to say that I can absolutely make no commitment on this matter. I point out, as the noble Lord, Lord Watson, said, that the next review of the Charities Act will be not in five years but before that. That decision has been made for the specific reason that this one area of the law, like many others, merits further consideration at that point. I am sure that well before that we will want to consider all those points on how the law is settling down and bedding in. I very much hope that the noble and learned Lord, Lord Hope, and the noble Lord, Lord Cromwell, will be part of that discussion and those deliberations. I am sorry I cannot meet what they want right now but I certainly assure them that we will be beating a path to their door, even if they are not coming to ours, to ask for their views.

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It is important that if this House and another place pass legislation, we should look at its effects. Rather in the spirit of the noble Lord, Lord Hodgson, I say that if a bus comes along then you should jump on it in case it is a while before another one comes. I want to add this purpose, which is now reflected in the Bill, into the review. I beg to move.

[Lord Watson of Invergowrie]

My Lords, I am in the surprising and mildly embarrassing position of having to say to the Minister that I am glad that he did not take me at my word when we dealt with reviews in Committee. I have studied the Hansard and, under what was then Amendment 29, I sought the first review to be completed within three years. However, I am quoted—so I believe that I would have said it—as saying that,

“it would be in charities’ best interests to initiate the review after three years”.—[Official Report, 6/7/15; col. GC 36.]

The Minister has now come along with an amendment that says that the first review must begin “within 3 years”. I certainly welcome that. I was looking for a completion in three years, but I took on board the Minister’s comments in Committee when he said that the system would have to get up and running and the commissioner would need to take people on and put them in the proper positions, with all the various arrangements that have to be put in place, such as internal guidance. On that basis, he has made a very reasonable offer. In terms of what I actually intended, he has come halfway towards meeting me. Where I come from, that is called a score draw—and, on this occasion, I am prepared to settle for that.

I would be supportive of the amendment in the name of the noble Baroness, Lady Barker, because it adds an important issue that we should take into consideration, after all that was said about social investment earlier.

[Lord Bridges of Headley]

My Lords, I am grateful to the noble Baroness, Lady Barker, for explaining the rationale behind her amendment and to the noble Lord, Lord Watson, for what he just said.

Clause 14 currently makes provision for the operation of the Act to be reviewed by the Minister at least every five years, in line with government policy. We agreed a requirement for the review to include specific consideration of certain matters based on requirements in the statutory review provision of the Charities Act 2006, but that should not be considered as limiting the scope of any review of this legislation.

As noble Lords know, this Bill makes only a modest contribution to the growth of the social investment market, by clarifying charity trustees’ social investment powers and duties. At the moment, charitable foundations hold some £80 billion in assets, of which less than £100 million is invested as social investment. While we certainly hope that more charities will consider the total impact that social investment can deliver, I expect that it will be an incremental growth rather than a sudden swing of the pendulum.

That said, I do not believe that a statutory review requirement to consider a specific aspect of social investment and its interaction with grant-making would achieve much that is not already being done more frequently by many parties, not just the Government, and with much broader scope. I am reluctant to say so, but I do not accept the rationale for Amendment 34.

As the noble Lord, Lord Watson, said, I have sympathy, as I demonstrated in Committee, with several of his arguments for bringing forward the first review from five years to three. I do so not least because of the measures being introduced on social investment, because of the point the noble Baroness, Lady Hayter, made about the disqualification power, and because of the issue of fundraising more generally and ensuring that we continue to maintain the public’s trust and confidence in charities as a whole.

As the noble Lord said, my concern was that if we said the review would have to report within three years, that would be seen as too soon, particularly when one factors in the time it would take to prepare guidance and commence provisions, and for the review itself. That is why I have come back with government Amendment 35 which requires the first review to begin within three years and to report within four years. This strikes me as a sensible compromise which I hope noble Lords will support.