Intergenerational Fairness in Government Policy

Lord Young of Cookham Excerpts

Thursday 26th October 2017 Lords Chamber

[Lord Young of Cookham (Con)]

My Lords, it is a pleasure to respond to this debate as the Minister in the Government who happens to have more experience of more generations than any other. I thank the noble Baroness, Lady Smith, for selecting this subject for debate and for moving it so well. We have had an astonishingly good debate—non-partisan, apart from a few jibes from the noble Lord, Lord Hunt.

Any debate that has in its Motion “fairness” and “across all departments” of government gives the Minister replying a rather long frontier to patrol. I will try to address as many points as I can, but I may be defeated by the clock. In response to the point made by the noble Baroness, and underlined by the noble Lord, Lord Hunt, about looking at the long term, it is perhaps better to debate this subject in the upper House, where we are not so focused as individuals on the next election and can afford to take a slightly more detached and long-term view.

I shall first try to put this debate in a broad context by talking about the role of government in addressing fairness. The Government have a responsibility to address inequality between the rich and the poor. Major disparities between households are not only intrinsically unfair, but lead to a fractured and unstable society. Although there is a political debate in this country about how progressive Governments should be, about the extent to which the promotion of equality should erode the freedom of the individual—the noble Lord, Lord Wallace, implied that taxation should be higher than it is—all parties subscribe to progressive taxation on incomes and on capital. That debate has been about what I call horizontal equity—looking at households across the spectrum and reducing disparities between them, levelling up where possible rather than down and using the proceeds of economic growth to do so.

Our debate this afternoon has been about something different: fairness between generations—looking at cohorts up and down, as it were, rather than across, and identifying unfairness. This is a much more complex issue for Governments to address, for reasons that we have heard in the debate, because whereas poorer people do not necessarily become rich, younger people necessarily grow older. Also, older people give money to their younger generation—we heard this from my noble friends Lord Tugendhat, Lady Altmann and Lord True, and from the noble Lord, Lord Filkin, on the Cross Benches—and support is often given in kind the other way round, to an extent that rich people do not give money to poor people. This extent of intergenerational exchange and transfer adds an extra dimension to the traditional debate.

Carried out insensitively, addressing intergenerational equality could have the perverse consequence of a particular generation missing out as policies change, or, as my noble friend Lord Willetts explains in his excellent book, a particular generation benefiting at the expense of those who went before and follow after. A related issue in this context is the extent to which today’s generations can borrow to enhance their own lifestyles at the expense of potentially depressing those of the generation to follow.

The good news about our debate today is that the temptation to portray this as pitting one generation against each other has been resisted. This is not a zero-sum game, because, as I explained, people move from one cohort to another. The role of the Government should be, as my noble friend Lord True suggested, one of clearly targeted intervention to address specific problems and, as the Prime Minister has said, to try to build a country that works for everyone.

We need to approach this with a view to bringing people together rather than prising them apart. Nearly all those who contributed agreed with that premise. We have this debate against a background of a social contract, mentioned by my noble friend Lord Willetts—that the next generation will be better off than the one that preceded it—coming under some tension.

Much of our debate has focused on the issues facing the younger generation, and before I look at this subject by subject, I want to pick up a general point made by several noble Lords. Yes, there are real problems for today’s generation. The right reverend Prelate the Bishop of Salisbury said that hope was being sapped, but my noble friend Lady Jenkin put a slightly different perspective on it, because in some ways, the prospects for young people today are actually quite bright. Theirs is a generation that is healthier, with far greater access to higher education than their parents and grandparents, with record numbers—particularly from disadvantaged backgrounds—going to university, life expectancy up, youth unemployment falling, rates of smoking, alcohol consumption, drug abuse and teenage pregnancies down and with access to affordable travel overseas, which was denied to earlier generations. As my noble friend Lord True said, thanks to technology, there is access to information, music, entertainment and social exchange to an extent unimaginable 25 years ago, so there is something to put on the other side of the balance sheet.

I take on board the suggestion made from two Front Benches that there should be a Select Committee to look at intergenerational issues, and of course I will pass that on to the usual channels. I fear that I do not read the Daily Mail since it launched a fairly serious attack on me back in the 1980s, I think, and it is not a paper that is in the Government Whips’ Office, so many of the recent exchanges have passed over me.

Housing is one of the most pressing issues facing the younger generation, a point well made by the noble Lord, Lord Best. The simple truth is that, as a country, over decades, we have not built enough homes. We had a good debate on housing last week and there was consensus on that point. As a result, the number of homes has not kept pace with our rising population, fuelling soaring house prices and also rents, as many noble Lords have mentioned. The Council of Mortgage Lenders predicts that by 2020 only a quarter of 30 year-olds will own their own home, as my noble friend Lord Willetts said. By contrast, more than half the generation currently approaching retirement were homeowners by their 30th birthday. We are seeing an entire generation effectively locked out of the housing market, with all the implications that this has for opportunities to find work, start families, put down roots and acquire capital and security, as mentioned by my noble friend Lady Stowell.

That is why we have this ambition to deliver 1.5 million homes by the end of 2022. At a time of significant restraint on public expenditure, with difficult decisions being taken right across Whitehall, we committed £25 billion to housing in the previous Parliament and recently announced another £12 billion. That is evidence of our determination to make progress. We need to build more homes, faster and in the right place and, whether the homes are to buy or rent, ensure that they are more affordable.

We have to make more land available, particularly land owned by the public sector, and encourage local authorities to build more homes, including homes for rent. One of my noble friends wanted more incentives to save, but in a way that was not wholly accessible. I think that the recently introduced Help to Buy ISA ticks that box, offering people an opportunity to save for their first home.

On home ownership, as I said in our debate last week, our Help to Buy equity loan helped more than 134,000 households to buy a new-build home, and 81% of those were first-time buyers—39% had a total household income of £40,000 or less and 90% had a total household income of £80,000 or less. Many young people can afford the repayments, when it comes to home ownership, but not the deposit. That is why the Help to Buy equity loan can address that.

My noble friend mentioned renting. We are banning unfair letting fees, capping deposits and providing landlords with incentives to offer longer tenancies, and we are ensuring that all landlords are members of a redress scheme to speed up dispute resolution. We are also making sure that all letting agents are registered. We recently announced another £2 billion for the affordable homes programme, increasing the budget to more than £9 billion. Yesterday, the Prime Minister announced that local housing allowance rates in the social rented sector for general and supported housing tenants will not go ahead. There was quite a lot of comment about making better use of the housing stock. The noble Lord, Lord Best, the noble Baroness, Lady Greengross, and others emphasised the need for that. I was very interested in the proposals put forward the noble Lord, Lord Best.

Local authorities should have clear policies for addressing the housing needs of particular groups, including older people. Given the importance of this issue, the DCLG is consulting, as part of its review on planning the right homes for the right place, and the consultation ends on 9 November. Through the Neighbourhood Planning Act, we are introducing a new statutory duty on the Secretary of State to produce guidance for local planning authorities on how their local development plans meet housing needs for older people. Progress is being made on that front.

On the economy, there were many recommendations for the Chancellor—some for cutting taxes and some for raising them—and I shall pass those on. Some may feature more in thoughts for our manifesto than in immediate plans, given the commitments that we have already given. We want to provide economic security for people at every stage of their life. We have a progressive taxation system: the top 1% of income tax payers are paying more—28% of all income tax, up from £34.5 billion to £46.7 billion in 2014. With the vast majority of taxpayers kept out of capital gains tax, we have raised £8.4 billion from those who have made significant gains. That is why our rules on inheritance tax, mentioned by a number of noble Lords, strike a balance between ensuring that the average family can pass assets on, while at the same time facilitating redistribution, so that wealth is not unfairly concentrated. That is why we are continuing to take action on the deficit.

Our national debt is forecast to peak at around 90% of GDP by the end of the year, which is the highest it will have been in 50 years. Like the noble Lord, Lord Hunt, I was very interested in the intervention from the noble Lord, Lord Turnbull. I was slightly surprised by his remarks, as a former Permanent Secretary to the Treasury, that national debt should go higher. When I was briefly a Minister in the Treasury, the culture was very much the other way. However, we should look at the case that he made, although there is not only his view or my view about an acceptable level of borrowing by the Government; the international money markets may take a slightly more cautious view. I think that it was the Governor of the Bank of England who said that we are to some extent dependent on the generosity of strangers. In the meantime we are trying to get debt falling and to increase economic resilience.

Youth unemployment is at a near record low. There are a record number of people in work, and there are around 750,000 job vacancies, meaning greater opportunities for all. We need to focus on ensuring that, once people are in work, they see their wages rise and take home more of their pay package. I thought that my noble friend Lady Jenkin made a very important point about the changing nature of the job market as we look ahead, and how young people have to be prepared for that. We have increased the national living wage to £9 an hour by 2020, and cut income tax for over 30 million people.

Supporting people in retirement after they have worked hard all their lives continues to be a priority, especially as it can be more difficult to increase your income once you have retired. As the noble Baroness, Lady Greengross, said, we want this country to be the best place to grow old. My noble friend Lord Tugendhat said that it was time to think again about the triple lock, although that is more a matter for the next manifesto than an immediate option.

Under successive Governments, we have seen the percentage of pensioners living in poverty fall dramatically. In the 1970s, 40% were in poverty; today, that figure is 16%, a success of the policies of some 30 years ago to which my noble friend Lord Tugendhat referred. We have seen big rises in the living standards of pensioners. However, as my noble friend Lady Altmann said, it is important not to generalise. More than 1 million current pensioners rely solely on the state for their income. As my noble friend Lady Stowell said, quite often those are people who have had a tough time in life before they retired. That is the background to the triple lock uprating of pensions in 2011 and why we have committed to continuing it over this Parliament. For those with another income, of course, the state retirement pension is taxable.

This is not a case of robbing Peter to pay Paul. Young people will become old themselves, and today’s young workers will become tomorrow’s pensioners. However, mindful of increases in life expectancy, we are committed to regularly reviewing the state pension age each Parliament in the interests of intergenerational fairness. The first review of the state pension age, in July this year, proposed increasing it from 67 to 68 in 2037-39, seven years earlier than the currently legislated date of 2044-46, saving £74 billion by 2045-46. We are also minded, in the long run, to commit to up to 32% as the right proportion of adult life to spend in receipt of state pension. That proportion is consistent with the average spent above state pension age experienced by people reaching state pension age in the last 25 years. The 2017 Labour manifesto proposed maintaining the state pension age at 66. This would have built up a further debt of £250 billion by 2045-46, which would have to be passed to later generations.

Higher education was a major topic in our debate. For young people, one of the biggest advances in recent years has been the explosion in higher education opportunities. Graduates can earn, on average, at least £100,000 extra lifetime earnings after tax. We had various ways of presenting student finance in the debate—on one hand, from my noble friend Lord Willetts, on the other hand from the right reverend Prelate the Bishop of Salisbury. The point was made that what really matters is how it might be perceived by the students. There has been some unfairness in the time; I have only two minutes left, which means that I shall not be able to make all my points. But on student finance, the OECD’s Andreas Schleicher said in 2016 that the UK,

“has been able to meet rising demand for tertiary education with more resources … by finding effective ways to share the costs and benefits”.

On health, there has been real progress. However, on obesity, if we are not careful the next generation may not live as long as this one—and we have plans to address that.

On migration and refugees, an important issue raised by the right reverend Prelate, we transferred more than 900 unaccompanied asylum-seeking children in the UK from other EU countries, including more than 750 from France. Perhaps I could write on some of the other issues, such as those on climate change raised by the noble Baroness, Lady Featherstone. It would take me two minutes to read out my note, so I hope that the House will understand if I do not do so. The noble Lord, Lord Addington, and many other people asked specific questions—and I have the answers, but not the space to read them out.

To conclude, on a raft of issues—housing, taxation, employment, pensions, higher education and health—we are making significant strides to support people across the generations, giving young people the opportunities to get on and giving older people security and dignity in later life. The two are not mutually exclusive. We want to continue to renew the unspoken social contract—one generation helping another and being helped in turn—that has forged and strengthened our society, and renew belief in aspiration and the belief that, across the generations, our country can and will prosper.

House of Lords: Register of Hereditary Peers

Lord Young of Cookham Excerpts

Wednesday 25th October 2017 Lords Chamber

[Lord Grocott]

To ask Her Majesty's Government what is their assessment of the legislative arrangements giving rise to the Register of Hereditary Peers who wish to stand for election to the House of Lords.

[Lord Young of Cookham (Con)]

My Lords, the House of Lords Act 1999 provides for Standing Orders of the House to make arrangements for the replacement, by elections, of hereditary Peers who are Members of this House. The Standing Orders provide for the register of hereditary Peers. Therefore, these arrangements are a matter for this House.

[Lord Grocott (Lab)]

That was not really an Answer to the Question. I just ask the Minister to confirm that, of the 198 names on the register of those who are eligible to stand for by-elections for vacancies among hereditary Peers, just one is a woman and none is from any of the ethnic minorities. Should not those two facts alone convince us all that this system is not just ludicrous but totally indefensible? I have a very simple question for the Minister and, if he could just answer with a yes, we could move on to the next Question. Will the Government do something that will hurt no one and cost nothing—that is, back my Bill, which would scrap this whole ludicrous system?

[Lord Young of Cookham]

I am grateful to the noble Lord for that question. Moving on to the next Question would not help me at all, as I have to answer that one as well. As he will know, when I replied to the Second Reading debate on his Bill, I said, referring to the specific anomaly that he referred to, that as a consequence of the current arrangements we have a system that is very difficult to defend in equality terms, and that reflected the views expressed. However, I went on to say that there is an exemption from the Equality Act for this arrangement. The Equality Act 2010 provides that neither a life peerage nor a hereditary peerage, as a dignity or honour conferred by the Crown, is a public or personal office for the purposes of the Act. So Parliament specifically exempted these provisions when it passed that piece of legislation.

[Lord Rennard (LD)]

My Lords, does the Minister accept the principle that no one Parliament should be able to bind its successors, and that therefore an understanding between two Front Benches in 1999 to continue, as a temporary arrangement, the presence of hereditary Peers via by-elections should now be brought to an end by providing time in this House and the other place for the Bill of the noble Lord, Lord Grocott, to be considered in order to end the embarrassment of these hereditary by-elections?

[Lord Young of Cookham]

The arrangements that the noble Lord refers to do not just date back to 1999; they were confirmed in 2010 in the Equality Act. This legislation was introduced by the Labour Government and the relevant provisions exempting peerages passed without debate and without amendment in this House in 2010. So it is not a matter of blaming the 1999 arrangement. The House recently had an opportunity to address this matter but, when the legislation went through, it declined that opportunity.

[Baroness Smith of Basildon (Lab)]

But, my Lords, we are now in 2017. Some of my best friends are hereditary Peers, but this is not about the individuals concerned; it is about the system. Many “Blackadder” fans in your Lordships’ House will remember the Dunny-on-the-Wold by-election. As Blackadder said, it was half an acre of sodden marshland in the Suffolk fens with an empty town hall, a population of three rather mangy cows, a dachshund named Colin and a small hen in its late 40s. Such rotten boroughs in real places had larger electorates than some of our hereditary Peers’ by-elections and they were abolished in 1832. We all know that my noble friend Lord Grocott has a cunning plan. Is it not time for the Government to support his Bill?

[Lord Young of Cookham]

I say to the noble Baroness that her Government had 13 years, from 1997 to 2010, in which to address this issue but they did not do so. They had a further opportunity in 2010, when the Equality Act, to which I referred, was introduced to address it and they declined so to do. So far as the Bill of the noble Lord, Lord Grocott, is concerned, we had a good debate at Second Reading. I set out the Government’s view at that point, and we look forward to its Committee stage when my noble friend the Chief Whip finds time for it. The noble Baroness said that some of her best friends were hereditary Peers; my line manager, the Deputy Chief Whip, is a hereditary Peer.

[The Countess of Mar (CB)]

My Lords, as the last female hereditary Peer left standing, I ask the Minister whether he is aware that I support the noble Lord, Lord Grocott. We have gone on for too long with elections. We no longer know the electorate as well as we should and it is time that we called an end to them.

[Lord Young of Cookham]

As I said, the House will have an opportunity, when we debate the further stages of the noble Lord’s Bill, to come to a conclusion. When I summed up, I indicated the views that were for and against. I think I ended up by saying that in one sense, the Bill was premature, because we were waiting for the report of the noble Lord, Lord Burns. Hopefully, that report will be in the public domain by the Committee stage.

Housing: Planning Laws

Lord Young of Cookham Excerpts

Wednesday 25th October 2017 Lords Chamber

[Baroness Neville-Rolfe]

To ask Her Majesty's Government, in the light of the comments by the Secretary of State for Communities and Local Government on 22 October about investment in housing, what steps they are taking to liberalise planning laws in order to make it easier for new residential properties to be built.

[Lord Young of Cookham (Con)]

My Lords, in February, we published a housing White Paper, setting out how we intend to boost housing supply and create a more efficient housing market, including changes to the planning system to ensure we are planning for the right homes and building those homes faster. We have followed this with a further consultation, Planning for the Right Homes in the Right Places. Feedback from this and the White Paper will feed into a revised National Planning Policy Framework to be published early next year.

[Baroness Neville-Rolfe (Con)]

My Lords, this is very welcome as far as it goes. The problems are chronic, particularly in the south, with millions more people living here than was predicted 20 years ago. Can the Government increase the supply of homes by easing planning laws and being brave enough to do so in undistinguished pockets in the green belt?

[Lord Young of Cookham]

I am grateful to my noble friend, and for her contribution to our debate on housing last week. She will be aware that there was a manifesto commitment to safeguard the green belt. The planning policy indicates that the green belt should be developed only where all other opportunities have been explored, such as brownfield sites and building at higher densities in urban areas. However, we go on to say that if at the end of that it is necessary, we will develop in the green belt. Some areas of green belt do not live up to their name; they are sometimes very unattractive pieces of land. We are consulting on local authorities in the White Paper; if it is necessary for them to encroach on the green belt, they should make complementary provision elsewhere to replace the amenity that has been lost.

[Lord Beecham (Lab)]

I refer to my local government interest in the register. Apparently there are currently between 500,000 and 600,000 planning consents for houses, many granted years ago. What action will the Government take to ensure that these are used? Further, while I welcome today’s announcement by the Prime Minister that the Government will not cap housing benefit in the social housing sector, and the recent announcement of £2 billion for all of 25,000 extra homes over the next four years, will they remove the cap on council borrowing for new building, and if not, why not?

--- Later in debate ---

[Lord Young of Cookham]

I welcome what the noble Lord has said about the Prime Minister’s announcement on lifting the local housing allowance cap on supported housing. That is welcome. We now need to move on to an agreed model for supported housing. On planning consents, the planning system granted consent for 304,000 new homes in the year up to March this year, which is up 15%. However, the noble Lord’s point is a good one. A third of new homes granted permission between 2010-11 and 2015-16 have yet to be built. That is where we need to focus. In the Autumn Statement last year, the Chancellor announced £2.3 billion of funding for housing infrastructure. That is to be focused on those sites where we have planning consent but, for infrastructure reasons, development is not taking place. We hope that will unlock sites for 100,000 homes in areas of greatest need. On raising the cap on local authority borrowing, he will see from Hansard, in my reply to last week’s debate, that there are circumstances in which we would consider lifting the local authority borrowing restrictions.

[Lord Shipley (LD)]

My Lords, I remind the House of my interests in the register. I do not think this should be about liberalising the planning system, but rather about making the current system work better. Is the Minister aware of the very recent study by the Royal Town Planning Institute, which shows that we need more, not less, planning for getting large sites right without the delays and compromises we see so often? Does the Minister agree with that statement because, if so, there is an issue about the resourcing of planners from planning fees?

[Lord Young of Cookham]

There is indeed an issue, which is why we have decided that local authorities should be allowed to raise their planning fees by 20%, as long as the proceeds are then ring-fenced and ploughed back into the planning system. We are also looking at the so-called viability assessments, which sometimes hold up the planning process. The noble Lord will know that Ministers have powers to intervene where, for whatever reason, local authorities are dilatory in coming forward with local development plans.

[Baroness Gardner of Parkes (Con)]

My Lords, is the Minister aware that it is not only about planning but that local authorities need many more powers returned to them and more direct control over housing? Has he seen what is happening in London, where illegal letting is reaching huge proportions? I know that some people in council flats are subletting to illegal tenants without any notification, and probably without paying any tax. Councils need powers returned to them to be able to check these situations.

[Lord Young of Cookham]

I am grateful to my noble friend. I believe that local authorities have all the powers needed where illegal subletting is taking place, which is a clear breach of a tenancy agreement. I hope local authorities would take prompt action where they believe that social accommodation is being misused in the way that my noble friend has just outlined.

[Baroness Young of Old Scone (Lab)]

Is the noble Lord aware that even though we all agree that additional housing is required, particularly affordable housing, half of all threats of damage or destruction to our precious and diminishing ancient woodlands are caused by housing development? In the light of the Government’s commitment in the housing White Paper to improving protection for ancient woodland, what practical steps is the Minister’s department taking to ensure that these much-needed houses will not be built at the expense of irreplaceable ancient woodlands and to make sure that the garden village initiative is not just a front for enclosing ancient woodlands in small zoos of concrete from which they cannot escape?

[Lord Young of Cookham]

I am grateful to the noble Baroness. She will know that in the housing White Paper we consulted on the irreplaceable habitats to which she has just referred. We will clarify the strong protection for ancient woodland and aged or veteran trees, which has been set out in the National Planning Policy Framework.

[Lord Clark of Windermere (Lab)]

My Lords—

[Lord Clark of Windermere]

There is nobody standing on that side, so I shall carry on. The noble Lord mentioned the green belt. As he is aware, there is a peculiarity in relation to this in national parks, where many houses are disappearing from local occupancy and being turned into holiday cottages, whereby they escape the right-to-buy legislation and get 100% tax relief not only on mortgage repayments but on all furnishings, and do not pay council tax or a community charge. Will the Minister negotiate with local authorities in these areas to see whether we can manage this a bit more sensibly and provide residences for local people?

[Lord Young of Cookham]

I agree with the objective that the noble Lord has outlined. I am very happy to open discussions with the Local Government Association on the specific issue that he raised to see whether there are any further measures we can introduce to meet the objectives we both share.

Parliamentary Voting System and Constituencies Act 2011

Lord Young of Cookham Excerpts

Tuesday 24th October 2017 Lords Chamber

[Lord Rennard]

To ask Her Majesty’s Government whether it remains their policy to reduce the number of MPs to 600 in accordance with the Parliamentary Voting System and Constituencies Act 2011.

[Lord Young of Cookham (Con)]

My Lords, we are committed to ensuring fair and equal representation for the voting public across the UK. The independent Boundary Commissions are proceeding with the boundary review in accordance with laws already passed by Parliament, which provide for the number of constituencies to be reduced to 600. The Boundary Commissions are required to submit their final proposals in autumn 2018.

[Lord Rennard (LD)]

My Lords, figures from the Cabinet Office itself suggest that about one in six voters are missing from the electoral registers, making it very hard for the Boundary Commissions to produce fair boundaries. Since they began work, millions of extra voters were added to the electoral roll during the course of the EU referendum and the recent general election. Will the Minister consider convening all-party talks aimed at producing a Bill to amend the 2011 legislation in order to allow the Boundary Commissions to include these voters in time for a general election in 2022, and to reconsider the appropriate number of MPs to be elected?

[Lord Young of Cookham]

On the last point, I see from the Liberal Democrats’ 2010 manifesto that they committed themselves to cutting the number of MPs by 150, so I am not sure why the noble Lord is so squeamish about reducing the number by 50. There are a record 46.8 million people on the register, and what he has proposed is yet another Liberal Democrat delay to the Boundary Commission proposals. The dates for the current boundary review were approved by an amendment—to which the noble Lord put his name—to the Electoral Registration and Administration Bill back in 2013. The amendment made it clear that the electoral register as at 1 December 2015 would be used in this review. That was an amendment to which the noble Lord put his name.

[Lord Blunkett (Lab)]

My Lords, I put my name to none of this. I simply say to the Minister, who is a very reasonable person, that if there are 46.8 million people on the register but a substantial number of them are not counted in the reconfiguration of boundaries, that would be unacceptable to any political party.

[Lord Young of Cookham]

The date for the boundary review is inevitably a snapshot. During the period of all boundary reviews, people are added to the register. As I said, the date of 1 December 2015 was approved by this House when the relevant legislation went through, and any interference with the current review would mean that the next election would be fought on boundaries dating from the year 2000. That cannot be in the interests of democracy.

[Lord Cormack (Con)]

My Lords, some people would think that the noble Lord, Lord Rennard, was brazen; others that he was brave. Does my noble friend remember that it was the former Deputy Prime Minister and leader of the Liberal Democrat party who scuppered all this in a fit of pique when he lost his Bill on reform of the House of Lords?

[Lord Young of Cookham]

My noble friend uses language which I would not dream of using at the Dispatch Box, but it is indeed the case that the coalition agreement, which was ratified by Liberal Democrat MPs and the membership of the Liberal Democrat party, committed them to reducing the number of MPs by 50, and that that legislation was taken through the other place by the Deputy Prime Minister, the leader of the Liberal Democrats. I cannot understand why the Liberal Democrats now seek to distance themselves from a measure which their former leader piloted through Parliament.

[Lord Kennedy of Southwark (Lab)]

My Lords, we have four parliamentary Boundary Commissions, one for each of the constituent parts of the United Kingdom. Can the Minister confirm that at the conclusion of the reviews, there will be brought before this House and the other place one Motion to approve all four reports, so there is no risk of, say, three reports being approved and one not, and it will be all or nothing, with no risk of cherry-picking the reports we like, as opposed to those we are not so keen on?

[Lord Young of Cookham]

I am happy to confirm that the position is exactly as the noble Lord said. The legislation requires the Minister to produce a single order to introduce the reports of all four Boundary Commissions, so there can be no cherry-picking—which would never have occurred to our side, but might conceivably have occurred to others.

[Lord Tyler (LD)]

My Lords, assuming that Brexit actually happens—the Minister will have noted that Donald Tusk says that we do not have to do it—does the Minister not recognise that there will be a considerable increase in the workload of our House of Commons Members of Parliament, but, at the same time, a wonderful saving in costs when MEPs such as Mr Nigel Farage and his freeloading UKIP Members are abolished and removed from the European Parliament? Is this not a good opportunity to change the Government’s mind?

[Lord Young of Cookham]

Yet again, we have a plea from the Liberal Democrat Benches to go back on an agreement which they were party to. When we passed the legislation in this House, the date of 2018 was endorsed by members of the noble Lord’s party. Basically, this is special pleading to revisit a measure that, if everyone was sensible, they would put their minds behind this and just get on with it.

[Lord Naseby (Con)]

My Lords, is my noble friend aware that when I stood for a marginal seat, despite the efforts of Mr Callaghan to postpone a review of the boundaries, nevertheless I won my seat? Later, there was another review and I lost my seat. Against that background, it is not vital for all of us who believe in democracy to try to hit the target of each voter’s vote being of equal weight?

[Lord Young of Cookham]

My noble friend came into the other place on the same day as me. My majority that year was 808—I am not sure whether that was more or less than his—and my seat was also subsequently abolished. My noble friend has put far more eloquently than I did a few moments ago the imperative of getting on with legislation that has been through both places to ensure that the next election is fought on up-to-date boundaries, not on boundaries that date back to the year 2000.

Financial Guidance and Claims Bill [HL]

Lord Young of Cookham Excerpts

Tuesday 24th October 2017 Lords Chamber

[Baroness Altmann (Con)]

My Lords, I echo the wise words of the noble Viscount. It is absolutely clear that the level of financial education across the country is woefully low, and that stems from the absence of any financial education at the schooling stage. When I was looking at introducing some pension issues into the national curriculum, the main message that I received as to why it could not happen was that teachers themselves did not know enough about those issues to be able to teach even primary or secondary schoolchildren.

There is clearly a role for the single financial guidance body, which is set up to provide information and education for the public, to devise modules that schools could use—but not only schools. I would hope that, given that most people in the workplace did not get financial education in school, such modules would also be useful within the workplace. This is a big gap in our education system. Education needs to provide our students and young people with the tools that they need to manage their lives. If they cannot manage their finances, they will often get into difficulties that they do not need to be in.

I certainly echo the sentiments of the amendment, which would require the single financial guidance body, as the obvious body to do this, to provide education materials that could be used within schools, but even importing that into the workplace alongside auto-enrolment, because all workers will automatically be put into pensions and need to have some understanding of how finance works in order to make the best of that. I support the sentiments expressed.

[Lord Young of Cookham (Con)]

My Lords, I was hoping for a moment that the noble Lord, Lord McKenzie, was going to wind up the debate and give some cogent reasons why his amendment should be resisted, but that falls to me.

Amendment 13, tabled by the noble Lord, Lord McKenzie, would alter the strategic function on matters relating to financial education. I am grateful to the noble Viscount, Lord Brookeborough, the noble Baroness, Lady Kramer, and my noble friend Lady Altmann for their contributions because, once again, we have highlighted the important issue of financial education, which has been one of the themes running through our debate today. We had a good debate on it in Committee, and there is no disagreement that financial education is extremely important at all stages of life.

In fact, a key role of the new body as a whole will be to improve people’s financial capability and help them to make better financial decisions. Clause 2(7) states:

“The strategic function is to support and co-ordinate the development of a national strategy to improve … the financial capability of members of public”.


Then there is the paragraph quoted by the noble Viscount, Lord Brookeborough:

“the provision of financial education to children and young people”.

The noble Viscount outlined areas where the public need to be better informed, and I agree with all that he said.

The financial education element of the strategic function is targeting a specific area of need, which is to ensure that children and young people are supported at an early age on how to manage their finances—for example, by learning the benefits of budgeting and saving. As I think I said in response to an earlier debate, the new body will have a co-ordinating role to match funders with providers of financial education projects and initiatives aimed at children—those could well be in schools—and will ensure that they are targeted where evidence has shown them to be more effective. This falls four-square within the wider strategic financial capability work of the body, and should form part of the national strategy that we expect the body to deliver.

As has been mentioned, the Money Advice Service has been undertaking that role, and it is one aspect that respondents to the government consultation overwhelmingly agreed is important for the new body to continue to work on, build on, and continue the initiatives already under way.

The amendment makes provision for the new body to advise the Secretary of State on the role of Ofsted and the primary school curriculum. As the noble Viscount, Lord Brookeborough, said, the Select Committee on Financial Exclusion made similar recommendations on the role of Ofsted and the primary school curriculum in its recent report. We will publish a direct response to the House of Lords ad hoc Select Committee report before Third Reading. The Department for Education, which has prime responsibility for this, will be a major contributor to that section of the response.

Again, as I said in Committee, the Government believe that the remit of the new body may cause confusion with regards to the school curriculum. Of course, it can work with schools to help children understand financial education and it can help fund lessons and explore further the barriers to school involvement. The Government are clear, however, that the school curriculum and monitoring of school performance are matters for the departments for education in England and in the devolved nations. Nevertheless, Clause 2(3) states:

“The single financial guidance body may do anything that is incidental or conducive to the exercise of its functions”.


It seems to me that there is nothing to stop the SFGB informally making suggestions to Ministers without the need for the amendment, as long as they relate to its functions. So I do not think that we need the amendment for there to be a dialogue between the SFGB and education providers. In practice, the body will be able to undertake activities to help schools provide financial education but we do not believe the amendment is an appropriate addition to the strategic function. For that reason, I urge the noble Lord to withdraw the amendment.

[Viscount Brookeborough]

May I intervene for one second? I thank the Minister for his response. At one stage he said: “Well, we might get help, and it might be in schools. Maybe the education board will look at this and maybe the guidance authority will include this and this”. The whole thing is so wishy-washy. There are so many let-out clauses, I am simply not sure that it will happen.

[Lord Young of Cookham]

That is a fair point, but I ask my noble friend to give the Government the benefit of the doubt until such time as we publish the response to the specific recommendations he has referred to. If he finds that the response is inadequate and does not meet his expectations, I am sure there will be further opportunities for him to raise it. The point has been well made during this debate that further progress should be made. There is an outstanding recommendation to which the Government are about to respond. I suggest that the amendment is withdrawn and the Government given an opportunity to put their case forward when they respond to the Select Committee.

Housing: Availability and Affordability

Lord Young of Cookham Excerpts

Thursday 12th October 2017 Lords Chamber

[Lord Young of Cookham (Con)]

My Lords, I join others in thanking the noble Lord, Lord Smith of Leigh, for selecting this subject for debate and for bringing to his opening speech his wealth of experience as leader of Wigan Council for 26 years—a local authority with major housing challenges. I thank all those who contributed, some of whom have taken an interest in housing for many decades. I first discussed housing with the noble Lord, Lord Best, when I was chairman of a housing association in the early 1970s. All those who spoke in the debate have been motivated by a sense of impatience—and a sense of anger, at times, from the noble Lord, Lord Cashman. That has run right through the debate: impatience at the lack of adequate progress over recent years to meet the legitimate aspiration of every family to have a decent home to live in.

I am conscious that I cannot respond to all the points that have been made in the debate—and when I do not of course I will write. As the noble Lord, Lord Smith, said in his opening remarks, and as others, too, have said, successive Governments have failed to provide the homes that we need. As a result, whether for sale or rent, housing is increasingly unaffordable. As the noble Lord, Lord Smith, told us, an average home to buy in England now costs almost eight times average earnings. Twenty years ago it was three and a half times average earnings.

The right reverend Prelate the Bishop of Chelmsford told us of the social consequences of moving towards a more polarised housing market and the dislocation for families who have to move, and my noble friend Lord Kirkham reminded us of the frustration of young people who cannot get a decent home of their own. Our manifesto commitment is clear: we want to deliver 1 million homes by the end of 2020 and 500,000 more by the end of 2022.

The noble Lord’s Motion has two themes—availability and affordability—and I will address each in turn. I agree with what my noble friend Lord Kirkham said: housing is more important to the man in the street than Brexit.

On availability, in the last Parliament we set out over £25 billion of spending on housing up to 2021 and last week at the party conference we announced another £12 billion of spending up to 2021 in order to tackle the failures at every point in the system. This includes a further £10 billion of new funding for Help to Buy—I will say a bit more about that in a moment—which could help around 135,000 more people to buy their homes, and another £2 billion in additional funding for affordable housing in England.

As a former Treasury Minister, I will say that at a time when there has been intense downward pressure on departmental budgets, the figures that I have mentioned represent a very substantial commitment by the Government to investment in housing and show our determination to do better. As the noble Lord, Lord Stunell, said: yes, we will have to pay and yes, we are paying. I will pass on to the Chancellor of the Exchequer my noble friend Lord Horam’s suggestions about the division of spending into capital and current.

If we want new homes to be built by councils and housing associations, we recognise that they need a stable investment environment. The noble Lord, Lord Stoneham, said that continuity was what his chief executive really wanted. That is why we have recently set out a long-term rent deal for social landlords in England, limiting increases to CPI plus 1% for five years; an announcement welcomed by David Orr, chief executive of the NHF, as,

“a huge change in tone and approach”.

I am grateful to the noble Baroness, Lady Warwick, for her generous comments on some of the recent announcements.

What everyone in this debate wants is to see these extra resources spent effectively and promptly and targeted at those in greatest need. Our policies are already having an impact. In 2015-16 we delivered nearly 190,000 homes in net additions. That number was up 11% on the previous year and was the highest level since 2007-08. We do not yet have the net additions figures for the most recent year, but measures of new-build starts and completions are up again. In the year to June 2017, new-build dwelling starts totalled 164,960—up by 13% compared with the year to June 2016 and the highest for nine years. During the same period, completions totalled over 153,000, an increase of 11% compared with last year. For the year ending March 2017, the planning system granted permission for 304,000 new homes, up 15% on the year ending March 2016 and up 70% on the year ending March 2012. We have policies, which I hope to come to in a moment, to ensure that these permissions are translated into homes for families more promptly than in the past—a point mentioned by the noble Lord, Lord Smith, in his speech.

The message from today’s debate is that, however well we have done and however much better we may have done than our predecessors, it is not enough. We know that there is a lot more that needs to be done if we are going to address today’s unmet needs, such as on waiting lists, mentioned by the noble Baroness, Lady Warwick, and at the same time keep up with future demand while ensuring that we also deal with affordability. Our housing White Paper, which we debated earlier this year, sets out how we will: make more land available and help local areas plan for the right homes in the right places; build homes faster, giving local authorities the tools they need to drive new housing and hold developers to account and assisting local authorities where necessary with extra infrastructure; bring new players into the housing market, reducing the dominance of a few major housebuilders, as mentioned by the noble Lord, Lord Best; and champion modern methods of construction and support new investment, hopefully driving up productivity—a point mentioned by my noble friend Lady Neville-Rolfe. We also want to give local people a say over new development and ensure that they feel the benefits of new infrastructure.

Many noble Lords spoke about planning and the constraints it has imposed on securing the necessary consents. I may be wrong, but I think that there has been a shift in public opinion about the imperative for more homes, as more and more families have children or grandchildren who struggle to get a decent home. I detect a growing, but not universal, impatience with unjustified nimbyism. Of course we should be alive to the need to avoid development that is inappropriate, but in my last years in another place I detected a recognition of the need—and at times a welcome—for well-designed, appropriate development on sites that might have generated a more hostile response in earlier years, particularly if it was targeted at meeting local needs.

Often, the concern has been not so much about the development but about the infrastructure—a point made by several noble Lords in this debate, including my noble friend Lady Neville-Rolfe, who spoke about roundabouts. That is exactly why we have introduced our new £2.3 billion housing infrastructure fund to make sure that the infrastructure is put in first. We launched our prospectus on 4 July and applications closed on 28 September, with the ambition of reaching as many councils as possible. The fund is oversubscribed and we expect to start announcing successful bids in early 2018. The money will be focused on areas of greatest housing need, helping to deliver up to 100,000 new homes.

My noble friend Lady Neville-Rolfe mentioned the release of public land. Again, we are taking direct action there. Since 2011 we have released land or identified land to be released with the capacity for up to 249,000 homes. Once permission has been granted—I think it was the noble Lord, Lord Stunell, who said that there were 600,000 extant planning consents—we are proposing greater scrutiny and transparency of a site’s delivery prospects. This includes more streamlined completion notice procedures and new guidance encouraging more active use of compulsory purchase powers by local authorities at stalled housing sites. Those are just some of the measures we have introduced to secure a step change in the volume of new starts.

Affordability is the other subject of the noble Lord’s debate. Affordability has to be a priority for any Government. Traditionally, affordable homes were provided by local authorities and many questions have been raised in the debate as to why we cannot do what we did in the 1950s. If we could build nearly 200,000 council houses in 1953, why can we not do so now, when the country is more prosperous? The House is grateful to my noble friend Lord Horam for his historical intervention explaining how that commitment came about.

The time has come to think again about our approach to social housing, not least in the wake of the Grenfell Tower tragedy. The noble Lord, Lord Stoneham, made the point that we need that review. In a speech to the National Housing Federation conference, the Secretary of State recently announced that the Government will be bringing forward a Green Paper on social housing in England—a wide-ranging, top-to-bottom review of the issues facing the sector. It will be the most substantial report of its kind for a generation, tackling head-on the issue of affordability—which was the motivation for the social housing movement several generations ago—and looking at the role of social housing in society today. I will ensure that all the contributions of noble Lords in today’s debate are fed in to that review.

However, the context has changed since the 1950s and 1960s, and I will spend a minute looking at this. Housing associations were not significant players then and historically have been classified as private sector bodies. As a result, Governments of all parties have routed public funds for social housing to housing associations rather than local authorities, because housing association borrowings did not score as public debt. That meant that for every given public pound, the Housing Minister could get more social housing through housing associations than local authorities. I will avoid a theological debate as to whether that should score as public expenditure, but that is the reality and that has been a significant change.

There has been another since the golden years of the 1950s. Section 106 planning obligations were not there then; they mean that local authorities can secure the direct provision of, or financial contributions toward, affordable housing, with the cost borne not by the public purse but by landowners securing less of a windfall gain when they get planning consent. In 2015-16, over 12,000 affordable housing completions were fully funded, and 350 partially funded, through Section 106.

The final change is that local authorities are no longer the significant landlords they were. Since 1988, through large-scale voluntary transfer, some councils, with the support of their tenants, voting in a ballot, decided to transfer their housing to a housing association. They did this because it helped improve the standard of their housing stock, with faster access to investment. In many cases it got them a more benign rent regime and additional benefits such as greater tenant choice and participation. So the context has changed; but, having made those points, the Government do see a significant role for local authorities again. More than twice as much council housing has been built since 2010 than in the previous 13 years and more affordable homes overall delivered in the last six years than in the last six years of Labour government. The numbers of new council homes have been increasing year on year, and they are now an important source of new supply. In 2014 we saw the highest number of council house starts for 23 years.

We want to go further. We want to see a new generation of council house building and housing association homes. The extra funding and rent certainty we have just announced will further support councils and housing associations in areas of acute affordability pressure, where working families are struggling with the costs of rent and some are at risk of homelessness. We will be looking to the sector to show that it can make the best possible use of its resources and make a substantial contribution to building the homes that all noble Lords want to see built.

The chief executive of the National Housing Federation said:

“The additional £2 billion will make a real difference to those let down by a broken housing market. Building homes for social rent will make work pay and help bring down the housing benefit bill in the long run by moving people out of costly private lets”.


Those announcements build on the flexibilities that councils already have, following the self-financing settlement in 2012, which will enable them to build more homes to meet housing pressures.

A number of noble Lords mentioned the borrowing capacity of local authorities and wanted the ceiling lifted or abolished. There is still around £3.4 billion of borrowing capacity available to local housing authorities. Some £300 million of additional borrowing was made available to councils in England in 2013, but only £144 million was taken up by councils. There are also substantial reserves, not just in the housing revenue accounts of local authorities but in the reserves of those councils that have transferred their stock over to housing associations. The Government responded to the Economic Affairs Committee’s report. We had a debate on it, which I think I may have answered. In response to the noble Lord, Lord Kennedy, and others, on the issue of raising the capital on local authority borrowing, we will look seriously at any request from councils that will result in a significant investment in additional housing.

On the second prong of the Motion—affordability—we have plans to increase the output of affordable homes. Affordability is an issue for home buyers as well, as my noble friend Lord Kirkham mentioned. We are supporting first-time buyers to achieve their ambition of home ownership. That is why last week we announced £10 billion of new funding for the Help to Buy equity loan, which could help around 135,000 more people to buy homes by 2021, on top of the 400,000 households that have been helped by government-backed schemes—over half of them through Help to Buy.

We ran into a bit of headwind during the debate on Help to Buy; it was criticised by the noble Baroness, Lady Donaghy, and others. Some 39% of buyers had an annual household income of less than £40,000. An independent evaluation report of the Help to Buy scheme concluded that Help to Buy does not materially impact on house prices, it has helped to improve market access, especially among first-time buyers, and has encouraged more lenders into the new-build market. Help to Buy customers are satisfied with the buying process. The £10 billion for Help to Buy is different from the £2 billion referred to earlier, in that the Government will get money in Help to Buy back. In effect, it is a loan that the Government get back, possibly with additional funds—depending on the movement of house prices—whereas the Government will obviously not get the £2 billion investment in housing back.

I want to touch on one or two of the points made by noble Lords. There has been a lot of focus on homelessness from the noble Lord, Lord Smith, my noble friend Lady Neville-Rolfe, the noble Lord, Lord Cashman, the right reverend Prelate and others. We are committed to doing more to prevent more people becoming homeless in the first place. I am grateful to the noble Lord, Lord Best, for piloting through this House the most ambitious legislative reform in decades: the Homelessness Reduction Act. On resources, a point raised by the noble Lord, Lord Kennedy, we have allocated £550 million until 2020 to tackle homelessness and rough sleeping, as well as supporting the Homelessness Reduction Act. We are protecting £350 million of funding for local authorities and £149 million of central government funding for homelessness programmes.

There was much comment on Section 106 and the issue of viability assessments. I think there was a case, after the economic downturn, for having another look at some of Section 106 where, if no change was made at all, no houses would have been built. I take on board the criticisms made in the debate by the noble Baronesses, Lady Donaghy and Lady Young, the noble Lord, Lord Best, and others. Viability assessments are necessary to make sure that plans and individual proposals are deliverable, but we are aware—even more so now because of the debate—that their use can add complexity and uncertainty and lead to delays in and the reduction of affordable housing.

We are consulting on a new approach to viability with a view to speeding up the decision-making process by reducing the use of VA at the planning application stage. In response to demands for increased transparency, we are consulting on increased transparency so that local communities know what contributions are expected. The plans should set out how developers can contribute to infrastructure and affordable housing.

The noble Lord, Lord Best, spoke about the broken housing market being dominated by a small number of big players. Our housing White Paper set out our plans to encourage new players into the market through loan funding for small builders, custom builders and innovators. We are also improving transparency on buildout and proposing to make developers publish data on how quickly they build after getting planning consent.

A number of concerns were expressed about supported housing, a matter of great interest to this House which has been debated on many occasions. As noble Lords know, we announced proposals for a new funding model for supported housing, to kick in in April 2019. There have been a number of responses to that. We understand that the sector needs certainty now to plan delivery. We will announce next steps shortly in response to the consultation process.

I am conscious that I have about 15 pages of notes in front of me responding to the many very valid points that noble Lords have made. If the House will accept it, I should like to write to them, in no way devaluing the importance of their contributions.

We have so much to do. Successive Governments have failed to provide the homes we need. Progress has been made, but it is not enough. This Government are determined to work with every local authority, organisation and business with a role to play to ensure that we build more of the good-quality homes this country needs, and help more people to achieve their dream of home ownership and help more people into good-quality rented accommodation at a price they can afford. We are committed to deliver on our promise of 1 million homes by 2020 and a further half a million by 2022, and the action that I have set out in this debate shows how we propose to achieve it.

Race Disparity Audit

Lord Young of Cookham Excerpts

Tuesday 10th October 2017 Lords Chamber

[Lord Young of Cookham (Con)]

My Lords, with the leave of the House I shall repeat a Statement made by my right honourable friend the First Secretary of State in another place. The Statement is as follows:

“Mr Speaker, I wish to make a Statement about the race disparity audit, which the Government are publishing today through a new website—Ethnicity Facts and Figures—and a summary report, which I have ordered to be placed in the Library of the House. The audit was announced just over a year ago by the Prime Minister as part of her commitment to tackling injustices in society. This exercise has been unprecedented in scale, scope and transparency. It covers detailed data on around 130 different topics, from 12 government departments.

The first product of the audit is the website, which is created to be used by all citizens. It has been developed through extensive engagement with members of the public from across the UK, public service workers, NGOs and academics. I hope honourable Members will agree, once they have had the chance to examine it, that the website is clear and user-friendly. Each section of the website includes simple headlines and charts, and allows users to download all the underlying data.

Although the past few decades have witnessed great leaps forward in equality and opportunity in British society, this audit shows that there is much more still to do if we are to end racial injustice. In itself, that will sound to honourable Members like an unsurprising conclusion. However, the audit adds a lot more clarity and depth to that single challenge. It tells us in which public services there are the largest disparities, whether those are increasing over time or diminishing, and about the influence of poverty and gender on the wider picture. For example, black people were more than three times more likely than white people to be arrested and more than six times more likely to be stopped and searched.

There are three issues that demonstrate the added complexity of the data. First, there are significant differences in how ethnic minorities are doing in different parts of the country. For example, while employment rates are generally higher for white people than for ethnic minorities, there is a larger gap in the north than in the south. Also, if people are expecting a report that is relentlessly negative about the situation for ethnic minorities in Britain today, I am pleased to say that it is simply not the case that ethnic minorities universally have worse outcomes. For example, people of Indian and Pakistani origin have similar levels of homeownership to white people, though this is not true of other ethnic minorities. Secondly, on some measures there are very significant differences between ethnic minority groups. Education attainment data show there are disparities in primary school which increase in secondary school, with Asian pupils tending to perform well and white and black pupils doing less well, particularly those eligible for free school meals. Finally, on other measures, it is white British people who are experiencing the worst outcomes, for example in relation to self-harm and suicide in custody or smoking in teenagers.

In terms of what happens next, the data set out on the website present a huge challenge, not just to government, but also to business, public services and wider society. We hope this website will contribute to a better-informed public debate about ethnicity in the UK and support local managers of public services to ask how they compare to other services.

On behalf of the Government, I have committed to maintaining and extending the ethnicity facts and figures website. More importantly, I commit that government will take action with partners to address the ethnic disparities highlighted by the audit. We have made a start through initiatives such as the Department for Work and Pensions taking action in 20 targeted hotspots. Measures in these areas will include mentoring schemes to help those in ethnic minorities into work and traineeships for 16 to 24 year-olds offering English, maths and vocational training alongside work placements.

In the criminal justice system, I want to thank the right honourable Member for Tottenham for his recent report, and I am pleased to announce that the Ministry of Justice will be taking forward a number of recommendations made in the recent Lammy review. These will include developing performance indicators for prisons to assess the equality of outcomes for prisoners of all ethnicities, committing to publish all criminal justice datasets held on ethnicity by default and working to ensure that our prison workforce is more representative of the country as a whole.

In addition, the Department for Education will take forward an external review to improve practice in exclusions. This will share best practice nationwide and focus on the experiences of those groups who are disproportionately likely to be excluded. The House can expect further announcements on future government work to follow in the coming months.

The approach the Government are taking is “explain or change”. Where significant disparities between ethnic groups cannot be explained by wider factors, we will commit ourselves to working with partners to change them. The race disparity audit provides an unprecedented degree of transparency into how ethnicity affects the experiences of citizens. It will be a resource which tells us how well we are doing as a society in ensuring that all can thrive and prosper, and I commend it to the House”.

--- Later in debate ---

[Lord Young of Cookham]

I am grateful to both noble Baronesses for their broad welcome of the publication of these statistics. On the question of the delay, no one has ever done this before and there was no template for us to follow. No other country has done this. It was a complicated exercise. We wanted to make sure that the data were of the right quality, and that has contributed to the delay from the hoped-for date earlier this year. We are taking steps to address some of the problems that have been mentioned, particularly the 20 hot spots, which we have not announced yet, where there will be special measures by the DWP to help those who find it difficult to get into work, such as mentoring, which the noble Baroness, Lady Gale, mentioned, traineeships and other steps to help people into work.

The noble Baroness asked a good question about the devolved regions. The Minister, my noble friend Lord Bourne, is meeting the devolved regions tomorrow. The initial indications are that the Welsh Assembly is quite anxious to participate but so far the Scottish Parliament has been somewhat more reluctant, as my right honourable friend said in another place. The devolved regions hold some of these statistics. We have provided only statistics for data that are reserved; the devolved Assembly and the Scottish Parliament have many of the local data. I very much hope that they will either join in this or take it forward in their own way. As I said, there is a meeting tomorrow to take this matter forward.

On the question of who was involved, the race disparity audit that was published at the same time said:

“Ongoing and wide-ranging consultation with potential users of data has helped identify questions of public interest and concern, and to understand how to present the data objectively and meaningfully in a way that makes sense to users and commands their confidence. This has included roundtable discussions with NGOs, public service providers and academics, and engagement with the public”.


So there was a fairly extensive consultation exercise before we published this.

In response to further questions that were asked, we expect there to be further announcements in due course from other government departments taking the agenda forward. In response to the noble Baroness from the Liberal Democrat Benches, there will be an interministerial group where all the departments involved will be represented to take it forward. The noble Baroness will be familiar with the Parker report, which looked at representation on executive boards, and we need to take that agenda forward. However, this is not just a matter for the Government; it also poses some difficult questions for those in the private sector.

“Explain or change” applies to the Government as much as to everyone else. We will have to explain why these figures are as they are. If there is not a good explanation then we will have to make changes, and we will come forward with those in due course.

[Lord Singh of Wimbledon (CB)]

My Lords, in the 1950s and 1960s it was perfectly legal to put adverts in shop windows saying, “No blacks or coloured people”. There has been a gradual improvement, but in the past few years here, in the United States and in much of Europe it has gone the other way. There is a lot of xenophobia, which was very evident in the Brexit debate. Does the Minister agree that to some extent that explains why we have this continuing problem?

[Lord Young of Cookham]

The noble Lord is right to say that we in this country have made enormous progress. I was looking at the Equality and Human Rights Commission report Is Britain Fairer?, which says:

“The reader will find that Britain has become fairer in many areas. We should be proud of and celebrate these advances. If we do not recognise the positives, we run the risk of feeding an untrue and excessively negative narrative that suggests everywhere you look we are becoming more divided and less fair as a nation”.


I think there has been enormous change and improvement in social attitudes, underpinned by relevant race equality legislation. The noble Lord is right that there was a spike—I hope it was just a spike—after the referendum result, and that poses a challenge to all those government departments with responsibility for promoting good relationships. There is particular responsibility for the police on the law and order front. In publishing this document, we recognise that we have progress to make in a wide number of areas.

[Lord Gadhia (Non-Afl)]

My Lords, I add my welcome for the publication of this report. Sunshine is often the best disinfectant, and bringing transparency to areas where more work needs to be done to tackle persistent inequality and prejudice is most welcome. I encourage the Government to develop a proactive agenda to tackle these issues. At the same time, there is some positive evidence in the report, particularly regarding the British Indian community, which comes top in a number of earnings and education indicators. For example, 35% of British Indians earn more than £1,000 a week, versus an average of 24% in that income bracket across the population; and 14% of British Indian children achieve three A grades or better at A-level. Does my noble friend agree that the British Indian community provides a role model for how a minority group can integrate successfully into British society and make a positive and outstanding contribution to this country?

[Lord Young of Cookham]

I agree with my noble friend. One positive fact that emerged from this audit was that 85% of ethnic minority people believe that they are British and identify very strongly with their community. That is a very positive sign. My noble friend is right that in many of these indicators, the Indian community does well; but, by contrast, they reveal that the Bangladeshi community does not do nearly so well on many of the same indicators. We need to understand the reasons, address them and see whether we can bring those members of the ethnic minorities who do not achieve quite as well as the Indian community in the respect that my noble friend mentioned up to the same standard.

[The Lord Bishop of Chelmsford]

My Lords, although, let me be clear, the Church of England has nothing to teach anyone else on this subject—our record is not a good one—in the diocese of Chelmsford, where I serve, which includes the east London boroughs, which have some of the most diverse communities in Europe, we have found that of course there is racism and xenophobia but there is also what has been explained to me as unconscious bias. It is not quite the same as racism; it is those things which prevent us from seeing each other as clearly as we need to. Both in the Church of England generally and in the diocese where I serve, we have done a lot of training over the past couple of years to help people to see their own unconscious bias towards people, and this is already bearing fruit in the church context with black and global majority people coming forward into positions. I wondered whether the Government had looked at that both for us and in wider society to try to move the debate on beyond the binary thing of, “Somebody is a racist or they are not”.

[Lord Young of Cookham]

I welcome the work which the right reverend Prelate has been doing in east London, in his diocese. If there is a template there, a model of working which can have wider application, of course the Government would be interested. One thing that I discovered from going on to the website this morning, which I had not appreciated before, is that black people are disproportionately more likely to engage in voluntary work than any other group. If one digs into the audit, there is a lot of good news there about ethnic minorities, which I hope we can now put in a wider domain. If we can build on the good work that the Church has done in east London and apply it to some other areas where there are big ethnic minority populations, the Government would be delighted.

[Lord Hastings of Scarisbrick (CB)]

My Lords, congratulations have already been received by the Government on publishing this race disparity audit. It has been well presented and the Prime Minister has done the country a good service. I understand from inside information that, of the 25 people around the Cabinet table this morning, there was only one under 40 years of age. It would be interesting to see the list of those who attended the Cabinet discussion this morning and to know why there was only one person under 40, given that some of the information made available to the newspapers reveals that many of the key factors affect those under 30. Does it indicate whether the Government’s relationships with people under the age of 30 may need a little enhancement and support to ensure that this race equality audit is put into place?

As the Minister referred to the fact that he looked at the audit this morning, perhaps he could also tell the House whether it says anything about the race profiling undertaken by customs officers, border control and police services. Although that may not necessarily relate to education or employment, it is infuriating, especially for black people, who find themselves consistently stopped, undermined and picked on. Sometimes it actually reverses their commitment to nationhood.

[Lord Young of Cookham]

In response to the last question posed by the noble Lord, I have looked at the website and I think I am right in saying that it does not contain the data to which he has referred about those who are stopped at border control or customs. I shall double check that and, if I am wrong, I shall write to him.

On the broader point, I was not sitting around the Cabinet table this morning but, if I had been, I would certainly not have scored as being under 40. I shall make some inquiries but, in the Statement made by my right honourable friend in the other place, he said that there were 12 representatives of NGOs at that meeting and that there was a universally positive response. The representative of Black Vote said that this was a real opportunity to make transformational change.

I take the noble Lord’s point about those under 40. My party has a challenge in that regard, which we need to address between now and the next general election. But one good thing about the audit data is that they break down by age, showing for example that those offenders most likely to reoffend are between the ages of 15 and 18. So there is a lot of information about age there—but it is also broken down by ethnicity, which will help us to tackle particular areas in the criminal justice field.

[Baroness Howells of St Davids (Lab)]

My Lords, I did not intend to say anything on race, because I have spoken for 60 years in this country. There have been many changes, but we are not talking about black people—this is about white people, and the Aryan myth of white superiority. I would be very grateful if somebody did some sort of exercise to bring forth that myth of white superiority. We forget that education came from Africa to the west; noble Lords can look that up and will find out that it is true. I have had 60 years in race relations—and I gave up a career to work in that field because I was fortunate to have had a good education early on in the Caribbean. We do not have people coming to universities here from the Caribbean who are unworthy of taking their place without getting an access course. That is happening in white Britain. Before I die, please show me that you will look at that myth of white superiority and, for God’s sake, end that discussion.

[Lord Young of Cookham]

I applaud the work that the noble Baroness has done over many years in the field of promoting better community relationships. One thing this audit does is to demolish the myth of white superiority. According to the indicators, white children leaving school do much worse than particular ethnic minority groups. As I said in the Statement, white children are more prone to smoke than children from other ethnic minorities. It helps to identify those areas in which ethnic minorities are outperforming the white British. If I refer to black people, that is the language used in the report, on the website and in the Statement. But I hope that when the noble Baroness has an opportunity to look at the website, she will find that some of her fears about promoting white superiority are allayed.

[Baroness Hussein-Ece (LD)]

The race disparity audit is very welcome. I have worked in the race equality field since the mid-1980s, and I was a commissioner on the Equality and Human Rights Commission when the report to which the Minister referred about how fair Britain is came out some years ago. It is depressing that there are still areas that have not improved, through discrimination, poverty or class—through a variety of factors. It cannot be right that black and ethnic minority children are more likely to be excluded and are less likely to go to a decent university; they are more likely to end up in prison, and they also, perhaps, may have to change their names on their CV to get an interview. Lots of research has been done; those are the stubborn areas that we need to tackle.

A lot of this is new, but an awful lot of it is not and has been around for many years—we have been talking about it for many years. Will the Government undertake to have a coherent race equality strategy which, as my noble friend Lady Burt said earlier, is cross departmental, and whereby Secretaries of State have responsibility in their own departments to tackle this issue and make a difference?

[Lord Young of Cookham]

I agree with much of what the noble Baroness has just said. If one looks at excluded children, which I did this morning, one sees that those most likely to be excluded are Traveller children and those in the Roma community. Publishing the figures highlights the fact that those children are more likely to be excluded. The noble Baroness is right that there are substantial discrepancies and differences between particular ethnic groups when it comes to exclusion. Now those who run our schools will have to explain or change—that is the whole purpose of the exercise.

On a coherent race equality strategy, again, I hear what the noble Baroness says. As I mentioned a moment ago, there will be an interministerial group to take this forward. I anticipate that there will be interest in both this House and another place now that we have published the report and the Government have explained how they are making progress in eliminating some of the discrimination that has appeared.

[Lord Marlesford (Con)]

My Lords, in debating these matters, will my noble friend bear in mind the advice of the late Lord Bauer—the distinguished economist Professor Peter Bauer, at whose feet I was lucky enough to sit many years ago as an undergraduate—that sometimes the word “difference” is more enlightening than “inequality”?

[Lord Young of Cookham]

Yes—and, again, if my noble friend has time to look at this, he will see that often there are very good reasons why there are differences. But he has given me some good advice and I will stop there.

[The Earl of Listowel (CB)]

My Lords, the Runnymede Trust has found that 59% of black Caribbean children, 44% of black African-Caribbean children and 61% of mixed race children grow up in a single-parent family, compared with an average in this country of 22%. The figures highlight the fact that it needs to be understood that many Afro-Caribbean fathers are identified as not being with the family at birth but are found to be there when the child is five. I have worked with many young black boys—and, indeed, white working-class boys—who feel the lack of a father. Will the Minister and his colleagues think when they decide how much to fund local authorities in future how harmful it is to such vulnerable families as these when funding for children’s centres and family support groups is cut, as it has been in recent years? These are the families who pay the greatest cost. They need the most support to stay together and intact so that we do not continue the generational breakdown in families.

[Lord Young of Cookham]

The noble Earl is quite right. Again, I looked at some of the figures this morning. Children who grow up in single-parent families are disproportionately likely to have Afro-Caribbean mothers. That, of course, has a knock-on effect on the income of the household, which in turn has a knock-on effect on expectations and in some cases achievement. The specific question of how one recognises these challenges in the formula for the revenue support grant is one that I will pass on to the Secretary of State at CLG to make sure that he takes it on board as we look at next year’s RSG.

[Baroness Uddin (Non-Afl)]

My Lords, I want to follow up on the previous comments of the noble Earl from the Cross Benches, which relate to what my noble friend Lady Howells said. We need to address busting the myths about one of the issues, which is the impact of families living with a single parent and the claim that there is always an impact. That myth is always about black parents. There are countless single-parent families in this country and many children have done well, so we should not continue to perpetrate this myth because it adds to the burden of racism that many families have to face. I welcome the audit and whatever it is going to deliver, but it would be very helpful if the Minister said what the timeframe is for explaining and for action. The noble Lord himself will know about some of the issues around disparity and discrimination—whatever we wish to call it—and the challenge of making ourselves a more equal and just society. He has many long-standing associations with Tower Hamlets. He knows all about this issue, as do other members of the Government. I want to be told about the parameters of action to be taken rather than about the audit or the changes envisaged, because change has obviously not taken place over a generation. Therefore, I would welcome a little more certainty about the timeline.

[Lord Young of Cookham]

Change will not happen overnight; this will take some time to put right. On the first part of the noble Baroness’s intervention, there need be no more myths about growing up in single-parent families because the figures are now clearly set out on the website. She can see that there are significant variations according to the ethnicity of the family. The figures are there and we have to respond to that. On the question of government responses, I announced in the Statement some action that is being taken by the Ministry of Justice and the Department for Work and Pensions. There will be other announcements in due course from other departments as they take the agenda forward.

[Baroness Verma (Con)]

My Lords, I commend my right honourable friend the Prime Minister as she has been passionate about getting this issue on the agenda for as long as I have known her, which is a very long time. Could we start first with Whitehall? Many people of all ethnicities come into Whitehall but, when it comes to promotion, we seem to lose people of colour along the way and very few positions across Whitehall are held by people from ethnic minorities. I am not sure that mentoring is the answer, because I do not think you need it if you have an equal level of education.

[Lord Young of Cookham]

My noble friend is absolutely right. The statistics showing the percentage of those from ethnic minorities employed in the public sector are in the report. She is right to say that there is good representation at the lower levels but much less as one goes up the chain. Again, that is a question for the Government to explain or change. If one looks at the Armed Forces, the Army has a relatively good record with some 10% of personnel coming from ethnic minorities, but the RAF has a less good record. Therefore, there are challenges for the Civil Service and those in the public sector to look at the figures and establish why those from ethnic minorities are disproportionately represented in the less well-paid posts.

[Baroness Benjamin (LD)]

My Lords, I welcome this report because it focuses on an issue that affects the whole of society, even more so than when I came here from Trinidad as a 10 year-old in 1960. I was born in Trinidad so I knew that I was worthy and I knew about my history, but a lot of young black and Asian minority children do not know about their history. It is Black History Month so I have visited schools, universities and prisons. Just this morning I visited a school in Bedfordshire to talk about Black History Month. When I visited prisons, I realised just how much black men did not know about their history and how they felt let down by the education system not focusing on who they are. To move forward you need to know where you have been and where you have come from. What are the Government doing to create a safety net and ensure that BAME children do not fall through it? We need a safety net to help and protect them and show them that they belong. We owe it to them and we owe it to our young people—not just black people but white people too—to teach them about black history and how we can all move forward to make our country, Great Britain, great again.

[Lord Young of Cookham]

Again, I commend the work that the noble Baroness has done in this field. If I may say so, she is an admirable role model for those in our country. The specific question she raises—the extent to which one wants to change this issue and inject into it the dimension to which she referred—is one for the Department for Education and the national curriculum. I very much hope that schools will teach not just British history but history more generally, particularly in those areas where they have children coming from a wide variety of different backgrounds. I will certainly pass that suggestion on to my noble friend.

Financial Guidance and Claims Bill [HL]

Lord Young of Cookham Excerpts

Committee: 4th sitting (Hansard): House of Lords
Wednesday 13th September 2017 Lords Chamber

[Lord Young of Cookham (Con)]

My Lords, Amendments 69A and 69B, which my noble friend Lord Hunt has put forward, seek to include credit hire agreements and the commissioning of medical reports within the scope of claims management regulation. He seeks to do that by amending the definitions in Clause 16. The Committee is grateful to him for the powerful way in which he put forward his case. I am sure we all agree with his quote from Lord Justice Jackson about artificial claims.

I understand my noble friend’s concerns and agree there are links, as the noble Earl, Lord Kinnoull, said, between these issues, not least in terms of the impact they can have on the cost of insurance premiums and other fees for consumers. However, credit hire and medical reports are separate from the issue of claims management regulation. They are important issues which are being considered through other government work, taking into account the broader context of the market. In both cases, CMCs are a very small part of the overall market. To revert to my aeronautical analogy, they are on a separate flight path from the measures in the Bill, but they are none the less important.

As my noble friend explained, credit hire is the supply of a like-for-like replacement hire vehicle on a credit basis to a not-at-fault vehicle owner following a road traffic accident. This can, of course, be part of the overall insurance claim process, but it is not in itself a claims management activity. Similarly, some CMCs are involved in medical reporting, but the market is far broader than CMCs, with most reports sourced by claimant lawyers and/or insurers. Medical reporting organisations provide services organising the provision of medical reports, as my noble friend explained, for personal injury claims, but they do not pursue claims themselves.

That is not to say that these issues are not important. It is clear from the interventions of noble Lords on all sides of the Committee that they are. They should be addressed, and the Government will address them. The Government are considering what more can be done on credit hire. We sought views on this issue in the call for evidence section of the whiplash consultation that closed in January 2017. Responses are being considered, and the Government will make an announcement in due course.

With regard to commissioning medical reports, as my noble friend noted, MedCo is an industry-owned, not-for-profit company that was established to enhance the quality and independence of initial medical reports in support of whiplash claims. As my noble friend said, attempts to subvert government policy in relation to the introduction of greater independence in medical reporting have resulted in firm enforcement action by MedCo against medical experts, lawyers and medical reporting organisations who have breached MedCo’s user agreements. Good-quality medical evidence supported by the MedCo system is, and will continue to be, an integral part of the Government’s whiplash reforms going forward.

I shall pick up some of the points made in this debate. My noble friend Lord Trenchard asked whether the FCA is qualified and resourced to take on the responsibilities in CMCs. The independent review, which I will refer to again in a moment, concluded that stronger regulation is necessary in order to deliver a step-change in the regulation of the sector. It recommended transferring regulatory responsibility for claims management companies to the FCA. All the costs of regulation will be borne by the CMC market through the FCA’s levy-raising powers, which we discussed at our previous session.

The noble Lord, Lord McKenzie, asked whether firms might get round the regulation by turning themselves into another body, such as a solicitor. Currently, the CMRU, which is in the MoJ, regulates CMCs while the Solicitors Regulation Authority regulates firms of solicitors that conduct claims activities. The full scope of claims management services for the purposes of FCA regulation, including the extent of any exemptions, will be defined through secondary legislation. We want to make sure that there is a tougher regulatory regime and greater accountability for CMCs while ensuring that solicitors are not burdened with unnecessary regulation. The scope and nature of exemptions will be drafted to reflect these priorities, and we will, of course, take on board the point which the noble Lord made.

The noble Lord, Lord McKenzie, then mentioned tax refund companies. I think we all believe that too much tax is being deducted from our income. He is quite right to say that tax refund services are currently unregulated, but they will be subject to trading standards. I can tell the noble Lord that we will further consider and consult on secondary legislation to ensure that the definition of claims management activities is both proportionate and relevant. I would like to reflect on the points that he made about tax refunds and perhaps write to him in more detail.

The thrust of the Government’s case in response to these amendments goes back to the independent review of claims management, which recommended the transfer of claims management regulation to the FCA—that is the foundation of the Bill. However, the review did not consider the extension of scope to credit hire and medical reporting, as suggested by the amendment. CMCs are only part of a larger market in the case that my noble friend has raised, and this wider context needs to be considered, as credit hire and the commissioning of medical reports are separate issues to those under consideration within the Bill. As they are being dealt with separately by government, I would encourage my noble friend to withdraw his amendment. If he wants a further discussion about the action the Government are taking on this, I would be more than happy to meet him.

[Lord Hunt of Wirral]

My Lords, I accept the offer of a further discussion. I am very grateful to the noble Baroness, Lady Kramer, the noble Earl, Lord Kinnoull, my noble friend, Lord Trenchard, and the noble Lord, Lord McKenzie of Luton. I am intrigued by the idea of my noble and learned friend Lord Mackay of Clashfern that perhaps we ought to go a step further and find out ways to stop all this happening in the first place by making it impossible to bring such claims. No doubt we will be delving further into how we control what I have described as this insidious, nasty part of the marketplace when we come to the civil liability Bill and through various other opportunities. I know my noble friend has said that this Bill is on a separate flight path, but I am dealing with drones, and these drones are criss-crossing all the flight paths and creating new flight paths. With that acceptance of the offer of a further meeting, I have no hesitation in saying this problem will not go away and that we have to sort it out. But in the meantime I beg leave to withdraw the amendment.

--- Later in debate ---

[Lord Young of Cookham]

My Lords, this amendment, tabled by my noble friend Lord Holmes of Richmond and the noble Baronesses, Lady Meacher and Lady Greengross, seeks to include in the Bill a set of regulatory principles to be applied by the FCA in respect of claims management services. It has reopened one of the discussions which have run through the debates on the Bill about the interface between the SFGB and the FCA and the overall responsibilities of the FCA so far as the consumer is concerned.

I am grateful to my noble friend for the way he proposed his amendment, which would require that authorised persons act and manage conflicts of interests honestly, fairly and professionally. I do not think that anybody who has spoken in this debate—I am grateful to all noble Lords who have taken part—would disagree that these are worthy principles for the FCA to adhere to. I am sure that my noble friend is aware that the FCA already applies these principles in the way it regulates the conduct of business.

The FCA will give careful consideration to the appropriate design of the precise rules that apply to claims management services and how they fit together as an overall regime. Noble Lords may have looked up the FCA’s principles for businesses. They already include the requirements to act with integrity, to,

“pay due regard to the interests of its customers and treat them fairly”,

and to,

“manage conflicts of interests fairly”.

There is a degree of overlap between those and the principles set out in my noble friend’s proposed new clause. If one drills down and looks at the conduct of business rules, they say:

“A firm must act honestly, fairly and professionally in accordance with the best interests of its client”.


Those three adverbs are exactly the same as the ones in my noble friend’s proposed new clause.

When designing new rules for claims management companies, the FCA must take into account its statutory operational objectives, including its objective of securing an appropriate degree of protection for consumers. The FCA will consult publicly on the proposed rules for claims management companies. Here, I may get into trouble with air traffic control. I am not quite sure whether there was an implication that it was going to wait until after we had left the EU before consulting publicly on the rules for claims management companies. As far as I am concerned, there is no need to wait at all: it should get on with it—“Lights touchpaper and retires”.

I therefore hope that I have allayed concerns that there will be an unreasonable delay. The FCA will consult, and when it does, I am sure that it will take on board the points made in this debate. I noticed that the words “duty of care” do not appear in the proposed new clause, but I hope they can be embraced in some of the principles that we have been discussing.

We have every expectation that the FCA will create appropriate rules for claims management companies that will extend existing principles in FCA rules regarding integrity and the interests of customers to claims management companies. I touched on those principles a moment ago. Therefore, our debate this afternoon is not so much about the destination—on which we agree—but about the vehicle. The Government’s view is that there is an existing framework for the FCA to set out its principles—I referred to that. As there is an existing framework for conveying its objectives and its principles for businesses, the regulatory principles do not need to be enshrined in the Bill, which is what my noble friend suggested. The Government are sympathetic —they always are—but this is not a necessary way forward. For that reason, I hope that I can persuade my noble friend to withdraw his amendment.

[Lord Holmes of Richmond]

I thank my noble friend for that response. It would certainly be a courageous Back-Bencher who sought to push an amendment this afternoon when his Whip is on the Front Bench. But I thank all noble Lords who participated in the debate.

I am grateful to the Minister for taking us through some of the rules set out in the handbook. Indeed, much in there is worthy of note. I wish to put on the record in Hansard that I believe that the FCA does an extraordinary job in a number of ways, not least—departing slightly from this issue—in its regulation of fintech, which leads globally in London and the UK and is always worth a mention in your Lordships’ House.

Having said that, despite what was read from the handbook, it is pretty clear that there is a need to consider a duty of care. On the specific issue of claims management services, which we are discussing this afternoon, and indeed in general terms, I am grateful to my noble friend for, as he put it, lighting the blue touch paper. I hope that it does indeed burn bright and that there is action on a consultation on these points by the FCA sooner rather than later, in 2019.

The Minister says that it is not about the destination; we are merely discussing the vehicle. It seems clear that from his point of view, the vehicle would be an aeroplane. However, we are probably not just talking about the vehicle but discussing the timetable and having a timely duty of care in respect of claims management services and generally across all financial services. It would be excellent for the FCA to have that additional remit, which would sit alongside all its other services.

I am grateful to my noble friend the Minister but I will certainly look at what we can potentially bring back on Report. However, for the time being—certainly as he was formerly a Chief Whip in the other place and, even more significantly, as he is my Whip in this place—I beg leave to withdraw the amendment.

--- Later in debate ---

[Baroness Altmann]

My Lords, Amendment 70ZZA seeks to give the FCA the power to direct providers who are found liable for compensation to pay the claims management company’s fees direct, rather than the CMC taking money out of the customer’s compensation award. The aim of this change is to drive different behaviour in the market and bring about better outcomes for customers by making it more expensive for providers to pay redress to customers who use a CMC than it is in respect of those who claim direct.

It is clear that claims management companies are extremely profitable, with the National Audit Office reporting in February 2016 that CMCs are estimated to have earned between £3.8 billion and £5 billion just from PPI mis-selling compensation between April 2011 and April 2015. That means that consumers could have had billions of pounds more to spend but, instead, some of their compensation has gone to firms that have done very little work for the payments. Indeed, most people could have claimed compensation on their own, particularly if it was made much easier for them to do so. If providers were required to pay the CMCs directly rather than customers funding them, there would be an incentive for providers either to proactively contact customers to offer compensation or to make the process of applying for compensation much simpler, thereby encouraging more people to claim directly and saving the extra costs to the provider.

Claims management companies exist because the process of claiming compensation is not straightforward. Again, PPI is a good example of this and it highlights that the current redress practices are not working well enough for consumers. Therefore, as well as helping consumers keep every penny of their compensation, the amendment could also help to improve the redress system overall. I venture to suggest that it could be an alternative and possibly achieve better overall outcomes for consumers than banning claims management companies from charging fees at all.

Clearly, if the CMCs cannot charge for their services they will not remain in operation. However, simply doing this would address only one part of the problem: it would still not give firms any incentive to make it easier for people to claim compensation themselves, nor would it encourage the firms proactively to offer compensation in cases where there is a clear entitlement. Therefore, the risk would be that customers entitled to compensation would not receive their redress.

This measure would still benefit from being combined with a reasonable cap on claims management companies’ charges. I beg to move.

[Lord Young of Cookham]

My Lords, the amendment tabled by my noble friend Lady Altmann would, in effect, give the FCA a power to make rules requiring firms at fault rather than consumers to pay the costs associated with claims management services and she explained why this would a popular step. The FCA would be able to use such a power only in respect of firms it regulates.

I understand why this idea might seem appealing. The approach could, for example, incentivise those firms that the FCA regulates to be more proactive in offering compensation and dealing with consumer complaints, although this would be a rather indirect way of trying to do this. There are risks that such measures would lead to an increase in speculative and unmeritorious claims by CMCs, which could in turn have an adverse impact on consumers by burdening consumer redress schemes such as the Financial Ombudsman Service. Hopefully consumers will be helped by the ability to cap the fees in certain circumstances, therefore reducing the risk of the consumer not getting as much as they would otherwise be entitled to.

We are not ruling out the possibility that in some circumstances, the FCA might consider it appropriate to make a rule which has the effect that my noble friend seeks. This is within the FCA’s existing rule-making powers—subject of course to the normal principles and procedures which govern the FCA’s rule making, including public consultation and the preparation of a cost-benefit analysis.

However, as I mentioned earlier, such a rule could apply only in respect of defendants which are firms that the FCA already regulates. Claims management services include personal injury cases, and certain housing disrepair and employment cases. The FCA does not regulate defendants in that wide range of cases, so its rules could not apply to them.

Given the possibility of the FCA, within its existing rules, moving in the direction my noble friend has suggested, I hope she might withdraw her amendment.

[Baroness Altmann]

I thank my noble friend for his courteous and helpful reply.

I have been working with the consumer group Which? and it has been very forthright in explaining that it believes this would help the market and consumers overall. However, in light of my noble friend’s saying that the FCA already has the powers and may even be considering such a measure in certain circumstances—I am delighted that we have aired this issue in Committee— I beg leave to withdraw the amendment.

--- Later in debate ---

[Lord Young of Cookham]

My Lords, the amendment tabled by the noble Baroness, Lady Greengross, seeks to require the FCA to make rules restricting fees relating to claims for financial services within two months of the Bill receiving Royal Assent. I agree wholeheartedly with what the noble Baroness and others who have taken part have said on the need to ensure consumers are not charged excessive fees by companies offering claims management services. I also appreciate the Committee’s wish to ensure this protection is given to customers of CMCs as soon as possible. However, it will not be possible for the FCA to make all the necessary rules within two months of Royal Assent. That is indeed an ambitious target.

The Bill puts a duty on the FCA to make rules restricting charges for regulated claims management activity relating to financial products or services. The duty is broad so as to give the FCA the flexibility to design an appropriate cap relating to a wide range of claims for financial products and services. Conceivably, different types of claim might require different levels of cap. To ensure the cap is appropriate, the FCA will need to obtain evidence from across the sector, analyse that information to develop suitable proposals, prepare a cost-benefit analysis and consult on draft fee cap rules. This will, necessarily, take some time. I am sure noble Lords will agree that we need a robust cap, developed on the basis of sound evidence and consultation.

The Government are giving the FCA the tools it needs to start that work as soon as possible. Schedule 5 to the Bill gives the FCA the information-gathering powers it will need to do the work, and Clause 19 provides that those powers will come into force on Royal Assent. However, the scale of the work that needs to be done means it cannot do it all within a two-month window.

Noble Lords have quite rightly raised the current campaign on PPI and how it impacts on the proposals in the Bill that may not come into force for some time. They have asked what might be done in the meantime, which is a very good question. The Government remain committed to establishing a tougher regulatory regime for CMCs. We are considering further the nature of any fee controls that could be introduced before the FCA’s new powers are switched on, using the helpful and comprehensive range of responses to the Ministry of Justice’s consultation. Indeed, this could include a ban on up-front fees. To that end, the Claims Management Regulator is working with the FCA. We are taking the opportunity in the Bill to incorporate a duty on the FCA as the new regulator to develop and implement a fee cap for financial services claims. As that debate gets under way I am sure those concerned will take on board the concerns expressed in the debate to make sure CMCs do not use the benefit of any hiatus to unduly disbenefit—

[Baroness Kramer]

Will it be possible for the Government to bring forward some appropriate language that achieves that when we get to Report so it becomes a locked-in proposition rather than one that has various legislative stumbles before it can be achieved?

[Lord Young of Cookham]

I will do what I can to shed some more light on those issues. As I said, discussions are going on to see whether we can bring those proposals forward. We will certainly update the House when we come to Report.

In response to the noble Lord, Lord McKenzie, this is a similar point to one he raised earlier, and the answer is very similar. The CMRU regulates CMCs, while the Solicitors Regulation Authority regulates solicitors firms conducting claims activities—I think that I am reading exactly the same note as I received earlier. The full scope of claims management services for the purposes of FCA regulation will be defined through secondary legislation, including the extent of any exemptions. The Government want to ensure that there is a tougher regulatory regime and greater accountability for CMCs, while ensuring that solicitors are not burdened with unnecessary regulation—the more I read, the more familiar the sentences become. Both the scope and the nature of exemptions will be drafted to reflect these priorities.

Against a background of what I have said about the Government seeing whether, if we cannot—as we cannot—implement the full Act within two months, something can be done in the meantime, and against an undertaking to update noble Lords by the time we get to Report, I hope that the noble Baroness might be able to withdraw her amendment.

[Baroness Greengross]

I thank the Minister and the noble Baroness, Lady Kramer, and the noble Lord, Lord McKenzie, for their support on a matter which obviously they and, I hope, others feel sympathetic about. I hope that we can discuss the issue with Ministers before Report and make sure that we can in some way protect these very vulnerable consumers, as everybody has agreed is necessary. On that basis, I beg leave to withdraw the amendment.

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[Lord Young of Cookham]

My Lords, I am sure the noble Lord, Lord Stevenson, will find himself on “Yesterday in Parliament” because I am not sure there is much else to report from your Lordships’ House today apart from that moving explanation of a very unfortunate holiday.

My noble friend’s Amendment 70A seeks for the duty on the FCA to cap fees on financial services claims to include personal injury claims. I am grateful to my noble friend for outlining the reasons behind his amendment and to all noble Lords who have taken part and shared with us their various experiences on holiday. It has given us the opportunity to discuss the different types of claims management services that the FCA will be responsible for regulating.

Like other noble Lords, I am irritated by the advertisements on some radio stations encouraging me to recollect what happened three years ago and to apply for compensation. Other noble Lords made it clear that they are against this claims culture and want to see action taken.

CMCs manage claims in different ways. Those dealing with personal injury claims, such as holiday sickness claims, typically focus on marketing activities—we have heard how people are approached overseas—and refer clients to lawyers. They do not usually charge consumers directly, so the opportunity to provide customers with poor service and charge high fees is greatly reduced. To that extent, they are different from some of the activities that we have been talking about.

In the financial services claims sector, CMCs tend to represent clients through the claims process and charge them directly for this service. Evidence suggests that the average completion fee for financial services claims is 28% of the claim value, despite there being very little work involved in processing many financial services claims. The most common example, as we have heard, is PPI, where the consumer only needs to complete and submit a form to the lender. In 2015-16, 95% of complaints about CMCs related to financial services claims; only 2% related to personal injury. However, I recognise that markets and business plans can change. That is why the Bill provides the FCA with a broad power to restrict fees across the range of claims management services it will regulate. It will be up to the FCA to decide whether to exercise this power, based on evidence about how the market is operating, so it could extend it to holiday sickness, which we have heard about in this debate.

My noble friend and other noble Lords referred specifically to holiday sickness claims and the apparent propensity of Brits to be ill overseas more than other Europeans. The Government are concerned about the apparent recent increase in this type of claim. Tackling fraudulent claims is a key priority, and the claims management regulator and the Solicitors Regulation Authority have taken significant steps to deal with abuses in this area. I recall reading in the press that a case is imminent in this country regarding an alleged fraudulent claim, and I also read that prosecutions are taking place in Spain, I think.

The Claims Management Regulation Unit recently cancelled the licence of a CMC responsible for pressuring people into making holiday sickness claims. On top of this, the Solicitors Regulation Authority recently issued a warning making it clear that any solicitor handling holiday sickness claims must carry out proper due diligence. They must make sure they advise clients properly and are dealing with a genuine case where the client is seeking legal help of their own accord.

There is a difference between personal injury and financial services claims management services, so it is logical to impose a duty on the FCA to cap fees for financial services CMCs only. As I said a moment ago, it does have a broad power to restrict fees across the range of claims management services that it regulates.

Amendment 70B provides a useful opportunity to discuss some of the recommendations put forward in the Independent Review of Claims Management Regulation. My noble friend’s amendment would provide for a 0% cap where free alternative claims routes are available, except if it can be shown that the claimant was provided proper information on alternative free methods to claim.

As the Committee is aware, and as my noble friend reminded us, we accepted the recommendations of the Brady review, including the one my noble friend refers to, which was to ensure better signposting to alternative claims resolution channels in order to enhance consumer awareness and help consumers make informed decisions. I am confident that the FCA will take the independent review’s recommendations into account as it develops the new regime.

I would also note that the FCA already has the power to make rules requiring firms to signpost customers to free alternatives, and that power will be available, when the Bill hits the statute book, in relation to claims management companies. It has already made rules to that effect in relation to debt counselling, debt adjusting and the provision of credit information services. In each of these cases, firms must indicate that free services are available and that customers can find out more by contacting the Money Advice Service in their first oral or written communication with their customers. In addition, their websites must provide a link to the Money Advice Service. The FCA already has the power to make rules that would signpost customers to free alternatives, as well as substantial powers to enforce those rules.

I return briefly to the issue of the small claims threshold, which was recently changed. I think it best to write to the noble Lord on the impact of the change to that limit. On overseas claims, the Bill gives the Treasury a power to define when a person should be treated as carrying on claims management activity in England and Wales. The intention is that CMCs approaching consumers in England and Wales and taking forward their claims will be subject to FCA regulation as far as possible. In relation to holiday sickness claims, a CMC carrying out all of its marketing and advertising in Spain is outside of the England and Wales jurisdiction, but if it refers the details on to a UK law firm, that action would be captured by CMC regulation. I hope that answers the noble Lord’s query.

Against the background of what I said earlier, I repeat my acceptance of my noble friend’s offer of a meeting and hope he might feel able to withdraw his amendment.

[Lord Hunt of Wirral]

My Lords, I am grateful to all those colleagues who participated in this debate. I always want the noble Earl, Lord Kinnoull, to participate in debates in which I have spoken because he supplies all the information which I lack. His statistics were staggering and worrying, and once again an indication that something has to be done. I am also very grateful to my noble friends Lord Trenchard and Lady Altmann. I would just say to the noble Lord, Lord Stevenson of Balmacara, that his story will follow us for a long time to come. It is the sort of nightmare from which fresh and better laws are born.

We must find ways of ensuring that genuine claims are dealt with properly. ABTA would say that it has now set up this free service which will deal promptly and well with that sort of situation. No doubt the Minister is overwhelmed by the Cross-Bench, Liberal Democrat, Conservative and Opposition support that has come today for the amendments I have had the honour to table. I detect that there is already a willingness on his part to find a solution, which is why, in anticipation of the many meetings we will hold between now and Report, I so readily beg leave to withdraw the amendment.

--- Later in debate ---

[Lord Stevenson of Balmacara]

My Lords, we have Amendment 75 in this group, and I shall speak to it briefly. It is a gentle prod to the Government that in the clause that deals with commencement there is an extensive list of the various sections that come into play. Then at the top of the next page is just a general provision stating:

“The other provisions of this Act come into force on a day appointed by regulations”.


No date is given for that. It would be helpful if the Government could urge themselves to do a bit a more than just leave it open that regulations will come forward at some future date. A lot of what we have been talking about in this area would be helped if there was urgent action, and the urgency should apply to the regulations that need to come forward as well. I hope that will be well received by the Government at this point.

The noble Earl, Lord Kinnoull, has done another good service to us in bringing forward a possible lacuna in the approach being taken by the Government. It fits in with the various sensible amendments that I have been tabling, asking the Government to look again at the way in which the financing arrangements for debt advice in Scotland, Wales and Northern Ireland operate. I sense that there is also an issue around CMCs that needs a response. I look forward to hearing from the Minister.

[Lord Young of Cookham]

My Lords, Amendments 74 and 76, tabled by the noble Earl, Lord Kinnoull, seek to extend Part 2 to Scotland. I am grateful to him for the way he set out the case for this extension. The Government carefully considered the scope of claims management regulation during the development of this policy. The current framework for claims management regulation, set out in the Compensation Act 2006, limits the extent of claims management regulation to England and Wales only and this will remain the case as we transfer regulation to the FCA. The matter is currently reserved, so we cannot simply make regulations to devolve the matter to the Scottish Government.

In reaching this decision, the Government had a dialogue with the Scottish Government to establish their view. Their view, as outlined in correspondence from the Scottish Business Minister, was that there is limited evidence of malpractice by CMCs in Scotland, and they concluded that extending the scope of claims management regulation would be unnecessary and disproportionate. That view is clearly challenged, and is about to be challenged again.

[The Earl of Kinnoull]

The Scottish Government have come out with a long paper—it is a dozen pages or so—in which they publicly state completely the opposite. We have been citing these terrific statistics from Which?. I do not know at what point in time their views are dated, but events have moved on and the old views are clearly wanting.

[Lord Young of Cookham]

I am very grateful to the noble Earl, who has been very influential, as I will explain in a moment, in persuading the Government to think about this again. I will not quote it again, but what I just quoted was the view at the time we consulted. The Scottish Government concluded that regulation would be unnecessary and disproportionate. It may well be that, from the evidence the noble Earl referred to, since then they have changed their view.

As for regulatory arbitrage, it should not mean that a firm can evade regulation by moving across the border. The Bill gives the Treasury a power to define when a person should be treated as carrying on claims management activity in England and Wales, which gives government the flexibility to adapt the definition should the market change. When exercising this power, the Government intend to capture CMCs approaching consumers in England and Wales, and CMCs taking forward their claims should be subject to FCA regulation. This mirrors the current regulatory framework, in which the requirement to be authorised is not dependent on where the CMC is located but based on where it carries out the regulated service.

With regard to nuisance calls in Scotland, the Government continue to build on a package of measures to tackle this problem across the UK. We have already delivered a number of actions, including: a measure in the Digital Economy Act 2017 making it a requirement for the Information Commissioner to issue a statutory code of practice on direct marketing; requiring all direct marketing callers to provide caller line identification; and increasing the maximum level of monetary penalty the ICO can issue to £500,000 for serious breaches of the regulations. In the light of what the noble Earl has said, we will re-engage with the Scottish Government on this issue and keep our position on claims management regulation under review.

Amendment 75, tabled by the noble Lords, Lord McKenzie and Lord Stevenson, seeks to establish a timescale within which the Government will commence the legislation relating to the single financial guidance body. I am not sure the amendment would do what the noble Lord wants: these regulations would have to be made within 18 months of Royal Assent, but the regulations could then provide for these sections to come into effect after 18 months have passed. I am sure that was not the intention, but that is the reading of the amendment as I have interpreted it. As indicated in our response to the consultation on the single financial guidance body, the new body will come into existence no earlier than autumn 2018. We want to ensure that we provide for the best possible transition from the existing services to the new body. We are conscious, though, that the process has already created some uncertainty for existing services and for consumers. For that reason, as well as those given by the noble Lord, we would like to move as quickly as is practicable.

We also want to provide time for the chair and chief executive to assess and contribute to the key set-up arrangements. In line with Managing Public Money principles, the Bill must have passed Second Reading in the House of Commons before a recruitment exercise for the chair and chief executive can commence. We anticipate starting this recruitment exercise as soon as possible after that point. We are working with existing services and other key stakeholders to ensure that we remain on track to establish the new body. Although I sympathise with what the noble Lord is seeking to achieve with this amendment, I assure him we have every intention of establishing the new body as soon as is practically possible and ensuring that the body is able to deliver an improved, joined-up service to meet the needs of the public.

Against the background of the undertaking I have given to the noble Earl, and the assurances I have just given to the noble Lord, Lord Stevenson, I hope this amendment might be withdrawn and the others not pressed.

[The Earl of Kinnoull]

I am very grateful to the Minister for his typically courteous response and the courteous way in which he dealt with my rather not-so-courteous interruption, for which I apologise. What he said about my point on arbitrage sounded very good, although I want to read it again in Hansard, as did the undertaking. I would like to see how things progress from here, to see if there is anything left on these issues to discuss on Report. But it sounds as if progress is being made, for which I thank the Government very much indeed. On that basis, I beg leave to withdraw the amendment.

House of Lords (Hereditary Peers) (Abolition of By-Elections) Bill [HL]

Lord Young of Cookham Excerpts

2nd reading (Hansard): House of Lords
Friday 8th September 2017 Lords Chamber

[Lord Young of Cookham (Con)]

My Lords, it is good to start this season of Private Members’ Bills with a traditional number—one that we are all familiar with. I start by thanking the noble Lord, Lord Grocott, for his rendition of it today. The noble Lord has consistently shown a passionate commitment to this issue which is admired, even by those who, as we have heard this morning, are in disagreement with him. Before the noble Lord sums up the debate, I will try to respond to some of the points made and questions raised from the Government’s perspective, and am grateful to all who have taken part.

The Government are committed to ensuring that this House continues to fulfil its constitutional role as a revising and scrutinising Chamber, a role that it carries out so effectively. As a newcomer to your Lordships’ House and a migrant from the other place—and therefore to be regarded with some suspicion by my noble friend Lord Mancroft—I am even more impressed than I was before at the way this House discharges its responsibilities, scrutinising legislation and holding Government to account, while respecting the primacy of the other place. As a departmental Minister answering questions in another place, I would reckon to know more about the subject in question than my interrogators. In your Lordships’ House, with its wealth of expertise, it is exactly the opposite, with a dramatic reversal of the terms of trade at the Dispatch Box. The Government’s position on Lords reform generally was set out in their manifesto. We do not consider comprehensive reform of this House to be a priority during this Parliament, and I will return in a moment to the question whether this Bill is comprehensive.

As noble Lords know only too well, the Bill before us today seeks to end the practice of hereditary by-elections which began under the Labour Government’s reforms of 1999, when the majority of the hereditary Peers were removed. Since then, as we have heard today, there have been numerous proposals to end this practice. Indeed, the Labour Government never intended any by-elections to occur. I recall, as shadow Leader in another place, being assured that elections to a reformed upper House with no hereditaries would take place before the 2001 election. The Wakeham commission, as part of its comprehensive package of reform, recommended that excepted hereditary Peers should cease to be Members of this House, and the Labour Government repeated that proposal in numerous White Papers.

As we have heard, the Constitutional Reform and Governance Act 2010 tried, and failed, to remove by-elections. In the subsequent Parliament, I was the Minister in charge of the coalition Government’s House of Lords Reform Bill, which would also have removed hereditary Peers altogether, and which failed to make progress for the reasons set out by the noble Lord, Lord Tyler. We also had the numerous efforts by noble Lords through Private Members’ Bills to end the by-elections, including Lord Weatherill, Lord Avebury, the noble Lord, Lord Steel, the noble Baroness, Lady Hayman, and now, of course, the noble Lord, Lord Grocott. But thus far, none of these proposals has succeeded in achieving a consensus across this House. Against this background of collective failure of Governments and Back-Benchers, one can but admire the courage of the noble Lord in having another crack.

It is clear from today’s debate that many noble Lords here today wish to see the end of by-elections. Those who have been following the debate can see the balance of views. I was particularly struck by the point made by my noble friend Lady Berridge, and a consequence of the current arrangement is a system that is very difficult to defend in equality terms. As I think my noble friend explained, there is in fact an exemption from the Equality Act 2010 for this arrangement, but that does not make it any easier to defend. But while the balance of argument in terms of numbers has been in favour of the Bill, we have also heard some strongly held beliefs that while the issue of comprehensive reform remains unsettled, the excepted hereditary Peers should remain—an argument put forward by my noble friends Lord Trefgarne and Lord Caithness.

We continue to support incremental reforms that achieve this and command consensus across the House, and I shall return in a moment to the question of whether the Bill is incremental. For example, as evidence of our support for incremental reforms under the terms of the House of Lords Reform Act 2014, 68 Members of your Lordships’ House have retired and a further six have ceased to be Members by virtue of their non-attendance. I had the privilege of steering through the other place the House of Lords (Expulsion and Suspension) Act 2015, which provides this House with a power to expel Members in cases of serious misconduct. Those changes have been important in gradually changing the culture of the House. Moreover, looking ahead, it is in that spirit that we should proceed.

The Bill before us today makes provision to stop any hereditary Peers from taking a seat in this House in the future, while the existing hereditaries will remain. Over time, as has been said by the noble Earl, Lord Erroll, this House would de facto become an appointed Chamber save for the Lords Spiritual. Some noble Lords have argued that this is not incremental as we move to that position. My noble friend Lord True also pointed out that over time, the Bill would affect the party balance in the House as one party has significantly more hereditary Peers than the others. This consequence could be avoided, as my noble friend Lord Forsyth suggested, by appointing Peers to compensate, but that would negate one of the objectives of the Bill, which is to reduce our numbers.

I am most grateful, as I think are other noble Lords, for the intervention of my noble friend Lord Cope. He is absolutely right to point out that it is our Standing Orders rather than primary legislation which make provision for the by-elections, and that we do not need primary legislation to change them. A number of noble Lords, including my noble friend Lord Cormack and the noble Lord, Lord Pannick, suggested that we might look at that depending on the progress of this Bill. The opening speech of the noble Lord, Lord Grocott, on the process of by-elections, could almost have come out of the Gilbert and Sullivan opera, “Iolanthe”. However, some of the suggestions put forward during this debate for extending the franchise might overcome the size of the electorate.

In passing, perhaps I may touch on a point brought up by the noble Baroness, Lady D’Souza, and others about the role played by hereditary Peers in the work of the House. The vast majority attend regularly and participate in our proceedings. Today, nearly half of those who are Members of this House by virtue of hereditary peerage are active as Government Ministers or members of committees. Looking at my own party, the ministerial ranks are fortified both by the initial 92 hereditaries such as my noble friend Lord Courtown and by by-election victors such as my noble friend Lord Younger.

I was also struck by the argument put forward by a number of noble Lords that the 92 were the grit in the oyster, and that those who are elected feel an obligation to stay until the comprehensive reform that was part of the initial deal is secured. My noble friends Lord Trenchard, Lord Elton and Lord Mancroft, and the noble Earl, Lord Erroll, all made the point that they feel an obligation to honour the agreement that was entered into and which was discussed at some length during the debate.

Since we last debated this subject, there has been an important initiative which to my mind constitutes a decisive reason for pausing this Bill, regardless of one’s views as to whether it is incremental or comprehensive. I would say to the noble Lord, Lord Anderson, that I wrote that sentence myself; I did not take it out of a Civil Service file. But I was struck by a point made by my noble friend Lord Brabazon that I will come on to in a moment. During the last Parliament the Lord Speaker established a cross-party committee specifically to address the size of the Lords, chaired by the noble Lord, Lord Burns. I would like to dissociate myself from the remarks made by the noble Lord, Lord Foulkes, who cast doubt on the suitability of the noble Lord, Lord Burns, as the chairman of that committee. The noble Lord, Lord Burns, has already done a great service to this House by chairing a committee in which it has been difficult to come to a conclusion. Noble Lords may remember the Trade Union Political Funds and Political Party Funding Committee which was chaired by the noble Lord, Lord Burns. It enabled us to make progress with that legislation. I should say to the House that I would rather that the noble Lord, Lord Burns, was chairing this committee than the noble Lord, Lord Foulkes.

[Lord Foulkes of Cumnock]

So would I.

[Lord Young of Cookham]

The committee has been asked to examine practical and politically viable options for reducing the size of this House, so that progress might be made on the issue, and to provide advice to the Lord Speaker on the potential next steps. I am sure that within the remit was the issue of the hereditaries; it certainly was if the noble Lord, Lord Grocott, gave evidence. The noble Lord, Lord Burns, and the committee have since worked tirelessly on this issue, looking at reform measures to reduce our size as a whole. My noble friend Lord Brabazon reminded us that this was a priority. The committee is going to report in October and the Government look forward to its recommendations. I have no idea what they are going to be, but it cannot be right, in advance of publication and debate on those proposals, to single out one possible element which may or may not be in the recommendations and launch it down the legislative slipway. Consideration of this Bill is therefore premature by singling out as it does one potential reform which does little to address the size of the House. We should await the findings of the committee rather than seeking to pre-empt them, and proceed on that basis.

On a more consensual note, I agree with what the noble Lord, Lord Grocott, said in his peroration. We should sort this out ourselves before someone else sorts it out for us. I pay tribute to the noble Lord for pursuing this important constitutional matter and to those here today for their insightful contributions to the debate. Finally, I would urge noble Lords to engage with the work of the noble Lord, Lord Burns, and his committee to see if we can find a consensus on the best way forward, because ultimately it should be for this House, working in a spirit of partnership, to address the issue.

Bell Pottinger

Lord Young of Cookham Excerpts

Thursday 7th September 2017 Lords Chamber

[Lord Young of Cookham (Con)]

My Lords, the behaviour of Bell Pottinger in South Africa has been completely unacceptable. We support the investigations conducted by the Public Relations and Communications Association and Herbert Smith Freehills and the stark conclusions of their report. I want to put it on record that at no stage were Her Majesty’s Government in any way involved in its work in South Africa.

[Lord Hain (Lab)]

I welcome that Answer but do the Government agree that, after running a pernicious and poisonously racist smear campaign in South Africa for the wealthy Gupta brothers, whom President Zuma has enabled to capture the state and bankroll his family and friends through corruption and cronyism, all Bell Pottinger’s work for British public bodies must be called in and reviewed? Since the respected former Finance Minister Pravin Gordhan has stated that the Guptas and Zumas have benefited from 6.8 billion rand of money laundering, can the Government investigate whether any British banks are involved and what action can be taken at a European level? Will the Minister agree to meet me about this?

[Lord Young of Cookham]

I am grateful to the noble Lord for those questions. There are no contracts between the Government and Bell Pottinger. On the second point about money laundering, I have read the reports that I referred to in my original reply and there is no implication that there has been any money laundering or indeed any criminal activity. The company behaved unprofessionally and unethically. If the noble Lord has any evidence of money laundering, of course that should be investigated. We have some of the toughest money laundering regulations in the world, and earlier this year Deutsche Bank was fined £163 million for breaching those regulations. If there is any evidence of money laundering, of course we should look at it. I would not rule out at all a ministerial meeting with the noble Lord.

[Lord Watts (Lab)]

My Lords, what action are we taking against the individuals involved in this case? It is okay dealing with the organisation, but what about the individuals? Will they be allowed to continue their normal duties?

[Lord Young of Cookham]

This is a private company operating in a foreign country. In this particular case, the chief executive has resigned and a number of officials have been dismissed. I am not sure there is a role for the Government in intervening on a private company in disciplinary matters of this nature.

[Baroness Hayter of Kentish Town (Lab)]

My Lords, that is not quite the case. When the lobbying Bill was going through the House, we warned the Government that if they did not require a lobbying firm to be a member of a professional body and abide by its code, then their statutory register would be meaningless. We now see that Bell Pottinger, although thrown out of the PRCA because it broke the code, is still a member and remains on the statutory register, able to lobby Ministers and Permanent Secretaries. Could the Minister undertake to discuss with the Office for the Registrar of Consultant Lobbyists whether it is appropriate to give to give credence to this company and whether Ministers will still be willing to meet with it?

[Lord Young of Cookham]

As I said, the Government have no contracts with Bell Pottinger. I understand that the registrar is in touch with Bell Pottinger to establish whether or not it is still signed up to the codes of either the PRCA or the other professional body. In the light of those inquiries, the register will then clarify whether it is still signed up to those principles. As the legislation stands, you can be removed from the register only if you stop doing public relations business. You cannot be removed from the register for the sort of activities that we have been talking about.

[Lord Campbell of Pittenweem (LD)]

Does not a rather wider consideration arise out of these matters? While Bell Pottinger might have suffered reputationally and financially from its behaviour, the fact that it is a British company, albeit operating in a foreign country, may well have an effect on the extent to which, in the febrile atmosphere of South African politics, diplomatic representations may be disregarded.

[Lord Young of Cookham]

I have been in touch with our high commissioner in Pretoria this morning. He has made it clear that this has had a very damaging impact on our country’s reputation in South Africa, which is why I have gone out of my way to make it absolutely clear that neither the Government nor indeed the staff of the high commission in South Africa were in any way involved in this contract. The reputation of Bell Pottinger has been seriously impaired. This is a company that seeks to boost the image of other companies but here it is, having a very severe reputational hit of its own. It could perhaps begin to put that right by donating any profits it has made from the contract to some charity in South Africa.

[Baroness McIntosh of Hudnall (Lab)]

My Lords, the noble Lord, Lord Young of Cookham, made an observation in an earlier reply to the effect that it was not possible, as he understood it, for Bell Pottinger—or any other company—to be removed from the register of those people entitled to lobby Parliament. Might this not be an appropriate moment to review those rules and to consider whether there should be a mechanism for removing such people from the register?

[Lord Young of Cookham]

The House, I know, was surprised when I stated the legislative position: you can be removed from the register only if you stop acting as a lobbyist. That is what the law says. There was an attempt last year with a Private Member’s Bill, which started in this House and progressed through it, to take this a step further and have a statutory code of conduct. Although it passed through this House, there was no parliamentary time in another place to take it forward. Discussions are taking place at an official level between those who would like to see the sort of reform that the noble Baroness, Lady McIntosh of Hudnall, has outlined, but at this stage the Government have no plans to legislate.