Financial Guidance and Claims Bill [HL]

Lord Young of Cookham Excerpts

Committee: 2nd sitting (Hansard - continued): House of Lords
Wednesday 6th September 2017 Lords Chamber

[Lord McKenzie of Luton (Lab)]

My Lords, this is an interesting amendment. I believe that it is possible for the noble Baroness to achieve what she wants under the terms of the Bill as it stands, but that is not entirely clear and not quite for the reasons set down in the amendment. The amendment says:

“As part of its pensions guidance function, the single financial guidance body must provide”,


et cetera. Clause 2(4) says that the “pensions guidance function” under Clause 2(1)(a) is,

“to provide, to members of the public, information and guidance on matters relating to occupational and personal pensions”.

I do not think that equity release falls within that definition. There is a separate issue as to whether it would fall within Clause 3, which says:

“As part of its pensions guidance function, the single financial guidance body must provide information and guidance”,


et cetera, but that is to do with,

“flexible benefits that may be provided to the member or survivor”.

It seems to me, on a straightforward reading of the Bill, that it would not be possible to use the pensions guidance function strand of the new body, but there seems absolutely no reason why the money guidance function could not be used for that purpose. That would be a potential quarrel I would have. The Minister may say that interpretation is too restrictive and not right, but I do not think it would preclude the noble Baroness achieving what she wants. It seems to me the money guidance function should enable guidance to be provided on assets including on equity release.

The noble Baroness, Lady Kramer, raised the question of whether the FCA regulates all these schemes. I am advised that it probably does not, but obviously there is an issue there and perhaps the Minister would respond to that. We can support the thrust of this, because I think it achieves what the noble Baroness wants, but not quite, as I understand it, in the terms of the amendment, because of the other functions in the Bill.

[Lord Young of Cookham (Con)]

My Lords, I begin by thanking the noble Baroness, Lady Greengross, for her amendment, which seeks to add an additional requirement to Clause 3. She has a formidable reputation for campaigning on behalf of those of above average age. For as long as I have known her, she has taken a particular interest in housing, so there is a lot of force behind her amendment.

Clause 3 specifies that as part of its pensions guidance function, the single financial guidance body must provide information and guidance to help a member of a pension scheme make decisions about the options open to them as a result of the pension freedoms. This requirement replaces the current duty on the Secretary of State for the DWP to take steps to ensure that people have access to guidance on the pension freedoms. It ensures that the single financial guidance body will continue to meet the guidance guarantee made by the Government when they introduced the pension freedoms legislation back in 2015.

In its recently published interim report on the review of the retirement income market, the Financial Conduct Authority identified some emerging issues. For example, the review found that draw-down of defined contribution pots is becoming much more popular, and accessing pension pots has become the “new norm”. The FCA is now working with the Treasury, the DWP and other stakeholders to fully understand all the emerging themes and to develop ways in which any issues can be addressed. Without reopening some of the earlier debates, that shows the FCA is able to respond to concerns about consumer interests.

At Second Reading the noble Baroness raised questions about the adequacy of saving into a pension scheme at the levels required by automatic enrolment. The amendment she proposes would make it a statutory requirement for the body to provide guidance on other sources of retirement income, including housing wealth. While I agree with her that it is important that people plan for retirement, no matter what they age they are, and that they consider all their retirement income options, I hope to persuade her that her amendment is not necessary.

As part of its pensions guidance and money guidance functions, the body will provide general information and guidance to members of the public about the benefits of saving towards retirement, and the range of products available to provide income in retirement, including the products that the noble Baroness mentioned in her speech. I think the noble Lord, Lord McKenzie, came up with the answer before me: these services are already provided by the Money Advice Service and the Pensions Advisory Service. For example, the MAS website has information on what equity release is and on other products, such as home reversion plans. In establishing the single financial guidance body, the information and guidance about sources of retirement income that are currently spread across all three existing bodies will continue to be delivered but will be much more joined up—for example, there will be just one website instead of three—making it easier for people to access and consider in the round. That will also make it easier for the new body to assess any gaps in the provision, quality or impartiality of the information and guidance available.

Reverting to the debate that we had before the dinner break, the body will not provide advice on specific products. Its role is to provide general information and guidance on the options open to people so that they can make their own more informed financial decisions. It is not in the remit of the body to provide financial advice. In some instances, though—this was touched on during our debate—it may be that the body would need to refer an individual to an independent financial adviser, who would be able to advise them which products were the most suitable in their circumstances; I think that is what the noble Baroness, Lady Kramer, was implying. That in itself is a helpful service; we know that often, people are reluctant to seek financial advice or unsure of where to go. The body and its partners can play a role in breaking down those barriers, enabling people to understand when it will be beneficial or necessary for them to seek financial advice.

Housing wealth, as the noble Baroness knows better than anyone, is a complex area. Equity release schemes, as an example, may be a suitable option for some, but it is important that people are made aware of the associated risks. The FCA’s ageing population study, to be published later this year, will consider how lending in retirement can be made to work better for older consumers—again, evidence that the FCA is conscious of its responsibility to consumers. That study will consider product innovation and building upon existing industry initiatives to facilitate mortgage lending to older consumers. The Government are clear that anyone considering equity release should seek independent financial advice to ensure that the product is appropriate to their individual circumstances.

The noble Baroness, Lady Finlay, raised a number of issues. I may have to write to her about the transparency of exit charges. In a nutshell, though, so far as equity release is concerned, the FCA, as I think she said, has responsibility for the regulation of equity release products and advice on these. The Equity Release Council is the industry body for the sector and sets out rules and guidance that all members have to comply with. All customers must receive independent legal advice before taking out an equity release product. I hope that addresses some of the issues the noble Baroness raised about undue pressure being exercised by family members with an interest. The borrower has to provide a written suitability report, and the FCA requires the borrower to be provided with a “key facts” illustration for each product. Independent solicitors must also verify understanding before proceeding, and the customer must signal receipt and acceptance of the written suitability report. That report explains why they believe that equity release is suitable and why a particular product is being recommended to that customer. I think the noble Baroness raised the issue that people do not have to get regulated advice. I would like to reflect on that and perhaps drop her a line.

So while the body may provide general information on these schemes, that is an example where it would be best placed to make people aware that they should be speaking to regulated advisers, and signpost them to the appropriate place. As I explained, the body is required to provide guidance to replace the pension guidance guarantee. That is because we want to ensure that the move to a single body in no way reduces the guidance on offer for those who wish to consider exercising their pension flexibilities.

To conclude, the SFGB’s money guidance and pensions guidance functions already enable it to provide people with information and guidance on retirement planning, saving in a pension scheme, different sources of retirement income and, where appropriate, to signpost them to regulated advisers. These are all services which MAS and TPAS deliver now, and the body will continue to do that but in a more joined-up way for customers.

Against that background, I ask the noble Baroness to withdraw her amendment.

--- Later in debate ---

[Lord Young of Cookham]

I thank all those who have taken part in this debate for these amendments on the specifics of the pensions guidance function.

Amendment 42B, tabled by the noble Lord, Lord Sharkey, and my noble friend Lady Altmann, seeks to ensure that people have taken guidance or regulated advice before accessing their defined contribution pension pot. The pension flexibilities introduced in 2015, which a number of noble Lords who have taken part in the debate have spoken about, gave people the freedom and choice to decide how to access their defined contribution pension savings. The flexibilities give people control of their money and allow them to make choices which tailor their approach to their own particular circumstances. As has been mentioned in the debate, at the point of introduction, this provision was not there.

Since 2015, we have provided Pension Wise as a source of free and impartial guidance to help people make more informed decisions. There have been over 5.3 million visits to the Pension Wise website since launch and there have been more than 154,000 appointments. Customer satisfaction with Pension Wise remains very high. In 2015-16, Pension Wise delivered 61,000 guidance appointments. In 2016-17, this had increased to 66,000. By the end of July this year, there had already been nearly 27,000 appointments. This clearly demonstrates that the work we and the industry are doing to promote Pension Wise guidance is working.

It is important that people know that help is available when making important decisions about their pensions. Clause 3 ensures that the Government’s guidance guarantee will continue to be met by the new body. It is also important, however, that people have the freedom to choose sources of information, guidance or regulated advice that are right for them before making a decision about their pensions. It is not immediately clear that such an intervention at this point in the journey would be effective in changing people’s behaviour, and it might serve only to frustrate people who have already made the decision about accessing their money. As has been mentioned, such an approach would not be without cost, which would fall on the firms that pay the levy. Additional costs would need to be justified with clear benefits in terms of better outcomes for people.

Pension schemes and providers are required by law to signpost people to Pension Wise guidance. We know that this is working: pension providers are consistently cited by around half of the people who contact Pension Wise as the place they first heard of the advice. We are working with providers to ensure we continuously improve the effectiveness of signposting. We are also working with a number of employers, locally and nationally, to promote the Pension Wise service.

The FCA’s Retirement Outcomes Review: Interim Report found that take-up of Pension Wise was low. However, it also highlighted a number of mitigating contextual factors which should be considered. It found that 53% of pots had been fully withdrawn, but that the vast majority of these were small pots—60% were smaller than £10,000 and 90% were smaller than £30,000. It also found that 94% of people making full withdrawals had other sources of retirement income on top of the state pension, and so the FCA did not see this as evidence of people squandering their pension savings. Lastly, some people who did not use Pension Wise decided that financial advice was the right route for them. Between October 2015 and September 2016, sales to people who took regulated financial advice accounted for 37% of annuity sales and 70% of draw-down sales.

Having said all that, I find this all quite difficult. As noble Lords have suggested during this debate, it may well be the case that people could benefit from using more guidance. However, the landscape is somewhat complex and bears further scrutiny. I am not persuaded that the amendment in front of us is the right way to go. I listened with interest to a number of the alternative suggestions that were made.

I return to my script. The interim report to which I referred a moment ago has raised a number of issues, and the FCA has proposed a number of remedies. It has invited views and is actively engaging with government, regulators, industry and consumer bodies before delivering its final report in the first half of 2018. The right way forward may be to wait for the full report of the FCA and consider its recommendations, which may pick up some of the points made in this debate, in light of all of the information and evidence. This will ensure that we make the right interventions at the right time, which help people make the right choices for their circumstances.

Amendment 42C—which I was never attracted to—tabled by the noble Lord, Lord Sharkey, would require the new body to report annually on the usage of pension guidance and regulated financial advice by members of the public accessing their pension pots. The noble Lord made it clear that, on reflection, he thought that this might not be the best way to proceed, so it might be for the interest of the House if I skip the next four paragraphs of my remarks, as I think that the noble Lord indicated that this may not be the best way to go forward. There is already a robust process in place in this area, and we should not seek to duplicate work which is already in train and well advanced. The FCA has already identified a range of indicators that are intended to give a snapshot of the market for financial advice and establish a baseline.

I think that I have dealt with the points that have been raised in the debate; if I have not, I would like to write on them. However, against the background of what I have just said, I hope that the noble Lord may feel able to withdraw his amendment.

[Lord Sharkey]

My Lords, I thank the noble Baroness, Lady Altmann, and the noble Lord, Lord McKenzie, for their contributions to the debate. In a way, I am not quite certain where this leaves us. I listened quite carefully to what the Minister said, and I can understand the merit in having this completely underworked, over-resourced FCA carry out yet another inquiry in its spare time into this again. However, I can also understand the merits of doing something fairly concrete, fairly soon, about what I think we all agree is a problem. I am also puzzled about why it is quite so difficult, in the sense that this is what happens when you take out a mortgage. It seems to me perfectly reasonable to suggest this is also what should happen when you access your pension.

In passing, I should say that, first, I am quite grateful for the Minister’s speedy dispatch of the second amendment—I will not dwell on that—but I disagree with him when he talks about Pension Wise working. That is not right or accurate; it is misleading. A more accurate view is that it works exceptionally well for the very small number of people who use it. That is a better statement than the blanket statement that Pension Wise is working. That is one of the roots of the problems that we face here.

In the face of the lack of absolute enthusiasm for the first amendment, I will withdraw it. However, we should continue the conversation about this and not just wait for the FCA to opine. There is perhaps room for a more round-table general discussion about what advances we can make without waiting for whenever—shortly or in due course—the FCA will publish its findings. However, in the meantime, I beg leave to withdraw.

--- Later in debate ---

[Lord Stevenson of Balmacara (Lab)]

My Lords, it is well past my bedtime and I will therefore be very brief. I think I can be. I was going to say that these are two sides of the same coin but there are three amendments. Let us be imaginative and say they are grouped around a common theme, which is again to get on record the idea that the work that is going on either directly or through the SFGB must ensure that the services delivered are free at the point of use. That is the main point of Amendment 45, which restricts the operations to,

“companies which are established for charitable or not-for-profit purposes”.

It may be argued, and I think I would accept, that many companies operate in a way that has different branches and it may be that the particular branch which deals with, for example, debt advice might be a not-for-profit operation. Provided it is understood that the advice is always free, the actual status of the company is probably of a lesser order and I would understand if the Minister were of a mind to mention that in his very brief response.

Amendment 46 deals with how the objective attaching to the SFGB also applies to the overall system, in the sense that it would be perverse if the arrangements were such that the initial interactions with the partners and organisations working with the SFGB were free at the point of use but these were also referring clients to profit-seeking or charging operations. This is primarily a probing amendment but, again, I am looking to make sure that the advice circle is complete by retaining this free-at-the-point-of-use idea.

Amendment 47 picks up the possibility that with regard to the general governance arrangements that are set in place—which the Secretary of State has responsibility for, as we have learned this evening—the FCA may have an involvement but the single financial guidance body certainly has an arrangement for making sure that governance is properly arranged and the level of accountability is appropriate. One might ask why that was necessary but it would be a rhetorical question and I do not expect a lengthy response. Given that the delivery partners are being supervised by the FCA in most cases, and certainly where clients’ money is concerned, it is a requirement that they be authorised by the FCA. Given that most of these are charities and therefore also subject to the regulatory requirements of the Charity Commission, it is unlikely that the SFGB would be in a situation where governance arrangements were falling short of absolutely perfect. Again, reassurance from the Minister would be most welcome. I beg to move.

[Lord Young of Cookham]

My Lords, I am grateful to the noble Lord, Lord Stevenson, for moving Amendment 45 and then demolishing it, which saves me the task of so doing. I confirm that we are absolutely clear that any help funded by the new body will be free at the point of use. The difficulty we have with his amendment is that it may be appropriate for the body to enter into arrangements with organisations which provide free-to-client advice but also make a profit elsewhere. He made it clear that as long as it is free at the point of use to the client, he was relaxed. That deals with that amendment.

Turning to Amendment 46, we agree it is important that delivery partners refer members of the public to additional help when they are unable to provide the information themselves. The difficulty with the amendment is that it prevents delivery partners referring members of the public to the most relevant source of help in the first instance. For example, if a member of the public needs legal advice, we do not believe that delivery partners should be obliged, as the amendment requires, to refer that individual back to the SFGB. They should be free to refer that person for appropriate legal advice.

Finally, I may need to write to the noble Lord on Amendment 47. Given the SFGB’s relationship with government, it would be inconsistent with the precedent set by other arm’s-length bodies if the sponsoring department sought to interfere with, or have direct involvement in, the contractual arrangements that the body seeks to enter into. But I assure the noble Lord that as an arm’s-length body the SFGB will be required to comply with government policy on public procurement. The sponsoring department will support the SFGB in dealing effectively with any issues that may arise in the area of delivery partner governance and accountability. If the noble Lord wants more information on that, I would be very happy to drop him a line. Against that background and given the hour, I hope he will be able to withdraw the amendment.

[Lord Stevenson of Balmacara]

I thank the Minister for his comments and his brevity. Hansard will have an interesting time trying to unscramble all our mixed-up shorthand for the body that is still yet to have a name. I wish we would get a name quickly and then we would not have to worry about “F”, “S”, “G” and “B”, and my teeth falling out. I will read Hansard very carefully, and I am sure that any additional information that might be provided by letter will be most welcome. I beg leave to withdraw the amendment.

Local Government Finance

Lord Young of Cookham Excerpts

Thursday 13th July 2017 Lords Chamber

[Lord Young of Cookham (Con)]

My Lords, I welcome this opportunity to debate this important issue, and I am grateful to all noble Lords who have taken part. We have had a thoughtful and, on the whole, consensual, debate about the future of local government. As the noble Lord, Lord Kennedy, said, right at the beginning, many of the key services on which our society depends—education, social services, housing and public transport—are not delivered by central government but by local government. Local government works hard to deliver quality services when it has had fewer resources to do so, as the noble Lord, Lord Smith, said. It works hard to deliver those services. Local councils have much to be proud of and I pay tribute to the way that they have made economies and efficiencies and yet still maintained a high level of public satisfaction.

I cannot claim the same intensity of local government service as many noble Lords who have spoken. I served three years on Lambeth Borough Council in 1968, when there were 50 Conservative and three Labour councillors, but I must have visited Pendle in 1971, because I then lost my seat.

This debate, which I am grateful to the noble Lord, Lord Kennedy, for initiating, gives us an opportunity to stand back a bit from the day-to-day challenge of service delivery and look at some of the medium-term strategic issues that we have talked about—if not the fundamental rethink that the noble Lord, Lord Greaves, called for, at least a serious look at the challenges faced by local government and possible solutions. These strategic issues include finance—the main subject of the debate—but we have also touched on the relationship between central and local government and the redistribution of powers, and within that, the relationship between the NHS and adult social care, which has been one of the major themes. I also want to touch on the emerging and changing structures of local government, and new ways of working together, mentioned by the noble Lord, Lord Shipley, and indeed, working with the private sector to deliver those services.

First, a cautionary note: when I was no longer Housing Minister after my second visit to Pendle, I became a Minister at the Treasury. We need to set this discussion in the context of the challenging fiscal position in the UK. As we heard at the end of the previous debate, at nearly 90% of GDP, our public debt is the highest it has been in nearly 50 years. Our deficit is still above the post war average and above sustainable levels. We have the fourth highest deficit and the sixth highest level of debt out of 24 advanced economies.

We are having this debate against the background of trying to return to balance by the middle of the next decade, which is the right medium-term fiscal objective, enabling debt to fall back to safer levels. We cannot exempt, and we have not exempted, local authorities from this process. As I said, we have recognised their successes in making efficiencies over recent years. Looking ahead, local authorities will see a modest 1.2% increase in cash terms between 2015 and 2020, but looking only at central grants—RSG—does not reflect the totality of resources available to local authorities to deliver local services, including business rates and council tax, as well as dedicated grants, such as the improved better care fund.

Local government finance is a key element in enabling local councils to play their role. To facilitate their work, we have given councils important financial freedoms and flexibilities to help them manage their own budgets. For example, we have given councils new flexibility to use up to 100% of the receipts from the sale of land and buildings, to help make the up-front investment in the transformation of local services and therefore ensure further savings.

The noble Lord, Lord Kennedy, asked in his opening speech for more certainty and stability—I think those were the two words he used. In 2015 we provided more certainty and stability through the offer of a four-year financial settlement, and 97% of eligible local authorities have accepted that offer. We have also introduced flexibility to use the receipts from the sale of land and building, as I have just mentioned, not just to help pay the up-front investment in the transformation of local services, but to put more money into adult social care. We have also introduced the social care precept. As a result of those, against a challenging background, councils can now plan for the future with greater certainty over their funding than ever before, helping them to take more control and plan service delivery and transformation, and to achieve more effective collaboration with local partners.

For example, the transformation challenge award is a challenge fund to support local authorities to re-engineer their business practices and redesign service delivery. It helps local authorities to go further and faster with their transformation plans. Among many others, Lancashire County Council used it to develop and implement an integrated well-being and resilience offer, the London Borough of Brent used it to help local residents overcome barriers to employment, and Blaby District Council is using it to make housing support services easier to access. Much of this debate has been about business rates retention. The noble Lord, Lord Kennedy, and the noble Baroness, Lady Donaghy, touched on that.

As noble Lords have noted, there was no government finance Bill in the Queen’s speech, so there have been questions about our plans for the future of business rates. Looking ahead, I can assure the noble Lord, Lord Kennedy, and others, that local government finance is still very much on our agenda. We are committed to delivering the manifesto pledge we made to continue to give local government greater control over the money it raises, and we will work closely with local government to agree the best way of achieving that. We have no plans yet on timing for a broad local government finance Bill; we will, of course, be looking at what can be achieved without primary legislation, which was something the noble Lord, Lord Shipley, touched on, although, of course, there will be some constraints on what we can do through that route.

We are planning to take this opportunity to open up a conversation with business and local government stakeholders, and ask what their priorities are for the future direction of local government finance reform. We are committed to making the right reforms and ensuring the long-term sustainability of the local government system, delivered on an appropriate timescale. That does not mean we have abandoned the idea of early action. We recognise the impact of increasing service pressures, and are already responding positively to help councils meet immediate issues. For example, as noble Lords have said, in addition to the money announced by the Government in 2015, at the spring Budget this year the Government announced an additional £2 billion to put social care on a more stable footing and alleviate short-term pressures across the health and care system. We have also allowed relevant authorities the flexibility to raise more income through the adult social care precept.

I note the point raised by the noble Lord, Lord Smith—that the money raised from the precept is not quite as much in areas with low-valued housing. But the money raised from the precept is only part of the additional funding made available for adult social care. The majority of the funding announced in the spring Budget will be allocated using the improved better care fund formula, which takes account of the ability to raise money through the council tax precept for social care. Therefore, the total reflects relative need as closely as possible, in recognition of the additional challenges that social care places on certain councils.

In the medium term I reiterate our commitment to the fair funding review, which addresses local authority concerns about the fairness of current funding distributions and the lack of transparency and simplicity in how that funding is allocated. It has been almost 10 years since the current formula was reviewed, and it needs revision to reflect the rapidly shifting factors, such as changing population and demographic pressures, which determine local authority costs in providing services. The fair funding review will set new baseline funding allocations for local authorities by delivering an up-to-date assessment of their relative needs and resources, using the best evidence available. It will be a thorough, evidence-based review of what the relative needs formula should be and will consider a wide range of options for developing an updated funding formula by looking again at the factors that drive costs for local authorities. We cannot and will not do that in isolation; the review is using an open process of close consultation and engagement, and the team is working actively with the LGA and with representatives from all parts of local government through a technical working group to try to get this right. I recognise that local authorities are keen to make progress on this, as indeed are the Government, but they also tell us that it is important to get this review right. We shall continue to seek views on the approach and the target date for implementation.

Adult social care was mentioned by the noble Lord, Lord Smith, the noble Baroness, Lady Donaghy, and others. As my noble friend Lord O’Shaughnessy said in exchange at Question Time earlier this week:

“This Government’s ambition is to make the UK a good place for everyone to grow old, and we have put in place a programme of reforms across health, care, housing and other services to support older people to live independent and fulfilling lives”.—[Official Report, 11/7/17; col. 1158.]


For example, following the rollout of full devolution in April 2016, 10 local authorities and clinical commissioning groups for Greater Manchester have devolved responsibility for the health and social care budget to a new Greater Manchester partnership, which will oversee an annual £6 billion budget with which to commission both health and social care services. That has to be the way forward—breaking down the iron curtain between health and social care.

The ageing population still presents one of our nation’s most profound challenges—one of the themes of this debate—and it raises critical questions as to how as a society we enable all adults to live well into later life and how we deliver sustainable public services that support them. We have, as I said already, invested an additional £2 billion to put social care on a more stable footing and alleviate short-term pressures across the health and care system. However, further reform is required to ensure that the system is prepared to meet the challenges of the increasing numbers of over-75s.

To address these questions, the Government will work with partners at all levels, including those who use services and who work to provide care, to bring forward proposals for public consultation. The Government will consult on options to encourage a wider debate. The consultation will set out options to improve the social care system so as to put it on a more secure financial footing, supporting people, families and communities to prepare for old age, and to address issues related to the quality of care and variation in practice.

On emerging structures of local government and new ways of working, local government has changed since I was a first elected as a councillor nearly 50 years ago. The aldermen and town clerks that I recall working with have been replaced by chief executives, leaders and cabinets. Across government, we are making huge strides towards rebalancing the economy and empowering local government. Devolution deals have been mentioned in this debate, and we have supported such deals, strengthening local leadership and institutions through the establishment of mayoral combined authorities. We have devolved powers and funding away from Whitehall, so that those powers are exercised at the right level. We are also strengthening local leadership and institutions through the establishment of mayoral combined authorities. Directly elected mayors provide a single point of accountability for residents and are an ambassador for their area, boosting the area’s profile and helping to attract inward investment. On 4 May, six combined authority mayors were elected, representing 9.8 million people in England—33% of England, including London, now has a directly elected mayor with new powers to create jobs, improve skills, build homes and make it easier to travel.

We want to see these new city region mayors continue to develop innovative policy solutions. I will, for example, be interested to see development of the West Midlands Mayor’s mentorship scheme, which he hopes will attract mentors to help guide young people into worthwhile careers and out of unemployment. Councils are also innovating in how they work with each other—a point raised by the noble Lord, Lord Shipley—and with outside bodies. This has produced new delivery models such as Achieving for Children, a social enterprise company created by the Royal Borough of Kingston upon Thames and the London Borough of Richmond upon Thames to provide their children’s services.

Touching on some of the issues raised in the debate, the noble Lord, Lord Desai, mentioned the poll tax. I confess that I was one of the Tory rebels who voted against the poll tax at every conceivable point as it went through the House of Commons—I was subsequently surprised to be appointed Chief Whip against that background. The noble Lord said, I think, that he could quadruple the revenue from council tax in a way that was almost painless. I think that we would like to see that scheme worked up in a little more detail before we finally commit ourselves to it.

On revaluation, I gently point out that the Labour Government, between 1997 and 2010, did not revalue in England, despite the powerful arguments for revaluation that we have heard from the noble Lord, Lord Desai. The Government capture the rising values of property in other ways, for example, through inheritance tax and, of course, stamp duty. It is not the case that the public purse does not benefit from rising values. We have no plans to introduce new bands; adding new bands would be complex, involve the valuation of many homes and raise fairness issues about the ability of those liable to pay the tax. Many people living in high-value homes may be on fixed incomes and may have lived in them for a long time. It would risk penalising those people on low incomes, such as pensioners, who have seen their homes appreciate in value. They might face a substantial increase in taxes without having the income to pay it.

[Lord Desai]

The noble Lord will remember, during the poll tax debates, that we had the whole population studied. It was said there were houses where a working man lived with four adult boys working and others where there was a lonely old lady, and there was an injustice because their rates were the same. That is a myth. Let us face it: we need revaluation. People with a fixed income living in a highly valued property will be a very tiny minority.

[Lord Young of Cookham]

Well, I hope that the noble Lord’s words of wisdom have fallen on his Front Bench as well as my own. I just make the point that they did revalue in Wales, in 2005; 33% of homes were placed in a higher band and only 8% of homes were placed in a lower band. Two-thirds of the net rises were among homes originally in bands A to C, meaning that in that case revaluation hit the less well-off households the hardest. Therefore, I note the case that was made, but I have to disappoint the noble Lord and say that that is not on the agenda.

I was encouraged to hear the noble Baroness, Lady Donaghy, say that she has three energetic candidates waiting to fight in her ward. I will make it my mission to ensure that they are opposed by three equally energetic, dynamic and motivated candidates from my party so that we have a proper contest in whatever part of Southwark she may live in.

The noble Lord, Lord Shipley, raised the point about local authorities investing in property. Like him, I saw the article and made some inquiries following the leader in the Times on Tuesday about local authority property investments betting with taxpayers’ money. There are strong checks and balances in place to protect taxpayers’ money, and local authorities are required to ensure that they have the right skills and commercial expertise to make investment decisions. However, we are actively monitoring the nature and scale of local authority commercial activity, working closely with the sector to ensure that the governance framework continues to be appropriate.

Yes, we have to do more on housing; I recognise that. I have some briefing here on housing, explaining how we are building more council houses than the Labour Party. I will not read this out because I am short of time, but I agree with one of the thrusts of this debate that we need to raise our game on housing.

I say to the noble Lord, Lord Greaves, that it says here that you should not comment on an ongoing police investigation, so I will not.

[Lord Greaves]

I was very careful not to comment on the ongoing police investigation. I commented on what is happening in Liverpool council and Lancashire council, which is alarming.

[Lord Young of Cookham]

I will be even more careful by moving quickly on.

The noble Baroness, Lady Pinnock, made the interesting proposal that we should somehow topslice DVLA proceeds and VAT and give it to the local authorities. However, they would not then have the certainty that they have at the moment, because they would not know how much they would raise. Local government would be out of pocket because it would have kept the money and we might simply reduce the RSG to that local authority by the amount that it was going to get from the VAT, so actually you would be back where you started. I note that in the many reviews of local government finance that proposal has not found favour.

In conclusion, local government has met some major challenges recently. It has faced immediate demands from emergencies: terrorist attacks in London and Manchester and the fire at Grenfell Tower. It is dealing with these emergencies against a background of rising demand for services in key areas such as adult social care. It has shown willingness and ability to work together across boundaries of all kinds, not just geographic boundaries but social and political ones as well, to best support the communities it represents.

Despite such challenging conditions, councils continue to deliver, and council tax is expected to be lower in real terms in 2019-20 than it was in 2010-11. Councils have embraced innovation and transformed the way they work to deliver services for their local areas. We must create the conditions for strong local public services to serve our communities. This will support the important work that our public sector workers do in ensuring that all our citizens are provided with high-quality public services at local and national level at every stage of their lives.

Anti-corruption Strategy

Lord Young of Cookham Excerpts

Monday 10th July 2017 Lords Chamber

[Lord McNally]

To ask Her Majesty’s Government what plans they have to update their anti-corruption strategy.

[Lord Young of Cookham (Con)]

My Lords, the Government are working on a new anti-corruption strategy, which will be published in due course. They continue to take forward a wide range of anti-corruption measures, including those agreed at the London anti-corruption summit.

[Lord McNally (LD)]

My Lords, it is over a year since the anti-corruption summit which promised that new strategy. Is the Minister aware that there are voices around which suggest that Brexit is an opportunity for Britain to hoist the Jolly Roger and buccaneer its way around the world with scant regard to things like bribery or money laundering? Is it not time that the Government sent out a clear message that we are a beacon of integrity in these matters by bringing this strategy forward, giving a vote of confidence in the Serious Fraud Office and finding a new anti-corruption champion to succeed the one who has now departed the other place? Those challenges would make us a beacon of integrity, rather than the other way.

--- Later in debate ---

[Lord Young of Cookham]

The noble Lord asked a number of questions. First, he is quite right: the deadline has been missed. We hoped to publish the updated strategy by December last year. There was some turbulence in Whitehall following the outcome of the referendum and then, in March, when the inter-ministerial group met to consider the draft strategy, there was a further discontinuity with the general election. However, a near-final draft of the document is being prepared and we hope to publish it shortly. There has been a series of anti-corruption champions: Hilary Benn, Jack Straw and Ken Clarke. Eric Pickles was the last but since the election Sir Eric is no longer a Member of Parliament. We hope to appoint a new champion in due course.

On the noble Lord’s second point about the Jolly Roger, I prefer the union jack. However, he is quite right: this country has a reputation for integrity and fairness throughout the world. That helps us win export orders and inward investment. The noble Lord may know that in a recent analysis of integrity, the UK was ranked joint 10th out of 176 on the Transparency International corruption perceptions index. He is quite right: we value our reputation and are determined to maintain and enhance it after Brexit.

[Lord Kirkhope of Harrogate (Con)]

My Lords, the Government have previously indicated to the House that they were attempting to meet a target by the end of June this year to have central registers of beneficial ownership opened in the Crown dependencies and the overseas territories. I believe it is now July. Therefore, I would be very grateful if my noble friend updated us on the current position.

[Lord Young of Cookham]

I am grateful to my noble friend. It is indeed now July, and I am happy to tell him that good progress has been made with the overseas territories and the Crown dependencies. Most of the larger territories already had these central registers in place. I think that only two, or possibly three, have not met the deadline, and they are making good progress. Therefore, significant information is now available, almost real time, in this country for law enforcement and HMRC because of the central registers of beneficial ownership that the overseas territories and the Crown dependencies have now introduced following last year’s London summit.

[Lord Watts (Lab)]

Will the Government review their own actions bearing in mind that they have just given a £1 billion bung to the DUP? Does the Minister think he should put his own house in order first?

[Lord Young of Cookham]

I understand that in another place, Nigel Dodds MP suggested that he might put in the public domain correspondence between Gordon Brown and the DUP following the 2010 election. I also remember the 1974 to 1979 Parliament, when the Callaghan Government limped from Division to Division, putting together a series of deals with individual parties and individual Members which involved significant expenditure of public money. The noble Lord may wonder where this train of argument may lead him.

[Lord Faulks (Con)]

My Lords, during the passage of the Criminal Finances Bill, a great deal of concern was expressed around the House about the number of properties, particularly in central London, being acquired by anonymous foreign owners, often using corrupt proceeds of crime. Can the Minister update the House on what is happening with unexplained wealth orders and, indeed, with the proposed register of foreign owners of property here in London? It is time we kept the momentum going on this.

[Lord Young of Cookham]

I am grateful to my noble friend, who played a significant role when the then Criminal Finances Bill was going through the House in ensuring that we had the unexplained wealth orders in the right shape. That legislation hit the statute book on 27 April. We are now preparing statutory guidance, subject to the affirmative procedure order, and introducing new court rules and training for officials so that we get the orders in good shape before they are introduced. We remain committed to a register of beneficial ownership of foreign companies that own or acquire property in this country. Good progress is being made. BEIS submitted a consultation document earlier this year, and it is now analysing the responses. I say to my noble friend that we are determined to honour the commitment to introduce such a register.

[Baroness Stern (CB)]

My Lords, the Minister will know that four senior executives from Barclays Bank are facing criminal prosecution for wrongdoing that took place in the financial crisis of 2008, and that this is the first such prosecution. The director of the Serious Fraud Office, whom I hope the Minister will confirm will remain in his place, has repeatedly called for reform of UK law on criminal corporate liability to make it easier to prosecute private companies involved in wrongdoing. Could the Minister tell the House when the Government intend to reform the UK’s very weak laws on corporate liability, so that companies can be held to account for actions that facilitate money laundering of the proceeds of corruption?

[Lord Young of Cookham]

I cannot give a substantive reply to the noble Baroness, but I would like to write to her. I think I am right in saying that recently, companies have been prosecuted. For example, I think that Rolls-Royce as a company entered into a deferred prosecution agreement and, as a result, paid a penalty of over half a billion pounds—and that was for the company. I am cautious about saying anything more, because I understand that individuals are also under investigation by the SFO. I am afraid that I cannot comment on the question she raised about the personnel at the SFO, but I will make inquiries and write to her.

Government-commissioned Research

Lord Young of Cookham Excerpts

Wednesday 28th June 2017 Lords Chamber

[Baroness O’Neill of Bengarve]

To ask Her Majesty’s Government what steps they are planning to take to register externally commissioned research in a standardised public register, as recommended by Sir Stephen Sedley in his report Missing Evidence: An Inquiry into the Delayed Publication of Government-commissioned Research, published on 2 June 2016.

[Lord Young of Cookham (Con)]

My Lords, Ministers understand the importance of ensuring that government research can be easily accessed. Departments can already publish research in a single place, the GOV.UK website, and the Government Digital Service is making it easier for users to find the information they need on this website. More widely, we remain in close dialogue with Sense about Science, which commissioned the report, and with the research community to understand how the Government’s digital channels can better serve their needs.

[Baroness O’Neill of Bengarve (CB)]

I thank the Minister for that reply. Sir Stephen Sedley’s report estimates that about £2.5 billion a year is spent on government-commissioned research, which is a very large sum. It is intended to provide an evidence base for public policy. However, much of this evidence is then lost, missing or unfindable by people for whom it is relevant. Commissioning departments, other departments and the public at large cannot find out what has already been done. Past research is simply lost and may have to be duplicated. Does the noble Lord agree that not having a co-ordinated register of this research is a very big waste of taxpayers’ money?

[Lord Young of Cookham]

The noble Baroness has rightly summarised the recommendations made by Sir Stephen Sedley. Basically there are two problems, one of which is the availability of research and the other its accessibility. On availability and putting it in the public domain, Sir Tom Scholar, the Permanent Secretary to the Treasury, has recently written to all Permanent Secretaries reminding them of the protocol which obliges them to put research into the public domain as soon as possible. On ease of access—finding the data—the Government Digital Service is sharpening its navigational and taxonomy tools in order to make it easier for users to find the information they need.

[Lord Hunt of Kings Heath (Lab)]

My Lords, I am sure that the House is reassured by the noble Lord’s response. He mentioned two problems, but surely the third is that much of this research shows that government policies have little basis in evidence and, therefore, departments are not keen to allow it to be published. Is he aware of the debate in relation to pharmaceutical companies and the publication of research that has not worked? There has been a big change in attitude by a number of the companies and they are now committed to full transparency. Given the sensitivity of those companies, I would have thought that the Government could take the same approach.

[Lord Young of Cookham]

Sir Stephen Sedley made it clear that:

“There is no recent evidence of the indefinite suppression of research”.


The problem he identified was not suppression but delay. On medical research, the Chief Medical Officer, Professor Dame Sally Davies, told the inquiry that the systems in place now support publication and said:

“Although a decade or more ago there may have been more of a problem with research being delayed, clearer guidance and publication frameworks in place today mean there isn’t a major problem anymore”.

[Lord McNally (LD)]

My Lords, is not the beauty of Sir Stephen’s suggestion that it brings two benefits? It prevents Ministers commissioning backside-covering reports; and, if published, it gives other departments and the taxpayer the value of the research that they have paid for. I am a little worried that the matter is in the hands of the Treasury. Will the Minister draw the attention of the First Secretary, Mr Damian Green, to this matter and suggest that he should circulate an “action this day” memo?

[Lord Young of Cookham]

The responsibility for publication does not rest with the Treasury, it rests with the individual department that has commissioned the research. The protocol makes it quite clear that research should be published as soon as possible. A number of the recommendations are being taken forward by the Government Digital Service and by relevant departments. But I will certainly bear in mind the noble Lord’s suggestion that there might be a fresh initiative by my immediate boss, the First Secretary of State at the Cabinet Office.

[Lord Krebs (CB)]

My Lords, the June 2012 Civil Service Reform Plan, in a section on the components of open policy-making, set out the ambition to have a:

“Shared, transparent evidence base from all sources in accessible format for all to interpret”.


Is the Minister satisfied that, five years on, this reform has been effectively implemented? If not, he may wish to refer to another section of the reform plan, which says of the Civil Service that,

“its culture can be cautious and slow-moving”.

--- Later in debate ---

[Lord Young of Cookham]

I am sure there is room for progress, but I note that the UK is a world leader on open data and, in 2016, for the third year running, ranked first in the world on the World Wide Web Foundation’s Open Data Barometer.

[Baroness Hollis of Heigham (Lab)]

My Lords, we all know of circumstances in which government research has been published after the relevant debate in this House. We all know that government research has been published in the long vacations or vacations where there is no access to it or ability to scrutinise it or interrogate Ministers about it. In other words, delay is effectively suppression in too many fields. Will the Minister please take seriously the very real and pertinent points made by the noble Baroness, Lady O’Neill, in order to help the House of Lords in its primary function, which is scrutiny?

[Lord Young of Cookham]

I certainly agree that research should be released as soon as possible and it would be wrong to suppress it for political reasons. As I said a moment ago, Sir Stephen said he found no indication that research had been indefinitely suppressed. However, he went on to say that delay could be damaging or unfortunate. The protocol that I referred to gives advice to departments on the timing of the publication of research. I will do what I can to make sure that is adhered to.

[Baroness Kennedy of The Shaws (Lab)]

Is the Minister aware that there is public concern about the failure to publish the report on the funding of terrorism, which is particularly in our minds now in light of recent events? The concern is that the delay may be to cover our commercial interests, perhaps in parts of the Middle East where we have been selling arms. Is delay operating as suppression in this area?

[Lord Young of Cookham]

I say with respect to the noble Baroness that I am not briefed on that report, but in the light of her question I will of course make inquiries and let her know the answer to those representations.

Civil Society and the Democratic Process

Lord Young of Cookham Excerpts

Tuesday 27th June 2017 Lords Chamber

[Lord Rooker]

To ask Her Majesty’s Government whether they intend to bring forward amendments to legislation to ensure that civil society plays a meaningful role in the democratic process.

[Lord Young of Cookham (Con)]

My Lords, the rules for third-party campaigning are set out in the Political Parties, Elections and Referendums Act 2000. The law was changed in 2014 to ensure that third-party campaigning was more transparent and accountable through the Transparency of Lobbying, Non-Party Campaigning and Trade Union Administration Act 2014. The Government are keen to ensure that civil society plays a meaningful role in the democratic process, and believe that current legislation facilitates this.

[Lord Rooker (Lab)]

Is it not the case that the present position harms our democracy and keeps important voices out of public debate? In fact, civil society was effectively snuffed out at the general election. Does the Minister agree that organisations involved in incomes for pensioners, the care of the elderly, the care and education of children, social housing and public safety should be allowed to express their views freely at the next general election?

[Lord Young of Cookham]

I am grateful to the noble Lord. I know he has taken a particular interest in this and served on the Select Committee that produced the report Stronger Charities for a Stronger Society. One of its conclusions was that although charities are quite properly regulated in their campaigning activities, particularly at election times, any new regulation or guidance should clearly recognise that advocacy is an important and legitimate part of their role, to be set out in clear and unambiguous language. We need to strike a balance between, on the one hand, the rights of civil society to campaign in the way the noble Lord has just mentioned, and on the other, maintaining the integrity of the electoral process by having transparency on expenditure.

[Lord Lansley (Con)]

My Lords, does my noble friend agree that there is no legal bar to an organisation campaigning at a general or other election as long as, if it is a charity, it is consistent with its charitable objectives? However, it is right that it should be transparent about that by registering to do so with the Electoral Commission.

[Lord Young of Cookham]

I am grateful to my noble friend, who piloted the relevant legislation through the other place. During those debates he made the point that the boundary between what you could and could not do has not changed. What we did was insist on transparency and accountability. Therefore, if charities or civil society organisations want to engage in certain activities during a campaign, they have to register and declare their expenditure.

[Baroness Hayter of Kentish Town (Lab)]

I am glad that the noble Lord has raised the question of transparency. During the referendum, the DUP spent £250,000 on the leave side, but because of the rules in Northern Ireland it does not have to declare the source of that income. We do not know who funded that. On behalf of my noble friend Lord Kennedy and I, I asked for a meeting with the chief executive of the Electoral Commission about this serious matter, but she has declined to meet us. Can the Minister tell us what plans the Government have—which I am sure will not be affected by the deal with the DUP—to re-examine this issue?

[Lord Young of Cookham]

I agree with the noble Baroness that we need to have another look at the exemptions that Northern Ireland has from certain parts of electoral law, in particular on declaring sources of expenditure. We have a new First Secretary of State, and I am sure he will be interested in taking this matter forward in discussions through the usual channels.

[Lord Wallace of Saltaire (LD)]

My Lords, does the Minister agree that the time may now have come to make sure that transparency of income for campaigning charities is extended? It is striking that there are a number of charities, some Muslim, that the Charity Commission has been concerned about, but right-wing bodies such as the Taxpayers’ Alliance and the Global Warming Policy Foundation do not declare their large donors. It would be useful, appropriate and an extension of democratic transparency if those rules were changed to ensure that donations were necessarily declared in their annual reports.

[Lord Young of Cookham]

I am grateful to the noble Lord, who piloted the relevant legislation through this House in 2014. I mentioned a moment ago the House of Lords Select Committee on Charities report, Stronger Charities for a Stronger Society. Chapter 3 is on improving governance and accountability. The Government will look at the recommendations in that chapter, to which the noble Lord referred. In due course, we will respond to the Select Committee report. There has been a slight discontinuity because of the general election.

[Lord Davies of Stamford (Lab)]

Is it not the case that the whole democratic process in this country has reached a new nadir, with public expenditure no longer being distributed on a needs basis or according to some consistent programme or policy, but with taxpayers’ money being appropriated by the Government of the day to buy votes from other parties to keep them in power? Is that not a thoroughly squalid and corrupt bargain?

[Lord Young of Cookham]

I am not quite sure how that derives from the Question on the Order Paper. I refer the noble Lord to the exchanges in the other place yesterday when the First Secretary of State put the arrangement that he just described in a slightly different context.

[Lord Lawson of Blaby (Con)]

I would like to respond to the noble Lord, Lord Wallace, who referred to the Global Warming Policy Foundation, of which I am chairman. I am very happy to disclose the identities of all our donors, who are thoroughly respectable people. It is right, however, that if donors do not wish to declare themselves they should not be forced to do so, particularly since they will be vilified by those, like the noble Lord, who disagree with what we stand for.

[Lord Young of Cookham]

The stakes are rising by the minute in this exchange about electoral expenditure. As I said a few moments ago, if transparency of income is one of the recommendations, it will be addressed by the Government. The whole House will have noted the challenge laid down by my noble friend Lord Lawson.

[Baroness Mallalieu (Lab)]

My Lords, the report by the noble Lord, Lord Hodgson, on the flaws in this piece of legislation was published some considerable time ago. In view of the clear evidence of chilling on the part of the charities who felt unable to conduct their proper campaigning during the last election and the one before, will the Minister tell us when those recommendations will be implemented?

[Lord Young of Cookham]

I am grateful to the noble Baroness. It is indeed the case that the Hodgson review was published in March last year. Since then, we have had the report by the Select Committee and one of its recommendations was that the Hodgson report should be implemented in full. In due course, we will respond to the report and, by implication, to the Hodgson review, but at the same time there are other pressures on the Government in this field. We have had Eric Pickles’s report on electoral fraud and the Law Commission report on electoral law. We have also just had a general election and it might be useful to look at the experience of civil society during the recent election before we come to a final decision on whether legislation needs to be reviewed.

Boundary Reviews 2018

Lord Young of Cookham Excerpts

Monday 26th June 2017 Lords Chamber

[Lord Kennedy of Southwark]

To ask Her Majesty’s Government whether they intend to introduce legislation amending the provisions relating to the 2018 Boundary Reviews.

[Lord Young of Cookham (Con)]

My Lords, following laws already passed by Parliament, the independent Boundary Commissions are consulting on their proposals to deliver boundary changes. They will submit their final proposals to Parliament in autumn 2018, ensuring fair and equal representation for the voting public across the UK. We have no plans to change this process.

[Lord Kennedy of Southwark (Lab)]

My Lords, millions of people have registered to vote who are not taken into account in the present parliamentary boundary review. Will the noble Lord commit the Government to including these people? Would he comment on the general opinion that the present boundary review is dead in the water because the DUP does not want it and that any review approved by Parliament will be on the basis of there being 650 seats in the House of Commons? If that is the Government’s real intention, they should say so quickly and stop wasting any more public money on a review that will not be approved.

[Lord Young of Cookham]

My Lords, the country has already fought two general elections on out-of-date boundaries for reasons that are familiar to the noble Lord. If we followed the noble Lord’s suggestion and started again with a new register, there is a risk of a third general election on boundaries which were set in place in 2000. That would be an affront to democracy.

[Lord Wallace of Saltaire (LD)]

My Lords, fair and equal representation is clearly one of the principles. The principle of a single-member constituency also refers to the importance of place and community. Are we now abandoning that, as seems to have been done in the proposals which we are developing, and following the American system, where boundaries are drawn up entirely according to which party has the advantage in each state and without reference to local communities? Will we still try to hold on to the principle that representation should be based on towns, communities and counties?

[Lord Young of Cookham]

We are implementing proposals put on the statute book by the then leader of the noble Lord’s party, who was Deputy Prime Minister. He put on the statute book the legislation implementing the reviews which are currently being delivered.

[Lord Campbell-Savours (Lab)]

My Lords, is the reduction from 650 to 600 still on the cards? Is that going to happen? Has the DUP approved that?

[Lord Young of Cookham]

The legislation, which was approved by both Houses of Parliament, reduced the numbers of Members of Parliament from 650 to 600. The review that I referred to in my earlier response postulates boundaries for 600 constituencies.

[Lord Forsyth of Drumlean (Con)]

My Lords, I speak as someone who, when Secretary of State, had to sign a Boundary Commission report which made my own constituency unwinnable. Would my noble friend confirm that it is the duty of this House and the other place to approve the independent Boundary Commissions’ proposals? If it becomes a party-political matter, that way lies great danger to our democracy.

[Lord Young of Cookham]

I heartily agree with my noble friend. His constituency was made unwinnable by the Boundary Commission; mine was actually abolished; I am not quite sure which of us came out of it best. So far as his question is concerned, it would be an affront to democracy if the proposals of the independent Boundary Commissions were obstructed.

[Lord Grocott (Lab)]

Is it not also an affront to democracy that the strategy of this Government has been to plan a reduction of the number of MPs from 650 to 600, while in the same period increasing the size of this House by 240-plus life Peers? Could the Minister explain the thinking behind this situation?

[Lord Young of Cookham]

The noble Lord will know that the coalition Government sought to reduce the number of noble Lords by a very substantial number, but because of the failure of his party in the Commons to support it, that Bill did not go through. He will also know that the Lord Speaker has set up a committee under the chairmanship of the noble Lord, Lord Burns, which I understand may report in July. There is a consensus across the House that the numbers need to come down. We look forward to the noble Lord’s proposals, to see how that might be delivered.

[Lord Elystan-Morgan (CB)]

Does the Minister agree that the punishment handed to Wales is utterly out of proportion; that, whereas the loss of seats for the United Kingdom as a whole is one out of every 13, in the case of Wales 40 seats are reduced to 29; and that this is regarded as being entirely out of kilter with the whole principle that has been adumbrated?

[Lord Young of Cookham]

It is out of kilter only because Wales is overrepresented compared with other countries in the UK Parliament. At the moment, the quota for Wales, the average number of voters in a Wales seat, is 56,000, against 71,000 in England. At the moment, we have a constituency in Wales, Arfon, with 39,000 voters, while North West Cambridgeshire has 92,000. The proposals that the Boundary Commission is introducing will ensure that each vote has equal weight.

[Lord Cormack (Con)]

My Lords—

[Lord Cormack]

I think it is this side’s turn. Can my noble friend, having referred to the Burns committee, give an assurance to the House that, when the committee reports, its report will be fully debated and that, if there is indeed a consensus, the Government will give it a fair wind?

[Lord Young of Cookham]

The business of the House is in the capable hands of the Government Chief Whip, who will have noted exactly what my noble friend has said. If my noble friend looks at what we said in our manifesto, he will see that we said we want to work with the House of Lords where there is a consensus on measures to take it forward. What we have actually said—I have now found the quote—is that the Government will work with Peers where there are measures that command consensus across the House.

General Election: Voting Rights

Lord Young of Cookham Excerpts

Tuesday 25th April 2017 Lords Chamber

[Baroness Walmsley (LD)]

My Lords, I beg leave to ask the Question standing in my name on the Order Paper and I declare an interest as the mother of an expat of more than 15 years.

[Lord Young of Cookham (Con)]

My Lords, legislation scrapping the 15-year rule will not now be introduced in this Parliament. I understand the disappointment of those affected. However, it is my hope that this will be delivered in the next Parliament, so that those who have lived abroad for more than 15 years will be able to participate in future elections.

[Baroness Walmsley]

My Lords, I thank the Minister for his reply, but I do not think that hundreds of thousands of disenfranchised British expats will thank him. The Government have been in place for two years now. Why have they not fulfilled their promise in the 2015 manifesto to give votes for life to these people? Is it not because the Government are afraid of how they might vote, given that the Government have ruined the lives of many of them who live in other parts of the EU by choosing a hard Brexit?

[Lord Young of Cookham]

My Lords, when Members of Parliament, including Liberal Democrat Members, voted overwhelmingly last week that this Parliament should come to a premature close, it was inevitable that certain measures would not be introduced in this Parliament. However, I hope that if this measure is introduced in the next Parliament, it will have the full support of the Liberal Democrats, in view of the interest that the noble Baroness has just shown.

[Lord Kennedy of Southwark (Lab)]

My Lords, I refer noble Lords to my entry in the Register of Lords’ Interests. Can the noble Lord tell the House what additional resources the Government are providing to enable local government to register more citizens to vote? What representations are they making to the Residential Landlords Association and the Association of Residential Letting Agents to encourage them to bring it to the attention of their tenants that they could be eligible to vote—because tenants in the private sector are one of the most underrepresented groups at elections?

[Lord Young of Cookham]

The noble Lord is quite right that a number of groups are unregistered in the current regime. Over recent years, the Government have devoted resources to trying to increase registration of those groups, particularly students. We have also made it much easier for people to register to vote: you can vote online in about three minutes. A number of initiatives are also being taken by the Electoral Commission, focused on some of the groups that the noble Lord rightly mentioned, to encourage them to vote. Over forthcoming weeks, the Electoral Commission will of course have an additional campaign as part of its responsibility of informing people how and where to register to vote.

[Lord Lexden (Con)]

I have asked the Government on many occasions to expedite this important matter, and the disappointment will be widespread and great among our fellow country men and women living abroad. When will the Government reach decisions on the issues set out in their policy statement relating to this area, which was published last October?

[Lord Young of Cookham]

My noble friend is quite right to draw the attention of the House to the progress that we have made in this Parliament by publishing the Ministerial Statement on 10 October. That Statement made it clear that our plan was to have the policy implemented before the next scheduled parliamentary election. Discussion is now taking place on how to register and who will be eligible to register. I hope that Ministers, if they are indeed returned after the next election, will be able to take this initiative forward.

[Lord Wallace of Saltaire (LD)]

My Lords, the Government will recall that in the referendum campaign a number of voters living abroad did not receive their postal vote in time to vote. There was much discontent over that. Can the Government make sure that on this occasion, those who wish to vote while living abroad and who are registered are provided with the opportunity to vote in good time?

[Lord Young of Cookham]

My Lords, I understand that I said earlier that people could vote online; I should have said that they could register online. I am happy to put the record straight.

When people tried to register before the last referendum, there were times when the system could not cope. Since then, steps have been taken not only to increase the capacity of the system but to build in extra safeguards against any attempt at sabotage.

[Lord Dubs (Lab)]

My Lords, would it not be more important to give the vote to 16 and 17 year-olds, whose future is in this country, than to people who have left this country, do not pay taxes and seem to have no interest in us?

[Lord Young of Cookham]

Since the last election, the issue has been discussed on several occasions in the other place. Each time that it was put to a vote, the proposition that the noble Lord has just referred to was voted down. We are in line with most mature democracies in having a voting age of 18, which is aligned with the age for jury service. I do not detect a huge public demand to lower it.

[Lord Hayward (Con)]

My Lords, what efforts are being made by different agencies and government to ensure not only that there is participation in terms of registration to vote but that those people who will be on holiday on general election day can vote?

[Lord Young of Cookham]

My noble friend takes a keen interest in matters psephological. He is quite right that a large number of people who have retired will be taking their holiday in June. The Electoral Commission is aware of this propensity and, as part of its campaign to encourage people to register to vote, it will be taking on board the necessity to remind people who are going to be away that they should vote by post. I suspect that the political parties will be taking similar initiatives.

[Lord Grocott (Lab)]

Will the Minister explain what principle he is defending? He seems to be saying that someone who has lived and worked abroad and has not paid taxes or lived in the United Kingdom for, let us say, 50 years, and has not even been on an electoral register in the United Kingdom to tie him or her to a particular part of the United Kingdom should have exactly the same rights in determining who the Government of the United Kingdom should be as a lifetime resident of this country.

[Lord Young of Cookham]

British citizens living abroad have been entitled to vote ever since I have been a Member of Parliament. Initially, it was 20 years, which was then reduced to 15 years. So the principle that the noble Lord seems to object to has already been conceded; the debate is where you draw the line. At the moment, it is 15 years. My party stood on a manifesto to increase it. Those who have lived abroad for more than 15 years quite often have families in this country and connections in this country, and in many cases they may want to return to this country, so it is perfectly right that they should be enfranchised for future elections.

Tax Havens

Lord Young of Cookham Excerpts

Thursday 6th April 2017 Lords Chamber

[Lord Sharkey]

To ask Her Majesty’s Government what steps they are taking to curb the use of tax havens.

[Lord Young of Cookham (Con)]

My Lords, the Government are committed to a regime where tax is fair, competitive and paid. The UK is at the forefront of global action to tackle harmful tax practices through implementing the agreed base erosion and profit shifting project outcomes, the OECD’s new common reporting standard and the development of new beneficial ownership information standards.

[Lord Sharkey (LD)]

I thank the noble Lord for that Answer. Last week, Oxfam’s report revealed that last year five UK banks made £9 billion in profit in tax havens, which was 67% of their global profits. Half a billion pounds of this profit was made in UK-linked tax havens, where the banks paid just 7% in tax. What estimate have the Government made of the loss to the Exchequer of profit shifting by UK-based companies?

[Lord Young of Cookham]

My Lords, I do not have the estimate of the amount lost but the noble Lord will know that we are taking steps to avoid the diversion of profits through country-by-country reporting. This means that we tend to tax the activity in the country where it takes place—so, if the activity takes place in the UK, companies will be taxed in the UK. We have also introduced a diverted profit tax, so if people seek to divert their profits to another country, a higher rate of tax can then be paid. Therefore, we are taking measures to plug the loopholes that the noble Lord has identified.

[Lord Howarth of Newport (Lab)]

My Lords, why have the Government not used the leverage they undoubtedly have to require the British Overseas Territories and Crown dependencies to maintain publicly available registers of beneficial ownership? Will the noble Lord accept that the Government’s failure to do so has not only had bad reputational consequences for our country but impeded law enforcement here and in other countries, and it has allowed the huge inflation of house prices in London, which has had very damaging effects on the lives of Londoners who are not rich?

[Lord Young of Cookham]

My Lords, we had an extensive debate on this subject on Monday on the Criminal Finances Bill, and I suspect that we will be returning to exactly the same subject on Report on, I believe, 25 April. In that debate, the Minister at the Home Office explained why we had encouraged the Commonwealth dependencies and overseas territories to produce central registers, and they will be doing that by June this year. We are not prepared to use the powers that the noble Lord has referred to, which we believe should be used in exceptional circumstances such as the abolition of capital punishment and rules relating to homosexuality. We do not believe it is appropriate to use those powers in this case.

[Lord McConnell of Glenscorrodale (Lab)]

My Lords, many of us were willing to give the previous Prime Minister and Chancellor the benefit of the doubt on this issue because they were legislating in the UK and were engaged in international negotiations. However, given that we are now leaving the top table of the European Union, where much of this action could have taken place, would it not be appropriate in the brave new world of new trade agreements and Britain becoming more global for this country to lead the way on this issue by legislating to ensure that all British companies operating around the world report on a country-by-country basis to ensure that countries across the world can tax those companies where they make their profits?

[Lord Young of Cookham]

We already have country-by-country reporting in this country, and multinationals based in this country have to report to HMRC how much profit they make and how much tax they pay in each country. We are encouraging other countries to do this, so we have a multilateral approach, and the Chancellor raises this issue at the G20. In response to the first part of the noble Lord’s question, we have taken the lead on this as a result of our presidency of the G8, and more than 90 countries have agreed automatically to exchange taxpayer information under the common reporting standard. We are also taking initiatives on beneficial ownership and some of the other issues that we have already discussed.

[Lord Forsyth of Drumlean (Con)]

My Lords, given the widespread use of Luxembourg by large companies and multinationals to reduce their tax, will our exit from the European Union provide an opportunity to broaden our tax base?

[Lord Young of Cookham]

The initiatives we are taking on tax evasion are independent of our membership of the EU, although we are pursuing some EU directives. As I said, this country is in the lead. I do not know whether my noble friend has seen page 9 of today’s Times, which says that:

“Oligarchs must disclose identity as home owners”,


with a register. That is a world first: the people behind anonymous companies that own billions of pounds-worth of property must reveal their identities under new anti-corruption rules. This shows that the country takes the matter very seriously.

[Baroness Kramer (LD)]

My Lords, in arguing that they will not use the powers they have to require the overseas territories to make registers of beneficial ownership public, the Government say that they expect the overseas territories to do so when that becomes the international standard. Will the Minister tell me the timeframe within which he expects public registers to become the international standard—and will it be within my lifetime?

[Lord Young of Cookham]

The noble Baroness looks younger every day, and so I will not go there.

[Noble Lords]

Oh!

[Lord Young of Cookham]

More seriously, we are going to return to this matter on 25 April. At the moment I do not know the timescale by which we hope all the other countries in the world will have signed up to these central registers. However, I will make sure that if there is another amendment along those lines on 25 April, we have the most up-to-date information.

[Lord Foulkes of Cumnock (Lab)]

My Lords, is it a breach of our privileges for any Member of this House to avoid paying United Kingdom tax by the use of tax havens?

[Lord Young of Cookham]

My understanding is that in order to be a Member of your Lordships’ House you have to be registered as a UK taxpayer. My own view is that everybody should pay the tax which is due to them, and I agree with what the former Prime Minister said about the morality of tax avoidance.

[Lord Tunnicliffe (Lab)]

My Lords, the noble Lord has given his usual charming and reasonable answers, if somewhat unconvincingly in some cases. However, I wonder whether the truth of the matter is displayed by his boss, Philip Hammond, who in an interview with a German newspaper in January said:

“I personally hope we will be able to remain in the mainstream of European economic and social thinking. But … We could be forced to change our economic model, and we will have to change our model to regain competitiveness. And you can be sure we will do whatever we have to do”.


Is his boss threatening to turn Britain into a Cayman Islands-like tax haven?

[Lord Young of Cookham]

My Lords, we want to remain competitive in a world economy and to attract inward investment. Although we have reduced corporation tax since 2010, onshore corporation tax receipts have gone up by 50% since that date, despite the reduction in the rate. Reducing corporation tax encourages business investment and growth, and one estimate has shown that the cuts announced since 2010 amount to an estimated increase in GDP of 1.3%.

Brexit and the EU Budget (EUC Report)

Lord Young of Cookham Excerpts

Thursday 6th April 2017 Lords Chamber

[Lord Young of Cookham (Con)]

My Lords, when the noble Lord, Lord Tunnicliffe, returns to the pub and resumes the dialogue with his drinking friend, I hope that he will share with him his deep insight into the mechanics of the EU budget. I am sure that he will be fascinated to learn even more about it.

I thank all those who have taken part in this debate, particularly the noble Baroness, Lady Falkner of Margravine, who not only chaired the committee but also introduced this debate. I particularly welcomed her peroration with its plea for fair play and an amicable settlement—an emotion that was shared by nearly everybody who spoke in the debate. I particularly recall the interventions of the noble Lord, Lord Butler, and my noble friend Lord Lindsay in that respect. Having listened to the noble Lord, Lord Thomas of Gresford, I came to the conclusion that if only those on this side of the negotiating table and those on the European side of it were all members of the Reform Club, our withdrawal could be settled quite quickly after a decanter or two of very good port.

This committee, together with the others under the umbrella of the EU Committee, continues to inform and influence the Government’s approach to the EU negotiations and I welcome the significant contribution this report has made in that respect. I reread earlier this week one of the first reports on this subject, The Process of Withdrawing from the European Union, which came out nearly a year ago, when withdrawal seemed unlikely. Like today’s report, for those of us for whom the EU is not our special subject, it was clear, concise, eminently readable and cogently argued. I was struck by how perceptive that original report was, particularly on the key role of the European Parliament in consenting to any agreement, and on the process of disentangling the UK from EU law, where the report quoted the chilling comment of Sir David Edward, a former judge of the Court of Justice of the EU who said:

“The long-term ghastliness of the legal complications is almost unimaginable”.


On the report, I certainly take on board the advice from the noble Lord, Lord Hannay, who said that sweeping assertions should be avoided. Throughout this report on the EU budget, the committee has successfully identified the legal and technical issues, as set out by the negotiation guidelines recently published by the European Council and the European Parliament. I can confirm, in response to the question posed by the noble Lord, Lord Tunnicliffe, that the headings identified in the report as liabilities are the liabilities identified in the EU’s annual accounts. The Government will publish their formal response to this report in the usual timeframe. But I say from the outset that this is a significant contribution to the EU budget discussion in which, so far, much heat but little light has been generated. We have had a very high-quality debate inspired by this report.

As the Prime Minister made very clear in her Statement to the Commons last week, we will begin our negotiations with the European Union with the ambition to be not just a truly global Britain but the best friend and neighbour to our European partners. We have set ourselves a clear and ambitious plan for the negotiations ahead. During these, we will seek to achieve the best outcome, not just for the UK but for our European partners as well.

The Article 50 letter that was delivered last week by our UK representative in Brussels to Donald Tusk, President of the European Council, formally set out what we are proposing to our European partners on the forthcoming negotiations. The Council has responded with draft guidelines which say, on the subject we debate today:

“A single financial settlement should ensure that the Union and the United Kingdom both respect the obligations undertaken before the date of withdrawal. The settlement should cover all legal and budgetary commitments as well as liabilities, including contingent liabilities”.


Therefore, the response to another question from the noble Lord, Lord Tunnicliffe, is yes: both the European Union and the European Parliament are looking for a single financial settlement.

The UK Government will now seek a deep and special partnership that covers both security and economic co-operation with a bold and ambitious free trade agreement, greater in scope than any such agreement before. We should begin these negotiations constructively, in a spirit of sincere co-operation, as indeed has been advocated in today’s debate, and we are confident that, at the end of the day, Britain can secure a deal that works both for us and for the EU. I agree with what a number of noble Lords have said—the noble Lord, Lord Butler, for one—that we want an agreement, but so does the EU.

Before I get into the legal arguments about whether we owe the EU a so-called exit bill, I will briefly set out the Government’s ambition in this area. As the Prime Minister made clear in her Lancaster House speech on 17 January, having been a net contributor to the European budget since we joined the Common Market in 1973,

“the days of Britain making vast contributions to the European Union every year will end”.

While we remain a member of the EU, the UK will continue to play a full part in EU business, including EU budget negotiations—a matter the noble Lord, Lord Thomas, referred to—and meeting our contributions. We will remain committed to budgetary restraint and ensuring that we live within the current deal on the multiannual financial framework. However, what is important is that, once we have left the EU, control over how our money is spent will reside with the UK Government and Parliament.

Throughout the negotiations on withdrawal, we have to look at the rights and obligations we have as a departing member state, in accordance with the law but also in the spirit of continued partnership with the EU. As the report makes clear, a whole range of issues for the UK and the EU will need to be addressed as we leave the Union. The House will not be surprised, against a background of earlier debates on this subject, if I say little about the Government’s negotiating strategy, not least because the formal negotiations have not started yet. In any case, that was the advice I was given by the noble Lord, Lord Hannay, when he spoke a few moments ago. The guidelines are still being agreed and the debate over UK payments according to the rights and obligations of our membership is just speculation at this stage—speculation that has prompted a range of figures from the other side of the channel, which some noble Lords have referred to in this debate.

As the Prime Minister has said, the UK is a country that meets its international obligations. It is in the interests of both the UK and the European Union to agree a new partnership in a fair and orderly manner, with as little disruption as possible. There is indeed no reason why a new deep and special partnership between the UK and the EU should not be achievable.

On the specific issues raised in the report and in the debate, throughout the report there are a range of different opinions about the legal interpretation of potential obligations which the UK may or may not be legally required to pay. Witnesses to the committee are a testament to the complexity of it, and disagreement and uncertainty over the liabilities of a member state under Article 50 are to be expected in an area that has of course little precedent. The legal nuance is interesting. The report concluded that the wording provided under Article 50—in particular,

“The Treaties shall cease to apply to the State in question from the date of entry into force of the withdrawal agreement or, failing that, two years after the notification”—


was sufficient to clear the UK of any ongoing obligations. My noble friend Lord De Mauley said that this was a useful incentive for the EU to seek agreement, and my noble friend Lord Taylor of Warwick made the case for that side of the argument more forcefully.

Other legal experts argued that Article 50 does not expressly deal with the question of financial consequences as a member state withdraws from the Union. The noble Lord, Lord Davies of Stamford, developed that case, as did the noble Lord, Lord Thomas of Gresford. The noble Lord, Lord Haskins, made the point that, whatever lawyers on one side for the argument might say, lawyers to support the other side of the argument can fairly easily be recruited. They argued the other side of the argument, that rights and obligations upon the termination of a treaty are governed by Article 70 of the Vienna Convention on the Law of Treaties. This states that obligations undertaken when the UK was still bound by the EU treaties would not disappear at the moment of Brexit.

We are far from exhausting the range of opinions that can, and will, be given on this matter over the next few years. Superimposed on the legal uncertainty over what is or is not a survivable obligation on the UK, there is the additional ambiguity over the size of each obligation and how to calculate the UK’s share—a point the noble Lord, Lord Jay, made in his contribution. As the report makes clear,

“if it were to be accepted that the UK had any financial liability on leaving the EU, no single figure can incontrovertibly represent an amount that the UK might be requested to pay”.

Again, for each potential obligation, witnesses before the committee highlighted various ways in which you could calculate its size and various ways in which you could calculate the UK share. At least four different percentages were given with respect to pensions alone. Reading all this as a lay man—indeed, it has been confirmed by this debate—my conclusion was that a solution will be arrived at not by lawyers but by politicians.

A number of noble Lords mentioned the question of the MFF and what would happen when, without UK funding, the EU 27 would face an immediate decision on how to manage the shortfall in the remaining years of the MFF once we have left. Again, the noble Lords, Lord Jay and Lord Butler, raised this issue. Member states will face a difficult choice between increasing contributions or cutting payments. Increasing contributions will be unpopular with member states that are net contributors, but of course cutting payments will be equally painful for those who rely on receipts. The noble Lord, Lord Butler, referred to a comment from the German Deputy Finance Minister, Jens Spahn, who has already said:

“We shouldn’t be talking about more money for the EU budget, but how to make better use of our resources”.


The noble Lord, Lord Thomas of Gresford, asked whether beneficiaries of the UK would continue to receive EU funds. I am sure he is aware of the commitment, given by the Chancellor, that the Government will guarantee funding for projects signed before exit, even if they continue after we leave.

My noble friend Lord De Mauley asked whether it was realistic to try to expect an agreement in two years. We start from the advantage of close regulatory alignment with the institutions of the EU, with an understanding and indeed a trust in each other’s institutions, and with a spirit of co-operation which stretches back some decades. We hope that those attributes will be useful in trying to reach an agreement within that time span.

The noble Lord, Lord Davies of Stamford, asked whether the CJEU jurisdiction would still apply post exit. The UK is leaving the EU, and we have been clear that that means bringing to an end the direct jurisdiction of the CJEU in the UK.

On the question of the European Investment Bank, raised by the noble Lords, Lord Shutt and Lord Butler, we remain a full member of the EIB. The EIB has signed and approved new projects in the UK since the referendum, including £60 million for the purchase of new trains, which will improve passenger services in East Anglia, and £800 million for the upgrade of the national grid’s gas network. However, as with other items on the table, as part of the UK’s withdrawal from the EU the UK’s long-term relationship with the EIB will need to be resolved, and we are currently evaluating a full spectrum of options for the nature of that long-term relationship.

During our debate, there was a discussion on the size of the RAL and the liability relating to pensions. The noble Lord, Lord Butler, with agreement from other noble Lords, said that the liability rested with the EU. My noble friend Lord Lindsay said that that may be the case but that we have a moral obligation to make sure that it is happily resolved. Again, I say to your Lordships that we are approaching discussions on all these issues constructively and respectfully, and we are confident that we can achieve an outcome that works in the interests of both sides.

The noble Lord, Lord Butler, asked, I think, whether nothing is agreed until everything is agreed. I have in front of me the communication from the Council of the European Union. Paragraph 2 says:

“Negotiations under Article 50 TEU will be conducted as a single package. In accordance with the principle that nothing is agreed until everything is agreed, individual items cannot be settled separately”.


That was in the communiqué from Brussels that came out on 31 March, and I hope that that answers his question.

My noble friend Lord Lindsay asked a rather binary question: are we talking about a divorce or cancelling club membership? The honest answer is that we see this process as the UK leaving the European Union. We want to negotiate this withdrawal in good faith and with the ambition of being the best friend and neighbour to our European partners.

To sum up, this is a complicated topic whose complexity the committee has done very well to bring out. Equally important is its reflection—less well reported—on the importance of the spirit of the negotiations as much as the legal issues. That has been one of the themes running through this whole debate: we have to get the tone and the spirit of those discussions right. Therefore, I very much agree with the report’s conclusion, which is worth repeating here in full:

“It is also a negotiation about establishing a stable, cooperative and amicable relationship between the UK and the EU, so as to promote the security, safety and well-being of all the peoples of Europe”.


We want to play our part in making sure that Europe remains strong and prosperous and able to lead in the world, projecting its values and defending itself from security threats. We want a deep and special partnership, taking in both economic and security co-operation.

This report is a welcome and comprehensive contribution to this debate, as indeed our discussion has been today. It has highlighted critical uncertainties over the legal position with respect to survivable obligations and the approach to exactly what this means for UK finances. Our approach to the budget negotiations is ambitious but grounded in the principle of achieving the best outcome, not just for the UK but for our European partners as a whole.

I hope that the tone of this debate, in which different views have been expressed by Members of different parties and none, is matched by the tone of the negotiations, which are to start shortly.

Electoral Registration Pilot Scheme (England) (Amendment) Order 2017

Lord Young of Cookham Excerpts

Thursday 30th March 2017 Lords Chamber

Moved by

[Lord Young of Cookham]

That the draft Orders and Regulations laid before the House on 8 March be approved.

[Lord Young of Cookham (Con)]

My Lords, I shall speak also to the Electoral Registration Pilot Scheme (England and Wales) Order 2017, the Electoral Registration Pilot Scheme (Scotland) Order 2017 and the Representation of the People (Scotland) (Amendment) Regulations 2017. The instruments will help enhance the operation of electoral registration across Great Britain. Noble Lords will be aware that individual electoral registration—IER—was successfully introduced in 2014 and for the first time ever enabled people in Great Britain to apply online to register to vote. Nearly 24 million people have applied to register under IER, 18 million of them online.

Applications to register to vote peak in the run-up to elections and during the autumn canvass, when each household in the country receives registration forms. Noble Lord will be aware that this process, and indeed registration overall, is costly for electoral registration officers—EROs. While the Cabinet Office currently provides direct financial assistance for registration linked to the introduction of IER, the total costs of the annual canvass are high, at some £65 million per year. The current process is inefficient, costly and burdensome for local authorities.

What is more, a large proportion of these costs relate to activities required by law that simply confirm that people are correctly registered. What is needed is a more effective and efficient system that targets resources on reaching out to underregistered groups to add new names to the register, rather than simply confirming names already there. The Cabinet Office is therefore working with EROs across Great Britain to pilot alternative approaches to the current paper-based, inflexible and prescriptive annual canvass. Three of today’s instruments will enable such pilots this year. The fourth instrument will enhance the operation of IER in Scotland to allow cost savings for EROs throughout the year.

I turn, first, to the annual canvass pilots for 2017. Three of these instruments establish pilot schemes under Sections 7 and 9 of the Electoral Registration and Administration Act 2013. As noble Lords may already be aware, Section 9D(3) of the Act requires the annual canvass to be conducted in the manner prescribed in the Representation of the People (England and Wales) Regulations 2001 and the Representation of the People (Scotland) Regulations 2001. This process requires EROs to send an annual canvass form—the household enquiry form, or HEF as it is known—to every property in their area. The HEF asks residents to set out whether there have been any changes in the composition of the household since the previous year’s canvass, and it enables EROs to identify whether any residents should be removed from the register or be invited to make an application. Response rates to the HEF are significantly lower under IER, as it is no longer a registration tool, yet, where no response is received, EROs are required to issue up to two further forms and to carry out at least one visit to the property.

These three orders disapply those requirements for 23 participating EROs in areas of England, Wales and Scotland. Instead, the orders require EROs in the specified areas to attempt to make contact with a person at each residential address in the area for which they act at least once between the date the order comes into force and 2 February 2018. The manner in which they do so, however, and whether they take further steps where no information is received at a particular address will be at the EROs’ discretion. This will enable EROs to test new and innovative approaches to canvassing—including using data, such as council tax data, the local land and property gazetteer, and internal local authority databases—to determine whether chasing responses to ERO inquiries is necessary. These approaches have been developed closely with the Electoral Commission, which is supportive of the pilots. The commission will be reporting on the schemes and will provide a copy of its evaluation to Ministers and the EROs by 29 June 2018. The order ceases to have effect on 6 July 2018.

The fundamental objective of the annual canvass—namely, the maintenance of a complete and accurate register through regular data collection—is and will continue to be a government priority. However, consultation with EROs and local authorities over an extended period has indicated that the annual canvass in its current form is not a sustainable way to achieve that aim. Many EROs, who are on the front line of electoral registration activity, have told the Cabinet Office that the canvass procedure is time-consuming and expensive. Electors will receive up to three letters and a visit from their local ERO, even if they are already registered, solely for the purposes of information gathering.

Last year, for example, huge numbers of citizens registered to vote in the run-up to the EU referendum in June. This year, many may register to vote in local and devolved elections in May, and perhaps even for a by-election as well, yet, when the annual canvass takes place between July and December, they will receive fresh inquiries in the form of the HEF about their registration status. The reality is that household churn is around 12% per annum—thus the majority of the canvass activity is redundant. Over half of households do not respond to the initial HEF, meaning that EROs are required to chase them up with the further two forms and a visit, despite the fact that 88% of households will be listed as “no change” on the electoral register.

This tremendously bureaucratic process is frustrating for administrators. Having to follow steps prescribed in statute is stifling their capacity to innovate and adopt new approaches to canvassing. Through knowing their local area or having access to local authority data, EROs may well be aware of the registration status of households in their area. However, the current system does not allow them to draw on their own expertise or on other information held by the local authority. This is not an example of “smart working”, and it does not allow citizens to “tell us once” of changes to their registration.

Furthermore, it is worth noting that the recent referendum was conducted using one of the largest electoral registers ever. With the advent of online registration, it is becoming increasingly apparent that electoral events can drive registration to new heights and that the current system of canvassing around six months in advance of a poll, through an inefficient cycle of paper HEFs and household visits, may not be the best approach for the modern world.

It is important to note that the canvass itself is purely an information-gathering process. The pilots will not alter the requirements for the registration process and for invitation to register forms to be sent to individuals. Therefore, what is being proposed—the impetus for which has come from EROs themselves—is to enable local authorities to test alternative methods for conducting the annual canvass that have the potential to be more cost-effective while still securing the same or higher levels of information on changes to the register compared with the current annual canvass process.

Operations along these lines were successfully carried out in 2016. Specifically, during the 2016 annual canvass process, the Cabinet Office ran initial pilots in three areas of England—Birmingham, Ryedale and South Lakeland. In order to broaden the evidence base, however, further pilots, including in Wales and Scotland, are needed to inform a wider change to the annual canvass across Great Britain. Early results from the pilots last year have been very promising, with provisional figures indicating that the costs of the alternative canvasses were substantially lower than those of the legislated canvass due to the reduction in printing, paper, postage and staffing costs. Ryedale, for example, estimated that the new methodology it employed resulted in an 89% saving in staff time and costs. The Cabinet Office and the Electoral Commission are currently analysing the full cost data of the whole process and intend to report initial results in May.

In addition to the pilot areas from last year, the areas selected to participate in 2017 are Barrow-in-Furness, Bath and North East Somerset, Blaenau Gwent, Camden, Coventry, Derbyshire Dales, Dumfries and Galloway, East Devon, Glasgow, Hounslow, Luton, Newcastle, Salford, South Holland, South Norfolk, South Oxfordshire and Vale of White Horse, Sunderland, Torfaen, Wakefield and Woking.

Although the initial results suggest that alternative approaches to the annual canvass can be at least as effective as the currently prescribed method, the Cabinet Office intends to ensure that applying this learning to local authorities across Great Britain, including Wales and Scotland, generates similar results. If successful, the pilots will demonstrate that the annual canvass does not need to be so prescriptive and that a number of alternative methods are just as effective and more cost-efficient, potentially saving at least £20 million from the cost of electoral registration each year.

The 2017 pilots will take place in local authority areas across England, Wales and Scotland. The areas were chosen using robust research methodology to ensure a spread of electoral register churn, population size, chosen pilot model and region. In each area, the EROs will be operating control groups and pilot groups so that the results of these approaches can be rigorously evaluated.

Four models of piloting activities will run with these EROs in the 2017 pilot scheme. Each model has been created based on proposals from EROs, and each participating ERO has chosen the model they wish to apply to their area based on their local knowledge and expertise. Each model reduces the number of paper communications sent to electors, using means such as telephone and email channels, and one model uses existing local data to determine where best to focus resources. Again, these ideas have all come from the experts on the front line and are designed to improve the citizen experience as well as ease administrative burdens on hard-pressed electoral teams. The elector will benefit from the local authority being able to redirect resources and target canvassing more effectively towards underregistered groups.

I will now give more detail on each pilot model in turn to offer some insight into the innovative approaches being taken to move us towards a more effective and targeted canvass process.

The first model, which is being piloted in areas such as Torfaen, Ryedale and Barrow-in-Furness, tests the use of a household notification letter, or HNL. Under this model, the ERO will send all households in the treatment group a HNL instead of a standard household enquiry form. The HNL lists the details of everyone registered to vote in that household and advises residents to take action only where the details held are no longer up to date. This model allows EROs to reduce the number of paper communications sent to electors and also reduces the number of expensive household visits required.

The second piloting model involves the use of email in areas including Hounslow and Woking. For this model, an electronic HEF will be sent to households by email, chased with a visit if necessary. Where no email is held, households receive a postal HEF followed by a visit. This model further tests the use of email communication between EROs and electors, following the uptake of email invitations to register in England and Wales. This also expects to reduce the number of overall communications with electors including, again, expensive household visits.

The third model uses a discernment step to identity different types of properties, in areas such as Glasgow and Birmingham, so that EROs can take the most appropriate approach. This discernment could involve local data matching using sources such as council tax, or assignment by ward based on the ERO’s expert knowledge. Depending on the assignment, some properties will receive a HNL, while others will be more actively canvassed where a change in household composition is suspected. Where possible, communication will be sent to these households by email before being chased with postal reminders and visits if necessary. This model allows EROs to use the existing data and knowledge they have of their areas to target resources better as well as use digital means to communicate with electors.

Finally, a fourth model tests the use of telephones in the canvass process. Areas participating in this model include Dumfries and Galloway as well as East Devon. Under this model, EROs will send initial postal HEFs but will then be able to chase non-responding households by telephone, rather than by additional canvass forms or household visits. Where no telephone number is held, households will receive two letters followed by a visit. This model allows EROs to test the use of telephone canvassing and should also reduce the number of household visits and postal communications.

The Government have consulted widely, including with the Electoral Commission, on the pilot proposals. The commission has been very supportive of these plans and has been involved from the early stages of their development. The Electoral Commission has also been consulted on these orders, on which it is content, following the Cabinet Office’s confirmation that Section 13 of the Representation of the People Act 1983 remains applicable to participating local authorities during the pilot scheme so that participating authorities are still expected to publish their registers by 1 December 2017, unless exceptional circumstances apply, such as a local election, where they are required to publish a revised register by 1 February next year.

Consultation has also taken place with bodies such as the Association of Electoral Administrators, the Society of Local Authority Chief Executives, and the Scottish Assessors Association. This is in addition to the work the Government have been doing with interested councils directly and who have helped shape the four pilot models. The Information Commissioner’s Office was also consulted during the development of these pilot orders and is content that they do not raise any new or significant data protection or privacy issues.

Equality impact assessments have been completed to ensure that underregistered groups, as well as those groups protected by virtue of the Equality Act 2010, will not be negatively impacted by these pilot schemes. Privacy impact assessments have also been completed to ensure that no new negative privacy impacts under the Data Protection Act 1998 will arise.

While the purpose of these pilot schemes is to give EROs the space to innovate and test alternative and more effective approaches in relation to the annual canvass, I stress that the integrity of the register will be maintained throughout the pilot schemes. EROs have a duty, under the Representation of the People Act 1983, to maintain their registers and nothing in these orders change that.

I turn now to the draft Representation of the People (Scotland) (Amendment) Regulations 2017. These regulations take steps to allow Scottish EROs to benefit from the same cost optimisation measures as have been available to English and Welsh EROs since last year. This will be achieved by amending the registration application forms for Scotland to allow applicants to identify that they are the only person resident at the address aged 14 or over. It also provides discretion to EROs as to whether to canvass a property within 12 months of an indication of single occupancy. Allowing EROs to make this choice decreases the amount of resources spent processing applications and increases the efficiency and speed of the registration process.

Secondly, the regulations will modernise the system of registration by enabling Scottish EROs to send invitations to register and ITR reminders by electronic means if they wish to do so. This delivers a quicker and more efficient service to the elector, who expects electronic communication in this age, as well as enabling cost savings. The instrument will also allow an attester to an applicant’s identity to be registered in any local authority area in Scotland. At present, both the attester and the applicant must be registered in the same local authority. This provision will assist those applicants whose identity cannot be verified using the Department for Work and Pensions matching process, local data matching or by documentary evidence who have to provide an attestation to verify their identity. This change will result in more eligible applicants becoming registered to vote. In addition, the regulations make a minor amendment to correct an error in an existing regulation concerning the requirement to provide fresh signatures following rejection of a postal voting statement.

The measures were conceived to generate savings from the cost of the annual canvass process to counteract the fact that the introduction of IER has increased the cost and administrative burden on local authorities. These provisions also aim to reduce unnecessary ERO correspondence and contact. Preliminary estimations project that these regulations will reduce the overall cost of IER in Scotland by around £125,000 for the single-occupancy provision and around £400,000 for email ITRs per year. The Electoral Commission was consulted during the development of these measures and on the specifics of this order, and it is supportive of these regulations offering the same provisions to Scotland as already exist in England and Wales.

The Cabinet Office has worked very closely with Scottish Government officials to ensure that these measures can be in place for the 2017 annual canvass, and to ensure that Scottish EROs are able to participate in the aforementioned pilot schemes. The Minister for the Constitution and the Scottish Government’s Minister for Parliamentary Business agreed last year for these instruments to make provision in respect of both the parliamentary and local government registers in Scotland. This will be done before commencement of the relevant provisions of the Scotland Act 2016, which will devolve competence in relation to the local government register in Scotland. This was agreed in order to ensure that Scottish EROs could take advantage of these cost- optimisation measures in respect of both the parliamentary and local government registers this year, and that local authorities in Scotland are represented in the canvass pilot schemes.

With this in mind, the Government believe that the instruments allowing for annual canvass piloting schemes are a crucial step towards improving the annual canvass and wider registration process. I therefore commend them and hope noble Lords will also agree that the statutory instrument relating to cost-optimisation measures in Scotland helps move electors and electoral administrators towards an enhanced IER system for members of the public and for EROs as part of the continued successful implementation of IER across Great Britain. I beg to move.

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[Lord Kennedy of Southwark (Lab)]

My Lords, first, I make my usual declaration that I am a councillor in the London Borough of Lewisham and a vice-president of the Local Government Association. The four statutory instruments we are debating today are ones that I accept, as far as they go. I broadly welcome the process outlined by the Minister. Certainly, the entitlement to vote and the accuracy and completeness of the register are the most important things we are debating here. That underpins all this. I have some wider comments and one or two questions for the Minister but generally I welcome the orders and regulations and I am very happy that we are exploring new methods of getting people registered to vote.

On matters concerning elections and electoral registration, it is always desirable to get agreement among the interested parties on the way forward. I accept that that is not always possible but it is a desirable aim nevertheless. Changes should be implemented carefully, should be thought about, should seek to improve voters’ engagement in the electoral process and should command wide confidence. In that sense, pilots are a useful tool to see how certain measures will play out in practice, followed by proper evaluation and informed policy decisions. Can the Minister tell the House why the decision was made to extend these pilots for another year? I cannot believe that the Government have made this decision in isolation. But it is not clear from the papers why they have done so.

There is no mention of the political parties being consulted on the regulations. Will the Minister confirm that neither the Electoral Commission nor the Cabinet Office team that meets the political parties on a regular basis have brought these regulations anywhere near them? Of course, the Parliamentary Parties Panel is a statutory panel set up under PPERA. If that is the case, does the Minister agree that that is regrettable and should be rectified quickly? The political parties use the electoral register for their campaigning, they understand the registration process, and they have a legitimate voice that needs to be heard in any discussions on these matters.

I refer the Minister to page 3 of the Explanatory Memorandum to the Electoral Registration Pilot Scheme (England and Wales) Order 2017; he mentioned it in his introduction. Referring to the annual canvass, paragraph 7.1 in the section headed “Policy background” says:

“In its current form under IER, it is proving to be an unsustainable cost burden for local authorities to administer”.


I thought that was an interesting comment. I must say, it is not the biggest issue that comes up when we discuss finance and budgets and unacceptable cost burdens at Lewisham Council. The noble Lord, Lord Rennard, may have let the cat out of the bag by telling us that these issues were discussed in the coalition Government in 2013. Of course, members of that coalition wanted to bring forward these proposals then.

I had a look at what the Local Government Association was saying and I could not find any mention at all of the unacceptable cost burdens of the annual canvass—not a thing—in its campaigns, press releases or anything else. I then had a look at London Councils and again there was no mention in any of its campaigns or media releases about these unacceptable cost burdens and the problems being caused for local authorities. Both organisations are well known to Members of this House. They are expert at getting their views across to us when they have issues they want to raise with us. But I have had absolutely nothing—not a letter, not an email, not a text message, not a phone call—from these bodies that represent local government.

Of course, there are many issues that these two bodies are interested in: the housing crisis, the social care crisis, education funding, public health budgets, business rates, pavement parking, homelessness and the lack of funding for that, bus funding, and many other issues—the list goes on and on. Many of these issues are putting local authorities in a difficult situation and putting pressure on budgets, but the Government are not the slightest bit interested in dealing with them. I also had a look at SOLACE and the AEA. Again, they are silent on these issues and do not appear to be campaigning on them at the moment.

It really is a bit rich for the Government to hide behind the suggestion that there are all these concerns from elsewhere in local government. The Government do not have a good record here. They sped up IER, against the advice of the Electoral Commission. They reduced the transition period for IER by one year. They threw out the consensus on that point. They moved ahead with reducing the number of seats in the House of Commons by 50. They removed voters from the electoral roll, against the advice of the commission, and of course that helped them in their redistribution of parliamentary seats and limited the scope of electors to get involved in local inquiries. At the same time, we all know that they made a record number of appointments to your Lordships’ House. Their claims about cutting costs just do not hold water.

Democracy costs money. We should cherish it and pay for it. We need an efficient, well-run, properly resourced electoral registration service in every part of the United Kingdom. In comparison with other services, the costs involved are not huge and the Government should be seeing how they can use every avenue of the state to get and keep people registered to vote. They should be learning from other parts of the United Kingdom. How does the Electoral Management Board in Scotland work in getting people registered to vote, compared with what happens here in England and Wales?

Pilots are good to see how we can efficiently and expertly register people to vote. There is nothing presently in force that stops EROs making any innovation, and many EROs do an excellent job of innovating to get people registered to vote. We should be looking at the incentives to get people on the rolls. What are schools, colleges and universities doing? What can we learn from the schools issue in Northern Ireland? Many noble Lords from all sides of the House have raised that and so far the Government have not been interested at all in bringing it into play in England. We should look also at what we can learn from other parts of the world.

I worry that the real agenda is just to cut the need to send out a prepaid envelope and a form and to avoid knocking on the door, with very little else under that. I am happy that we have new procedures and new ideas. We have to be absolutely sure that we are not making it any harder to get people registered to vote. I am not confident that so far the Government have done that.

My noble friend Lord Blunkett raised some very important points. The noble Lord, Lord Hayward, spoke about the two local authorities. I do not know that case but if that is the situation, it is regrettable. All the councils that have been invited to be part of the pilot should be part of it when it takes place next year. He made a very important point about savings. I am happy to make savings but, again, the important point in all this is the accuracy and completeness of the register. That must be paramount for all of us. The noble Lord, Lord Rennard, made some important points about automatic registration. Again, young people and students are a very important group and we must make sure that we get them registered. I know that many councils and EROs have worked closely with universities and colleges. We need to ensure that that happens as well.

I am happy to agree the orders and regulations before us today, although I worry about the Government’s real intention behind these matters.

[Lord Young of Cookham]

My Lords, I am grateful to all noble Lords who have taken part in this debate and for their broad welcome for the initiatives that are in the orders before the House.

In response to the noble Lord, Lord Kennedy, I am grateful for his welcome for what we are doing, but there were some uncharacteristically partisan comments in his speech. On the size of the House of Lords, I just say, as somebody who was Leader of the House of Commons at the time, that if his great party had supported the programme Motion on the House of Lords Reform Bill, the House of Lords would be a lot smaller than it is now. His party bears some responsibility for the failure to get the numbers down to a more manageable level. I will put that on one side because I know the noble Lord did not mean to stimulate an aggressive partisan debate on these non-controversial orders.

I will try to respond to the issues that were raised. The noble Lord, Lord Blunkett, raised the issue of privacy. Of course I confirm that the protection of personal data is important. As I think I said, the Cabinet Office carried out a privacy impact assessment which took into account privacy impact assessments commissioned from all the participating local authorities. The provisions before us do not have any significant further impact on an individual’s privacy than the current legislative requirements concerning registration. They simply support the EROs in carrying out their legal duty to take all the necessary steps to maintain registers of electors in their area. As I said, we have consulted the Information Commissioner’s Office on this order and it does not consider that the proposed measures raise any new or significant data protection or privacy issues. The noble Lord also raised some issues about the Digital Economy Bill and I would like to accept his generous offer to pursue those in writing.

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[Lord Kennedy of Southwark]

No, I am sorry. I meant the political parties panel in PPERA which is drawn from officials.

[Lord Young of Cookham]

I will make inquiries and deal with the important questions that the noble Lord has raised about the level of consultation, and of course he is entitled to a reply on that.

I think I have dealt with nearly all the issues that have been raised. If I have not, I will write. We have had direct advice from a range of those in local government—the chief executive of Trafford, the electoral registration officer for Grampian and others—about this initiative. I again thank noble Lords for the time they have spent scrutinising these instruments, which will enable EROs in England, Wales and Scotland to pilot innovative approaches to conducting the annual canvass and also allow EROs in Scotland to make use of email invitations to register and single occupancy provisions. I beg to move.

[Lord Kennedy of Southwark]

Before the noble Lord sits down, the point I was trying to get across is that I am very happy that we have pilots. There is no issue about that. However, when we make changes—and stopping the annual canvass, stopping people knocking on doors and stopping letters going out are very big changes—we cannot assume that everybody is e-enabled. Each change has to be carried out very carefully; otherwise we make mistakes, things go wrong and people lose their right to vote. That cannot be the case. The heart of this is that the Government must take a long period and absolute care when they pilot changes. The decision to reduce the time for confirmation was a mistake. If we had taken a longer time, we might not have needed these measures now. That is the point I am trying to make.

[Lord Young of Cookham]

I am grateful to the noble Lord. As I said, we are not stopping the annual canvass. The annual canvass remains. I will just end on this. The initiative for this has come not so much from the Government as from the EROs. They take their responsibilities very seriously and want to have the maximum number of people registered. They still retain all the powers they have at the moment, as well as the powers they have in the pilots, to continue to knock on doors and send all the forms. I personally have confidence that the EROs will use the powers they have, and which we are giving them today, not just to maintain the current accuracy of the register: I think we will end up with a better register if we go ahead with these pilots and extend the lessons that we have learned.

Motions agreed.