Higher Education and Research Bill

Lord Young of Cookham Excerpts

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

[Lord Stevenson of Balmacara (Lab)]

My Lords, with all the voices in accord around the Chamber it seems almost otiose for me to join in and add my support. I had a conversation with the noble Lord, Lord Sharkey, just after he had tabled his amendment; I suggested that it was a rather weak amendment and he ought to sharpen it up because I thought there would be a lot of interest around the House. I have been proved right in that, to the point where a vote would perhaps be sensible. I am sure his intention in speaking today is not to force a Division on the House because the arguments are so all-encompassing and completely unanswerable.

I hope the Minister will be able to make a firm commitment, as previously suggested: first, that he supports the intention of introducing this measure as quickly as possible; and, secondly, that he will not allow the apparent problems with the supply line to hold up the provision of sharia-compliant loans. After all, a touch of competition from those experts in the field who might be able to step in might be a way for the Government to get themselves out of the hole. But it is a very sorry tale. The idea that students who could benefit from these loans cannot because of a conflict between faith and their ability to operate within the system that is currently available seems so utterly shocking that it just needs the Government to say that it will change.

[Lord Young of Cookham (Con)]

My Lords, the noble Lord, Lord Sharkey, is to be commended for his continued work to emphasise the importance of the Government’s plans to put in place a viable system of alternative student finance. I know that he has had a useful discussion with the Minister, my honourable friend Jo Johnson, and my noble friend Lord Younger.

I am grateful to my noble friend Lord Sheikh, who reminded us of the history of this commitment and the objectives of further opening access to higher education to more people who might be unable to access it at the moment. His points on the importance of Islamic finance in this country, particularly on the potential benefits of alternative student finance, are well made. We will consider carefully the correspondence that he has sent on to us. I am also grateful to the noble Baroness, Lady Cohen, for reminding us of the adverse impact of the current regime on women, and to other noble Lords who came in on this debate.

In response to the noble Lord, Lord Hussain, who is worried that this might be more expensive, I have looked quickly at page 53. Clause 82(7) would insert new subsection (11), which says that,

“the person making the regulations concerned, achieves a similar effect to a loan under this section”,

so the idea is that it should be neither more nor less expensive than the equivalent finance under a conventional student loan.

During debate in Committee, my noble friend sought to assure noble Lords that the Government are fully committed to delivering alternative student finance. We are the first Government to legislate to make such alternative finance possible, and have legislated at the first opportunity. As the noble Lord, Lord Stevenson, has just reminded us there is no disagreement at all about the policy and the objective. Introducing alternative student finance is one of our priorities for the student finance system. We are working to expedite its delivery. We want this new alternative system to be available to students as soon as practicable. In response to the questions posed by the noble Lord, Lord Sharkey, and other noble Lords, I can inform the House that subject to parliamentary processes, we are currently working towards it being open to applications from the first students within this Parliament.

I can see that there is interest in more information on our progress but I am afraid that a quarterly report, as required in the amendment, would be an unusual and unwarranted step. It would be onerous and, I suspect, of limited value to the people we are trying to support. The Bill is not the place to set out administrative processes around policy development; it is about the legislative framework needed to bring in alternative student finance. I am very happy to give an update on our progress here today, in the light of the clear interest shown. I have detected a note of impatience in the speeches we have heard this afternoon. Noble Lords will of course have an opportunity to hold the Government to account through the usual processes, whether by tabling questions or scrutinising the regulations that we intend to bring forward using the powers within the Bill.

Officials in the department are co-operating closely with counterparts in delivery partner organisations. Together, they are working through the requirements for the new alternative student finance system. We have started the process to engage dedicated experts in Islamic finance to work for the Government and support the detailed implementation of alternative student finance. We are also commissioning research that will explore the views of Muslim prospective students, and their non-Muslim peers, to help ensure that alternative student finance will meet their needs. I also assure noble Lords that we are actively considering how best to bring alternative student finance to the attention of prospective students in England in the run-up to its launch. We will want to ensure that we reach prospective students studying in a variety of settings, or indeed not currently studying at all.

It is only by working hard to develop and deliver complex and detailed plans that we will be able to meet our policy objective—a shared policy objective—of supporting participation in education. This careful, sensitive and important work has to be done properly first time. It takes time but I reassure all noble Lords who have spoken that it is one of our top priorities.

As a final point of reassurance, I note that in Amendment 208 the noble Lord, Lord Sharkey, has sought to ensure that his proposed new clause in Amendment 144 would be commenced on Royal Assent. I assure noble Lords that although the Government’s clauses enabling alternative student finance are to be commenced by regulations and not directly on Royal Assent, this is consistent with the rest of the Bill and should not in any way be considered as an impediment to the Government’s commitment to making alternative student finance available as soon as practical.

In light of the progress that I have set out here, and of the commitment that we have given about the timing of the introduction of this important new initiative, I hope that noble Lords will feel that a reporting clause in this legislation is not required. I therefore ask respectfully whether the noble Lord might withdraw his amendment.

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[Lord Willetts (Con)]

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

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

[Lord Young of Cookham]

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

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

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

[Lord Watson of Invergowrie]

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

[Lord Young of Cookham]

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

[Lord Watson of Invergowrie]

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

[Lord Young of Cookham]

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

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

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

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

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

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

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

[Lord Watson of Invergowrie]

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

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[Lord Stevenson of Balmacara]

My Lords, I think that we are all very grateful to my noble friend Lord Dubs for bringing back this amendment in an amended form. We should also credit the Minister for arranging a meeting with his counterpart in the Home Office, the noble Baroness, Lady Williams, which was extremely helpful in identifying two things that allowed us to make progress. One was that the original drafting seemed to imply a much larger number and a much larger problem than could have been resolved within the scope of the clause as originally proposed and amended. After a very good discussion, we were able to get that down to a very narrow point. It seemed to be a point of considerable unfairness in relation to the people whom my noble friend mentioned. I also thank the Home Secretary, to whom reference has been made, for taking the trouble to see my noble friend Lord Dubs today to make sure that he understood the context within which the decision, which we hope to hear shortly, has been made.

[Lord Young of Cookham]

My Lords, I begin by thanking the noble Lord, Lord Dubs, for bringing forward this amendment and, with others, I commend him for his tireless campaign on behalf of a group of vulnerable people. This is an important issue and our short debate today, coupled with our debate in Committee, have demonstrated wide support and compassion for those who seek our protection. The UK has a long and proud history of offering sanctuary to those who genuinely need it. The Government take our responsibility in asylum cases very seriously.

Those who come to this country and obtain international protection are able to access student support and home fee status. Uniquely, those who have been granted refugee status and their family members are allowed access to immediate and full support. This includes access to tuition fee loans, living costs support and home fee status at higher education institutions. This is a privilege not extended to others, including UK nationals who have lived overseas for a few years or EEA nationals, all of whom need to have lawfully resided within the EEA for at least three years prior to commencing study.

The requirement for three years’ lawful residence was put before the Supreme Court only two years ago, in the case of Tigere. The Supreme Court upheld as fully justified the Government’s policy of requiring three years’ ordinary residence in the UK prior to starting a course. The Supreme Court also upheld the Government’s case that it was legitimate to target substantial taxpayer subsidy of student loans on those who are likely to remain in this country indefinitely so that the general public benefits of their tertiary education will benefit the country.

Noble Lords have expressed sympathy and compassion for people who have entered the UK under the Syrian vulnerable persons resettlement scheme and the vulnerable children’s resettlement scheme who are currently granted humanitarian protection. The Government share that sympathy and have taken a number of actions to support those on the scheme. The Government are not persuaded of the need to treat persons given humanitarian protection more favourably than UK nationals for the purpose of student support. The noble Baroness, Lady Lister, raised some wider issues, and I confirm that we are looking at them in the round.

UK nationals arriving from overseas must wait three years before accessing student support, regardless of their personal circumstances, and so must nationals of British Overseas Territories. That is not a lack of compassion but a fair, objective and non-discriminatory rule to demonstrate the lasting connection to the UK upheld by the Supreme Court in the Tigere case.

Turning to the specific group whose cause the noble Lord, Lord Dubs, has championed, I know that the Home Secretary has met him to discuss how we can progress the issue of access to higher education and that she shares my sympathy for the matters presented by the noble Lord. The Government understand the importance of accessing higher education as soon as possible for those on the Syrian vulnerable persons resettlement scheme and the vulnerable children’s resettlement scheme and are looking very carefully at this issue. I hope that the noble Lord will understand that I cannot say more than that today. I know that he will continue to engage with the Home Office on this issue over the coming weeks to resolve some of the complexities in the determination of refugee status to safeguard the UK’s proud history of offering sanctuary to those who genuinely need it.

I was not at the meeting which the noble Lord attended earlier today, but if he came away from that meeting with a spirit of hope and optimism, it is no purpose of mine to do anything to take away from that. In the light of the ongoing discussions that are under way with the Home Office, and against a background of the spirit of hope and optimism mentioned by noble Lords, I hope that the noble Lord might feel that this is not an amendment that should be pressed to a Division at this stage.

[Lord Dubs]

My Lords, I hope I have not gone over the top in my sense of optimism. It is not something I normally do in relation to this Government, and I have had experience to the contrary on other, related issues. However, I take a little bit of comfort from what the Minister said. I took more comfort in my earlier meeting today, but that is not on the record for our debate now. However, the Government speak with one voice, both privately and publicly, and I am hopeful that they will be able to deal before too long with what is an acknowledged anomaly.

It is unfair that if people who have missed out on education and had enormous difficulties in their life want to make some sense of their life, they have to wait three years to access higher education. It is an appallingly long time. What are they supposed to do in those three years—sit at home and watch television? It is a real indictment when these people want to move forward. I accept that other groups are also penalised in this way—they should be looked at in the same way—but if people are going to make a positive contribution to this country, it is right that we should not withhold higher education from them. That way, they can make a much bigger and more positive contribution to this country. I beg leave to withdraw the amendment—but on the understanding that, at intervals, the Government will let us know how they are getting on with looking at this.

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[Lord Watson of Invergowrie]

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

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

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

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


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

[Lord Young of Cookham]

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

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

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

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

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

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

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

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

[Lord Storey]

My Lords, I am grateful for the Minister’s reply and for the opportunity to talk over the issues with the Minister for Universities. The Minister is right to say that this should not be rushed. It is interesting that this issue started from a very small complaint and has become such an important matter that we now want to deal with. It shows that when we collectively share our thoughts and ideas we can get a result—I hope.

I was quite shocked to see in the QAA’s briefing that a 3,000-word dissertation in law can be done for just £6,750. I am delighted that the Government take this seriously. There is a need for a co-ordinated response. The penalties will be important. It is important that students know what is happening, and I suppose that if students do not wish to have penalties levied against them, the companies will wither on the vine. I look forward to seeing how this develops over the next few years. I was pleased to hear the Minister say that if this joint co-ordinated initiative does not prove effective, the Government will be open to legislation. I beg leave to withdraw the amendment.

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[Baroness Lister of Burtersett]

My Lords, I am pleased to support the amendment and to follow the noble Baroness, Lady Hamwee, who, as she noted in Committee, joined the Joint Committee on Human Rights just as I left it. In Committee, I reminded noble Lords of the concerns raised across the House during the Counter-Terrorism and Security Bill about the application of the Prevent duty to higher education institutions. As we have heard, the present amendment does no more than call for an independent, authoritative review of how the duty now operates in those HE institutions. This would respond to concerns raised more recently by a range of organisations, including, as my noble friend Lord Dubs said, the Home Affairs Select Committee. These concerns include: possibly discriminatory impact; the question of the adequacy or otherwise of the training given to academics; and the human rights implications, echoing earlier concerns of the JCHR.

In Committee, the noble Baroness, Lady Goldie, said that,

“we welcome discussion about how to implement Prevent effectively and proportionately, but … we consider blanket opposition to the duty unhelpful”.—[Official Report, 25/1/17; col.762.]

As we have heard, the amendment no longer proposes blanket opposition. Surely, in order to have a well-informed discussion, as called for by the noble Baroness, it makes sense to have an independent review of how the policy is operating, as called for in the amendment, to inform that very discussion. I can understand why the Minister opposed the original amendment, even though I disagreed with her, but I can see no justification for opposing this much more modest, and I hope helpful, amendment as a basis for the discussion that she said the Government would like to see.

[Lord Young of Cookham]

My Lords, I am grateful to all noble Lords who have spoken to this amendment and for the measured way in which they have put forward the case. I hope we will all agree we cannot ignore the increasing threat to the UK from terrorism. This is currently assessed as severe, meaning an attack is highly likely. We cannot simply wait for attacks to happen. We cannot stand by and do nothing while vulnerable individuals are targeted for radicalisation and drawn into terrorism, so we must have a strong and robust strategy to prevent this.

Prevent was discussed in Committee, and I am particularly grateful for the input at that stage from the noble Baroness, Lady Deech, who recognised the importance of Prevent in higher education. The Prevent programme is designed to safeguard vulnerable individuals from all forms of radicalisation in a variety of institutions. It is an important safeguard for our domestic students but also for the thousands of international students who choose to study here each year. Setting off to university can be a big transition in the lives of many people, and it is vital that universities safeguard their students during what can sometimes be a very challenging time for vulnerable individuals. The coalition Government introduced a clear legal duty to ensure universities recognise and act on this responsibility.

Preventing people being drawn into terrorism is difficult and challenging work, but Prevent is working and making a positive difference. In 2015, more than 1,000 referrals of vulnerable individuals were made to Channel, which enabled them to access support to try to divert them away from radicalisation. The vast majority of the individuals who choose to participate in Channel leave with no further concerns about their vulnerability to being drawn into terrorism—so as I say, Prevent is working.

Of course, this amendment is aimed at reviewing the operation of Prevent in the higher education sector, but this is already happening. Following consultation with the sector, HEFCE, which I believe to be independent of government, launched its monitoring framework last year and has had 100% engagement. In its report published in January, HEFCE found that the vast majority of institutions are implementing the Prevent duty effectively.

HEFCE has seen higher education providers increasingly improve their awareness of the risks to vulnerable students, and there have been some highly encouraging examples across the sector of how they mitigate these risks in a sensible way. The HEFCE report highlights numerous cases of good practice in the sector, and the steps being taken by institutions, from our oldest institutions through to newer providers. To give just one example, HEFCE found that the University of the West of England hosted a joint consultation with its students’ union on the implementation of the Prevent duty. This included open debate between students and Prevent partners with an opportunity for all students to view and comment on draft policies and procedures. This demonstrated a real understanding of the importance of engaging and collaborating with the student body to effectively implement the duty.

Finally, I know that noble Lords are concerned about the interplay between Prevent and freedom of speech, something the higher education sector rightly holds dear, and which we touched on in an earlier debate. Prevent does not stop lawful debate. In higher education, providers that are subject to the freedom of speech duty are required to have particular regard to this duty when carrying out their Prevent duty. This was explicitly written into the Prevent legislation to underline its importance as a central value of both our higher education system and indeed of our society. HEFCE’s monitoring shows that higher education providers are balancing the need to protect their students and their obligations under Prevent while ensuring that freedom of speech on campus is not undermined.

I say to the noble Lord, Lord Dubs, and those who have taken part in this short debate that the Government are grateful for the opportunity to discuss this vital duty that stops vulnerable individuals being drawn into terrorism. Prevent is being implemented effectively and pragmatically in the higher education sector and we want to maintain this momentum. We know it is both effective and pragmatic from the monitoring that HEFCE does. Against that background, I hope the noble Lord might feel able to withdraw Amendment 154.

[Lord Dubs]

I am grateful to the Minister for his response and to those noble Lords who have spoken in this short debate. I am not quite sure that the HEFCE review the Minister spoke about goes as wide as I would have wished—certainly the amendment would have gone much beyond that—nor am I sufficiently aware of the details of the results to see whether they would meet the concerns that many people have expressed to me. Given that we got something, though, I think we will return to this before too long. I think in the end, the Government will have to do a full and totally independent review of the Prevent strategy in higher education; there is too much at stake, it is too contentious, it is not as easy a situation as the Minister suggested and the concerns are much more widespread. On that basis, I beg leave to withdraw the amendment.

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Moved by

[Lord Young of Cookham]

155: Schedule 8, page 104, line 6, at end insert—
“23A  (1) Section 78 (financial years of higher education corporations) is amended as follows.(2) In the heading, at the end insert “: Wales”.(3) In subsection (1), after “higher education corporations” insert “in Wales”.(4) After subsection (2) insert—“(3) In this section “higher education corporation in Wales” means a higher education corporation established to conduct an institution whose activities are carried on, or principally carried on, in Wales.””

Political Parties (Funding and Expenditure) Bill [HL]

Lord Young of Cookham Excerpts

2nd reading (Hansard): House of Lords
Friday 10th March 2017 Lords Chamber

[Lord Young of Cookham (Con)]

My Lords, I am grateful to the noble Lord, Lord Tyler, for the opportunity to debate this important issue, and to all noble Lords who have spoken in the debate. I congratulate the noble Lord, with whom I have been debating in a variety of institutions for 57 years—he said 55 but I make it 57—on producing a substantial piece of legislation: a much richer diet than we are normally used to on a Friday. As he said, this is based on work by MPs of all three parties, supported by some professional input. I am grateful for his kind words about me and I reciprocate by complimenting him on his consistent campaign on matters of constitutional reform over a number of decades.

As the noble Lord indicated, he has been here long enough to know that a Bill that gets its Second Reading in the first of two Houses on the last sitting Friday has a short life expectancy. However, this is an important subject that deserves an airing. I was struck by what the noble Lord, Lord Wallace of Saltaire, said when he opened a short debate on a similar subject on 3 November last year. He said that,

“party funding reform is rather like Lords reform: we come back to it every other year, or at least once every Parliament; we … get round to setting up a working group; the parties fail to agree; we go away and significant change is rarely made”.—[Official Report, 3/11/16; col. 867.]

I think that parallel is actually instructive, and I will return to it later.

The current regime to regulate political parties and party funding was established in the PPER Act 2000, on which I and, I think, the noble Lord, Lord Tyler, were our respective parties’ spokesmen as it went through the other place. Since then there have been a number of proposals to reform the system. Indeed, the proposals of both the Committee on Standards in Public Life in 2011 and those of Sir Hayden Phillips in 2007 are drawn on in this Bill. However, despite a decade of talks, there has been no cross-party agreement on changes to party funding. Wide-ranging talks were held in 2012 and 2013, with representatives meeting seven times. Many of the issues raised by noble Lords today were covered during those talks.

Unfortunately, as on previous occasions, the parties did not reach agreement during those talks. No consensus has emerged since then and, understandably, the Government are reluctant to make changes without that consent. In a debate on 9 March last year the noble Lord, Lord Tyler, quoted Winston Churchill counselling in 1948 against one party imposing its will on another on matters affecting the interests of rival parties. Several noble Lords have called for cross-party talks on this subject to be resumed. For those to be worthwhile, there would need to be some agreement about the basis of the talks so that we do not simply repeat the fruitless exercises of the past. I will return to this point at the end of my remarks.

The Bill uses the proposals of the CSPL from 2011, in particular, as its foundation. We must remember that that report did not receive cross-party support. Indeed, there were dissenting opinions within the report itself. Both Labour and Conservative members of the committee disagreed with its conclusions, as the noble Lord, Lord Bew, reminded us.

The Bill suggests reallocating and increasing state funding for political parties in Clauses 10 to 14— a subject touched on by the noble Lord, Lord Whitty. The Government do not believe that there is any public appetite for more taxpayer funding of politicians and political parties at this time. Noble Lords will be familiar with the advice of Nick Clegg in another place that,

“the case cannot be made for greater state funding of political parties at a time when budgets are being squeezed and economic recovery remains the highest priority”.—[Official Report, Commons, 23/11/11; col. 25WS.]

That advice seems as relevant today as it was then. Indeed, as substantial demands are likely to be made on the public purse to restore the building in which politicians work, it might test the patience of the public if at the same time we were to ask for significantly greater support for the trade we carry on within it.

Instead, we want to reduce the cost of politics, and we are taking steps towards this by reducing the size of the House of Commons—which I hope noble Lords will support when the relevant SI comes before us—freezing ministerial pay and stopping unanticipated hikes in the cost of Short money.

[Lord Bassam of Brighton (Lab)]

What about reducing the number of Peers?

[Lord Young of Cookham]

We tried to reduce the number of Peers in the previous Parliament, as I know to my cost, but it did not have the consensus that we needed.

Often, the starting point of our discussions is that the spending of political parties should be reduced and that, in the absence of stricter rules, an arms race is taking place between the parties. Research published by the CSPL in August 2016 showed that this is not the case. There has been no arms race in party funding in recent years. My party spent less in the 2015 general election than in 2010—and that was a lower figure than in 2005. The less we spend, the better we seem to do. Taking into account inflation, the CSPL research showed a steep fall in central party spending since 1997. Neither of the two main political parties in the 2015 general election came close to its spending limit.

Like other recent attempts at reform, the Bill suggests complex and, at times, controversial structural changes to the party funding system. Talks that have focused on these ideas have so far always failed. Perhaps real progress could be made if the focus was instead on smaller reforms that might gain cross-party support.

Here, I return to the parallel drawn by the noble Lord, Lord Wallace of Saltaire, with Lords reform. As I know to my cost, heroic attempts to reform your Lordships’ House failed because there was basically no consensus between the two Houses and within the two main parties. Subsequently, there has been useful incremental reform, with two Private Members’ Bills reaching the statute book and the possibility of further incremental reform coming from the Lord Speaker’s Committee.

Indeed, I wonder whether the noble Lord, Lord Burns, who has tackled difficult subjects such as hunting with dogs, the Trade Union Act and Lords reform, might thereafter apply his resourcefulness and ingenuity to this subject. As with incremental reform of our House, I think we should adopt the same approach to party funding: moving ahead with smaller reforms that may command broad support, rather than trying and failing to achieve an all-or-nothing solution, as this Bill does.

I was interested in what the noble Lord, Lord Bew, said, in the debate on 9 March. Commenting on my party’s evidence to the noble Lord, Lord Burns, which suggested smaller reforms rather than an all-or-nothing, big-bang solution, he said:

“That is an interesting observation. We could address certain aspects of what is a very difficult problem in its totality, in the event that we do not within this Parliament achieve the big-bang solution. These smaller reforms could include finding practical ways to encourage more and smaller donations from wider audiences”.—[Official Report, 9/3/16; col. 1377.]


He repeated that suggestion this afternoon.

These smaller reforms could include finding practical ways to encourage more and smaller donations from wider audiences. As the Minister for the Constitution said when he appeared before the Constitution Committee earlier this week, the Government are open to constructive debate and dialogue on small-scale measures that could command broad support, if there was a positive reaction to such a potential step from the main political parties. I think that today’s debate has shown that there is such an appetite, and I shall return to that in a moment, when I have addressed some of the issues raised in the debate.

The noble Lords, Lord Bew and Lord Rennard, raised the issue about the lack of transparency in donations in Northern Ireland. On 5 January, the Secretary of State for Northern Ireland announced that he would write to Northern Ireland political parties seeking their views on ending the current arrangements on donations and loans to political parties. He asked whether now was the right time to move to full transparency, and he remains keen to make progress on the issue of donations to political parties now that the election has concluded.

The noble Lord also asked about the review of third-party campaigning by my noble friend Lord Hodgson. The Government welcomed that review of campaigning in the 2015 general election, and welcomed the noble Lord’s conclusion:

“Restrictions on third party expenditure at elections are necessary”.


He recommended a balanced package of measures; some would tighten the rules and some would relax them. We are considering his recommendations carefully, along with the Electoral Commission’s response to them.

My noble friend Lord True raised two important issues. Firstly, on impermissible donations, he rightly said that all three parties had been affected but focused his comments on the Michael Brown case and asked whether the Electoral Commission should be able to secure the return of donations which are later found to be the proceeds of crime. The Electoral Commission has recommended that the rules on company donations should be reviewed following its investigation of donations made by 5th Avenue Partners Limited to the Liberal Democrats in 2005. We are considering that issue alongside a number of other issues related to donation matters.

My noble friend also raised the matter of reports about a £250,000 donation being offered to the Green Party before the Richmond by-election. This was denied by the Green Party, and the Electoral Commission records for the relevant period do not show any such donation being made. Laws around such donations relate largely to ensuring that they come from a permissible source and that they are properly declared to the Electoral Commission to comply with transparency requirements. If the donation in this case had complied with those requirements, it is unlikely to have broken any laws. But my noble friend raised an interesting question as to whether the law applied to parties as well as to individuals. That is an issue that we need to reflect on further.

The noble Lord, Lord Wrigglesworth, made a valid point about social media and the changing landscape of political campaigning. I agree that it would be better if all parties were less reliant on large donations and we had a broader base of membership donations on which to rely.

The Bill proposes a number of reforms to political party funding, including caps on donations and new schemes for public funding. These are complex structural reforms which could be taken forward only on the basis of a cross-party consensus. No such consensus exists at this time, so the Government believe that it is premature to consider a Bill at this time.

However, anticipating that there would be an appetite in today’s debate to make progress and try to break the logjam that we now have, I spoke to the Minister for the Constitution earlier this morning. He would be happy to have a meeting with the noble Lord, Lord Tyler, and other noble Lords who have spoken in this debate, to see whether we can find a way forward along the lines that I have suggested of incremental reforms that achieve cross-party support.

That may not be the giant step forward that the noble Lord hoped for in his opening remarks, but I hope that he accepts it as a constructive response to the debate and a helpful way forward, even though we cannot take his Bill very much further forward today.

Social Security (Contributions) (Rates, Limits and Thresholds Amendments and National Insurance Funds Payments) Regulations 2017

Lord Young of Cookham Excerpts

Thursday 9th March 2017 Grand Committee

Moved by

[Lord Young of Cookham]

That the Grand Committee do consider the Social Security (Contributions) (Rates, Limits and Thresholds Amendments and National Insurance Funds Payments) Regulations 2017.

[Lord Young of Cookham (Con)]

My Lords, these two Motions relate, first, to the disability elements of tax credits, as well as the guardian’s allowance; and, secondly, to the rates, limits and thresholds that govern national insurance contributions. Many of these changes are made simply to bring rates into line with inflation, as measured by the consumer prices index, which put inflation at 1% in the year to September 2016.

I speak first to the draft regulations for the uprating of disability-related tax credits and the guardian’s allowance. In short, the regulations provide for an increase in line with inflation to the disability elements of tax credits. This means that we are maintaining the value of support for both the disabled children whose parents or carers are in receipt of child tax credits and the disabled workers in receipt of working tax credits. The rise in rates also covers the new element for disabled children who were born on or after 6 April this year, regardless of the two-child limit for claims of child tax credit. The regulations also increase the guardian’s allowance in line with inflation, to sustain the level of support for children whose parents are absent or deceased. The two things I just outlined—the disability elements of tax credits and the guardian’s allowance—are exempt from the benefits freeze. This is so that we can provide support to those who face the additional cost of disability and care.

Let me turn to the other set of draft regulations we are debating: those that make changes to the rates, limits and thresholds for national insurance contributions, and make provision for a Treasury grant to be paid into the national insurance funds if required. These changes will take effect from 6 April this year. Starting with Class 1 national insurance contributions, the level of earnings at which employees start to gain access to contributory benefits, known as the lower earnings limit, will rise in line with inflation. The primary threshold, which is the level at which employees begin to pay Class 1 national insurance at 12%, will also rise with inflation. The upper earnings limit, which is the level at which employees start to pay Class 1 contributions at 2%, is being raised from £827 to £866 a week. This reflects the Government’s commitment to align this limit with the higher rate income tax threshold, which is being raised from £43,000 to £45,000 for the 2017-18 tax year.

As the Chancellor announced at the Autumn Statement, the levels at which employers and employees start to pay Class 1 national insurance are being aligned. To do this, the secondary threshold, where employers start to pay, is being increased from £156 to £157 per week. This will be the same as the primary threshold for employees from 6 April this year, and will make it easier for employers, as they will no longer have to operate two similar thresholds at slightly different rates.

Finally, for the employed, the level at which employers of people under 21 and of apprentices under 25 start to pay employer contributions will keep pace with the upper earnings limit and rise from £827 to £866 per week. This maintains our commitment to reduce the costs of employing young apprentices and young people. This is an above-inflation increase and maintains alignment with the upper earnings limit, meaning that employers pay national insurance only for the highest earning young apprentices and those under 21.

Moving on to the self-employed, the level at which they have to pay class 2 contributions will rise with inflation to £6,025 a year, and the weekly rate of class 2 contributions will also rise in line with inflation to £2.85. Self-employed people who earn above the lower profits limit, currently £8,060, also pay class 4 national insurance contributions at 9%. This threshold will rise with inflation. Above the upper profits limit, the self-employed instead pay 2%. Like the upper earnings limit for the employed, this limit for the self-employed will rise from £43,000 to £45,000 per year.

Finally, for those making voluntary class 3 contributions, the rate will increase in line with inflation from £14.10 to £14.25 a week.

I note that these regulations make provision for a Treasury grant of up to 5% of forecast annual benefit expenditure to be paid into the National Insurance Fund, if needed, during 2017-18. This is a routine measure which does not impact the Government’s overall fiscal position. A similar provision will also be made in respect of the Northern Ireland National Insurance Fund.

I hope that has been a helpful overview of the changes the Government are making to increase rates of support and contributions to the Exchequer in line with inflation. Noble Lords will of course be aware that the Chancellor announced yesterday that the main rate of class 4 national insurance will be increased to 10% in 2018-19 and 11% in 2019-20. This, alongside the abolition of class 2 NICs, is a progressive change to the self-employed NICs system. Over 60% of self-employed people who have to pay national insurance will be better off as a result of these changes. However, the rate of class 4 is not affected by these regulations and there will be an opportunity for noble Lords to discuss this measure in the Budget debate next week. I commend to the Committee the draft regulations on tax credits and the guardian’s allowance, as well as on social security contributions. I beg to move.

[Baroness Wheeler (Lab)]

My Lords, I thank the Minister for introducing these two instruments. The first on the agenda, the Social Security (Contributions) (Rates, Limits and Thresholds Amendments and National Insurance Funds Payments) Regulations, would enact the annual re-rating of national insurance contribution rates, limits and thresholds and allow for the payment of Treasury grant not exceeding 5% of the estimated benefit expenditure for the coming tax year to be paid into the National Insurance Fund. These come into effect in April this year. Given that we are dealing with national insurance contribution rates, I am sure the noble Lord will not be surprised by my first question, to which he has already referred. In view of the surprise announcement in yesterday’s Budget, which is attracting some controversy, is he able to clarify or provide further information on the proposed changes?

The second SI is on tax credits and guardian’s allowance upratings for the increase in working tax credits and child tax credits for individuals who are disabled or severely disabled. It would also increase the weekly rate of the guardian allowance, again with both changes taking effect in April 2017. Since 2011, the inflation measure used to determine the uprating of social security benefits is the CPI. The uprating is based on the change in level of the CPI from September 2015 to September, recorded at 1%.

A rise in support for working families, however small, is welcome, and we have no intention of opposing either of the orders this afternoon. However, although I do not want to rehearse the arguments that will be had during the Budget debate next week, it is important to consider on the record this 1% uprating in context. Inflation is rising, and indeed is expected to increase further still over the course of this Parliament. As the Resolution Foundation has recently reported, the result of that could mean that average earnings in 2020 will be only just higher in real terms than they were 15 years ago and, crucially, we could see a fall in real pay at the end of this calendar year as price increases outstrip pay rises.

The same report from the Resolution Foundation found that the Government’s benefit freeze will raise an extra £1 billion a year by 2020, or £3.6 billion over the Parliament, compared with what was expected in the 2016 Budget. My noble friend Lady Sherlock asked a question about this figure last week in Committee but was unable to get an answer, so I hope the Minister will be able to respond today. Is the figure accurate? If not, will the Minister tell the Committee the value of savings that the Chancellor expects to make?

The Resolution Foundation analysis has been supported by the Institute for Fiscal Studies, which has underlined that the Government’s approach represents,

“a shifting of risk from the Government to benefit recipients”.

The institute has also stressed that this risk is borne by low-income households and that, unless this policy changes, higher inflation will reduce their real incomes.

I have one final question regarding the Treasury grant. In what circumstances do the Government anticipate such a grant would be made; when was a grant of this nature last paid into the National Insurance Fund; and what does 5% represent in real terms? The economic outlook for working people is one of less disposable income. Although we do not oppose these instruments, it is clear from the Government’s overall approach that their priorities are not compatible with a society that truly wants to support the most vulnerable. I look forward to the Minister’s response.

[Lord Young of Cookham]

My Lords, I am grateful to the noble Baroness for her support for these measures. I will try to answer the three or four questions that she put to me, starting with the easiest on the provision of a Treasury grant. The provision in the estimates does not mean that it will be drawn down. Indeed, this year the provision is being made only as a precaution. The 5% provision is equivalent to £5 billion in the case of the GB National Insurance Fund, and £134 million in the case of the Northern Ireland fund. A Treasury grant was last paid into the National Insurance Fund in 2015-16. We do not anticipate a payment being made in the current year because the reserves in the fund seem at the moment to be adequate.

I turn to the question posed by the noble Baroness, Lady Sherlock, about the savings from the uprating freeze. I hope I can provide some helpful information. When we legislated for the four-year uprating freeze in the Welfare Reform and Work Act, we published an impact assessment of those rates included in the four-year uprating freeze. Both Houses debated the clauses and passed the Bill, which received Royal Assent in March last year. At Budget 2016, which was the last fiscal event before the change came into effect, the freeze was expected to save £3.5 billion in 2020-21 to help to deal with the underlying deficit. However, neither the Government nor the OBR has re-costed the freeze. The uprating freeze has already been implemented and is subsumed within the welfare spending forecast. I hope that gives the noble Baroness the information that she asked for.

On the report by the Resolution Foundation and the impact on household incomes and distribution, we considered the impact of the four-year uprating freeze when we announced the policy in the July 2015 Budget. The background was that we found that the majority of working-age benefits and tax credits had grown faster than earnings since 2008. As part of our commitment to make work pay, we introduced the four-year uprating freeze to reverse that trend of benefits rising faster than earnings. We introduced the uprating freeze alongside other measures to support work incentives such as the national living wage, and we exempted elements of benefits and tax credits that related to the additional cost of disability and care, in recognition of the additional costs that these claimants face. Indeed, the regulations today increase those elements of tax credits in line with prices.

With regard to the legitimate question the noble Baroness posed about inequality, income inequality is now lower than it was in 2010 and the share of total income tax paid by the top 1% is 27%. According to the latest data from the Office for National Statistics, income inequality in the UK is at its lowest level since 1986.

Finally, as I have said, there will of course be an opportunity to discuss yesterday’s Budget announcement in the Budget debate and when the necessary legislation comes before the House. I am not sure that I can add to what the Chancellor has said, not just in his Budget but in his many interviews during the day. The background is basically that, at the moment, self-employed people pay less in national insurance contributions than people in employment and, historically, this was because the self-employed received much less in state pension and contributory benefits. Since last year, because of the changes that we have made, self-employed workers now build up the same entitlement to the state pension as employees, which is an £1,800 a year pension boost for the self-employed. At the moment, someone who is employed and earning £32,000 will incur, with their employer, over £6,000 in national insurance contributions, while a self-employed person earning a similar amount will pay £2,300. That is why we needed to address the point of fairness in the national insurance contributions, which fund the NHS and pensions. That is the background which has given the noble Baroness, Lady Wheeler, the ammunition she needs to come back next week with her colleagues in the debate on the Budget. I welcome what she has said about these regulations and I beg to move.

Motion agreed.

Tax Credits and Guardian’s Allowance Up-rating etc. Regulations 2017

Lord Young of Cookham Excerpts

Thursday 9th March 2017 Grand Committee

Moved by

[Lord Young of Cookham]

That the Grand Committee do consider the Tax Credits and Guardian’s Allowance Up-rating etc. Regulations 2017.

Motion agreed.

Legislative Reform (Private Fund Limited Partnerships) Order 2017

Lord Young of Cookham Excerpts

Thursday 9th March 2017 Grand Committee

Moved by

[Lord Young of Cookham]

That the Grand Committee do consider the Legislative Reform (Private Fund Limited Partnerships) Order 2017.

Relevant document: 17th Report from the Regulatory Reform Committee

[Lord Young of Cookham (Con)]

My Lords, the venture capital and private equity industries are important parts of the UK financial services cluster, and the limited partnership structure provided by the Limited Partnerships Act 1907 is a popular vehicle for establishing investment funds in these industries. Currently, approximately 250 fund managers operate some 780 venture capital and private equity schemes in the UK under this structure. This equates to around £142 billion in assets under management, and 20 to 30 new schemes are launched each year. These businesses are important contributors to the UK economy, providing high-wage direct employment and indirect employment through the use of professional services firms, as well as contributing tax take to the Exchequer. The venture capital and private equity industries play an important role in providing funding to start-ups and small businesses and in improving the UK’s productivity.

In 2013, the Government launched their investment management strategy—their comprehensive strategy to make the UK one of the best places globally for asset managers to do business. As part of the investment management strategy, the Government committed to consulting on amendments to the Limited Partnerships Act. While limited partnerships are a popular vehicle for private equity and venture capital schemes, the legislation was not originally drafted with its use primarily as an investment vehicle in mind. Rather, it was originally drawn up to apply to trading entities. The result is that some provisions in the Act are not suitable for the needs of investment funds.

The investment management strategy came at a time when the competing jurisdiction of Luxembourg was updating its own limited partnership regime. Further to this, since 2013, France and Cyprus have also introduced structures to compete with the UK regime. With the UK’s imminent withdrawal from the EU, there is even more pressure to maintain our status as a leading global financial services hub. Therefore, it is timely and urgent that the UK looks to update its structures for the private funds sector.

The Government propose by way of this order to create a new category of limited partnership, the private fund limited partnership, which will differ from the existing structure in areas that currently create unnecessary administrative burden and legal uncertainty for partners. The existing 1890 and 1907 partnership Acts were originally designed to apply to trading businesses rather than investment funds. When an investment fund is established as a partnership, extensive legal work is necessary, using powers of variation under the legislation, to clarify the respective roles of: the general partners, who are in practice the fund management entities who have wide powers to manage the affairs of a partnership but face unlimited liability in respect of its activities; and limited partners, in practice the investors who have no general powers of management over the affairs of the partnership but have limited liability in respect of its activities, up to an amount specified in the partnership agreement.

The proposed order will introduce a list of activities that limited partners are permitted to carry out without taking part in management, to increase legal clarity for partners on the current state of the law. It will also make some other minor changes to the Act to remove unnecessary administrative burdens for private funds structured as partnerships.

Limited partners in a private fund limited partnership vehicle will not be required to contribute paid-in capital to the partnership. This will make the administration of investments simpler. All capital requirements set out in Financial Conduct Authority regulations will continue to apply. Statutory duties which are inappropriate to the role of a passive investor will be disapplied in a private fund limited partnership. These statutory duties are already generally disapplied through the partnership agreement. The partnership will not be required to advertise changes in the London Gazette, Edinburgh Gazette or Belfast Gazette, with the exception of the requirement to advertise when a general partner becomes a limited partner. Limited partners will be able to make a decision about whether to wind up the partnership where there are no general partners, and to nominate a third party to wind up the partnership on their behalf.

These reforms will reduce administrative and legal costs associated with the establishment of a fund. The updated structure will increase investor confidence in the UK as a jurisdiction for fund domicile. This order will reduce the burden for businesses and make the UK a more attractive jurisdiction for funds. I beg to move.

[Baroness Wheeler (Lab)]

My Lords, I thank the Minister for introducing this order. As he has outlined, this instrument would enable a limited partnership which is an investment firm to be designated as a private fund limited partnership. It also amends some of the provisions of the Limited Partnerships Act 1907 as they apply to PFLPs and to partners in PFLPs. This change has been in the pipeline for over a decade, since the Law Commission and the Scottish Law Commission published proposals in 2003. In 2008, the then Labour Government published a consultation on limited partnerships. However, in response to the stakeholder responses, the decision was taken that it was not possible to continue with those reforms.

We will not be opposing this order. However, I wish to put a number of questions to the Minister, and perhaps the most sensible place to start is with the Labour Government’s objections. The consultation response in 2009 stated that concerns were raised about particular issues in Scotland, as well as how the order was drafted. I appreciate that the order has undergone revision since then, but have stakeholders raised objections on the instrument in front of us today? Furthermore, has the draft been altered to reflect the concerns raised by funds with client interests in Scotland?

One of the changes made following the latest consultation was the removal of the strike-off procedure. The original proposal would have removed dissolved PFLPs from the partnership register. However, concerns were raised that limited partners would lose their limited liability status. We therefore now have a two-tier system for limited partnerships and PFLPs. What consideration was given to delaying introduction of this instrument until all the cracks surrounding the strike-off procedure are ironed out? The explanatory document promises that the Government will look into further steps that could be taken in relation to this issue “in due course”. Can the Minister say what further steps are being taken and when we can expect to be informed about them? There have been strong concerns raised about the burden that this two-tier system will create.

The Government’s stated aim is to,

“reduce the administrative and financial burdens that impact these funds under the current limited partnership structure”.

However, as the BLP law firm identifies, there is a chance that the reduction in the compliance and administrative burden under the new PFLP regime may be short-lived and may well be replaced by other initiatives to increase accountability for limited partnerships more generally. What measures are included in the instrument to ensure that the Government’s stated aim is achieved?

The introduction of a white list brings with it much- needed clarity on the activities of a limited partner, but there is real concern around whether the Government have achieved the right balance in the role of limited partners in the new PFLPs. The proposed changes allow a limited partner to take part in the committee and to vote on proposals by the general partner, while at the same time maintaining limited liability status. Do not the Government consider that this is an inappropriate power for a limited partner? I would certainly be interested to hear what criteria the Government have used to determine the content of the white list. Getting the balance right is vital, so do they intend to conduct a review of the white list and, if so, to what timescale?

Page 8 of the explanatory document—which I found very helpful as someone coming new to this issue—makes a forceful defence for the reforms, stating that:

“Without such changes to current legislation, the UK risks becoming a less attractive domicile for funds when compared to other jurisdictions”.


That is a strong claim, but I could not see any evidence in the document to support that contention, so I would be grateful if the Minister would address that issue. I would certainly be keen to hear his explanation of the role that PFLPs will be playing in making this a more “attractive domicile”.

Finally, I have two minor technical points. First, the impact assessment states on page 2 that 600 private equity and venture capital fund managers will be affected by this change. However, it states on page 8 that as many as 1,030 could be affected. Which of these figures is correct and what percentage of the current limited partnership landscape does that represent? Secondly, what discussions have the Government had with Companies House, which will be responsible for processing applications by firms wishing to become PFLPs, about the changes being made? Has it requested additional resources to deal with the increased administration costs of these charges? I look forward to the Minister’s response.

[Lord Young of Cookham]

My Lords, I am grateful to the noble Baroness for the welcome. To deal first with the typing error on page 2, it should read 250 fund managers, not 600. As I said in my opening remarks, we estimate that there are 250 fund managers managing 780 funds. I shall address some of the other issues that she raised. If I do not cover them all—some of them were quite technical—perhaps I may write to her to fill in the gaps.

She mentioned the concerns of stakeholders and Scottish funds. She is quite right: a range of stakeholders raised concerns which the Government listened to, and we amended the order in several areas in response to their feedback. We took into account the views of Scottish stakeholders, including the Law Society of Scotland, while developing the order. On the broader concern expressed about Scottish limited partnerships being used for fraud, the Government have listened to stakeholders’ concerns and the Department for Business, Energy and Industrial Strategy recently launched a call for evidence on the issue, covering all forms of limited partnerships, including these. The Government are committed to implementing any consequent reforms in respect of private fund limited partnerships, as well as other partnerships.

The noble Baroness asks why we did not postpone the order until we had the results of that survey. Strike-off procedure is an issue for wider limited partnership policy, and any process for removing partnerships from the register would need to apply to both private fund limited partnerships and other forms of partnerships. BEIS recently launched a call for evidence looking at the possibility of limited partnerships being used for criminal activity—a subject I mentioned a moment ago. The call for evidence closes on Friday 17 March, and BEIS will consider what further action is necessary. In answer to her direct question—why did we not wait?—the Government’s view was that it was important to press ahead with this package of amendments now because competing jurisdictions are acting quickly. Luxembourg updated legislation in 2013; France and Cyprus are introducing measures now; and UK withdrawal from the EU makes this reform timely. That is why we decided to go ahead now.

Higher Education and Research Bill

Lord Young of Cookham Excerpts

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

[Lord Watson of Invergowrie (Lab)]

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

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

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


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

[Lord Young of Cookham (Con)]

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

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

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

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

[Lord Watson of Invergowrie]

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

[Lord Young of Cookham]

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

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

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

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

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

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

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

[Lord Watson of Invergowrie]

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

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

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[Lord Mackay of Clashfern]

I think that that is certainly so; my understanding of time and practice here suggests that it is. Perhaps I may continue.

The noble Baroness, Lady Brown, made the point that the noble Lord was making on the previous amendment: that this is really rather novel. You can imagine the effect on a higher education provider if it appeared in the newspaper that, the night before, a search warrant had been issued for its headquarters. In answer to that, my noble friend Lord Younger of Leckie said that the conditions are very strict, and he read out the fairly detailed conditions. I thought it might be a simple safeguard to require a signature to say that these conditions had been met. I got a letter the day after that suggesting that this was an unheard of stipulation. As you can imagine, that slightly worked me up to see what I could do about it.

The provisions say that a search warrant must specify the name of the authorised person who applied for it and so on, and,

“state that it is issued under this Schedule”.

That is a fairly important provision. It occurred to me that all one had to do was add after that the following simple words,

“and that all the requirements for the grant specified in this Schedule are met”.

That seems very straightforward and easy.

Look at how these magistrate’s search warrants are granted. One must remember that where the conditions in a particular provision are important, the magistrate may not have in his head exactly what the conditions are. Therefore, I suggest that this amendment is a rather easy and convenient way of making sure that the magistrate’s attention is directed to the detailed requirements of the schedule, which have to be met before the warrant can be granted. That seems very straightforward and I cannot see anything wrong with it. So far, I have not heard any reason why it would not work. Therefore, I beg to move this amendment.

[Lord Young of Cookham]

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

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

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

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

[Lord Watson of Invergowrie]

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

[Lord Young of Cookham]

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

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

[Lord Mackay of Clashfern]

I am very sorry, but it strikes me as absolutely essential that the warrant be signed. I do not think that there is any question but that the magistrate has to sign the warrant. Given that the warrant has to contain a statement that it is under the schedule—in other words, the magistrate has to say that it is under the schedule—it is only common sense. There are special conditions here, which my noble friend relied on as justifying the proposition that they should have this provision, in spite of what the noble Baroness, Lady Brown, said about how detrimental it might be to a higher education provider. I am not disputing the need for the warrant at all; all that I am suggesting is that it would be a very important safeguard that magistrates’ attention would be drawn specifically to these quite elaborate conditions. They are quite detailed, and I do not think that it is likely that a magistrate will have them in his head, or her head, as they approach the grant of a warrant, when whoever it is comes along and applies for it.

Therefore I am not asking for any separate signature—one signature is enough—but the signature would include the phrase that I have put in this amendment, after the fact that it is under this schedule. That seems to be absolute common sense, and I am extremely sorry that the Government have not had the willingness to accommodate this, which occurred to me in the course of dealing with the matter here. Surely, that is what Committee stages are for. If the Government are to cast aside what I have suggested, given that I have a certain amount of experience of magistrates’ warrants and so on, I sincerely hope that before Third Reading this is taken into account. Otherwise, it seems to me an absolutely idiotic attitude from the Government to simple improvements suggested in the course of the discussion.

[Lord Young of Cookham]

I am grateful to my noble and learned friend, and of course I will with my colleagues have a look at this between now and Third Reading, but what we have done here is to take a standard approach used in existing legislative provisions relating to search warrants and powers of entry. We are simply seeking to replicate the procedure that already exists in similar circumstances, when for whatever reason powers of entry are required. We are simply applying best practice and extending to these institutions powers that already exist to institutions in the educational field. However, in view of the very strong feelings that my noble and learned friend clearly has on this, and in view of his greater knowledge than mine in matters judicial, of course we will take it away and have another look at it. Against those undertakings, I hope that my noble and learned friend might feel able to withdraw his amendment.

[Lord Mackay of Clashfern]

Certainly, with that understanding, I am prepared to withdraw the amendment and I sincerely hope that wise counsels will prevail by the time we come to Third Reading.

--- Later in debate ---

[Lord Stevenson of Balmacara (Lab)]

My Lords, I support the amendments in the names of the noble Lords, Lord Lucas and Lord Willis, which were explained very well by the noble Lord. They would contribute to a better understanding of all the issues that have arisen during the course of the Bill and would be a source of good data for the future as we see how the system being brought into play works in practice.

My Amendment 130 stems from Clause 61, which would place a duty on the relevant body or the Office for Students to put in a series of measures in relation to data that are to be published. The requirements are not very detailed—there is broad discretion—but the broader areas relate to student entrants, the number of education providers of different types, the number of persons who promote the interests of students and a good range of other things. Curiously, it does not really go down into the detail of some of the mechanics mentioned by the noble Baroness, Lady Garden, when she spoke on behalf of the noble Lord, Lord Willis, and these are the issues picked up in my amendment. It happened to be topical because, when the Committee stage took place, there was an investigation into the use of part-time, non-permanent and permanent staff in higher education on zero-hours contracts—I think that was the term used. This amendment at least points in that direction but I think that it has a wider resonance, and I look forward to hearing the Minister’s response.

[Lord Young of Cookham]

My Lords, I am grateful to those who have spoken in this debate for addressing data issues. I entirely share the view of my noble friend that as much data as possible should be made openly available as soon as possible, and I have no difficulty in endorsing the broad principles that he enunciated.

However, I do not think that the issue here is about the powers to obtain data under the Bill. The current drafting already enables the OfS to make data available in connection with the performance of its functions and it also gives the Secretary of State the power to require application-to-acceptance data for qualifying research purposes. I am sure my noble friend will accept that, however we draft the powers of the OfS, data protection rules will necessarily mean that open data are subject to restrictions on sensitive and personal data.

With regard to the amendment in the name of the noble Lord, Lord Willis, although I sympathise with its intent, the OfS will be a regulator of HE providers, with the power to require such information from them as is required to perform its functions. However, it is not feasible to expand its remit to impose conditions on private companies that it does not regulate and with which it has no regulatory relationship.

Although I do not believe that these amendments are the answer to overcoming barriers to accessing data, I agree that greater collaboration between sector bodies on sharing and making comparable data available to students and researchers is something that we must continue to strive for. We would expect the OfS and the body designated to compile and publish higher education information on behalf of the OfS to play a part in encouraging that collaboration. The requirement to consult on what, when and how data are published will ensure that the interests of the sector, as well as those of students and prospective students, as called for by my noble friend, are taken into account. Moreover, in the spirit of co-regulation we must also recognise that the sector is already taking measures to address the points raised by my noble friend through the recently published HESA open data strategy, along with the recommendations made in the Bell review around the co-ordination of data.

I turn now to Amendment 130, which relates to an issue raised by the noble Lord, Lord Stevenson, in Committee. I understand his concerns about the job security of higher education staff and I can reassure him that the Government value the crucial contribution of HE staff. I remind the noble Lord that we are not seeking to determine on the face of the Bill exactly which data must be collected. Data requirements and needs evolve over time. The relevant data body needs to maintain the ability to adapt to changes and therefore data requirements will be decided through a period of consultation. The OfS will have a duty to consult on data collection and publication in conjunction with the full range of interested parties. In respect of the publication duty, the OfS will also have the discretion to consult persons that it considers appropriate, including any relevant bodies representing the staff interest. It would be inappropriate to specify workforce data when all other data requirements will be agreed through a period of consultation. It also risks pre-judging the consultation process.

However, I can offer the noble Lord some reassurance on workforce data. The current data body, HESA, already collects data on so-called “atypical” academic staff whose working arrangements are not permanent. This is governed by the code of practice for higher education data collections. Discussions were held last year between the trade unions, employers’ representatives and HESA on improving understanding of employment patterns in the HE workforce. This has led to proposed improvements to the HESA staff record. These are currently going through consultation with a view to being implemented in 2017-18. We are confident that this issue will be considered as part of the data consultation and that the OfS will want to build on HESA’s positive action in this area. I would therefore ask my noble friend to withdraw his amendment.

[Lord Lucas]

My Lords, I am grateful to my noble friend. He has answered all the points I raised very satisfactorily.

I am delighted that the noble Lord, Lord Stevenson of Balmacara, spoke to his amendment as well. There are datasets that are not obvious but which can have a great effect on the way the sector progresses. If the sort of information he is suggesting is made public, there will be a trend towards better behaviour. Students care about these things. If you are considering a university, you care about who is going to be teaching you and what sort of workforce it is. Also, the fact that a university has a strong cadre of highly valued permanent staff who have been in post for a long time is something that can be used in its recruitment policy. It is the sort of thing that students like to know, so I would encourage the OfS to look wide in its definition of data, and certainly to include things like gender relationships and relationships in general between students and staff. That sort of thing is a great driver of good behaviour. From time to time we hear stories of bad behaviour, so unless the information is surfaced and it becomes commonplace for higher education institutions to have to tell people what is going on, these things can too easily be hidden.

I commend the Government for their attitude to data and I look forward to the OfS following the diktat that my noble friend has just outlined. With that, I beg leave to withdraw the amendment.

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[Lord Watson of Invergowrie]

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

That is it, apart from the catch-all,

“such other persons as the OfS considers appropriate”.

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

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

[Lord Young of Cookham]

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

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

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

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

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

[Lord Watson of Invergowrie]

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

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

--- Later in debate ---

[Baroness Wolf of Dulwich (CB)]

My Lords, I do not want to say very much about this. I did not withdraw the amendment which my noble friend Lady Brown and I originally tabled and which the noble Lord, Lord Stevenson, kindly introduced, because I wanted the opportunity to say in the House how very much we appreciate the fact that the Government listened to us on this and how convinced we are that introducing the Regulators’ Code into the OfS’s actions will be entirely for the good. It will take care of a great many anxieties we had about details in the Bill and we are truly appreciative of that.

I also want to agree with what the noble Baroness, Lady Deech, said about the realities of dealing with students who are in a university and how you cope with problems, complaints and all the issues which come to the Office of the Independent Adjudicator. It is really important that the Government take account of the fact that this is not like a situation where you buy a coffee and if you do not like it you go and buy another coffee. My noble friend spoke very eloquently. I hope the Government will listen to her on that as much as they listened to us, and I thank them very much.

[Lord Young of Cookham]

I am grateful to noble Lords who have spoken to these two amendments for their contributions to this debate. I shall deal with the easy one first.

My noble friend explained in his letter earlier this week that he had listened to concerns around the regulatory powers of the OfS and the assurance that noble Lords, many of whom have spoken in this debate this evening, are seeking around its adherence to the Regulators’ Code. As already stated in the Bill, under Clause 3(1)(f), we share the aspiration that the OfS should comply with recognised standards of good regulatory practice. We remain wholeheartedly committed to the principles of the Regulators’ Code, and because the OfS is the sector regulator, we agree that it should sign up to the code. I am therefore pleased to confirm the announcement made on Monday that the OfS will voluntarily commit to comply with the code, with a view to its regulatory functions being formally brought into scope when the list is next updated via statutory instrument.

I now turn to the more difficult amendment about the respective roles of the CMA and the OfS and what the interface is between the two. In his letter to noble Lords earlier this week, my noble friend recognised the concern over the respective roles and responsibilities of the CMA and the OfS. I will explain why we believe that this a not a substantiated concern. I think that the noble Baroness, Lady Deech, used the right expression when she said, “We expect collaboration”. That is exactly what we expect.

The CMA is not a sector regulator but an enforcer of both competition and consumer protection law across the UK economy. The CMA has the specific role and specialist expertise to enforce competition law and consumer protection across the whole of the UK economy. It would be unprecedented, as has been suggested at times, for the competition and consumer enforcement functions of the CMA to be transferred entirely to a sector regulator. Even where sector regulators have enforcement functions, the CMA retains powers as an enforcement authority, with appropriate arrangements for co-ordination of concurrent functions.

In the past the CMA has provided general advice to HE institutions on complying with consumer law. In addition, its consumer enforcement powers have been used in relation to the sector. Specifically, it has received undertakings from providers around, for example, academic sanctions for non-fee debts, such as accommodation debts; information for prospective students on additional non-fee costs; terms and conditions on fee variations; and fair complaints procedure.

HEIs are expected to comply with consumer law, enforced by the CMA. The OfS will be expected to take on board the CMA’s guidance and best practice when it develops the details of the regulatory framework. It is perfectly usual for an organisation that is subject to sector regulation to be required to comply with legal requirements that are enforced by bodies other than the sector regulator. For example, even in regulated sectors the Environment Agency carries out regulatory and enforcement activity in relation to the environmental aspects of an organisation’s activities—for instance, as regards waste and contaminated land—and the Health and Safety Executive enforces health and safety requirements.

Although the CMA and OfS share areas of common interest in relation to competition and consumer matters, their roles are distinct and complementary, not contradictory. This is the joint view not just of Ministers but of the CMA. So we expect the CMA and the OfS to work productively together, just as the CMA works well with other regulators—indeed, as it does with HEFCE at the moment—and we see no reason for this to be different once the OfS is established. There will be a further opportunity to explain respective roles and responsibilities, as necessary, as part of the consultation on the regulatory framework this autumn.

Students—in addition to being students—have consumer rights, and universities and other higher education providers that do not meet their obligations to students may be in breach of consumer protection law. Compliance with that law is important not just to protect the students but to maintain student confidence and the reputation of the HE sector, and to support competition.

The noble Baroness asked whether there was confusion about the regulatory roles of the CMA, the OfS and the OIA. I applaud the work that she did at the OIA. As I think I said a moment ago, subject to the passage of the Bill, the OfS will be the regulator for higher education providers in England. The OIA will continue to operate as the body designated by government to operate the student complaints scheme in higher education, so it is not a regulator and it will continue to deal with individual student complaints. The CMA is not a sector regulator but an enforcer of both competition and consumer protection law across the UK economy, and it has the specific role and specialist expertise to enforce competition law and consumer protection across the whole of the UK economy. So there is no overlap of responsibility between the CMA, the OfS and the OIA, although the OfS will be expected to take on board the CMA’s guidance and best practice when developing the regulatory framework.

As I said, there will be an opportunity, as part of the consultation on the regulatory framework this autumn, to explain, discuss and identify the respective roles and responsibilities of these three bodies as necessary. In the meantime, I ask the noble Lord to withdraw his amendment.

[Lord Stevenson of Balmacara]

I thank the Minister for that reply. On the relatively simple question—the good news, as he called it—of Amendment 135, I echo the remarks of the noble Baroness, Lady Wolf. We are very grateful for the listening and reflecting that has taken place. The end-result is exactly as we would want it. This is a body that will be carrying out regulatory functions. It would be better if it were fully subscribed to the Regulators’ Code. I understand that there will be a transitional arrangement. If that is the intention, we wish it well and that will be the right solution for that.

However, I am a bit more puzzled about the question of the overlap and links between the CMA and the Office for Students, particularly in relation to the very powerful case made by the noble Baroness, Lady Deech, whose experience in the OIA leads to real and very important questions about where this is all going to go. As she pointed out, and I do not think was picked up by the Minister in detail—although I will read what he said in Hansard—there are three bodies with very different functions and aims. They have very different cultures, missions and outturns that they will be looking for. I do not quite see how that all fits together.

I understand that there will be a consultation period, but we are starting from a very odd position. With the competitive focus and the competition issues—the possibility that institutions might seek to challenge the work being done by other higher education institutions through the Competition Appeal Tribunal—this is a new world that is going to cause quite a lot of concern, worry and cost. It is certainly a deflection from their main purpose of the higher education institutions engaging in this. That has not been dealt with, and I wonder whether it might be possible for more information to flow our way.

On the detailed precision about where the CMA sits in relation to the Office for Students, I understand that will have to evolve. I am not in any sense being critical of that, and I have already admitted in my opening statement that we understand the role that Parliament has given to the CMA. That cannot be taken away but, surely, there is a case here for a memorandum of understanding at least—some sort of written documentation so that we would at least have a baseline on which to operate. I did not hear that from the Minister. Perhaps he could reflect on that and write to me about it.

It was a good aphorism to say that these are complementary but not contradictory groups working here, but it will be very difficult to see for a few years where this will all settle down. He may be right in what he asserted: it may be that this is in the best interests of students, but it is a bit hard to see that at the moment. While I see no particular case for progressing this amendment, or any others related to it, to improve the Bill, I wonder whether it might be sensible to have a quick meeting about this. Those who are keenly involved in this might just share experiences about where our nervousness comes from to ensure that there is nothing to be picked up, at least by a statement about a way forward to set out the broad understandings under which we will start the system before we get to Third Reading. With that, I beg leave to withdraw the amendment.

Higher Education and Research Bill

Lord Young of Cookham Excerpts

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

[Lord Carrington of Fulham (Con)]

My Lords, this is a probing amendment to clarify a situation which concerns, pretty specifically and possibly uniquely, the Guildhall School of Music and Drama. The Guildhall school is a very unusual institution, partly because of its history, and partly because of its ownership. It is an unincorporated body. It does not have the legal structure common among higher education colleges. It was set up 137 years ago, in 1880, by the City of London Corporation as a conservatoire, and has never changed its corporate structure since. It is owned by the City of London Corporation, its court of governors is appointed by the City of London Corporation and close to a third of its funding comes from the corporation. It is, indeed, an integral part of the whole structure of the City of London, in the same way that Hampstead Heath, Epping Forest, and various other schools are run.

This gives the problem under the Bill that the Guildhall is a body that does not really fit into the definitions of what the White Paper was trying to create. The White Paper, which informs the Bill, indicates that the governance principles of the Office for Students, under the powers conferred on it under Clause 15, will be,

“comparable to those currently required of HEFCE-funded providers in line with the HE Code of Governance”.

This code has been developed by the Committee of University Chairs, and has been deployed successfully by the Guildhall. There is every reason to assume that the governance principles envisaged by Clause 15, which the Office for Students will be developing, can be applied to the Guildhall with equal success. The clause, however, introduces statutory backing for the principles, and the concern is that in moving to this more formalised position, some of the current flexibility will be lost and the ability to take account of the possibly unique governance structure of the Guildhall will no longer be applicable.

The amendment is to try to flush out whether it is possible to have sufficient flexibility under the new structure to enable the Guildhall to continue in the way that it has in the past—in other words, to be an integral part of the Corporation of London. I am trying to work out whether things can go on as they are or whether they have to change for the Guildhall, possibly with unfortunate consequences. On that basis, I beg to move.

[Lord Young of Cookham (Con)]

My Lords, I am grateful to my noble friend who, not for the first time, has raised in your Lordships’ House interests of concern to the City of London Corporation.

Clause 15 enables the OfS to take over the responsibility of scrutinising providers’ governing documents against the list of public interest principles. I can reassure my noble friend that we do not anticipate any impact on current higher education institutions being recognised by the OfS as higher education providers in the future. The intended practical application of the current and future list is to ensure best practice within already existing and recognised higher education providers’ governing documents, and it is not the intention of these principles to prescribe the corporate form of providers. I hope that gives my noble friend the comfort he is seeking.

The OfS must consult on the new list of principles. With the exception of the requirement that there should be a principle protecting academic freedom for staff, which I am sure the Guildhall has no difficulty with, the Bill does not prescribe what should be included in that list. There is nothing in Clause 15 that should concern the Guildhall School of Music, and it should be able to continue doing the valuable work it has been doing for so long. Against that background of assurance, I hope that my noble friend will be able to withdraw his amendment.

--- Later in debate ---

[Lord Storey (LD)]

My Lords, I did not intend to speak on this issue but I want briefly to say something very important. If any of us had children who we sent off to higher education, we would expect that institution to give them the support and development they needed. There are private colleges that have their courses validated by individual universities. Of course, those private colleges could, under certain circumstances, get into difficulties and cease trading. What happens then to the students and to their student loans? As the noble Baroness, Lady Wolf, rightly said, we are seeing this already in further education, where training providers are going into liquidation. They are all right—they have gone into liquidation—but the poor student is left high and dry. I hope that when the Minister replies he might give assurances on this matter.

[Lord Young of Cookham]

My Lords, I am grateful to all noble Lords who have spoken in this debate, which has raised the important issue of student protection in the case of suspension of registration or indeed deregistration. I think that there is no disagreement that student protection is important, and that is why in this Bill we have gone further than ever before by including an express provision that will enable the OfS to ensure appropriate protections for students through a key condition of provider registration. The noble Lord and others have made some helpful suggestions regarding the likely content of student protection plans, which we agree need to be robust and comprehensive in their coverage. These plans are likely to include a diverse range of measures to protect students, as well as a diverse range of possible triggers for a student protection plan, including suspension of registration.

In response to the concerns that have been expressed in the debate, I can say that draft guidance will be prepared for consultation with the sector and with students as part of the regulatory framework consultation later this year. We would expect it to include information on how and when a provider should refer students to its student protection plan, for example during suspension of registration. It would be wrong to pre-empt the consultation by including these measures in the Bill itself, but I would seek to reassure noble Lords that the measures I have just referred to could include, for example, provision to teach out a course for existing students; offering students an alternative course at the same institution; making arrangements for affected students to switch to a different provider without having to start their course from scratch; and—in response to an issue raised by the noble Lord, Lord Watson—measures to compensate students who are affected financially. I hope that these examples provide some reassurance to noble Lords that we do have in mind the contingency arrangements they have outlined in the debate.

Clause 17 places a clear duty on the OfS to notify, through its maintenance of the register, when a provider has been suspended, and a similar duty is imposed on the OfS by Clauses 19 and 23 whenever providers are deregistered. The OfS already has the power, given in Clause 7, to require a provider’s governing body to make sure that students are promptly informed about its actions.

However, widespread publicity of preliminary compliance measures may not always be appropriate in every case. Before the OfS can impose a sanction of suspension and deregistration it must notify a provider of its intent to do so, unless an urgent suspension is being imposed, and then allow the provider the opportunity either to argue its case or to put matters right. As I am sure noble Lords will agree, the desired outcome for the benefit of students and the provider alike is that the provider takes the actions necessary to ensure that it complies with the conditions of registration that have been placed upon it, which would mean that no further action would be required.

There are also important matters of confidentiality at play here, which is a key concern that has previously been raised by Universities UK and a number of noble Lords in the debates in Committee. Higher education providers would not wish the OfS to announce that it was carrying out an investigation into a provider as this could lead to unnecessary reputational damage if the OfS subsequently decided not to take action. We must also be careful not to unsettle or panic students unnecessarily. Disclosing details of possible sanctions when the OfS has yet to decide to take action would not in our view generally be appropriate or helpful to students. It is the inclusion of the words “intention to” that I find real difficulty with in Amendment 56.

On Amendment 57, I have listened to the thoughtful debates we have had today, and indeed I read the debates in the other place, on the issue of student transfer. We tabled Amendment 100 on this important issue which we have already discussed. Our amendment will require the OfS to monitor and report on the provision of student transfer arrangements by registered higher education providers. It will empower the OfS to facilitate, encourage or promote awareness of these arrangements. In doing so, the Government are creating the conditions to allow the necessary flexibility for students to make the right choices for themselves and to have control over those decisions, whatever the reason for their transfer. The amendment that has been proposed and to which noble Lords have spoken would result in the OfS trying to make arrangements for students to be placed on other courses if their current course closed. However, the decision about what courses to offer falls within the institutional autonomy of each provider.

While I recognise the importance of students being able to transfer, particularly where their institution ceases to offer their planned learning, it is not and nor should it be in the OfS’s gift to determine whether institutions accept students from elsewhere. This has never been a role undertaken by the OfS’s predecessor, HEFCE, and there is no intention for it to be taken on by the OfS. It must surely be preferable for the sector to be in control of transfer processes, including where appropriate as part of the student protection plans, and for the OfS to play a greater role in facilitating and encouraging the availability and take-up of such arrangements.

In response to my noble friend Lord Norton, who was concerned that students would not know what protections they have, we have listened to concerns on this issue. That is why we brought forward an amendment in the other place to require plans to be published and therefore brought to students’ attention. This balanced approach is what our amendment sought to achieve. Against that background, I ask the noble Lord to withdraw Amendment 55.

Building More Homes (Economic Affairs Committee Report)

Lord Young of Cookham Excerpts

Thursday 2nd March 2017 Lords Chamber

[Lord Young of Cookham (Con)]

My Lords, the whole House understands why the noble Lord, Lord Kennedy, was unable to wind up the debate. We extend our sympathy to him and to his wife, the noble Baroness, Lady Kennedy, on the recent loss of her father, although no one would know that the noble Lord, Lord Beecham, had not been working on that wind-up speech for several weeks.

If political students wanted a textbook example of how a committee in your Lordship’s House could influence and reshape government policy, I would direct them to the report we have been debating this afternoon. As the noble Lords, Lord Horam and Lord Best, explained, its context was the Housing and Planning Bill, introduced by the newly-elected Government in 2015, which contained a number of measures to increase housing supply, particularly for first-time buyers, but was not free from political controversy. It provided the back-drop to this report, which was published a few weeks after Royal Assent.

A few days after publication, there was, in effect, a change of Government. All DCLG Ministers but one were moved and a new team arrived, with the political space to revisit policy and with your Lordships’ report in their in-tray to assist that process. I have been genuinely impressed by the fresh approach adopted by Gavin Barwell, as I know have many others, who have admired the way he has shown his commitment to tackling the challenges of his portfolio and engaged with all the stakeholders. As a former Chief Whip I would caution against praising him too highly, just in case he is headhunted by the Prime Minister and his skills are applied to other challenges that may confront the Government in Whitehall. But it was perhaps a tacit acknowledgement of the influence of your Lordships’ report that the title of the subsequent White Paper, Fixing Our Broken Housing Market, was lifted from the introduction to this report: “Housing, A Broken Market?”.

I cannot think of any Select Committee report in either House that has had so many of its recommendations adopted so quickly, sometimes at the expense of Government reordering earlier priorities, as my noble friend Lord Horam said, and as also mentioned by the noble Lords, Lord Turnbull and Lord Kerslake. Perhaps the right reverend Prelate the Bishop of St Albans would describe it as repentance. We are taking forward measures that fit with over half of the committee’s 13 final recommendations as well as a host of other points raised in the report. So I commend the committee on the timing and the targeting of its report, its chairman for his perceptive introduction and all noble Lords who have taken part in this debate. The White Paper was, of course, a consultation document, so everything that has been said in this debate will be taken into account in that process.

I have discovered in my short time in your Lordships’ House that Whips are often invited to respond to debates on subjects in which they had, until shortly before, displayed but a fleeting interest. I hope that that is not the case today; like other noble Lords, I have chaired a housing association. Unlike other noble Lords, I was a housing Minister at various levels of seniority from 1981 to 1994, with a discontinuity from 1986 to 1990 when I fell out with Margaret Thatcher over the poll tax. Indeed, as Under-Secretary of State at the Department of the Environment, I first spoke in a housing debate in October 1981 about making the best use of government land to support the housebuilding programme—a subject still topical today, as the committee highlighted in its report.

Let me say how the Government have acted on the committee’s recommendations, and try to address the points raised in today’s debate, recognising that I may not have time to address all of them, in which case I will of course write to noble Lords.

The report rightly acknowledges that housing has become too unaffordable, whether to rent or to buy—a point strongly made by the noble Lord, Lord Hollick, when he introduced the report; and many others, including the noble Baroness, Lady Blackstone, and the noble Lord, Lord Sharkey have explained the impact this has on the lives of those who are affected. They reminded us that the average house costs almost eight times average earnings—an all-time record. This means it is too difficult for too many people to get on the housing ladder, and the proportion of people living in the private rented sector has doubled since 2000. For the average couple in the private rented sector, rent now takes up roughly half of their gross income, a point mentioned by the noble Lord, Lord Turnbull, who also mentioned the anxiety that many of those in the private rented sector feel because of the absence of security. That figure, of roughly half of their gross income, is even higher in London. Noble Lords may ask themselves, as indeed do many others, how their children and grandchildren will be housed when they grow up and leave the family home. The Government are determined to reform the housing market so that housing is more affordable and people have the security they need to plan for the future. That is the background to the White Paper.

The starting point, as the committee has recognised, is to build many more homes. Since the 1970s we have delivered, on average, 160,000 new homes each year in England, far below what the committee and numerous independent assessments have said we need. The White Paper sets out a comprehensive plan to deliver the step change in housebuilding—as the noble Lord, Lord Kerslake, described it—which capitalises on the substantial additional funding secured in the Autumn Statement. The figure of £1.4 billion was referred to by a number of noble Lords as extra money available for affordable housing. In deciding how that money should be spent, the right reverend Prelates the Bishop of Newcastle and the Bishop of St Albans stressed the importance of stable communities where young people can buy a home and have a stake in the area in which they live. We were invited by the right reverend Prelate the Bishop of St Albans not to overlook the needs of rural housing. That is, indeed, a priority and there is a new community fund to provide £60 million per year to support housing in rural areas. It is interesting that in the Neighbourhood Planning Bill a number of neighbourhood plans came forward with more homes in their village or community than were actually required by the district plan. That addresses the point so well made by the noble Lord, Lord Best, that nimbyism is moving on, although it may not have totally disappeared.

To achieve this goal, the White Paper sets out a four-pronged approach. First, release more land for homes where people want to live. The noble Lord, Lord Forsyth, reminded us that there are regional variations in the equation between supply and demand. Secondly, ensure homes are built more quickly, once they have planning permission; thirdly, open up the housing market to a wider range of providers and methods of provision; and fourthly, help people in the meantime while our reforms take effect. We think that that is a comprehensive and realistic plan to deliver the homes we need, and others agree. David Orr, chief executive of the National Housing Federation, said that the White Paper contained,

“extremely positive steps towards ending the housing crisis”.

How have we addressed the committee’s recommendations? It raised the importance of ensuring that local authority planning departments are properly resourced—an issue raised by my noble friend Lady Eaton and others. As noble Lords have mentioned, the Government are boosting local authority capacity by raising planning fees, by 20% where local authorities commit to spending the additional income on planning services. The Federation of Master Builders has said that this is,

“one of the biggest game changers”,

in the White Paper. I hope that those extra resources might enable planning authorities to recruit the ecologists referred to by the noble Baroness, Lady Young of Old Scone, where they are needed and also to deal with some of the sharp practices that we heard about from the noble Earl, Lord Lytton. An additional 20% is available in areas that are delivering on their housing plans.

The Government agree with the committee that we need to act to ensure that homes are built more quickly once planning permission has been granted, which was an issue raised by the noble Baroness, Lady Blackstone. The White Paper includes a package of measures to address slow build-out. The committee highlighted the suggestion that planning consents should be limited to two years. We encourage local authorities to consider shortening the timescales for developers to implement a permission from three to two years, as set out in the White Paper.

The committee recommended that the community infrastructure levy needed to be simpler, more transparent and responsive to the concerns of builders and we are looking at that carefully. That includes the workings of Section 106, which was raised by the noble Viscount, Lord Chandos. We will make an announcement at the conclusion of those considerations in the Autumn Budget this year.

More broadly, we are tackling the barriers that can hold back development on-site, including through the £2.3 billion housing infrastructure fund, by helping to put the right infrastructure in the right places—an initiative welcomed by the noble Lord, Lord Hollick—and by streamlining the licensing system for managing the great crested newt. Too often, lack of infrastructure prevents development, and that substantial sum should unlock up to 100,000 new homes. We will hold the feet of local authorities and developers to the fire to account for the delivery of new homes, including through a new housing delivery test, to ensure that local authorities are on track with their plans.

The committee made several recommendations about making better use of public land to deliver new homes. The Government aim to dispose of surplus government land in England with capacity for at least 160,000 homes by the end of March 2020. This follows our successful programme in the last Parliament, in which land was released for 109,000 homes against a target of 100,000.

Progress with the current programme is good. The programme’s annual report, published on 20 February, shows that by the end of September 2016 departments had already sold or identified land with capacity for 145,492 homes—91% of the programme’s ambition. I hope that publication of that report, which of course came after the publication of the committee’s report, has addressed concerns about when information on monitoring the new programme would be available. We will publish a further report in July, with data about the number of homes built on land released under the programme—an issue raised by the noble Baroness, Lady Blackstone.

Alongside this, the Government’s new accelerated construction programme will deliver up to 15,000 housing starts in this Parliament on surplus public sector land and encourage new developers with different models of construction to build new homes at up to double the rate of traditional housebuilders.

We agree with the committee that we need to diversify the market to increase supply. That includes supporting housing associations and local authorities to build more—an ambition recommended by the committee in Chapter 5—alongside supporting smaller developers and new investors.

We want to support housing associations with ambitious plans for growth—for example, L&Q, which has recently merged with East Thames housing association and acquired the strategic land firm Gallagher. I was interested to hear from the noble Lord, Lord Kerslake, about the merger between Peabody and Family Mosaic with the specific aim of enabling the combined association to build more homes. We welcome new investors into different types of housing, such as the joint venture in supported housing between Universities Superannuation Scheme Ltd and Morgan Sindall Investments Ltd—a subject raised by a number of speakers, including the right reverend Prelate. Although we have taken initiatives to sustain supported housing with some ring-fenced funding, I understand that there are residual anxieties, which I will certainly pass on to ministerial colleagues.

We want to see local authorities deliver new council houses, as stressed by the right reverend Prelate the Bishop of Newcastle. Numbers of new council homes have been increasing year on year, and they are an important source of new supply, particularly in areas where there is acute housing need.

We will work with local authorities and key partners to consider the options for increasing housebuilding further. This may include innovative approaches—such as the one in Ashford mentioned by my noble friend Lady Eaton—and the use of local housing companies to deliver new affordable and market housing. In response to the question from the noble Lord, Lord Hollick, I understand that there is no fixed budget for this. The department responds to requests on a case-by-case basis, focusing on areas of high demand.

My noble friend Lady Wheatcroft raised points about diversifying the market and the potential for the greater use of modern methods of construction, such as off-site construction. We will stimulate the growth of the sector through government programmes—for example, partnering with off-site manufacturers through the accelerated construction programme—and we will work with lenders to ensure that homes built off-site can access finance on the same basis as traditionally built homes. Therefore, in direct response to the question from my noble friend, we recognise the imperative of government leadership in this area in getting the initiative off the ground.

The committee called for more homes for rent alongside those for sale. The White Paper includes a package of measures to boost new privately financed build-to-rent developments, as well as additional investment and flexibility for more affordable homes, including those for rent. That was a subject raised by the noble Lord, Lord Best, and perhaps I can focus on it for a moment. I have always been amazed that pension funds and insurance companies in this country have invested in almost every conceivable asset apart from residential accommodation for rent. They have invested in gilts, equities, commercial property, commodities, gold and silver, but, had they invested in homes for rent, they would have achieved both capital appreciation and income buoyancy unparalleled by almost any other investment. I have nothing against buy-to-let investors, but there would be more stability and professionalism in this sector if there were this long-term institutional investment, as suggested by the noble Lord.

A number of major investors have already invested and are already building schemes—Legal & General, M&G, Grainger, Moorfield, Lone Star, Hermes, Realstar, Essential Living and Delancey, to name but a few. I noted that the property consultancy Knight Frank estimates that investment appetite could grow to £50 billion, representing 250,000 homes.

The committee highlighted barriers to entry for smaller builders. The White Paper includes a package of measures to help smaller firms—an issue raised by the noble Lord, Lord Layard—from making more small sites available through the planning system, to loan funding of £1 billion as part of the home building fund to support small and custom builders. Many noble Lords spoke about those on the waiting list and those threatened by homelessness, which I hope will be assisted by the Bill being taken through your Lordships’ House by the noble Lord, Lord Best.

Increasing the supply of social housing for rent will of course help those looking to the sector for a solution to their housing problem. I have always favoured schemes that help social tenants move on to home ownership, such as HomeBuy. Some of these, where tenants move into a new property such as Help to Buy, can help to secure a re-let at a fraction of the cost and time of a new build. That can promote mobility through the sector helping both tenants and those in housing need.

The committee and noble Lords raised a number of questions about the Government’s housing target. Our ambition is to deliver 1 million new homes by this Parliament, by March 2020. We have made good progress so far with 189,650 new homes delivered in 2015-16. However, there is clearly more to do, as the noble Lords, Lord Sharkey and Lord Kerslake, reminded us. No one who has listened to this debate could draw any conclusion other than that we need to go a lot further to meet that ambition.

I turn now to some of the points raised in the debate. A recurring theme was the need to raise the borrowing limit for local authorities. In addition to doing a spell as a Housing Minister, I also did a spell in the Treasury so I can see both sides of the argument. On the one hand, the Housing Minister wants the maximum borrowing capacity for local authorities and on the other hand the Treasury sees an imperative to manage public debt. Clearly, there is tension between the two. I would like to write to noble Lords because there is a real danger of getting bogged down in fiscal theology as to what scores and what does not score as a public expenditure. I will set out more clearly what we are doing and what the constraints might be. But in the Autumn Statement 2013, £300 million of additional borrowing was made available to councils in England and £127.2 million was taken up. In 2015-16, local authority borrowing headroom is set to be £3.4 billion on top of almost £2.5 billion of general housing revenue account—the reserves accumulated by local authorities.

The noble Lord, Lord Sharkey, asked what the housing delivery test was. It is about assessing progress in housebuilding against local planning authorities’ targets. It compares the number of homes that local planning authorities set out to deliver in their local plans against the net additions in housing supply. It is not just about planning but about how many actual houses are built.

My noble friend Lord Forsyth raised the issue of the PRA. I will raise again with the Treasury and the PRA the issue of the capital weighting of loans to small builders. I have many other answers, but my time is drawing to a close so I will sum up. The Government are committed to fixing the problems with our housing market, many of which the Committee highlighted in its excellent report. By building the homes that Britain needs and giving those renting a fairer deal, we will give those growing up in society today a greater chance of enjoying the same opportunities as their parents and grandparents, as part of our wider ambition to make this a country that works for everyone. I welcome the committee’s interest in this area and, in light of the impact of its report, hope that it will consider looking at the issue of housing again, possibly later in this Parliament.

Parking Places (Variation of Charges) Bill

Lord Young of Cookham Excerpts

2nd reading (Hansard) : House of Lords
Friday 24th February 2017 Lords Chamber

[Lord Young of Cookham (Con)]

My Lords, it is a pleasure to speak in support of the Bill’s Second Reading. I begin by congratulating my noble friend Lady Redfern on taking her first—of many, I am sure—Private Member’s Bill through the House. I also congratulate my honourable friend the Member for Bosworth for his hard work, in his 30th year in Parliament, in getting his first Private Member’s Bill through the House of Commons. I am grateful to those who have spoken. I will come to the serious issue raised by the noble Baroness, Lady Thomas, in a moment, but I am grateful to the noble Lord, Lord Kennedy, for the support from his Benches for the Bill.

Parking is an issue that will be familiar to many of us. Indeed, my noble friend Lady Redfern assures me that as leader of North Lincolnshire Council she has always made sure that her local business community is properly consulted on changes to parking charges. North Lincolnshire Council has also led the way in providing targeted free parking in support of its high-street businesses. More than 1.5 million free parking permits were issued in 2015-16, double the number in 2012-13, by her council.

As my noble friend said, and was repeated by the noble Lord, Lord Kennedy, high streets and town centres are an essential part of the fabric of our lives and are the social core of local communities. The need for affordable parking to access town centres is critical to the sustainability of our high streets. The coalition Government brought forward reforms to make it mandatory for local authorities to give 10-minute grace periods for all on-street parking bays and all off-street car parks. This gives consumers greater flexibility to allow them to complete their business in the town centre without having to worry too much about feeding the meter. That Government were also concerned about the use of CCTV camera cars as a revenue-generating tool. That is why, in addition to the grace periods, they banned local authorities from sending parking tickets through the post. This means that individuals can have a degree of certainty that, when they get a ticket, they know about it on the day.

My noble friend the Minister for Local Government noted that further reforms to the local government transparency code will follow. A recent consultation set out the Government’s intention to amend the code so that everyone will be able to see first-hand a complete breakdown of the parking charges their councils impose and how much money they raise, promoting accountability.

The noble Lord, Lord Kennedy, raised the issue of what consultation is. I would like to take that away but perhaps my noble friend Lady Redfern, who also consults at the moment on parking charge changes in North Lincolnshire, can shed some light on best practice in her part of the country.

My noble friend’s Bill recognises on the one hand that all councils need flexibilities, but that they also need to involve local communities in the decision-making process. Her Bill offers a real opportunity for a small but sensible reform to local authority car parks. It will give the Government powers to scrap the bureaucratic requirements on local authorities if they wish to lower their car parking charges. This would allow councils to take a flexible approach in supporting their high streets—for example, by responding to the opportunity of local festivals that can be used to celebrate town centres.

While there is a need to offer councils flexibility in respect of car parking charges, it is important that we recognise that charging levels are a significant concern to town-centre businesses. The Government therefore think it fit and proper that councils are responsive to local concerns before seeking to increase charges. My noble friend’s Bill provides for a consultation requirement if local authorities want to raise their charges on an existing traffic order. I believe this is a sensible and proportionate reform that balances the needs of the local authority to set fair pricing policies, but takes into account the views of local communities.

I listened with interest to the speech from the noble Baroness, Lady Thomas, and I was concerned to learn about the problems that face many disabled motorists in private car parks when they have difficulties paying or with other issues. Of course the Equality Act applies to all bodies, and the Government urge those who operate private car parks to discharge their responsibilities under that Act. We are carefully considering our response to the discussion paper that we published on private parking in 2015, which focused on a range of issues including disability. We will announce our response in due course and I will make sure that the concerns expressed in this short debate by the noble Baroness are taken on board.

The Government are supportive of the Bill’s intentions because it helps to deliver a more effective parking model that is supportive of Great Britain’s high streets and town centres.

Neighbourhood Planning Bill

Lord Young of Cookham Excerpts

Tuesday 21st February 2017 Lords Chamber

Moved by

[Lord Young of Cookham]

That the amendments for the Report stage be marshalled and considered in the following order:

Clauses 1 to 4, Schedule 1, Clauses 5 to 9, Schedule 2, Clauses 10 to 13, Schedule 3, Clauses 14 to 44, Title.

Motion agreed.