Councils: Funding

Lord Young of Cookham Excerpts

Thursday 4th July 2019 Lords Chamber

[Lord Kennedy of Southwark (Lab Co-op)]

My Lords, I beg leave to ask the Question standing in my name on the Order Paper. In doing so, I declare my interest as a vice-president of the Local Government Association.

[Lord Young of Cookham (Con)]

My Lords, the Government recognise the vital work that councils do to support their communities. That is why the 2019-20 settlement confirmed that councils’ core spending power will increase by 2.8% in cash terms, including an additional £650 million for social care. This is a real-terms increase in resources to support critical services. The department is preparing actively for the spending review, which is the right place to take long-term funding decisions.

[Lord Kennedy of Southwark]

My Lords, the research just published by the Conservative-led Local Government Association—referred to in my Question—shows that one-third of local authorities fear they are going to run out of funds by 2022-23, rising to two-thirds of councils by 2024-25. In the light of this disturbing and sombre news, does the Minister have any words of encouragement, hope—something—for hard-pressed local councils and their civic leaderships as they end their conference today in Bournemouth?

[Lord Young of Cookham]

Local councillors and local government officials have done remarkably well to maintain, and in some cases improve, the quality of the services they provide despite, since 2010, a reduction in grant until recently, which was necessary to balance the national accounts. I recognise that they have done that without excessive rate increases. Looking forward, I have seen the report to which the noble Lord refers and welcome the Local Government Association’s attempt to quantify the pressure on resources. That information will be used by Ministers to feed into the spending review to make the case for a proper settlement for local government.

[Lord Shipley (LD)]

My Lords, I also remind the House of my vice-presidency of the Local Government Association. Local government will be pleased that the Minister thinks that the sector is doing “remarkably well”. Indeed it is, but does he accept that local government is facing ever-rising costs in service provision at the same time as increasing pressure on income, not least from business rates in the retail sector? Do the Government accept that this situation is turning into a crisis and would benefit from urgent cross-party discussions across national and local government, looking forward to the spending review but also examining fair funding, assumptions about council tax levels and the future of business rates?

[Lord Young of Cookham]

I say to the noble Lord that I was a vice-president of the Local Government Association—until I was expelled for introducing rate-capping in the 1980s. On the serious issue he raises, extra funding announced in last year’s Budget means that the Government will have given councils access to £10 billion of dedicated funding that can be used for adult social care, which is the real pressure point, in the three-year period to 2019-20. That is a combination of the adult social care precept and the better care fund. As for his invitation to cross-party discussions, those are always welcome: it is always helpful to have consensus on how local government is funded. Announcements on fair funding and the business rates retention scheme will be made alongside the decisions of the spending review.

[Baroness Neville-Rolfe (Con)]

What can be done to ensure adequate funding for trading standards officers, who do such an important job on product safety? Fake airbags, dangerous tumble dryers: this disturbing list could get longer unless priority is given to this work in the spending review. It does not require huge sums of money, but it does require better resourcing.

[Lord Young of Cookham]

I pay tribute to the work done by trading standards officers, whose case is championed by my noble friend. As she will know, local government does not like funding that is ring-fenced, so the resources for trading standards are included in the block grant. As I said a few moments ago, there has been a real increase in the funding for this year’s settlement; I hope that when we get next year’s settlement, there will also be a useful increase. It is then up to local government to give priority to the services my noble friend referred to.

[The Earl of Listowel (CB)]

My Lords, has the Minister read the report by the Children’s Commissioner for England, an in-depth study of spending by local authorities on children’s services? It highlights that 2.32 million children in this country are suffering from significant risk factors and that by 2025 we will need to spend £10 billion a year to meet these children’s needs. Does he agree that we need to fund local authorities better so that they can provide the essential early support to families, so that children at risk do not need to be taken into care, foster care or residential care?

[Lord Young of Cookham]

The noble Earl makes a powerful point. In the Budget last year, £410 million was added to the social care support grant for adults and children. The case he has just made, reinforced by the report he refers to, will reinforce the case to be made by Ministers at MHCLG in their discussions with the Treasury about future funding.

[Lord Grocott (Lab)]

My Lords, given the Government’s advocacy and indeed imposition in many parts of the country of directly elected mayoral systems, and given the enormous pressure on local government finance, will the Minister tell us whether these new systems represent good value for money in comparison with more traditional methods of local government administration? If he does not have precise figures to hand, is it not worth at least examining the comparative costs of the two systems of local government?

[Lord Young of Cookham]

The Government have not imposed mayors on parts of the country; they have elected to have mayors. There has been no imposition. In all the cases involving combined authorities and local mayors, local government has come to the Government and asked that these powers be given to them. I think the noble Lord will find that he is misinformed that we have imposed this structure on local government.

[Lord Forsyth of Drumlean (Con)]

My Lords, has my noble friend had an opportunity to read the report today on social care from the Economic Affairs Committee? Will he note that social care and local authorities have seen a real-terms cut in resources and that 1.4 million elderly people are not receiving the care they need? Does he not recognise that shifting the burden on to local government and relying on business rates results in postcode inequality, as different local authorities have different demands and different abilities to raise resources? Should this not be funded centrally, and done urgently?

[Lord Young of Cookham]

I took the precaution of getting a copy of my noble friend’s report, which was published this morning. For the last 30 or 40 years, Governments have been trying to bring together health and social care. If you are an elderly person in need, you are not interested in a bureaucratic argument as to whether yours is a health or a social care problem; you want the support that you need. The dilemma my noble friend’s report addresses is that health is provided by national government and is free at the point of use, while social care is provided by local government and is means-tested. He addresses that problem by suggesting that local government should provide social care but it should be free and be funded by central government—that is the nub of the report. It is a hard-hitting report that expresses noble Lords’ frustration at the delay to the publication of the social care Green Paper. I very much hope that his report will accelerate a solution to this long-standing problem.

Affordable Housing

Lord Young of Cookham Excerpts

Wednesday 3rd July 2019 Lords Chamber

[Lord Kennedy of Southwark (Lab Co-op)]

My Lords, I beg leave to ask the Question standing in my name on the Order Paper, and in doing so refer the House to my relevant registered interest.

[Lord Young of Cookham (Con)]

My Lords, it is government policy to increase the number of homes being built, including affordable homes. As far as possible, any impediments to selling government land and accelerating new house-building have been—and are being—removed. Guidance issued by the Treasury indicates that decisions should take account of wider social costs and benefits in the public interest, and it may be appropriate to choose an option that does not generate the highest Exchequer receipt.

[Lord Kennedy of Southwark]

I thank the noble Lord for that response. Making publicly held land available for the provision of social housing, encouraging below-value sales, would go a long way towards delivering on the Government’s pledges to fix our broken housing market, and have many other benefits. Can he tell us the likelihood of that happening?

[Lord Young of Cookham]

I agree. Until quite recently the policy on the disposal of government surplus land was that the best price should be secured—in the interests of the taxpayer, who is the ultimate owner. That money went into a central coffer and was then disposed of according to the Government’s priorities. There was a presumption against short-circuiting that process and disposing of land at less than best value. Two years ago that policy was amended, following a meeting of the housing implementation task force and, as I said in my reply, it is now possible to take the wider social costs and benefits and the public interest into account and to make the housing land available directly. A recent example of that was a site that was made available to the Government, initially to the homes agency—the Housing Corporation as was—and then passed on to Wolverhampton Council for £1. Now, 450 homes are being built on that land. That is a good example of what the noble Lord has asked for, and I hope that we see much more of it.

[Lord Naseby (Con)]

Is it not extraordinary that the Labour Party should remind us of the poor position of social housing? After all, the Blair Government had a very low quantum of building, the Brown Government followed suit and, I am sorry to say, the Cameron Government acted similarly. Against that background, is the example that my noble friend gave today not encouraging: that for a particular need the local authority is getting land at below cost price? Should that be the policy—for social housing only, where there is currently demand in some of our great cities?

[Lord Young of Cookham]

I agree with the thrust of my noble friend’s question. The other thing that we have done is that when surplus land becomes available from any government department it is put on a website, and the homes agency has the opportunity to acquire it before anybody else. It can put in a bid and do what he and the noble Lord suggested: to make the land available for housing. We are seeing more such transactions where the land is made available to local authorities or housing associations, and the Government are committed to providing 160,000 homes, I think, by March next year on land that was in government ownership in 2015.

[Lord Shipley (LD)]

My Lords, I refer the House to my interests in the register. A few days ago, at the Housing 2019 conference, the Prime Minister said that,

“we are delivering a whole new approach to social housing … Because this is a Government with a bold vision for housing and a willingness to act on it”.

Can the Minister can tell the House what that bold vision is for social housing?

[Lord Young of Cookham]

Yes, indeed. We announced that we would abolish the cap on the housing revenue account, to enable local authorities to build up to £4 billion- worth of new homes and introduce a new generation of council housing.

[Lord Dykes (CB)]

Since the Minister has conceded the need for government intervention against excessive free market distortion effects, particularly from overseas buyers, will the Government now take more action to ensure that empty properties are dealt with energetically and not left unoccupied, as are so many owned by overseas buyers, who pay just over £1,000 or £2,000 on council tax?

[Lord Young of Cookham]

Again, it is sad that any property is left empty for a substantial length of time, given the number of people in housing need. As the noble Lord will know, a premium rate of council tax is paid on properties left empty for more than a certain time. In certain parts of the country, additional council tax is levied on owners of second homes. I will, however, reflect on his question to see whether there is any further action we can take to make sure that houses are occupied by people who need them.

[Lord Hamilton of Epsom (Con)]

My Lords, I refer to my interests in the register. The Ministry of Defence is one of the main landowners in this country, and some of its land gets sold off for development. If it is sold below market price, the Ministry of Defence is effectively subsidising low-cost housing across the country. Is it right for that to happen?

[Lord Young of Cookham]

The Ministry of Defence had a target of disposing of land in 2015 that would provide 55,000 homes. In my initial reply, I said that the Government could take into account the wider social costs and benefits and the public interest. That is a good reason for not going through the whole process of putting the land on the open market and trying to get the best price but instead trying to do a quick deal that provides affordable homes, which may be more broadly in the public interest than the process initially followed.

[The Earl of Listowel (CB)]

This policy is particularly welcome when we think about “just managing” families and especially their children. As Baroness Farrington of Ribbleton reminded us, when children continually have to move home, their education is often disrupted. Is this policy not therefore particularly welcome for young people in such families?

[Lord Young of Cookham]

I agree that we should do all we can to increase the number of social homes that are rented. A £9 billion affordable homes programme is targeted on areas where affordability is a real issue. Within that, there is an opportunity for homes for social rent, which I know is of particular interest to the noble Earl.

Brexit: Other Policy Areas

Lord Young of Cookham Excerpts

Tuesday 2nd July 2019 Lords Chamber

[Baroness Massey of Darwen]

To ask Her Majesty’s Government what steps they are taking to ensure that appropriate consideration is being given by all departments to other policy areas alongside the preparations for the United Kingdom’s departure from the European Union.

[Lord Young of Cookham (Con)]

My Lords, the Civil Service has the capacity to deliver policies as prioritised by the Government and to deploy resources appropriately. We are ensuring that we properly resource and deliver on these priorities, such as backing the long-term plan for the NHS with an extra £33.9 billion a year in cash terms by 2023-24, creating record high employment, building more new homes, developing fresh policies to protect the environment and investing record sums in infrastructure.

[Baroness Massey of Darwen (Lab)]

I thank the Minister for that response. However, is he aware of the frustration within and outside Parliament about the number of key social issues that are being ignored or deferred because of the emphasis placed on Brexit? I am thinking of Bills on such issues as domestic violence, mental health and social care. When is the Government going to catch up?

[Lord Young of Cookham]

On the issue of social care, the noble Baroness will have heard responses from my noble friend who was pressed on the progress of the Green Paper on social care. I cannot add to what she said. As regards Brexit squeezing out legislation, we made it clear at the beginning of the session—which we knew would last slightly longer than usual—that Brexit would be a priority. However, we have so far introduced 63 government Bills, 44 of which have received Royal Assent, and, in addition to the European Union (Withdrawal) Act, 10 exit-related Bills are in Parliament or have received Royal Assent. So we have introduced 52 Bills that are not related to exit. It is not the case that Brexit has squeezed out all relevant social legislation.

[Lord Wallace of Saltaire (LD)]

My Lords, the Minister referred to the capacity of the Civil Service. The Conservatives were keen to reduce Civil Service numbers, did so in 2016 and planned to in 2017. Since then, I understand that they have had to go through some emergency recruiting to bring numbers up to what is needed to handle preparations for Brexit—and in particular a no-deal Brexit—and have not yet started on the number of extra civil servants we will need to staff all the agencies that will have to be created to replace those EU agencies that provided us with shared services. Can he give us some estimate of the additional number of civil servants who have already been recruited and the extra numbers we will need if and when we leave?

[Lord Young of Cookham]

I wish I could, but I honestly do not have those figures in front of me. The Civil Service has always had the flexibility to reflect government priorities and move people around from one department to another. At the beginning of the Blair Government, when constitutional reform was a priority—with the Scottish Parliament, the Welsh Assembly and reform of your Lordships’ House—resources were pushed into that. In the 1980s, when we had nationalisation, resources went there. So the Civil Service has the capacity to respond to challenges and, in my view, has always risen to that challenge.

[Lord Cormack (Con)]

My Lords, does the Civil Service have the capacity to respond to all the pledges that are currently being made?

[Lord Young of Cookham]

It would be premature at this stage to cost all the promises that are being made by the two contenders for the leadership of my party. When one of them becomes leader and Prime Minister, no doubt the Civil Service will then present him with a bill. Reality will then move in and difficult choices will have to be made about priorities.

[Baroness Lister of Burtersett (Lab)]

My Lords, the Secretary of State has acknowledged that the Government do not have what they call the “bandwidth” to deal with social care alongside Brexit. The Association of Directors of Adult Social Services has described social care in England as adrift on a “sea of inertia”. Is it not time that the Government did something to put an end to this inertia? I am afraid that the Minister’s response on social care was a bit dismissive in this context.

[Lord Young of Cookham]

I genuinely regret it if I sounded dismissive. I have sat through many exchanges on social care and the undertakings given to produce it by a given date. I understand the disappointment of noble Lords that that date has not been arrived at. There was an exchange with my noble friend relatively recently. I understand the urgency. We will produce the social care Green Paper as soon as we possibly can.

[Lord Dobbs (Con)]

My Lords, am I the only one to suspect that the complaints about Brexit dragging on, and the damaging implications of that, come from the very same sources as those designed to prevent Brexit ever being brought about? Would the logic of all this not be to get on with Brexit, get it finished and done, close down the Brexit department and get on with the rest of our lives?

[Lord Young of Cookham]

Yes. The Government plan to leave the European Union by the end of October and then we will indeed be able to get on with some of the other pressing issues. But I make the point that the Government have been taking action that does not require legislation. We had the Statement yesterday repeated by my noble friend about the 10-year NHS implementation plan. We have had Statements about zero carbon and about a breathing space for those in debt. We have announced 22 new free schools. So it is not the case that pressure on legislation is crowding out important initiatives that drive up the quality of life in this country.

[Lord West of Spithead (Lab)]

My Lords, the right reverend Prelate the Bishop of Derby has just taken her oath, in which defence was twice mentioned. Of course, defence and the security of the realm are the absolute highest priorities of any Government. Yet we are stumbling towards a comprehensive spending review with Armed Forces that everyone accepts are underfunded, and there seems to be almost no debate about it. Does the Minister agree that the amount of time this House has spent debating the most serious matter for any Government is rather small?

[Lord Young of Cookham]

If the noble Lord had joined my party three months ago, he would have been able to vote for one of the candidates who has made a specific pledge on defence expenditure. No doubt he is regretting that he did not take that step.

[Lord Harris of Haringey (Lab)]

My Lords, one of the candidates for the leadership of the Conservative Party has suggested that Civil Service leave during August should be cancelled. What impact does the Minister think that will have on Civil Service recruitment?

--- Later in debate ---

[Lord Young of Cookham]

If my party has any members who are civil servants, I think they would be unlikely to vote for that candidate. But the statement was qualified by saying that this would happen only if the Permanent Secretary was unable to give an assurance that all the Brexit preparations had been done; only if that assurance was not given would the threat be implemented. I am sure that the Permanent Secretaries will rise to the challenge.

Inflation

Lord Young of Cookham Excerpts

Monday 1st July 2019 Lords Chamber

[Lord Young of Cookham (Con)]

My Lords, I thank my noble friend Lord Forsyth for introducing this and all noble Lords who have taken part in an exceptionally well-informed debate on a rather specialised, but none the less important, topic which impacts directly on all of us—as the noble Lord, Lord Darling, and my noble friends Lord Tugendhat and Lady Browning, explained. I also thank noble Lords for their detailed report, for which the Government are grateful; I thank, too, the departing members of the committee for their work.

Normally, I look forward to debates on my noble friend’s reports, but on this occasion it cast a small cloud over my weekend, as I realised that what I have to say may leave my noble friend and his committee less than satisfied. However, I hope to persuade him that there are good reasons for that. In fact, much of the debate focused not exclusively on the Government but on the role of the UKSA—particularly the speeches from the noble Lords, Lord Burns and Lord Turnbull. I am sure that they will read with interest what we have said today.

As a former Treasury Minister, albeit some 25 years ago, I took a deep personal interest in the Government’s response, possibly straying from my advertised role as a spokesman for the Treasury. I have read the report, which raises a number of complex and wide-ranging issues on the RPI, the Government’s use of inflation statistics, and the future of measuring inflation.

Before I continue, may I first pay tribute to John Pullinger, who recently retired as National Statistician? He had a distinguished term in that post. To mention but a few of his achievements in the role, he led the ONS strategy entitled Better Statistics, Better Decisions, headed the newly created analysis function, and worked alongside the UKSA to, in his own words, make it,

“unacceptable for people to either not use evidence, or to misuse it”,

a sentiment with which I am sure this House concurs—and relevant in view of the exchange earlier today in the Oral Question from the noble Lord, Lord Foulkes.

I should like to address the concerns of my noble friend Lord Forsyth, and the other noble Lords who sit on the Economic Affairs Committee, on the lack of a government response to their report, which was published in January—an issue raised by many noble Lords, including the noble Lord, Lord Sharkey.

The Government appreciate the amount of work and the level of scrutiny that go into all the committee’s inquiries; we understand its frustration. I regret that there is yet to be a government response and understand the difficulties in debating a Select Committee report without one being available. This delay is not driven by inaction. The issues that the report raises are complex and wide-ranging. Measures of inflation are embedded across the economy and affect the lives of almost everyone in the country. They include rental agreements, mobile phone contracts, financial instruments, government debt, pensions and rail fares, to name but a few.

[Lord Lea of Crondall]

Will the Minister take this opportunity to include wage and salary increases in that list? It seems quite extraordinary that the main quantitative use of the RPI does not get a mention, even now.

[Lord Young of Cookham]

I said, “to name but a few”, but I will gladly add the issue raised by the noble Lord to the list. Some, but not all, wage increases are linked to RPI.

Some uses of the measures are interlinked; for example, for pension schemes whose members, many of whom are in private sector defined benefit schemes, have pension payments that increase by RPI. This means that, in turn, those schemes seek RPI-linked assets to hedge those liabilities. As a result, a large share of the Government’s outstanding RPI-linked debt is held by those pension schemes. The Pension Protection Fund estimates that almost 90% of outstanding index-linked gilts are held by UK defined benefit pension schemes and UK insurance companies.

The breadth, complexity, and importance of these issues mean that the committee’s report requires further careful consideration. Given the complexities of the issue, it is sensible that the Government and the UKSA produce a well-considered response—while respecting the UKSA’s independence, of course.

[Lord Forsyth of Drumlean]

A very kind and polite person from the Chancellor’s office rang me to say that there would not be a response. I said that I was not sure that the House would like that very much, but he said, “Don’t worry, Lord Young will be able to deal with the debate”. The Minister gave a reason for the complexities of the system: that so many things rely on the RPI. If that is so, is that not a reason to make sure that the RPI is accurate? I cannot get my head around it.

[Lord Young of Cookham]

That goes to one recommendation directed at the UKSA. That issue will be addressed directly in the government response to the recommendations. I cannot give my noble friend an answer today; I hope that he understands why.

In introducing the debate, my noble friend wondered whether the Government discussing this issue with the UKSA somehow compromised the UKSA’s independence. It is perfectly legitimate for the Government to discuss matters with the UKSA without interfering with its independence in decision-making. We discuss a wide range of issues with it—as we should, given that the ONS is the producer of economic statistics. One can have that dialogue without encroaching in any way on the UKSA’s independence. The Government continue to discuss the relevant issues raised by the report; the Chancellor wrote to my noble friend last week, outlining that point. I stress to my noble friend, the noble Lord, Lord Sharkey, and other noble Lords that we are working hard to respond to the committee’s report as quickly as possible. We will communicate a date for this response in due course and will provide sufficient notice for the markets.

Let me move on to the central focus of the inquiry, namely the RPI. As the Government have stated before, we recognise that there are flaws in the way that RPI is measured and that, as a result, its rate of inflation is higher than that of other measures, such as the CPI and CPIH, which is the CPI including owner-occupiers’ housing costs.

The report from the committee is the latest in a series of reports on this intractable issue. I highlight this to stress how complex it is. In 2012, the then National Statistician launched a consultation on potential changes to the RPI following concerns about the increased wedge between RPI and CPI, which had been driven primarily by the 2010 change in the collection of clothing prices. There was then a considerable response, both on matters statistical and non-statistical, and in 2013 the then National Statistician responded, arguing that the RPI did not meet the highest standards expected for a national statistic. That answers the question of the noble Lord, Lord Lea, as to why it was regarded as discredited: the UKSA stripped the RPI of its national statistic status.

However, given its widespread use in the economy, the National Statistician argued that the RPI should remain unchanged. In 2015 a review into consumer price statistics, which had been led by Paul Johnson of the Institute for Fiscal Studies, was published. This also criticised the RPI and recommended that it should be classed as a legacy measure and that its use should be actively discouraged.

Let me explain the Government’s use of inflation statistics and highlight how they have not ignored the criticisms of RPI. Since 2010 the Government have reduced their use of RPI. They have moved the indexation of direct taxes, benefits, public sector pensions and the state pension from RPI to CPI. More recently—this addresses the accusation of index shopping made by a number of noble Lords—in April 2018 the Government brought forward switching the indexation of business rates from RPI to CPI.

[Lord Tunnicliffe]

Did the Minister say that the state pension was linked to CPI? I thought it was triple-locked—I hope it is because I draw it.

[Lord Young of Cookham]

One of the locks is CPI.

[Lord Tunnicliffe]

My understanding of this part of my income is that it is the greater of CPI, RPI or, I think, 2.5%.

[Lord Young of Cookham]

We have moved the indexation of direct taxes, benefits, public sector pensions and the state pension from RPI to CPI. If that is wrong, I am sure a signal will come from the far end of the Chamber to put it right before I sit down.

I was dealing with the issue of index shopping and said that in April last year we brought forward switching the indexation of business rates from RPI to CPI. This move is expected to save businesses almost £6 billion over the next five years—at, of course, a cost to the public purse.

At Budget 2018 we outlined our policy on inflation statistics. Specifically on RPI, the Government committed to not introducing new uses of RPI and to reduce its existing uses when and where practicable. I note that the report encourages the Government to move all uses to CPI. However, the matter of practicability is key and further moves away would be complex. It has not been clear in recent years which measure of inflation it would be appropriate to use, although that picture is now getting clearer.

One sizeable area where RPI is used is in the Government’s index-linked gilts—a number of noble Lords mentioned this, including my noble friend Lady Browning— which are indexed to RPI. The Government have no plans to stop issuing index-linked gilts indexed to RPI. As the demand for RPI-linked debt is vast in comparison to CPI, particularly from the pensions sector—the largest holder of gilts by sector—the taxpayer gets far better value for money issuing into this market. Until such time as we can be satisfied that there would be sufficient demand for a new debt instrument, and that it would deliver better value for money, we will continue to issue RPI-linked gilts.

As mentioned by the noble Lord, Lord Macpherson, demand for CPI-linked debt is growing. However, given that demand for RPI-linked debt is stronger, the Debt Management Office gets better value for money by continuing to meet this demand. However, in response to the noble Lord, Lord Macpherson, the issuance of new debt instruments is kept under review.

On the Government’s future use of inflation statistics, particularly in relation to CPIH, noble Lords have raised concerns over its suitability as a headline measure for the Government. Again, I pay tribute to the work of the ONS, led by John Pullinger. CPIH has undergone extensive development, choosing between different methodologies where necessary, and rigorous testing by the independent Office for National Statistics. This robust process has led to CPIH being approved as a national statistic, meaning that it is fully compliant with its code of practice for statistics. The Office for Statistics Regulation recommended to the board of the UKSA that CPIH be granted national statistic status, which is the highest kitemark of quality in our statistical system. Following this extensive development, at Budget 2018 the Government stated that their objective was for CPIH to become their headline measure over time.

The Government have not, however, set a date for CPIH to become their headline measure of inflation. This is because CPIH is a relatively new measure—a number of noble Lords touched on the issue of housing. CPIH has only recently been certified a national statistic, and it was only late last year that an updated historical back series was published, extending the series. With this back series in hand, work is now ongoing to understand its properties compared to CPI and RPI. The Government will regularly update Parliament on their progress towards using CPIH and, of course, on its broader strategy on inflation statistics.

Perhaps I may touch on some of the issues raised in the debate. The noble Lord, Lord Tunnicliffe, raised the benefits freeze. The decision to freeze most working-age benefits from 2016-17 was one of a number of difficult decisions that the coalition Government took to put the public finances back on track. We have no plans to repeat the freeze and we expect working-age benefits to rise with inflation from April next year.

The noble Lord, Lord Tunnicliffe, mentioned Sections 7 and 21 of the Statistics and Registration Service Act. Other noble Lords also mentioned the issue—the noble Lord, Lord Turnbull, in particular. We recognise the committee’s view on this and the Government will respond to the report in due course and on that specific recommendation. Changes to RPI are a matter for the independent UK Statistics Authority and the Office for National Statistics. That is a response to the suggestion that RPI could be incrementally corrected.

In conclusion, I recognise that I have not been able to go as far as noble Lords would have wished. The Government note that this report covers complex and wide-ranging issues, and makes a number of serious and sober recommendations to both the Government and the UKSA. Given the extensive use of RPI in the economy, the complex nature of some of those uses and their interactions, and, most importantly, the effect on people and the economy, the Government believe that it is necessary to take time to consider the committee’s report carefully before responding.

The Government recognise that RPI is a flawed statistic, and stress that they have not avoided acting on the issue. They recognise that further work must be done, but note that further moves away from RPI are complex. Further, the necessary work to prepare for CPIH is yet to be completed. I say to the noble Lord, Lord Sharkey, that the Government will respond as soon as practicable to noble Lords’ report and are working extremely hard so to do.

Finally, I will convey to the Chancellor the sense of frustration expressed by my noble friend Lord Forsyth and others about the time it has taken to respond to the report. I will personally relay that message.

Statistics: Accuracy

Lord Young of Cookham Excerpts

Monday 1st July 2019 Lords Chamber

[Lord Foulkes of Cumnock]

To ask Her Majesty’s Government what procedures they follow to ensure the accuracy of any statistics used by ministers in parliamentary proceedings.

[Lord Young of Cookham (Con)]

My Lords, the independent UK Statistics Authority’s Code of Practice for Statistics details the practices to which departments must commit when producing and releasing official statistics and of which Ministers must be mindful under the Ministerial Code. Upholding the code of practice in each department is the responsibility of that department’s head of profession for statistics, who is professionally accountable to the National Statistician. This will be reflected in the arrangements of individual departments for ensuring that parliamentary statements are accurate.

[Lord Foulkes of Cumnock (Lab Co-op)]

My Lords, we know that the Government are worried when this Minister is put up to answer the Question. Is he aware that: on 10 January, the noble Baroness, Lady Buscombe, misled the House on benefit statistics; on 1 April, the noble Lord, Lord Bourne, did the same on rough sleepers; and, on 4 April, the noble Lord, Lord Henley, gave false statistics on fuel poverty? For these breaches, should not these Minister be referred to paragraph 8.15 of the Ministerial Code, to which the Minister referred, for breaking the UK Statistics Authority’s code of practice? This House is fed up with being given false statistics by government Ministers to cover up the misery caused by their austerity.

[Lord Young of Cookham]

If the noble Lord looks at the website of the UK Statistics Authority, he will see when Sir David has intervened since August 2017. Counting the interventions when he has written directly to a parliamentarian, raising issues with their presentation of statistics, four are Conservatives and five are Labour. However—to avoid accusations of misuse of statistics—if one then looks at the indirectly critical letters, where Sir David has written to a third party, agreeing with them and copying the letter to the parliamentarian, my party is the worst offender.

[Lord Tyler (LD)]

My Lords, does the Minister recall occasions in the other place where, immediately when it was pointed out that statistics or other information given to that House was misleading, Ministers immediately came to the House—not waiting for somebody dealing with statistics in their department or whatever—to make an apology and clear up the matter? Is it not much better to own up? Do Ministers not get more respect from their respective House if they are prepared to accept that what has happened is not right? I recall such an occasion, when a statement was made and an apology was made to me. Does he not recall that too?

[Lord Young of Cookham]

Under the Ministerial Code, if a Minister misleads the House, he or she is obliged to put it right. So far as Ministers doing the right thing, a year ago the Home Secretary resigned after inadvertently misleading the House. I say in passing that when it comes to the creative use of figures, none of us can lay a glove on the Liberal Democrats, with their use of bar charts—“Only the Lib Dems can win here”. These multicoloured instruments of fantasy now have a website all of their own on Buzzfeed.

[Lord Forsyth of Drumlean (Con)]

My Lords, does my noble friend not think it wrong that the official statistics body has openly admitted that there is an error in the retail prices index which results in commuters, students and other groups being short-changed? Should not a body responsible for the integrity of our statistics resile from its current position, where it refuses to adjust the error?

[Lord Young of Cookham]

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

[Lord Watson of Invergowrie (Lab)]

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

[Lord Young of Cookham]

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

[Lord Hunt of Kings Heath (Lab)]

In that regard, has the Minister been following the promises made by Mr Johnson and Mr Hunt over the weekend of low taxation and a massive increase in public expenditure? Does he think that those promises should be subject to the Statistics Authority’s considerations?

[Lord Young of Cookham]

As a former Treasury Minister, I view with alarm the weeks that are passing during the contest which is under way, where increasingly generous commitments are being made from the headroom which lasts, I think, for only one year. I hope that, in due course, there will be costings for all these commitments so that the members of my party who are choosing which is the most responsible leader can see which one has the most credible economic policy.

[Lord Cormack (Con)]

My Lords, are statistics written on the side of a bus subject to these strictures?

[Lord Young of Cookham]

I believe my noble friend is referring to the £350 million figure produced during the referendum. That was not a government statistic or a Conservative Party statistic. It was a Vote Leave statistic, which was criticised at the time by Sir Andrew Dilnot, who made it clear that the £350 million was a gross figure that did not take into account the rebate or other flows from the EU to the UK. The gross annual figure of £19.1 billion—the basis of the Vote Leave claim—reduced to £7.1 billion after these factors were taken into account. Sir Andrew concluded, in what might be considered an understatement, that the £350 million figure was “potentially misleading”.

Small and Medium-sized Enterprises: Mistreatment

Lord Young of Cookham Excerpts

Thursday 27th June 2019 Lords Chamber

[Lord Young of Cookham (Con)]

My Lords, I commend the noble Baroness, Lady Bowles, on her choice of subject and the speech she made in introducing it. As the noble Viscount, Lord Chandos, and the noble Lord, Lord Davies, said, it was forensic, well-informed and critically focused.

The Government want a strong, diverse and dynamic economy in which small businesses are respected and valued. As we have consistently said, the mistreatment of businesses by the Royal Bank of Scotland’s GRG from 2008 to 2013 was unacceptable and clearly at odds with that ambition. When discussing circumstances such as these, we should always remember the human element to each case. As the backbone of our economy, small businesses must be able to trust that their financial service providers will support them as they strive to meet their ambitions. The real distress that has been felt by GRG customers must be heard, acknowledged and referred to during our debate. It is vital that lessons are learnt from these events, which has been the theme running through the debate today.

I was shocked to read that 86% of SMEs in RBS GRG suffered inappropriate treatment, a point made by the noble Baroness. RBS has rightly apologised for these mistakes and has set up a scheme to compensate victims, overseen, as the noble Viscount, Lord Hanworth, said, by the independent reviewer, Sir William Blackburne. This scheme has paid out more than £150 million in redress so far, comprising both automatic refunds of complex fees and then payments for direct loss. Approximately two-thirds of complaints have been addressed so far and the Government are closely monitoring the progress of the scheme.

On the Financial Conduct Authority’s investigation—again one of the issues raised during our debate—let me set out the steps it has taken. First, it used its statutory powers to commission a skilled person’s report of how GRG treated its customers. This report identified that there was widespread inappropriate treatment of SME customers by RBS but concluded that,

“there was no widespread or systematic inappropriate treatment”,

of SME customers by RBS in a number of areas. This includes allegations that RBS artificially engineered a position to cause the transfer of an SME into GRG, although the report found isolated examples of serious malpractice.

The skilled person’s report also made findings which indicated that GRG’s senior management were aware, or should have been, of some of the issues identified. The FCA therefore opened an enforcement investigation to understand senior management’s knowledge of the issues in GRG and whether there was any basis for enforcement action. The FCA announced on 31 July last year that it had completed its investigation and concluded that any further action against senior management at RBS GRG,

“would not have a reasonable chance of success”.

I think it was the noble Lord, Lord Sharkey, who asked what the Government’s view was of that. The FCA is an independent non-government body and it would be inappropriate for the Government to comment on its conclusions on that case.

Following this, the Government appreciate that those businesses affected by the actions of RBS GRG would have expected to understand exactly how the FCA came to that conclusion, especially as it would have been viewed as a disappointing outcome by many. The FCA’s final report published on 13 June therefore supplies this clarity, and the Government welcome this transparency.

The noble Baroness, Lady Bowles, wanted more information about exactly how the FCA came to this conclusion. I encourage her to contact the FCA directly on this point. I will make it aware of her request.

Businesses affected by events at RBS GRG, as well as by other historic issues in business banking that have dominated public discourse in this area over the past few years, will rightly ask what has changed to prevent such circumstances arising again. That has been a theme of this debate, particularly in the contribution of the noble Lord, Lord Davies.

First, in future the senior managers and certification regime will allow the FCA to hold managers to account for the way they treat their SME customers. The Government expect the highest standards of behaviour across all financial services firms and believe that this is an important step in restoring public trust in the sector. The SMCR strengthens the regulatory toolkit by promoting individual responsibility for misconduct, holding senior managers to account for misconduct that occurs under their watch and ensuring that individuals at all levels can be held to appropriate standards of conduct. I was asked by the noble Lord, Lord Sharkey, I think, whether the SMCR would prevent such issues happening again. It is a good question. Andrew Bailey was clear in front of the Treasury Select Committee yesterday that the SMCR gives the FCA the ability to act, should circumstances similar to GRG ever occur again.

The second change that has taken place is that all major lenders have signed up to the standards of lending practice. Overseen by the independent Lending Standards Board, the standards for business customers set the benchmark for good lending practice in the UK, including when business customers experience financial difficulty, and contain clear guidance on best practice. If a lender breaches the standards, it may be warned, issued directions as to future conduct and possibly publicly censured by the Lending Standards Board.

The third change is that as of 1 April this year more than 99% of all UK businesses now have access to fast, free and fair dispute resolution in the form of the Financial Ombudsman Service. In response to the point raised by the noble Lord, Lord Davies, I say that the Government’s position is that an ombudsman-style approach is preferable to the tribunal that he suggested as it does not require the regulation of SME lending, it can apply a fair and reasonable test, it does not require legal representation and it has the potential to resolve disputes swiftly and efficiently.

We have been clear that where there has been inappropriate treatment of SMEs by their bank, it is vital that those businesses can resolve these disputes and obtain fair redress. That is why we supported the FCA’s recent expansion of eligibility to complain to the FOS to include small businesses as well as micro-enterprises.

A question that has been raised consistently by the noble Baroness, Lady Bowles, the noble Viscounts, Lord Chandos and Lord Hanworth, and the noble Lord, Lord Sharkey, is why the regulation does not apply across the board. In other words, why do only three of the 11 principles apply, not all of them, and should we not therefore extend the scope of regulation? As I just said, the financial services industry has changed significantly since the very challenging period following the financial crisis. Given the factors that I have just set out, the Government do not believe there is a clear case for bringing SME lending into regulation as there would be a number of direct and indirect costs associated with such a move. Direct costs would include annual FCA fees, product reviews and increased compliance and monitoring costs while indirect costs could include stifled product innovation, a narrower product choice for SMEs, and higher barriers to entry leading to reduced competition in the SME lending market. These changes could in turn impact on the price and availability of credit for small businesses, which would not be a desirable outcome. Having said that, I detect a very strong view from all those who have spoken that there might be a case for looking at this again and that if the principles are good principles, why should they constrained in the way that they are? That is a message that I will certainly send back to my seniors.

I shall try to deal with some of the other points that were made. The noble Baroness, Lady Bowles, asked whether the asset protection scheme has had an impact. As the FCA report makes clear, no evidence was found that the RBS’s participation in the APS made any difference to the way in which customers were treated. The FCA-commissioned skilled persons review of RBS noted that, in relation to the sample of cases it had reviewed, it has,

“not seen evidence … where the existence of the APS had an effect on how RBS approached the customer”.

Picking up a point made by the noble Viscount, Lord Chandos, I say that we have been clear that banks need to work hard to restore businesses’ trust in the institutions of banks. I am sure RBS will have noted the specific criticism that he made about it in particular. We have welcomed the banking industry’s commitment to establish a voluntary dispute resolution service. Having these standing dispute resolution mechanisms available for SMEs is an important part of restoring businesses’ trust in the sector.

The shareholding which the noble Viscount raised is managed by UK Government Investments on an arm’s-length and commercial basis. Commercial and operational decisions are for the RBS board to make. That said, of course the Government expect the highest standards of conduct from all businesses.

The noble Baroness, Lady Kramer, asked why the FCA did not go to phase 2 of the report. The FCA decided it was more appropriate to undertake a focused investigation itself than to progress to the so-called phase 2, which would be led by an independent third party. This allowed it to proceed straight to consideration of enforcement action, if it were deemed necessary, and ensured that the FCA was able to conclude any investigation more quickly. I need to write to the noble Baronesses, Lady Bowles and Lady Kramer, on some of the issues and questions they raised.

I assure noble Lords that we have taken the matters relating to the RBS GRG seriously and I have taken on board the comments, criticisms and suggestions that have been made during this debate. While we acknowledge the disappointment that many will feel at the conclusions of the FCA’s investigation—a theme running through our debate—lessons have been learned. We have the senior managers regime in place, firms have signed up to the standards of lending practice, and there is a permanent dispute resolution mechanism through extended access to the FOS. We are not complacent. We will continue to remind banks of the importance of earning the trust and faith of small businesses and will continue to monitor progress of the compensation scheme under Sir William Blackburne. With seconds to spare, I thank noble Lords again for their contributions to this debate.

National Insurance Contributions (Termination Awards and Sporting Testimonials) Bill

Lord Young of Cookham Excerpts

2nd reading (Hansard): House of Lords
Wednesday 26th June 2019 Lords Chamber

Moved by

[Lord Young of Cookham]

That the Bill be now read a second time.

[Lord Young of Cookham (Con)]

My Lords, it is a pleasure to open this short Second Reading debate on the National Insurance Contributions (Termination Awards and Sporting Testimonials) Bill. This is a small but important Bill that aims to bring the national insurance contributions, NICs, and tax treatment of termination awards and sporting testimonials into closer alignment. The rules determining the income tax treatment of termination awards and sporting testimonials were legislated for in the Finance Acts 2016 and 2017. Implementation of the measures in this Bill, announced at Budget 2018, will replicate these rules in NICs legislation.

The Bill has been expected for some time. Both measures were first announced at the Budget 2015, consulted on and published in draft in 2016. They were subsequently confirmed at Budget 2018, so they are expected by those affected and have been subject to much scrutiny. Together, they mean that a 13.8% class 1A employer NICs charge will be applied to income derived from any termination award over £30,000 or sporting testimonial over £100,000 that is already subject to income tax.

Let me give more detail on termination awards. Between 2013 and 2014, the Office of Tax Simplification reviewed the tax treatment of employee benefits and expenses. The OTS published an interim report in August 2013 identifying termination awards as a priority area. It found that relatively few employers and employees properly understood the regime and it recommended reform. The Government announced at Budget 2016 that they would implement the reforms of the tax and NICs treatment of termination awards and, shortly after this, they published draft legislation.

The reforms to the income tax treatment of termination awards were legislated for in the Finance (No. 2) Act 2017 and took effect from April 2018. The Government confirmed at Budget 2018 that the associated reforms to NICs legislation would be in place for April 2020. However, the fact that termination awards are currently subject to different income tax and NICs treatment has created confusion. Moreover, the current misalignment incentivises well-advised employers to disguise final payments as compensatory termination awards that benefit from a NICs exemption.

The Bill will place a 13.8% class 1A employer NICs charge on income derived from termination awards on amounts over £30,000. However, I assure noble Lords that employee NICs payments will remain entirely exempt. Employees will not face any additional liability as a result of these changes. Only around 1% of the workforce will receive a termination award in any given year, and of these around 80% will be unaffected by the Bill. This measure will raise around £200 million per annum for the Exchequer and make a useful contribution to public finances.

Finally on termination awards, it might be helpful if I address one of the main points raised during Report in the other place. Opposition Members proposed a new clause that would have required the Government to report every two years on the impact of the changes to termination awards on the number and size of awards, as well as any effect on specified groups with protected characteristics. As the Exchequer Secretary explained, the Government had already assessed the impact of the policy in compliance with our duties under the Equality Act 2010 and the conclusions were published as part of the tax information and impact note. No groups are explicitly targeted by the policy, which affects all groups identically in legal terms. Our assessment found no disproportionate impact on any of the groups specified in the proposed new clause. It is also worth noting that since 2017, if not further back, the Government have received no representations from stakeholders regarding any disproportionate impact on protected groups, despite our consulting extensively in 2015 and legislating for changes to the income tax treatment of termination awards in 2017.

I turn to the second measure in the Bill: aligning the class 1A employer NICs treatment of income from sporting testimonials with the income tax treatment. A sporting testimonial is a one-off event, or a series of related events, held on behalf of sportspersons who have played for a certain club for a long time. This often takes the form of an exhibition match involving famous players from the past and present. The testimonial can be used to raise money for the sportsperson before retirement, or sometimes to raise money for charity.

The relevant income tax changes came into force from April 2017. The rules governing sporting testimonials are now changing to give clarity to the NICs treatment. Currently, where a sporting testimonial is non-contractual or non-customary, it can be organised by a third party rather than the employer, to raise money without it being subject to NICs. Where the employer arranges the testimonial, if it is part of the contract or there was an expectation that the sportsperson would be entitled to one, the testimonial is already subject to income tax and NICs.

From April 2020, any income derived from non-contractual and non-customary testimonials arranged by third parties exceeding the £100,000 threshold will be subject to a class 1A employer NICs charge of 13.8%. I will say a few words about the £100,000 threshold. Some noble Lords may be aware that the Government consulted extensively on the proposals for reform, the draft legislation, guidance, and the threshold. Following this consultation, the Government increased the tax-free threshold from £50,000 to a very generous £100,000.

These types of testimonials will not be subject to employee NICs to ensure that the sportsperson is not adversely affected. I also emphasise that the Government expect the impact on charitable donations to be minimal, since donations made from sporting testimonials via payroll giving, operated by independent sporting testimonial committees, will not be subject to any income tax or NICs at all. I also reassure noble Lords that the vast majority of sporting testimonials will be unaffected by the Bill. HMRC estimates that there are only around 220 testimonials each year, with an average taking of around £72,000.

In conclusion, although this is a small Bill, it is nevertheless important and necessary. By bringing the national insurance and tax treatment of termination awards and sporting testimonials into closer alignment, the Bill simplifies the tax system, reduces the incentives for manipulation and raises important revenue for our public services. I commend it to the House.

--- Later in debate ---

[Lord Young of Cookham]

My Lords, this has been a short but interesting debate, and I am grateful for all the contributions made. The noble Lord, Lord Macpherson, claimed paternity for this reform and emphasised the logic of what is contained in the Bill. He reminded us of the different characteristics of national insurance and income tax and raised some broader issues about alignment. I can confirm that we will continue to look for opportunities for alignment, as he suggested. He wanted to extend the measure to employee NICs, which I think would qualify as mission creep in the vocabulary of the noble Baroness, Lady Kramer. We have no plans to charge employee NICs on termination awards, or indeed on testimonials. We think that the changes in the Bill strike the right balance between simplification and keeping taxes associated with redundancy at a reasonable level.

The noble Baroness asked about abuse. HMRC has evidence that a minority of well-advised employers have been manipulating the rules to minimise their NICs liability, which is a further reason for seeking to bring in this alignment. She made an interesting point about averaging: namely, that if you get a lump-sum redundancy or testimonial and no other income for a period, you should be allowed to spread it over a number of years. I would be misleading her if I said that that was likely to happen, but it is an interesting suggestion which we shall take on board and see whether there is an opportunity to spread the receipts.

I am grateful for the kind words of the noble Lord, Lord Tunnicliffe, about Treasury officials. He raised concerns that the Bill would result in smaller termination awards being made to employees unfortunate enough to lose their jobs. Noble Lords will know that no individual, on termination of his or her employment, will face an additional NICs liability as a result of the Bill. The class 1A employer NICs liability is a liability on the employer. On his question, as I think I said earlier, only 1% of employees receive a termination award each year, and of these only 20% will be affected by the Bill—but it is entirely up to businesses how any additional NICs liability is accounted for.

The noble Lord asked for reassurance that responsibility for any miscalculations of class 1A employer NICs or income tax will lie with the employer. I am happy to confirm that position for national insurance. In the case of any underdeduction or underpayment of PAYE income tax by an employer, HMRC is obliged to recover in the first instance from the employer. However, in some circumstances, for example where the employer made an innocent error or the employee knew that insufficient tax had been paid, HMRC may transfer the PAYE income tax to the employee at a later point.

The noble Lord asked how different forms of termination payment were treated for the purpose of determining eligibility for, and the calculation of, social security benefits such as universal credit. I can reassure him that the changes being introduced in the Bill do not affect the interaction of termination payments and universal credit. Termination payments in the form of redundancy pay are treated as capital rather than earnings and are therefore disregarded as income for universal credit purposes. However, if that payment results in someone having more than £16,000 in savings, they would no longer be eligible for universal credit. Termination payments in the form of payments in lieu of notice—PILONs—are treated as earnings for universal credit.

None the less, the Bill will not negatively affect a household’s universal credit entitlement, because earnings for universal credit are considered net of income tax and NICs. This is fair, as the purpose of a termination award or sporting testimonial is to ensure that the individual unfortunate enough to lose their job receives a lump sum, a large part of which is tax free, to cover the costs associated with retraining and finding a new job.

With regard to sporting testimonials, the noble Lord raised a concern that the new NICs charge could reduce donations to charitable organisations. I am happy to reassure him that, because testimonial committees are required to operate PAYE on income from testimonials in excess of £100,000, any charitable donations can be made through payroll giving without incurring any income tax or NICs liability at all. HMRC will ensure that the published guidance will make this clear prior to implementation.

I also assure the noble Lord that, although we have received no indication that the current guidance is causing any practical difficulties and this Bill does not make any changes that would supersede it, we will continually update our guidance in response to the issues raised during the passage of the Bill. This will include some practical examples of non-contractual and non-customary sporting testimonials to ease understanding, in response to the issue just raised by the noble Lord.

The noble Lord also asked what steps the Treasury would take to review the impact of the measures in the Bill. Again, I reassure him that the Treasury will continue to keep these issues under review once the measures in the Bill are in force. In the published tax information and impact notes for the measures in the Bill, the Government set out their commitment to review the policy through communication with taxpayer groups affected by the measure. We are also committed to carrying out post-legislative scrutiny three to five years after the Bill becomes an Act.

I say to the noble Lord and to all other noble Lords who have taken part in this debate that we are of course happy to have further informal discussions before the remaining stages of the Bill if any noble Lords would find that helpful. I am grateful for the opportunity to explain the issues that have arisen today and for the support of noble Lords for the Bill, and I am delighted to commend it to the House.

Bill read a second time and committed to a Committee of the Whole House.

Future Generations

Lord Young of Cookham Excerpts

Wednesday 26th June 2019 Lords Chamber

[Lord Bird]

To ask Her Majesty’s Government, further to the Written Answer by Lord Young of Cookham on 26 November 2018 (HL11361), by what means, if at all, they require public bodies to act, and to demonstrate how they act, in a manner which seeks to ensure that the needs of the present generation are met without compromising the ability of future generations to meet their own needs.

[Lord Young of Cookham (Con)]

My Lords, public bodies operate in the context of an overall framework of government policies and guidance that ensure financial and environmental sustainability. Fiscal rules implemented have meant that the Government are forecast to meet their fiscal targets early, with debt falling as a proportion of GDP in 2020-21, reducing the burden on future generations. Government guidance, such as the Green Book, ensures that public bodies consider monetisable and unmonetisable value, including environmental impacts on air, water and climate change.

[Lord Bird (CB)]

It is interesting that today we have a “The Time is Now” demonstration outside; it is interesting to us all to realise that we are moving towards many big problems. The thing about the Welsh commission—which I am very pleased the Government want to look at—is that it tries to bring together poverty, education and so on, so that we can look at the problems coming down the line. I would like the Minister to agree to meet me so that we can look at what has happened over the last five years with the Welsh commission. I am guilty of banging on about the Welsh; I am not a Welshman, but I do love this Act.

--- Later in debate ---

[Lord Young of Cookham]

The noble Lord refers to the future generations Act, which is operational in Wales and which we are following with interest. As he said, it imposes obligations to achieve certain objectives in Wales. Future Generations Commissioner Sophie Howe is charged with monitoring the implementation of the proposals. To some extent we are replicating that approach in the environmental Bill to be published later this year, which will set up an office for environmental protection to monitor progress towards our environmental objectives, with powers to impose sanctions against public bodies that do not follow those. So far as a meeting is concerned, I first met the noble Lord in 1991, when he was launching the Big Issue and I was Housing Minister. That was an agreeable encounter, and I am sure the next one will be as well.

[The Lord Bishop of Oxford]

My Lords, it has been a real privilege today—as the noble Lord, Lord Bird, mentioned—to spend time with some of the 16,000 people, many of them young, representing all faiths and none, who have come to say to Parliament that the time is now on climate change. I very much support the proposal from the noble Lord, Lord Bird. Does the Minister agree that the issues of climate change, both in the material sense and the perceived sense—public opinion—are absolutely the pressing priority for the future generation? Following the commendable adoption of the net zero by 2050 target, will the Minister share with the House what the Government’s next three priorities are in combating climate change?

[Lord Young of Cookham]

It was interesting that in the debate the noble Lord, Lord Bird, initiated last Thursday, climate change was one of the top priorities of Members of your Lordships’ House, so it is not solely an issue for the younger generation. The right reverend Prelate asks what our priorities are. Last year we published our 25-year environmental plan and later this year, a Bill will put a legislative framework round that. I agree that the greatest betrayal for this generation would be to pass on to the next generation a planet in worse condition than it currently is. Our objectives are to drive up air quality, reduce plastic waste and food waste, ban the sale of ivory and conserve energy. The environmental Bill, to be introduced later this year, will explain how we will take those objectives forward.

[Lord Wigley (PC)]

My Lords, we will be happy to have the noble Lord, Lord Bird, as an honorary Welshman, particularly after last Thursday’s debate. In the wind-up to that debate reference was made—the Minister has made it again today—to the five-year review for Wales. The Government said that they would wait to see the outcome of that review. As it will be another couple of years before that comes out, can the Minister give a commitment that the Government will treat issues such as the carbon targets with great urgency, and can they link up to find out what lessons have already been learnt in Wales in that regard?

[Lord Young of Cookham]

The noble Lord makes a helpful suggestion. There will be an opportunity later today to debate the net zero carbon emissions policy under the SI. The remit for the commissioner in Wales is slightly broader than just climate change. However, the elements that relate to climate change can be transposed, as I said earlier, into the environmental Bill, with an office not dissimilar to that of the Future Generations Commissioner in the Office for Environmental Protection, which will have roughly the same remit as Sophie Howe has in Wales.

[Baroness Hayter of Kentish Town (Lab)]

My Lords, one way of ensuring that public bodies think about future generations is to ensure that they hear their voices. Today’s 16 year-olds are the parents of babies born in 2037, who will themselves vote in 2055. Is not the best way of ensuring that decision-makers consider future generations to give 16 and 17 year-olds the vote, both in any referendum and in electing the people who govern the country?

[Lord Young of Cookham]

I understand the noble Baroness’s proposition. She will know that the current position of this Government is not to extend votes to 16 year-olds—but who knows what may happen in the future?

[Baroness Jones of Moulsecoomb (GP)]

My Lords, can I give the Government a good idea? Perhaps they will think about strengthening the Youth Parliament, because young people are clearly politicised and want the Government to do something. If we strengthened the Youth Parliament and gave it a more constitutional role, the Government could hear from it directly and in a more co-operative way.

[Lord Young of Cookham]

I am a great fan of the Youth Parliament and when I was in the other place I attended some of its sessions there. It gives young people an opportunity to taste public life and I hope that many of its members will go on to become Members of Parliament. Perhaps I may reflect on the broader issue the noble Baroness raises about whether we might give more powers to the Youth Parliament. It is a helpful and positive suggestion.

[Lord Wallace of Saltaire (LD)]

My Lords, is not part of the problem of short-term policy-making, when we should have long-term thinking, that the ministerial churn is enormous? A number of senior ministerial posts are on their third postholder since 2015 and are expecting a fourth within the next four to six weeks. The noble Lord is an absolute pillar of the example of long-term postholding in government. Does he have any recommendations to make about how we may shift from this constant change of ministerial office to a longer-term prospectus?

[Lord Young of Cookham]

The noble Lord makes a valid suggestion. I was a Minister 40 years ago and since then I have been churned many times, often against my will. The noble Lord makes a serious point. It takes time to come to terms with a portfolio and then to develop one’s own priorities and initiatives. It is demoralising, just when one has discovered one’s responsibilities and what one wants to do, when one gets the call from No. 10 to say that one’s talents have been recognised but need to be deployed elsewhere. It is right that Ministers should spend at least two years in the same position. However, it may not always be possible—as next month may show.

Boards of Public Bodies: Representation

Lord Young of Cookham Excerpts

Monday 24th June 2019 Lords Chamber

[Lord Young of Cookham (Con)]

My Lords, I congratulate my noble friend Lord Holmes on securing this debate on an issue he has championed both before and after the publication of his report last year on opening up public appointments to disabled people. I commend the speech he made today, and those of all noble Lords who have spoken—who had to cope for the first time with flashing lights to limit the times of our speeches.

Recommendation 2.1 of my noble friend’s report states that the Government should,

“showcase role models on a rolling basis”.

He has done exactly that for many years. As my noble friend reminded us, he is chair of the Global Disability Innovation Hub, diversity adviser to the Civil Service and co-chair of the All-Party Parliamentary Group for Assistive Technology, as well as sitting on the All-Party Parliamentary Group on FinTech, the All-Party Parliamentary Group on Blockchain and the All-Party Parliamentary Group on the Fourth Industrial Revolution. He is deputy chairman of Channel 4; he is chair of Ignite, an innovation and change consultancy; and he sits on the future talent steering group. So, it is not just this House that benefits from my noble friend’s wide range of skills, experience and energy.

The question that has run through our debate this evening is basically this: are there more people like him out there, whose energy and talents we can harness? To answer that question, as noble Lords will recall, we asked my noble friend, alongside his already significant responsibilities, to review how we can open up public appointments to disabled people.

Public bodies sit at the heart of our society. They deliver vital and essential services to our communities, such as the NHS, policing, justice and educational services, to name a few. It is vital that these public bodies have strong leadership at their core to help them to make the right decisions to deliver the services that the public need and expect.

The Government make more than 1,000 appointments a year to the boards of around 550 public bodies, spending more than £200 billion between them. It is these appointees who provide direction and leadership in public bodies. By holding senior staff to account, they also provide expert and independent advice. As other noble Lords have done, I thank the many hard-working individuals in public bodies, both within the executive and non-executive teams, who make these public services a reality—many of them also serve in your Lordships’ House.

The Government are committed to improving diversity in public appointments. Given the diverse communities that these bodies serve, it is important that the public appointments we make are as representative as possible of those communities. Indeed, the Prime Minister herself has made it clear that public services like these must represent the people they serve. Not only is this morally the right thing to do, but it also brings genuine value to decision-making. Public bodies regularly face challenging decisions so we need the best minds from our communities to help guide them. As my noble friend said in his report,

“talent is everywhere, but opportunity is not”.

We have made good progress in increasing diversity in appointments. New appointments made of women, candidates from BAME backgrounds and those with a declared disability have all increased since 2013-14. However, I am sure that noble Lords will agree—I know that the noble Baroness, Lady Hayter, will—that there is still more to do to meet the Government’s ambitions of 50% of public appointments being held by women and 14% of appointments being made from ethnic minority backgrounds by 2022. In the words of the noble Lord, Lord Scriven, we want to “unlock” talent. Both he and the noble Baroness, Lady Hayter, made a valid point about having a broader cultural base and broadening a board’s outlook so that it has the breadth of vision that is needed.

So what are we doing? In 2017, we published our Public Appointments Diversity Action Plan, which makes the moral and business case for more diverse public appointments. It sets out our goals and a 10-point action plan to help meet the Government’s ambition of achieving 50% of all public appointees being female and 14% of all public appointments being from ethnic minorities by 2022. My noble friend Lord Holmes’s review of the barriers preventing disabled people taking up public appointments was part of delivering this plan. My noble friend reported back in December 2018; again, I thank him for his excellent review, with its moving case studies. The Government remain committed to improving diversity in public appointments and have carefully considered the recommendations put forward in my noble friend’s review.

The review sets out a range of recommendations covering data collection and transparency, attracting and nurturing talent, application packs and job descriptions, interviews and the other issues that were mentioned in the debate; for example, the noble Lord, Lord Scriven, mentioned retention and both he and my noble friend Lord Holmes mentioned having a central application portal. The noble Lord, Lord Scriven, also mentioned making the interview panel more diverse, which is another recommendation in the report. Many of my noble friend’s recommendations will benefit all those from underrepresented communities wishing to apply for public appointments. I read my noble friend’s report last night. He said:

“I believe that they”—


the recommendations—

“could have general applicability and benefits in many situations, across public appointments and to all talent acquisition and recruitment practices”.

Therefore, it makes sense that, in parallel to responding to my noble friend, we refresh the 2017 Public Appointments Diversity Action Plan.

As I recently set out in my response to my noble friend’s Question in May, we will respond to the review imminently—around the end of this month—and at the same time we will publish a refreshed public appointments diversity action plan. I am only sorry that those were not available in time for our debate this evening. Appointments are made individually by departments, so officials in the Cabinet Office have been working across those departments and thoroughly considering how to take forward the review’s aims on a broad front.

In response to a question raised by the noble Lord, Lord Scriven, I can say that our revised diversity action plan will set out measures that will help to open up public appointments not only to disabled people but to diverse groups in the broadest sense. That includes women, those from ethnic minorities, those of different faith perspectives and those who identify as LGBT+, as well as individuals from different social backgrounds and indeed from all regions across the UK.

I know that officials from the Cabinet Office have been keeping my noble friend Lord Holmes informed of the progress of the Government’s response to his review and the refreshed diversity action plan, and I hope that he has found these updates helpful. I would welcome his views on them when they are published, as would the House as a whole. He will be pleased to know that, in the meantime, we have continued to take forward actions in the Public Appointments Diversity Action Plan published in 2017. We have been working to increase the visibility of appointees from underrepresented groups and have encouraged applications from people with diverse skills and experiences through a series of events.

Since last summer, my honourable friend the Minister for Implementation has been hosting and has spoken at events, including one held in Downing Street with the kind permission of the Prime Minister, to encourage talented individuals from ethnic minority backgrounds to consider public appointments. Events have also been held to encourage the brightest and best in business and those with faith perspectives to consider these opportunities. The Minister went to Birmingham and Newcastle to encourage talented individuals from outside London to apply for public appointments—we want more talented individuals from outside London and the south-east to consider these opportunities—and we will continue to hold further events throughout 2019. We have involved networks in these outreach events to help raise awareness of public appointments and have encouraged them to distribute communications about public appointment opportunities to their members. We have also improved how we collect and monitor data on the diversity of appointments and reappointments made each year through the launch of a new data collection tool.

I shall try to address some of the specific issues raised during our debate. My noble friend Lord Inglewood asked what we were doing to encourage more younger people to take up public appointments. Our public appointees have been getting younger. In 2017-18, 20% of new appointments were of people under 45, compared with 18% in the previous year, and some bodies have created specific roles—

[Lord Inglewood]

Does the Minister think that people under 45 are young people?

--- Later in debate ---

[Lord Young of Cookham]

Certainly as far as I am concerned, anyone under 45 is young. I will see whether we can collect statistics on a more granular basis than simply “under 45”.

I was asked what other tools the Government use to achieve inclusivity. Public appointees go through a fair, open and transparent selection process, set out in the Government’s code and regulated by the independent Commissioner for Public Appointments.

What are we doing to attract talent in public appointments? That question was posed by the noble Lord, Lord Judd. The measures that we will set out in our refreshed public appointments diversity action plan arrive at precisely the objective referred to by the noble Lord.

My noble friend Lord Inglewood made the point that we should not make the best the enemy of the good. On his point about building a team, that is a matter for the chair, but what is happening at the moment is that the specific methods of choosing people preclude people from applying who may indeed be the best—those who may have the best qualities and unusual life stories. At the moment those people may be excluded.

I do not want to run into injury time. I will write to noble Lords on those points that I have not replied to.

In conclusion, I believe that many of my noble friend’s considered and practical recommendations will help to increase diversity in public appointments from all underrepresented groups and drive up the quality of public services. We are both determined to put that right; I know that he and the House will ensure that we deliver real, positive improvements in the diversity of public appointments in the future.

House adjourned at 7 pm.

Breathing Space Scheme: Consultation Response

Lord Young of Cookham Excerpts

Wednesday 19th June 2019 Lords Chamber

[Lord Young of Cookham (Con)]

My Lords, with the leave of the House, I shall now repeat a Statement made today in the other place by my honourable friend the Economic Secretary to the Treasury. The Statement is as follows:

“With permission, I should like to make a Statement to the House on supporting people in problem debt. This is an issue close to my heart. As a former member of the All-Party Parliamentary Group on Hunger and Food Poverty, I have seen at first hand the hardship that problem debt can cause. Now that I am in a position to bring about change, I am very focused on improving the lives of the most disadvantaged.

Problem debt places a heavy burden on households and can lead to family breakdown, stress and mental health issues. The Government have taken steps to prevent problem debt from occurring and to support those who have fallen into it. We have reformed the regulation of consumer credit and widened access to professional debt advice, and we are helping to build individual financial capability. Today, I can update the House on the Government’s plans to go further, with the introduction of a breathing space and a statutory debt repayment plan. I am very grateful for the support of my honourable friend for Rochester and Strood, whose Private Member’s Bill and ongoing work has made a key contribution to this becoming government policy.

For people who are just getting by, even a small income shock can provoke a cycle of debt dependence that can be difficult to escape. If then faced with invasive debt enforcement, it is no wonder that many people in problem debt simply disengage. The first step to countering problem debt is to ensure that consumer credit firms are properly regulated; loans should not be made to people who cannot afford to repay them. The Government have empowered the Financial Conduct Authority to ensure that firms lend responsibly, protecting consumers from overborrowing. At Budget 2018, the Government announced new measures to increase access to affordable credit by helping foster a larger, more vibrant social lending sector.

In parallel, we have put in place support to help people make good financial decisions. The new Money and Pensions Service brings together three existing publicly funded money and pensions guidance services into one new organisation, providing free support and guidance on all aspects of people’s financial lives. Importantly, it also has a statutory duty to develop and co-ordinate a national strategy to improve people’s financial capability.

Despite these preventive measures, I recognise that many still fall into problem debt. For these people, further support is required. Seeking professional advice is a vital step in moving towards a sustainable debt solution. That is why we have increased public funding for free professional debt advice to almost £56 million this year, delivering 560,000 sessions in England. But more needs to be done. The Money and Pensions Service estimates that there are up to 9 million overindebted people in the UK, but only a fraction access free debt advice each year. That is why I can announce today, following consultation, how the Government will deliver their manifesto commitment to introduce a breathing space scheme for people in problem debt.

The scheme has two parts that, together, will protect debtors from creditor action, help them get professional advice on their debt problems and help them pay off their debts in a sustainable way. Breathing Space will provide debtors with a 60-day period in which interest and charges on their debts are frozen and enforcement action from creditors is paused. Creditors must not start new court action; communications with debtors relating to enforcement of their debt must stop; and benefit reductions to claim debt will pause. During this time, debtors will have to seek professional debt advice to find a sustainable solution to their debt problem. These protections will encourage people in problem debt to seek advice earlier and give them the head space to identify the right debt solution for them.

The statutory debt repayment plan is a new debt solution that extends the breathing space protections to debtors who commit to fully repaying their debts to a manageable timeline. Importantly, these payment plans will be flexible to changes in debtors’ life circumstances in order to remain sustainable over the long term. If their disposable income decreases, their payments will go down, and vice versa.

The Breathing Space scheme will make a real difference to the most vulnerable families across the country, and I recognise the sense of urgency across the House to deliver this policy quickly. So I am committed to delivering the scheme swiftly, working closely with key stakeholders to make sure that it works in practice. The Government will lay regulations on the breathing space element of the policy before the end of the year and intend to implement it as soon as possible in early 2021. We will continue to develop the statutory debt repayment plan to a longer timetable.

In addition, I am pleased to announce that the Government will go beyond their manifesto commitment in two areas. As many of us have heard in our constituencies, people’s experience of problem debt is changing. As I have seen at first hand, it is wrong to assume that overindebtedness is simply a product of taking out too much credit. Many people struggle to meet essential bills and can end up owing money to multiple creditors in the public and private sectors. For this policy to be successful it must properly reflect the issues that debtors are dealing with, so I can announce today that the Breathing Space scheme will cover a broad range of debts—not just financial services debts but arrears owed to utility companies and to central and local government. Council tax arrears, personal tax debts and benefit overpayments will be included, among others. This broad protection will make the policy effective for debtors and fair to creditors.

The House will recognise also the strong links between mental health issues and problem debt. Sadly, up to 23,000 people in England each year struggle with problem debt while in hospital because of mental health issues. The Breathing Space scheme must work for everyone facing problem debt. In particular, it must be open to the most vulnerable in society. To that end, I can confirm that people receiving treatment in mental health crisis can enter Breathing Space without seeking advice from a debt adviser, which could be a significant barrier for many. These protections will last the entirety of an individual’s crisis treatment, followed by a further 30 days to allow them to get back on their feet and decide whether they wish to enter the main Breathing Space scheme or work out another solution for their debts. Given that mental health issues are often recurring, there will be no limit to the number of times an individual can enter via this mechanism.

I thank the honourable Members for Liverpool Wavertree and North Norfolk, and my honourable friend the Member for Plymouth Moor View for their dedicated work on this issue, and the Money and Mental Health Policy Institute for raising this important issue.

Millions of people struggle with problem debt and the burdens it brings. The Government have committed to helping these people take control of their finances and get back on a stable financial footing. The Breathing Space scheme that I have described today will fulfil this commitment. I commend it to the House”.

My Lords, that concludes the Statement.

--- Later in debate ---

[Lord Sharkey (LD)]

My Lords, I thank the Minister for repeating the Statement. We on these Benches very much welcome the introduction of the breathing space and the statutory debt repayment schemes, although we do have a few questions about execution.

To debtors, this reform may seem to have been quite a long time coming: I can recall discussions in Parliament in 2015, as well as outside long before that. The proposal was, of course, included in the Conservative Party’s 2017 manifesto. Many people and organisations have played a part in getting us to this stage. I particularly want to mention StepChange and the noble Lord, Lord Stevenson of Balmacara. The critical point in getting the Government to do something arose during the passage through this House of what is now the Financial Guidance and Claims Act 2018. The amendment to the Bill by the noble Lord, Lord Stevenson, about breathing space now appears as Section 6 of the Act. This section encouraged and enabled the Government to do what they have announced today.

Turning to the schemes themselves, we are pleased that the Government have in most cases followed the advice they were given in the consultation—which seemed to be a model of its kind, unlike some of the other consultations that the Minister and I have had to discuss in this Chamber. We believe that the eligibility criteria for the breathing space scheme are broadly right, although we have doubts about the restriction to only once in 12 months. We encourage the Government to think again about this and—as they say they are minded to—to include provision for joint debts to qualify for inclusion in the scheme.

We are also happy to see that local and central government debts are to be included in the new scheme and very pleased to see the inclusion of small sole-trader debts, which we think is a vital element. We especially welcome the unlimited extension and repeated entry to the scheme for those in mental health crisis.

The Government’s very helpful consultation and policy response paper does qualify the inclusion of universal credit advances and third-party deductions from universal credit. The document is very vague about the timing of their eventual inclusion. I ask the Minister to give the House a little more detail and encourage him to speed up the process of including these two elements.

When it comes to which ongoing bills should be paid during the breathing space, I think that the Government have it about right in giving debt advice agencies the discretion over whether to remove people who do not keep up specified ongoing payments from the scheme.

Debt and debt repayment continue to be severe problems for millions of people in this country. As the Minister noted, the Money and Pensions Service has estimated that around 9 million people are overburdened with debt. We also now know that real incomes have started to fall again.

The Government’s proposals are a significant step forward in addressing problem debt, and we welcome them. However, we are disappointed with the timetable for the introduction of these measures. Early 2021 seems a very long way off—probably an intolerably long way off if you have unmanageable debt. All the Government’s proposed measures can be introduced by SI. Parliament is not currently overpressed with business. Why can we not use some of that time to bring forward the implementation date?

[Lord Young of Cookham]

I thank both noble Lords for their generous welcome to the announcement, in particular the noble Lord, Lord Stevenson. I remember the forceful case he made during the passage of the Financial Guidance and Claims Bill, drawing on his experience in StepChange, which drew on research showing that schemes such as this stop people getting into a cycle of debt and end up with the creditors getting more than they would, had such a scheme not been available. As the noble Lord, Lord Sharkey, said, his amendments to the Bill enable us to make progress. As he said, I was a co-pilot with my noble friend Lord Freud on the Bill—the two intellectuals Freud and Young took that Bill through the House.

I take the point from the noble Lord, Lord Stevenson, about 60 days possibly being not long enough. He will know that that is more than the six weeks pledged in our manifesto and more than the six weeks available in Scotland. We believe we have that right. I agree entirely with what he said about the Insolvency Service’s register being private and not public. I take his point, which was also made by the noble Lord, Lord Sharkey, about trying to speed things up.

I take the point that the 9% top slice that the agencies will get is less than the 13% currently available, but by contrast this is guaranteed in a way the 13% might not be. Also, we believe it will be on a much broader base. Of course we will keep the revenue stream under regular review, but we think we have it about right.

On loans, the FCA has announced a tough new package of measures on high-cost credit. It has the powers to introduce caps, but perhaps I can make more inquiries about that specific point. I have no hesitation in agreeing to a meeting with the noble Lord, Lord Stevenson, which I welcome. Perhaps it would make sense to involve the Economic Secretary to the Treasury, who has prime policy responsibility for the subject matter.

I am grateful to the noble Lord, Lord Sharkey, for his welcome of the scheme. The once-only ability to go into the breathing space does not apply to those with mental health problems. We wanted the first time to have a sustainable, long-term solution to the debt problems and there was an anxiety about the possibility of abuse if people could go on applying. We will look at that. He has a valid point about joint debts. Likewise, often a small trader’s personal finances are inextricably involved with the business. It makes sense to have eligibility for small traders up to the VAT limit.

On universal credit, any overpayments will be stopped immediately, although there is an IT issue that prevents the same process being applied to other payments. Perhaps I could write to the noble Lord, but the objective is to address those IT problems as soon as possible.

Finally, the noble Lord mentioned the timetable. This was raised in the other place. He might have followed the exchanges. The Economic Secretary said that he had had discussions with his officials to try to drive the timetable through as quickly as possible. There are some IT issues about making sure the public sector interface with the Insolvency Service can react to people entering and leaving the breathing space. We want to get it right, but I will certainly tell the Economic Secretary that both noble Lords expressed anxiety about the timetable and asked whether it could possibly be accelerated.

[Lord Boateng (Lab)]

My Lords, the scheme is welcome. My early experience as a lawyer helping to run a citizens advice bureau service in north-west London taught me that two particular categories of people are often overlooked on this issue. The first is those who cannot read or write, who can find themselves falling into enormous difficulties as a result of not being able to share that fact with the authorities. The other is those who do not read, write or even understand English. Speaking from experience, I think it is absolutely vital that the scheme provides adequate resources for training facilities that meet the needs of those two special and sometimes overlooked groups.

[Lord Young of Cookham]

The noble Lord makes a valid point. Those who are innumerate or illiterate will have difficulties in this area. The Money and Pensions Service will ensure that there are debt advice agencies available that can meet the needs that the noble Lord has just explained, also ensuring that those who may not have English as their first or second language are also able to access the debt advice agencies. Our objective is to make the breathing space available to everyone who has a debt problem, whatever their background.

[The Lord Bishop of Leeds]

My Lords, I welcome this Statement, and thank the Minister for repeating it. I also want to note the work that the Church of England and the Children’s Society have done promoting these matters. I am particularly pleased that public and utilities debt is to be included in this, but—taking advice from Donald Tusk, who said “Don’t waste the extension”—can the Minister say who will ensure that plans are put in place for sustainable debt resolution? It was said that debtors will have to seek professional advice. How will that be ensured, so that we do not simply prolong the problem of debt where it will be exacerbated? Secondly—and I am sorry if I missed this in the Statement—when might we expect the new regulations to be published?

[Lord Young of Cookham]

On the latter point, the first regulations will be laid towards the end of this year. I will write to the right reverend Prelate about the timetable for the sustainable development plans. Can I pay tribute to the work that the Church has done in this area? There is the Just Finance Foundation, founded by the most reverend Primate the Archbishop of Canterbury, the Lifesavers financial education programme, very active in primary schools, and Christians Against Poverty, a registered debt advice agency. I pay tribute to the work that they do.

The idea is that those who enter into a breathing space will, after a dialogue with the debt advice agency, then have a sustainable debt plan which takes into account the resources that are available and arrives at something which enables them to meet their debts—but over a period ideally not more than seven years. It is designed to ensure that they have enough to meet their obligations, including their ongoing debts. There may be some cases where the income simply is not available to enter a sustainable debt plan, in which case they may be advised for bankruptcy or IVA. The idea is to give a breathing space of 60 days in which a person can come to terms with their financial circumstances and have professional advice about the best way through, enabling them to get their life back on an even keel.

[Baroness Ford (CB)]

My Lords, like other noble Lords I greatly welcome the announcement made today and, in particular, the provisions and support offered to people with mental health difficulties and debt. However, when someone is in a crisis involving their mental health, they are probably at their least able or well-equipped to access the kind of advice that the Minister has described. Can he say whether there are plans in place to train and support health professionals in the NHS—particularly mental health professionals—to give support and advice to those who need to access the breathing space period?

[Lord Young of Cookham]

The noble Baroness makes a very good point. There is a crucial role in this for an approved mental health practitioner, who could be a social worker or a GP with the relevant qualifications. The AMHP can say to the debt advice agency that this person has a debt problem and is unable to go through the whole process of putting together a plan. But they get a buy-in to the next round, in that their debts are frozen, they enter the breathing space and they do not have to enter into a repayment plan until such time as the crisis is over and they are able to do so.

I take on board the noble Baroness’s point that we need to ensure, first, that there are enough approved mental health practitioners; and, secondly, that they know what to do if they meet somebody with a debt problem—to contact one of the debt advice agencies and get the breathing space.

[Lord Mackay of Clashfern (Con)]

I thank my noble friend the Minister for mentioning the CAP, a charity established in the north of England which I have known of for quite a while. I get its reports regularly and it seems very successful in dealing with this sort of difficulty. I hope that as the government machinery is developed, we might learn a little from that. I commend the thought that that might be a useful form of co-operation. It may be that such co-operation exists already; if so, so much the better; if not, please do.

[Lord Young of Cookham]

The answer to “please do” is, “Yes, I will”.

[Lord McKenzie of Luton (Lab)]

My Lords, like other noble Lords I warmly welcome today’s announcement. At the start of his presentation, the Minister talked about progress that was being made other than via these announcements, and he referred to financial capability. Can he update us on what progress has been made in that area? He touched upon the issue of overpayments of social security, whether through universal credit or otherwise. Can he say again how that fits into this scheme and whether the sanctions delivered on people might be covered by it?

[Lord Young of Cookham]

The second part of the noble Lord’s question is easier to answer than the first. Any overpayments to the DWP will stop. People will not have their benefits docked if part of their benefit is an overpayment of a previous benefit; that will stop from day one. Likewise, if they have been overpaid universal credit and it is being docked because that is being paid back, that will stop on day one. On financial capability, I remember the noble Lord’s interventions during consideration of the Bill referred to by the noble Lord, Lord Stevenson. I mentioned in passing the work of the Church in financial education, but the noble Lord’s question deserves a more substantive reply than I can give at the moment. Perhaps I could write to him about progress on developing financial capability.

[Baroness Altmann (Con)]

My Lords, I declare my interest as set out in the register, as an adviser to a social enterprise which helps people in debt to manage and consolidate their debt more cheaply in the workplace. I congratulate my noble friend the Minister on this Statement, and in particular I congratulate our honourable friend the Economic Secretary to the Treasury, who has clearly listened carefully to the debates and points made on this issue. The extent of the measures announced today goes a long way towards proving that he is genuine in saying that this issue, which we have worked on extensively across this House, is close to his heart. I pay tribute also to the noble Lords, Lord Stevenson and Lord Sharkey, who were instrumental in this area, and thank the Government for introducing something so necessary. I have one brief question. Will the Minister find out what plans the department has to make sure that these schemes are publicised, so that those who need them are rapidly directed to the help that will be available?

[Lord Young of Cookham]

May I, in turn, compliment my noble friend, who was a Minister at the DWP and can perhaps claim some maternity regarding some of the policies we are now discussing? She made a very valid point about the role of your Lordships’ House. I recall the debates on the Bill; it was improved as it went through, partly as a result of the intervention of the noble Lord, Lord Stevenson. My noble friend mentioned publicity, and I entirely agree. When the time is right and we are ready to launch the new scheme, it should of course be well publicised so that those in financial difficulty know that it is available and, crucially, how to access it.

[Lord Young of Norwood Green (Lab)]

My Lords, I do not know whether the Minister saw the recent “Panorama” programme that included a section on guarantor loans and the disgraceful activities of a company that was loading an individual up with another £10,000-worth of debt. Not only was she unable to pay; I think her mother was also involved. I recommend that the Minister watch that programme if he has not seen it, because the activities of some of these companies are reprehensible and are putting people in impossible situations. I heard reference to the possibility of the FCA introducing caps. Can he confirm that the FCA will take action?

[Lord Young of Cookham]

I am not sure whether the noble Lord followed the exchanges in the other place, but an honourable Member raised the question of guarantor loans. I think I am right in saying that the Economic Secretary to the Treasury said that he had recently met the FCA about guarantor loans, so perhaps I could write to the noble Lord about the outcome of that exchange.

[Lord Foulkes of Cumnock (Lab Co-op)]

My Lords, does the Minister accept that the picture he has painted of millions of people in debt and in poverty is at odds with the rosy picture that the noble Baroness, Lady Buscombe, tried to paint at Question Time earlier today? Could he have a word with his noble friend and explain to her that United Nations rapporteurs have no incentive to tell other than the truth? That is what they are there for. When that Minister comes here, it is to answer questions from the right reverend Prelates and Cross-Benchers, as well as from Members from political parties. It would do her and the House a great deal of service if she would make some attempt to answer them fairly and honestly.

[Lord Young of Cookham]

I am reluctant to rise to the bait that the noble Lord dangles in front of me. My noble friend made a robust defence of government policy.

[Lord Stevenson of Balmacara (Lab)]

My Lords, I have probably mistimed this but the Minister, who is well known for his quickness on his feet in debate and for his ability to spin out of absolutely nothing a brilliant joke, may have slightly overstepped himself. When he tried to pay tribute to the work done on the Bill, he got himself to the point where he could use the wonderful phrase, “Young and Freud did it”. In fact, it was the noble Baroness, Lady Buscombe, who took the Bill through this House, with his great co-piloting. The dual team was indeed a dream team and we had a great time. The noble Baroness also got the issue that we are trying to get very well. She did a lot of work behind the scenes and I pay tribute to that.

[Lord Young of Cookham]

The noble Lord is absolutely right. There are so many Bills going through the House on which my services are sometimes required that I may have muddled them up. My noble friend Lady Buscombe is not a great philosopher, unlike my noble friend Lord Freud. I am grateful to the noble Lord, Lord Stevenson, for putting the record straight and pay tribute to the work that my noble friend did. I know that she worked extremely hard to get consent and was as generous as she could be—within the constraints, as he will understand—in bending government policy to accept opposition amendments.