Disabled People: Impact from Policies and Spending Cuts

Viscount Younger of Leckie Excerpts

Tuesday 21st February 2023 Lords Chamber

[Baroness Thornton]

To ask His Majesty’s Government what steps they will take to assess the impact of their (1) policies, and (2) planned spending cuts, on people with disabilities, to ensure that they do not exacerbate existing inequalities.

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Viscount Younger of Leckie) (Con)]

My Lords, the Government recognise the barriers that disabled people face across many aspects of their lives. All government departments have rigorous processes in place, in line with the public sector equality duty to ensure that they consider proactively the impacts on disabled people when carrying out their day-to-day work in shaping policy and delivering services. This includes the Treasury, which carefully considers the equality impacts, including for disabled people, of the individual measures announced at fiscal events.

[Baroness Thornton (Lab)]

I thank the Minister for his Answer. This Question concerns the wider issue of impact assessments being used to guide government policy for disabled people, and is not just around vital income support. First, is an impact assessment being conducted, or has one been proposed, to look at the impact that Home Office immigration rules are having on the supply of personal assistants for working-age disabled people to allow them to be economically independent? Secondly, is an impact assessment being carried out, or has one been proposed, on the effects of the proposed modernisation of the railways on the mobility of wheelchair-users and people with sight impairment, many of whom are very worried about this?

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[Viscount Younger of Leckie (Con)]

The first thing to say is that there are no plans for impact assessments. What I can say to reassure the noble Baroness and the House is that much work has been done to take account of the extra costs that are required for those who are disabled. The extra-cost disability benefits have been uprated every year since their introduction, in line with inflation; these benefits were also exempt from the recent benefits freeze. Over 1.3 million more people of working age are in receipt of an extra-cost disability benefit since May 2013. On her final point about transport. we have done a lot of work on the transport issues. For example, we have enacted the Taxis and Private Hire Vehicles (Disabled Persons) Act 2022 and published guidance on inclusive mobility and tactile paving, and there is more that I could say.

[Lord Farmer (Con)]

My Lords, my understanding is that Access to Work grants for disabled people are beset with significant delays. For example, the Royal National Institute for Deaf People says that many are waiting close to four months for initial claims to be processed or renewals to be approved. This has a knock- on effect on the support workers they rely on, who understandably may refuse to take bookings from them as they will not get paid. Will my noble friend the Minister say what the Government are doing to cut delays?

[Viscount Younger of Leckie (Con)]

I agree with my noble friend that there have been delays, and perhaps I can give a little thought to this. One matter to note is that the Access to Work systems are currently receiving an increased level of applications for support—for example, there are 24,677 cases. On what we are doing about this, DWP has taken a number of actions: all applications for a job to start in the next four weeks are prioritised, renewal applications are also prioritised where possible, and support is approved using a new streamlined process. We have also increased the number of staff working on Access to Work. We are very aware of the delays and are taking some action.

[Baroness Falkner of Margravine (CB)]

My Lords, I declare an interest as chair of the Equality and Human Rights Commission. Are the Government minded to implement Section 28(8) of the Equality Act 2006, which would give the commission the powers to bring disability discrimination cases to court?

[Viscount Younger of Leckie (Con)]

Although I cannot confirm that, I know that the commission examined whether my department was making reasonable adjustments to its processes for people with mental health conditions and learning difficulties, as required under the Equality Act 2010. As the noble Baroness will know, the EHRC published a statement on 19 April about drawing up a legally binding agreement with the DWP to commit it to an action plan.

[Baroness Uddin (Non-Afl)]

My Lords, I declare my interest: a 42 year-old family member has recently become an amputee, so I have seen at first hand the desperate situation that many suffer, particularly in residential care. We are prepared to pay up to £2,000 or £3,000 a week for residential care but not for independent accommodation. Therefore, if the Minister considers an impact an assessment—I am disappointed to hear that he is not doing so—will he consider the impact on disabled people, particularly those with physical disabilities? Given local authorities’ depleted housing stock, they may need to rely on private housing. Will the Minister give some assurance that he will at least look at that?

[Viscount Younger of Leckie (Con)]

I reassure the noble Baroness that we understand that people across the UK, including those who are disabled, are worried about the cost of living—she mentioned housing and other matters. She will know that we have provided £37 billion-worth of cost of living support in this financial year, including a cost of living payment of £150 for the disabled. We have provided up to £650 for low-income households and £300 for pension households —both of these groups have large numbers of disabled people.

[Baroness Brinton (LD)]

My Lords, other noble Lords have spoken about some of the problems inside DWP. I will ask about PIP and applicants who have been disallowed it because they “didn’t return the form”. In 2017, 7,500 claimants were disallowed but, by last year, that had risen to over 42,000. The problem is that, even though many of these people were marked as vulnerable, some have died: Laura Winham starved to death, and it took three years for her body to be found—she was not the only person. What systems is DWP putting in place to ensure the protection of the most vulnerable disabled people?

[Viscount Younger of Leckie (Con)]

The noble Baroness is right to raise PIP. We are targeting support at those with the greatest needs, as she raised. PIP exempts a household from the benefits cap and is uprated by CPI, and it is payable regardless of a person’s employment status. On her particular points, I am pleased to say that we continue to see an improvement in the way that we look at and pay PIP, and particularly in the clearance times—the noble Baroness will know that there have been some delays. I will write to her on her specific question about the content. As I say, the delays are very much a priority for my department at the moment.

[Baroness Andrews (Lab)]

My Lords, I take the Minister back to his answer on personal assistants. When we were taking evidence in the Adult Social Care Committee on the provision of personal assistants, it became perfectly obvious that there is a real crisis for those people who do not want to ask their families to care for them and who would really benefit from personal assistants. One lady we spoke to had employed 27 personal assistants in the course of a year, none of whom could stay with her because they could not afford to. What is the Minister going to do, if he is not going to do an impact assessment, to find out what is actually going on in the lives of these people, particularly in an area where the data is extremely short and where we also know that people are having to take on personal assistants and then act as small businesses to try to organise their national insurance? For many, that is a huge burden.

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[Viscount Younger of Leckie (Con)]

The noble Baroness raises an important point. I think it might be helpful to remind her that the Minister for Disabled People announced on 1 December last year that a new disability action plan will be consulted on and published in 2023. The groups the noble Baroness mentioned will be part of that. It will set out the immediate action the Government will take in 2023 and 2024 to improve disabled people’s lives, as well as laying the foundations for a longer-term change. The plan will reference the work already being taken forward by individual government departments, but I know that there is more to do in this area and she is right to raise it.

[Baroness Janke (LD)]

My Lords, a decade of tightening eligibility for out-of-work sickness benefits on top of cuts to rates means that disabled people are now far more likely to be found incorrectly fit for work than awarded benefits they do not need. When will the Government take action to do something about this injustice?

[Viscount Younger of Leckie (Con)]

We certainly keep this under review. The noble Baroness will know that SSP is administered and paid entirely by employers, at a rate of £99.35 per week. Employers are required to pay it, but as I say, this matter is kept under constant review.

[Lord Touhig (Lab)]

My Lords, we all know that the cost of living crisis and pressures on public services are affecting families across the country, but the impact on families with disabled children is particularly acute and often not well highlighted. What assessment have the Government made of the effect of their current spending plans on the level of support for disabled children and their parents?

[Viscount Younger of Leckie (Con)]

I do not have any figures on disabled children but I can say that, in the year 2022-23, we will be spending around £65.7 billion on benefits to support disabled people and people with health conditions in Great Britain, including children. This is around 2.6% of GDP. Spending on the main disability benefits—PIP, DLA and attendance allowance—will be more than £7 billion higher in real terms than it was in 2010.

Health and Safety and Nuclear (Fees) Regulations 2022

Viscount Younger of Leckie Excerpts

Tuesday 31st January 2023 Grand Committee

Moved by

[Viscount Younger of Leckie]

That the Grand Committee do consider the Health and Safety and Nuclear (Fees) Regulations 2022.

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Viscount Younger of Leckie) (Con)]

My Lords, the Health and Safety and Nuclear (Fees) Regulations 2022 statutory instrument was laid before Parliament on 20 December 2022 and came into force on that same day. These regulations correct an error in the powers used to make the Health and Safety and Nuclear (Fees) Regulations 2021. The error was an unfortunate oversight. Due to the volume of Covid, Brexit and trade agreement work, pressures on the Government Legal Department—GLD for short—resulted in this referencing error not being picked up in checks. HSE and GLD regret the error and are taking steps to reduce the risk of this sort of error happening again. The error was identified by GLD during a recent review.

The urgency to make these regulations arose from the need to use the powers in the European Union (Withdrawal) Act 2018 before they expired on 31 December 2022 and so avoid the requirement for primary legislation. This instrument has to be made in the affirmative and debated in both Houses because this is what the EU (Withdrawal) Act 2018 specifies.

This instrument is non-contentious, as it repeats the previous regulations with some minor technical changes. The preamble to the Health and Safety and Nuclear (Fees) Regulations 2021 did not cite one of the enabling powers and was not made with the consent of HM Treasury to certain fees for chemical regulation functions which were transferred from the EU. The correction ensures that the Health and Safety Executive can continue to recover its costs for these functions.

The preamble in the 2021 regulations refers to paragraph 7 of Schedule 4 to the European Union (Withdrawal) Act 2018. It should also have referenced paragraph 1 of Schedule 4 to give the powers for the provisions which allow charging for certain regulatory activity around biocides and classification labelling and packaging—so-called CLP. In addition, this same error was repeated in later regulations, which contained a series of amendments to, and mirrored powers in, the 2021 regulations. This instrument also corrects that error.

Biocides and CLP provisions in the fees regulations 2022 rely on paragraph 1 of Schedule 4 to the European Union (Withdrawal) Act 2018, and so consent from HM Treasury is required, as referenced in paragraph 3 of that schedule. I can assure your Lordships that consent has been given. I can also assure your Lordships that we have a rigorous checking process in place which will normally ensure that errors are identified before instruments are made.

In conclusion, I take this opportunity to emphasise that this instrument is a restatement of the fees regulations 2021, with the correct powers cited in the preamble and for which HM Treasury consent has been obtained. These changes put beyond doubt the ability of HSE to charge fees for certain biocides and CLP regulatory activity. The instrument makes no changes to policy or duties, although, as explained in the Explanatory Memorandum, it corrects some minor technical errors as well.

I hope that colleagues of all parties will join me in supporting the new regulations, which I commend to the Committee. I beg to move.

[Baroness Sherlock (Lab)]

My Lords, I thank the Minister for that introduction, and I can only take it that the remarks he addressed to “colleagues of all parties” means me, so I am delighted to be here. I also love it when a Minister announces, as was done in the Commons as well, that an instrument is non-contentious. From the Opposition Benches, our mind goes, “Well, we’ll see about that; that’s our call.” It is not the kind of thing one can do unilaterally.

However, as we have heard, this instrument revokes and replaces the Health and Safety and Nuclear (Fees) Regulations 2021, as amended by the amending regulations, and consequentially revokes Regulation 14 of those. We have heard that the purpose is to correct a number of errors. I accept that some of them are clearly technical. There is the incorrect cross-reference in Regulation 12, the error in the definition of “nuclear provisions” in Regulation 16 and the omission from Regulation 22 of the process clarifying how to interpret terms on classification, labelling and packaging, and so on.

However, there is a more serious error. The fees regulations 2021, as amended, were meant to enable the Health and Safety Executive and the Office for Nuclear Regulation to charge fees for a range of specified activities, but, as we hear, it has become apparent that an error in the preamble to the regulations and to the amending regulations has caused a problem. Neither cites paragraph 1 of Schedule 4 to the EUWA 2018, but both should have done so. The problem is that that would have allowed provision for the charging of fees in connection with functions following Brexit, particularly those performed by the HSE in relation to biocides and chemicals—I still think fondly of our long debate on biocides and chemicals not very long ago.

I have some questions. The effect of the error was that the required Treasury consent was not sought prior to the making of regulations under paragraph 1 of Schedule 4 to the EU withdrawal Act. I accept that the Treasury has indicated that it would have given consent had it been asked. However, it was not asked, which is of course the problem. The EM says that the error

“may raise doubt as to HSE's ability to continue to recover the affected fees.”

Can the Minister unpack that a little more for us? First, we need to be clear what fees have already been charged using the flawed powers in the 2021 regulations. When these regulations were debated yesterday in the Delegated Legislation Committee in another place, the Minister, Mims Davies, said:

“About £25,000 was charged across the industry under the powers related to the error. However, HSE judged that there is a low chance of any case being brought, due to the amount of money involved. That is why we are rectifying it extremely quickly. HSE will continue to manage any legal implications on a case-by-case basis.”—[Official Report, First Delegated Legislation Committee, Commons, 30/1/23, col. 8].


Can the Minister tell the Committee: was there a legal basis for charging those £25,000-worth of fees? If not, will the money be refunded to the firms which paid them, or do I take it from that last sentence of the Minister that the Government are simply waiting to see whether anyone who paid them under deficient rules will sue to get their money back? Were any fees not charged as a result of this error that would otherwise have been charged? If so, has any revenue been lost?

There are two other questions. We need to know more about how we got here and, more importantly, how the Committee can be assured it will not happen again. I accept that drafting errors happen, of course, but there are quite a lot of errors in one set of regulations here. Yesterday, the Minister gave the explanation that the noble Lord has repeated today, which dumps the blame pretty much lock, stock and barrel on the Government Legal Service, saying that it was under pressure as a result of Covid, Brexit and trade agreement work, it had too much pressure and that is why it happened. The only problem with that is that two of those three were completely foreseeable. I realise that post Brexit there will have to be redrafting of regulations and other legislation, but the volume and speed is a direct consequence of decisions the Government made about the nature of Brexit and about the way to handle retained EU law.

So, knowing all this, why did the Government not plan and resource the GLD accordingly so that it could deal with the volume of work and the pressure that it would be facing? We cannot simply accept that our statute book should be in a mess as a result of Brexit. There were various points at which these errors could have been picked up. Why were they not? Is there a quality assurance process in place? Does the HSE or the DWP do any checking of their own legislation? Do they literally just give it to the GLD, say, “Do it!” and then take whatever is given back and put it out? Is there a quality assurance process and, if so, why was none of the errors picked up? I spent some years as a non-executive director on a board. If the executive reports a significant error, the question that one asks is: is it systemic? If the answer comes back, “No, it is not”, then one wants evidence of that; if the answer is: “Yes, it is”, one wants to know how one can be assured that it will not happen again?

The Minister yesterday in the Commons said that,

“the HSE and the GLD have completed a full review of the lessons learned,”

and,

“identified some practical actions”.—[Official Report, Commons, First Delegated Legislation Committee, 30/1/23; col. 7.]

to improve ways of working between their officials. That is nice but—this is an important question—if those practical actions had been in place, would they have avoided these errors? So, one has done lessons learnt. If one had done those things then, could this error have happened? If it could still have happened, then we have not solved the problem. Did the review look at other errors, other than the one that it turned out had created this problem?Crucially, how confident is the Minister in assuring the Committee that something this serious will not happen again?

Finally, we are told that

“the Department is adopting the free issue procedure in relation to this instrument.”

Do I take it that that means that there will be free issues of this instrument and the amendment regulations? What will be the cost of that?

Given that I have fired a number of questions, I really want to get answers today—I do not want any more letters because they never arrive, or they may arrive eventually but it takes a long time and these regulations have already been made. To clarify, I am interested in finding out: what happened; why the mistakes were not picked up; whether fees were charged without any legal cover and, if so, whether fees are going to be refunded and whether there were fees that could have been charged that have not been; whether there is quality assurance in place; and whether the DWP and the HSE do any checking of their own legislation and how they can assure us that this will not happen again. I look forward to the Minister’s reply.

[Viscount Younger of Leckie (Con)]

My Lords, I thank the noble Baroness, Lady Sherlock, for her response. I totally understand the tone and nature of the questions that she has asked. I hope that I can respond. It may be that the detail in the responses is not quite what she is looking for and, of course, I will say that I will write to her if the answers are deemed to be not satisfactory. But I will certainly do my best.

I should like to say first that these errors are unfortunate. As I said, the error was an unfortunate oversight caused by pressures on the GLD—the legal side—due to the volume of Covid, Brexit and trade agreement work. Despite checks in place, the omission of one of the powers from the preamble was not noticed. I shall go into a little more detail in terms of how the error was noticed. The preamble to the fees regulations 2021 referred to Paragraph 7 of Schedule 4 to the EUWA 2018 but should have also referenced Paragraph 1 of that schedule. The error was repeated in the amendment regulations, being a set of regulations that amended the fees regulations 2021. Due to that unfortunate oversight, the correct power was not cited in the preamble, which meant that certain regulations were made without the consent of HM Treasury, as they should have been. The error was spotted during a recent review of the fees regulations 2021, as I mentioned.

On the noble Baroness’s question what has been done to prevent such errors happening again, I believe that the review has been rigorous, and we do not believe that it will happen again. However, I shall give a bit more detail. HSE and GLD have completed their review of lessons learnt. This has identified some practical actions that can be taken including better ways of working between GLD crucially and HSE policy officials.

The question of HM Treasury and its role came up, and perhaps I can be helpful in answering some questions. HM Treasury has approved the 2022 fees regulations and has confirmed that consent would have been provided at the time of the 2021 regulations, if sought. HM Treasury consent was given when the fees were first introduced into UK law in 2019 by way of amendments to the fees regulations 2016. HSE is informing HM Treasury of the proposed treatment of the approximately £25,000 of fees received between 1 April 2021 and 21 December 2022. Some 14 companies have been charged between £500 and £5,000, so I hope that is helpful.

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[Baroness Sherlock (Lab)]

On the £25,000, I asked a specific question: was there legal cover for charging that money? I would like an answer to that. I think the Minister said that the HSE is informing the Treasury as to what it will do about the money. Can he inform us what it is going to do about it rather than just the Treasury?

[Viscount Younger of Leckie (Con)]

Those are two fair questions. I will have to write to the noble Baroness to follow through on the specific details that she has asked for. I will certainly write a letter and make sure that she is fully informed. With that, I commend these regulations to the Committee.

Motion agreed.

Universal Credit: Benefit Cap and Two Child Limit

Viscount Younger of Leckie Excerpts

Tuesday 24th January 2023 Lords Chamber

[Baroness Lister of Burtersett]

To ask His Majesty’s Government how many families in receipt of Universal Credit are subject simultaneously to the benefit cap and the two child limit.

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Viscount Younger of Leckie) (Con)]

My Lords, both policies aim to introduce fairness between households claiming benefits and taxpayers who support themselves solely through work. We estimate from published statistics that fewer than 30,000 households were impacted by both policies in April 2022, which is under 1% of households on universal credit. These families may benefit from additional financial help, such as the cost of living payment and discretionary housing payment, if they need additional support to meet rental costs.

[Baroness Lister of Burtersett (Lab)]

My Lords, in the absence of official data hitherto, the Benefit Changes and Larger Families Project estimates that at least 110,000 children are being pushed deeper into poverty because their parents are caught by both the cap and the two-child limit. Evidence of the damaging effects strengthens the case for scrapping both policies, which are far from fair. At the very least, will the Government now undertake to publish regular data on the numbers affected and monitor the impact on children and their parents?

[Viscount Younger of Leckie (Con)]

I am certainly aware of the larger families project. The latest published statistics on households on universal credit show that the majority of families—79%—on universal credit had fewer than three children, with 21% of universal credit households with children having three or more children. Having said that, it is important to note that there are a number of other initiatives where we can help families with more than two children if they get into difficulty.

[Baroness Meacher (CB)]

My Lords, one of the major contributors to poverty is the absence of affordable housing. Shelter produced a really alarming report this week which showed a year-by-year reduction in the building of affordable housing over the past 12 years. Do the Government have a commitment to reverse that policy and to increase the number of affordable homes built every year so that people living in abject poverty—particularly those depending on universal credit—will at least be able to find an affordable home?

[Viscount Younger of Leckie (Con)]

Absolutely. There are a number of initiatives on housing, which I am sure the noble Baroness will be aware of. One example is the discretionary housing payment, which can be paid to those entitled to housing benefit or the housing element of universal credit, particularly those who face a shortfall in meeting their housing costs. It is certainly a matter that I am aware of, and I know that my noble friend Lady Scott will be very much on top of that. We are working across government on this issue.

[Lord Farmer (Con)]

My Lords, can my noble friend reassure me that universal credit still makes work pay despite childcare costs when there is more than one child? Of course, an at-home parent conscientiously doing their own childcare in the early years is, in fact, working. What expectation is placed on claimants to work when parental care is their strong preference?

[Viscount Younger of Leckie (Con)]

Yes, my noble friend makes an important point. I should say at the outset that the Government firmly believe that, where possible, it is in the best interests of children to be in working households. That is why the department has continually provided support to help move people into work. To further that, this sort of support in making people financially resilient by moving them into work and also ensuring that they are progressing in work is important; up to 85% of the registered childcare costs each month is paid regardless of the number of hours that they work, compared with 70% for tax credits.

[The Archbishop of York]

My Lords, it is encouraging to see that the Government are keeping a check on the numbers of people being affected by these policies, but I was not quite sure whether I heard that work is being done to measure the impact of the policies on families. I can say, and it gives me no joy to say it, that from where I serve in the north of England—I am thinking particularly of Middlesbrough and Hull—I see the disturbing impact of an increase in poverty, child poverty and families in very difficult situations, not least with the cost of living crisis on top of all this. My simple, genuine and heartfelt question is: how would you explain this to a mum expecting her third child, or a family with three or four children who have been pushed into benefits over the past couple of years? They do not understand why this is happening but they are suffering as a consequence of it. How do we explain to them the rightness of this policy?

[Viscount Younger of Leckie (Con)]

My Lords, first, we are very aware of the fact that some people are finding it particularly difficult at the moment—some very good points have been made about that. One of the issues to focus on, which we are doing, is childcare, which is a key enabler of employment for parents and has clear developmental benefits for children. Of course, the onus falls on the caseworkers in the jobcentres. Often they are very well trained, and they have to deal directly with these people who come with some heartfelt stories.

[Baroness Sherlock (Lab)]

My Lords, can I give a specific example? The most reverend Primate has talked about the impact on individuals. The larger families study that the Minister mentioned interviewed parents who have been affected by this. It gives the example of a single mother who had experienced domestic abuse. She was given an exemption from the two-child limit under the rape clause because the child was conceived by rape, so she was then awarded an extra £237 a month. But then the benefit cap kicked in and she got only £30 a month of it. Because she struggled to provide for her children, she ended up returning to a violent relationship. I ask the Minister again: what does he think about the impact of these policies, not just their number?

[Viscount Younger of Leckie (Con)]

The noble Baroness makes a good point because we should be aware of the impact, which is why we are working hard on a number of initiatives. As she will know, there are a number of fallbacks on top of this, particularly the provision of cost of living support worth over £37 billion for 2022-23, including £400 for the non-repayable discount to eligible households. However, it is more than this. I am in awe of people on the front, including those who work in the front line of the jobcentres, who work with the social workers, and indeed with the Church, to see through these very challenging issues for some families.

[Lord Goddard of Stockport (LD)]

My Lords, does the Minister agree that larger families on benefits are doubly penalised by the Government’s policy, not only by losing support for third or subsequent children but also due to the lack of affordable childcare to enable them to work? Those families are, in effect, losing £2,935 a year.

[Viscount Younger of Leckie (Con)]

I mentioned childcare costs before and it is important to support parents who have childcare needs. Of course, we have the child benefit but on top of that there are other support mechanisms to ensure that those who have children—particularly more than two, which is the subject of this Question—can survive and, in many cases, find the next meal.

[Baroness Deech (CB)]

My Lords, research has shown that the majority of children of single parents would be lifted above the poverty line if the absent fathers paid what they owe. For decades, the child maintenance system has let single mothers down, condemned children to poverty and let men get away with it. What is the Minister’s advice?

[Viscount Younger of Leckie (Con)]

This is another important subject. The child maintenance system supports separated parents to agree their own family-based arrangements where it is possible. Where it is not possible, the child maintenance system steps in. It is incredibly important that the paying parent pays, and this is where the system is dealing with some extremely challenging issues in order that the receiving parent receives what they are due.

[Baroness Berridge (Con)]

My Lords, all noble Lords will be pleased that it is a small number of families that are affected. Can the Minister inform us whether any of those families are also being affected by having to pay back money, such as aged debts, when they are on such limited income? It has always struck me as rather odd since when you get fined in a court, very careful consideration is given to your means to pay, and if you borrow money from the Government for your education, you are not asked to repay it until you are earning a fair sum of money. The poorest in our society are being asked to pay money back to the Government, so can the Minister provide us with information on that?

[Viscount Younger of Leckie (Con)]

I will need to write to my noble friend about that issue. I am certain that this system allows for payback whenever possible, but I will certainly look into that.

[Baroness Finlay of Llandaff (CB)]

Can the Minister tell us when the special rules, which have passed through Parliament, will come into force for people caring for a terminally ill person at home, given that the cost of care has gone up quite significantly and that if it is a young parent, some people can find themselves in such poverty that they have to go bankrupt?

[Viscount Younger of Leckie (Con)]

I do not have any information to hand on the future of any legislation, but I will certainly follow up with the noble Baroness and let her know whatever I have.

Bereavement Benefits (Remedial) Order 2022

Viscount Younger of Leckie Excerpts

Tuesday 24th January 2023 Lords Chamber

Moved by

[Viscount Younger of Leckie]

That the draft Order laid before the House on 13 October 2022 be approved. Considered in Grand Committee on 17 January.

Motion agreed.

Bereavement Benefits (Remedial) Order 2022

Viscount Younger of Leckie Excerpts

Tuesday 17th January 2023 Grand Committee

Moved by

[Viscount Younger of Leckie]

That the Grand Committee do consider the Bereavement Benefits (Remedial) Order 2022.

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Viscount Younger of Leckie) (Con)]

My Lords, I am pleased to introduce this remedial order, which was laid before the House on 13 October. It will extend the higher rate of bereavement support payment and its predecessor, widowed parent’s allowance, to bereaved cohabitees with dependent children. These benefits can currently be paid only to survivors who were in a legal union—that is, married or in a civil partnership—with the deceased on the day they died.

In the McLaughlin judgment in the Supreme Court, handed down on 30 August 2018, and the Jackson case in the High Court, handed down on 7 February 2020, the legislation on WPA and the higher rate of BSP respectively was declared incompatible with Article 14 of the European Convention on Human Rights. This article requires all rights and freedoms set out in the Act to be protected and applied without discrimination. In both cases, the courts found that, by restricting eligibility to those in a legal union, current legislation discriminates between children on the grounds of the legal status of their parents’ relationship.

This order provides a remedy for both Great Britain and Northern Ireland. It does so by amending the Social Security Contributions and Benefits Act 1992, the Social Security Contributions and Benefits (Northern Ireland) Act 1992, and the Pensions Act 2014. I am satisfied that the provisions of the order are compatible with the European Convention on Human Rights. The Joint Committee on Human Rights has reported on this draft order and recommended its approval.

I will put this draft remedial order into some context. It was in 1925 that financial assistance following a bereavement, in the form of national insurance pensions for widows, was first introduced. This was open to all widows whose husbands fulfilled the contribution conditions, paid at a flat rate with additional allowances for children. This reflected the widely held expectation at that time that a woman would not return to work after marriage.

Further reforms culminated in the introduction of three new bereavement benefits: widowed parent’s allowance, bereavement allowance and the bereavement payment, all in 2001. WPA replaced widowed mother’s allowance, and extended support to both widows and widowers with dependent children. Like its predecessor, it was intended to provide ongoing financial support following the death of a spouse or, from 2005, a civil partner.

The bereavement payment was a one-off payment for surviving spouses, both with and without dependent children. Bereavement allowance was a short-term payment for widows and widowers aged 45 or over with no dependent children. It was not possible to get both widowed parent’s allowance and bereavement allowance.

It became evident that this system of bereavement benefits, based on outdated assumptions, was complex to understand and administer, and could be unfair to claimants. With universal credit’s introduction—a benefit designed to help with ongoing living costs—there was a need to look again at the whole package of bereavement benefits, but especially widowed parent’s allowance, which could be paid for the same purpose. So we modernised bereavement support by introducing a new benefit, the bereavement support payment, from 6 April 2017, to help with the more immediate costs of bereavement and to allow for a period of adjustment.

Although we do not specify what these costs are, it is our intention that they should be those associated with the bereavement. Each family will have different priorities. For some, it could be funeral costs or dealing with debts left by the deceased. For others, it may include budgeting adjustments following a loss of income or additional travel simply to meet family members.

BSP consists of an initial lump sum followed by 18 monthly instalments, and a higher rate is paid for those with dependent children to recognise that families with children may need extra help. Unlike its predecessors, it is tax-free and disregarded for the purpose of income-related benefits, thereby helping those on the lowest incomes most.

Bereavement benefits have only ever been payable to those who were in a legal union with their deceased partner. They are contributory benefits, with eligibility linked to the national insurance contributions of the deceased partner. Such inheritable benefits, derived from another person’s national insurance contributions, have historically been based on the concept of a legal union.

I will now move forward and outline what this draft order covers. Eligibility for WPA and the higher rate of BSP will be extended to surviving partners with dependent children who were living with their deceased partner as if they were married or in a civil partnership on the date of death. This includes partners who are or were pregnant on the date of their partner’s death, and there will be no qualifying period of cohabitation. This change will benefit thousands of families with dependent children.

This draft order applies to those who would have been entitled to either of these benefits on, or from, 30 August 2018. This was the date on which the Supreme Court, in the McLaughlin case, ruled existing WPA legislation incompatible with the European Convention on Human Rights and, effectively, the date on which the incompatibility was accepted as final. The Committee will know that it is exceptional to make social security change retrospectively; we consider this a logical and fair start date.

For BSP, where the death occurred before this order becomes law and the claim is received within 12 months of that date, claimants will get the full amount due to them. If the claim is received later, the claimant will get up to three backdated monthly payments, plus any remaining monthly payments due. The claim must be made within 21 months of the order coming into force for any BSP to be payable.

Where a claimant’s partner died before 30 August 2018, we will make a part payment and no initial lump sum will be payable. Where the death occurred after this order comes into force, BSP will be paid subject to the usual claim time limits: 12 months for the initial lump sum and three months for each instalment.

Claimants will be eligible for WPA where their partner died before 6 April 2017 and they continued to meet the entitlement conditions on 30 August 2018. They too must claim within 12 months of the date the order comes into force. They may also be entitled to ongoing payments if they continue to meet the WPA eligibility criteria at the point of claim.

Extending these benefits to cohabiting partners means that there may be cases where more than one person claims for the same death. This could apply in cases of polyamory or people dividing their time between two households, or where there is a separated spouse who no longer lived with the deceased. As noble Lords can appreciate, this is a complex area and my officials have been working hard to develop an approach that balances protecting taxpayers’ money and the contributory principle, while ensuring that any approach reflects people’s real-life circumstances.

In these cases, this order proposes that we pay just once per death, prioritising who was living with the claimant on the date of death. Where there are claims from different addresses, entitlement would be established as part of the normal decision-making and appeals processes.

In very rare cases, more than one potential claimant may have been living with the deceased on the date of death. Here, entitlement will be decided according to a hierarchy, intended to reflect the most established relationship as this person would usually bear the majority of the bereavement costs. Should this leave more than one potential claimant and become more complex, the Secretary of State would determine who is entitled.

Transitional protection will ensure that those already in receipt of WPA or BSP before the date this order comes into force do not lose their entitlement for the duration of their award. WPA is treated as income for the purpose of income-related benefits, such as universal credit, and is assessed at the point of award.

This order provides for all retrospective WPA payments up to the date of claim to be treated as capital and disregarded for 12 months, or 52 weeks for the purposes of income-related benefits. This ensures that claimants will not lose any existing entitlement to income-related or passported benefits, such as free school meals, as a result of receiving a retrospective award. This order also ensures there is a disregard for the same period for retrospective BSP awards. The usual rules will apply to future BSP and WPA entitlements.

We do not propose any changes for the treatment of income tax; BSP is already tax-free and WPA will be taxed according to the period of entitlement, as per the existing rules. We will communicate to make WPA claimants aware that any payment under this order may incur an income tax liability. The payment of BSP does not affect a person’s tax credit entitlement. WPA will be treated as income for tax credit purposes, as is common practice for social security benefits. It will be assessed in the year of payment rather than entitlement, so no adjustments to past years will be needed.

In accordance with paragraph 3(1) of Schedule 2 to the Human Rights Act 1998, a proposed draft of this order was laid for a 60 sitting-day period on 15 July 2021 to allow for Members of both Houses and other stake- holders, including the JCHR, to make representations. I fully considered all the representations made on the draft proposed order before preparing this draft for affirmative resolution. In doing so, I agreed with the recommendation of the JCHR to amend the order to ensure that pregnant WPA claimants were covered in the same way as those in a legal union. I also agreed with its recommendation to ensure that the implications of the retrospective effect of the order on entitlement to income-related benefits be taken into account. I have also included a number of technical amendments in response to comments made by the JCHR.

Finally, I emphasise how straightforward it will be, as we see it, for people to claim. We already know from our evaluation that claimants have a very positive experience of claiming bereavement support payment, with 97% reporting satisfaction with the process. We have also provided a paper claim form especially for cohabitees, accessible online at GOV.UK or by calling DWP’s bereavement service. For BSP, there will also be the option to claim online.

With that detail behind me, I have pleasure in commending this order to the Committee. I beg to move.

[Baroness Hayman (CB)]

My Lords, I am grateful for the opportunity to speak today and to the noble Viscount for the clarity with which he introduced this order. As he made clear, there are many complexities around the subject but the reason that I am here today is very simple.

In October 2020, I received an email and I shall read some of it: “Dear Madam, I am writing to you to raise an issue with the Department of Work and Pensions. On 12 September 2020, my partner of 12 years sadly passed away after losing his five-year battle with kidney cancer. He leaves behind me and our six year-old son. When going to apply for a bereavement support payment, I learned I was not entitled to claim this support as my partner and I were not married or in a civil partnership. I am writing to you because I feel this is a very unfair law and needs to be reviewed straight away, especially when we are going through a national pandemic and I find that I am not the partner of a very strong and resilient man any more, and I have been left these difficulties and increased anxiety as I face bringing up a child alone. I am by no means begging but I do think that this is discrimination to couples who love each other and live with each other as man and common-law wife with children, because they haven’t got a piece of paper to say they are together. I hope you can raise this issue.”

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I look forward to the Minister’s reply.

[Viscount Younger of Leckie (Con)]

My Lords, I start by thanking the Committee for its overall support for and approval of this order. I wholly appreciate that I am very much the messenger here as I am new to the role. For once, having spent 12 years in the Lords, having dealt with some challenging legislation and issues and having said myself that something will be brought forward “in due course” or shortly, I am the messenger for the great work that my predecessor, my noble friend Lady Stedman-Scott, has done and brought to fruition. I am delighted that we have come to this point, with this order bringing cohabitees into this area; as I say, I pay tribute to my predecessor for that.

A vast number of questions were asked. Many of them were very technical so, again, I feel that I have been thrown in the deep end. All the questions were fair; I will do my best to answer them. I know that I will not be able to answer all of them; certainly, I can already feel quite a detailed letter coming the way of noble Lords to be sure that I answer all their questions. When bringing in a new order of this nature, such questions are obviously natural. I am particularly aware of the question asked by the noble Baroness, Lady Brinton; I will come to it towards the end of my speech. I am not sure how much I can help her, but she referred to an interesting case.

Let me start with the noble Baroness, Lady Hayman. First, I thank her for her points. Secondly, I thank her for the letter she mentioned; as I moved into this role and took over from my predecessor, I picked up a letter, and there is a letter answering some of the noble Baroness’s question on its way to her. Her first point was very fair. She asked why this order has taken so long. My answer is that remedial orders can take longer than many other orders because they involve extensive consultation and, of course, parliamentary scrutiny. Also, in the introduction of the pandemic, we needed to divert departmental resources.

That said, the main reason was the delay resulting from the McLaughlin judgment in 2018; it made sense to wait for the conclusion of the Jackson case in 2020 before deciding how to proceed. Let me be the first to say that I appreciate that there was a pretty long gap between laying periods, but it is by no means unusual. I would also say that it was too long; I know that from the different cases that have been raised.

Additionally, officials have had to work through a number of complex policy, drafting and implementation issues, including those raised by the Joint Committee on Human Rights, which have required careful consideration. It is also vital that we get this right—I would say that, wouldn’t I, but I mean it. Throughout the process, the remedial order has remained a priority for this department and will continue to do so. Bearing in mind the number of questions that have been raised, I know there is quite a bit of work to do to see this through. I hope that provides some reassurance.

The question of raising awareness was raised by a number of noble Lords, starting notably with the noble Baroness, Lady Hayman, and continuing with the noble Baroness, Lady Sherlock. We are taking a range of steps to raise awareness of the remedial order, including updating GOV.UK and using existing DWP channels to communicate about this change. We are also working closely with external organisations to ensure that people have what they need to make an informed decision about making a claim.

To go a little further on this and answer a question raised by the noble Baronesses, Lady Hayman and Lady Sherlock, we want to ensure that people have what they need to make an informed decision about making a claim, but we will not be contacting previous claimants directly. We do not routinely keep details of people who had originally claimed and been refused benefit on the basis of being in a cohabiting relationship. However, my officials will develop an effective communication strategy that reaches out to as wide an audience as possible. That may not entirely satisfy the noble Baronesses who raised this question, but we were prepared for it and this is where we stand on that issue.

There is more, because how DWP staff reach out is also important. These changes will be delivered by the DWP’s existing bereavement services team, and officials have already been developing guidance, training and other products to ensure operational readiness on the go-live date. I am sure that there is more that can be done, but I hope that helps to begin with.

My noble friend Lady Altmann and the noble Lord, Lord Davies of Brixton, asked how payments of WPA are usually treated for tax and benefit purposes. As I think I said in my opening remarks, but to clarify, WPA is taken into account as income when assessing entitlement to other means-tested benefits, so is also taxable. I can and will write, because there is further detail that I can give the noble Baronesses on the lump sums, which they raised specifically.

The question of tax credits and how they will be treated was raised, again, by my noble friend Lady Altmann and by the noble Baroness, Lady Sherlock. Payment of BSP does not affect a person’s tax credit entitlement. To be clear, WPA will be treated as income for tax credit purposes, as is common practice for social security benefits. It will be assessed in the year of payment rather than in the year of entitlement, so no adjustments to past years will be needed.

However, I know that the noble Baroness, Lady Sherlock, raised a point about back payments. I do not have an answer to that, so I will write to her and copy in all Members of this Committee to answer that question.

My noble friend Lady Altmann asked about claimants’ use of their retrospective payments and whether, as I mentioned in my opening speech, it is viewed as deprivation of capital. We have a duty to ensure that means-tested benefits are paid to those who most need them, while also ensuring fairness to the taxpayer. The deprivation of capital rules are intended to apply to those who act with the intention to access or get more benefit. Therefore, provided any capital is spent reasonably, and not with the purpose of accessing or getting more benefit, claimants should not be treated as having notional capital. To define that, notional capital is taken into account in the same way as normal capital, where claimants get a retrospective lump sum. That was a bit of a convoluted response, but I hope that the department’s consideration of this was helpful.

A broader question from my noble friend Lady Altmann was on how payments of BSP are usually treated for tax and benefit purposes. She may know this, but the lump-sum element of BSP has a grace period, as it is intended to meet immediate needs—I think I alluded to this in my opening remarks—and is disregarded as capital for a full 12 months of universal credit. Additionally, the smaller monthly instalments of BSP are not taken into account as income for the full duration of the benefit award. This is more generous than the previous bereavement benefits, which were taken into account for income-related benefits. Unlike the previous benefits, BSP is not taxed.

The noble Lord, Lord Davies of Brixton, raised some further points about tax. Perhaps I might give an overarching response. BSP is tax free, as mentioned, while only WPA is taxed and is a legacy benefit; it can be paid only for deaths before April 2017. BSP and WPA are available only to working-age people, which I think the noble Lord will probably know.

Questions were raised about the ease of navigation. I hope that I can be helpful on that to the noble Baroness, Lady Sherlock, and the noble Lord, Lord Davies. This is an important point, as the operation of it is essential. I am happy to say that we already know that the process for claiming BSP is quick and clearly explained. I mentioned that the satisfaction level is very high at 97%. I am sure there is more that we can do but I am aware of some of the concerns raised about this. We are alive to this, as it is very important that people are not put off by not being able to operate the system properly.

My noble friend Lady Altmann and the noble Lord, Lord Davies, also asked about awareness of the changes. This perhaps goes a bit further than I went earlier. I already mentioned updating GOV.UK; I may also have mentioned that we are working closely with external organisations to ensure that people have what they need to make an informed decision about making a claim. I am pleased to say that for those previously refused entitlement, either by the Secretary of State or the tribunal, it will be open to them to make a new claim for benefit. The remedial order deliberately extends the time period for making such claims; this should ensure that all who qualify can access support, irrespective of whether they have claimed before. I think I pointed out, as far as I could, what we are doing to make people who had claimed unsuccessfully before aware that they could claim again.

The noble Lord, Lord Davies, and the noble Baroness, Lady Sherlock, raised a very important point on the evidence of cohabitation. They asked what evidence people will need to provide. The Committee will know that the onus will be on the claimant to prove cohabitation. We intend to use existing DWP IT systems to verify information provided by the claimant as part of their claim. If the information provided cannot be confirmed, the claimant will be required to provide two forms of documentary evidence. We will accept evidence in line with that currently accepted by DWP as proof of address. Where claimants are unable to provide documents, we will take a customer declaration over the phone. This approach follows the existing evidencing strategy for married couples and those in a civil partnership. We believe that this is a pragmatic and compassionate approach which minimises the impact on the claimant, is deliverable and protects against the risk of fraud. I would say also that, as this is new and coming in, we will obviously monitor it carefully, but that is where we stand at present.

The noble Lord, Lord Jones, asked an interesting question about the statistics on future retrospective payments and the average amounts. Unfortunately, as he might probably guess, I am unable to give the figures to him. They are not yet in the public domain but, of course, I am happy to write—but not quite sure when I can write—to him with the figures. It may be that somebody behind me can say it might be soon. The point is that his question is very much noted; I think it was echoed by the noble Baroness, Lady Sherlock.

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[Baroness Sherlock (Lab)]

I am grateful to the Minister and thank him for the answers he has been able to give. He was unable to answer questions from my noble friend and me about the treatment of the lump sums, which are extremely important. They are at the heart of the way this order will be operationalised. Given that, according to the order, it takes affect the day after it is made, can the Minister undertake to write as quickly as possible?

[Viscount Younger of Leckie (Con)]

The noble Baroness raises a very fair point. I will speak to the team and see what we can do to write a letter quickly covering all the points, not just that particular point.

Motion agreed.

Enterprise and Regulatory Reform Bill

Viscount Younger of Leckie Excerpts

Wednesday 24th April 2013 Lords Chamber

Moved by

[Baroness Stowell of Beeston]

That this House do not insist on its insistence on Lords Amendment 36 and do agree with the Commons in their Amendments 36C to 36E.

[Baroness Stowell of Beeston]

My Lords, I will also speak to Motion B. We return to discussion of the equality provisions of the Enterprise and Regulatory Reform Bill. The House debated these issues on Monday and strong views were expressed, on which the Government have reflected very carefully. On Monday, as on other occasions, the noble Baroness, Lady Campbell, spoke eloquently and with passion about the importance of the commission’s general duty. I very much respect the knowledge that she and others contributed during the passage of the Bill.

The Government want the commission to be a strong equality and human rights body: our national expert whose opinion is respected and valued. This is what our legislative proposals, alongside our non-legislative work, are intended to achieve. We recognise that the general duty is important to many people as a symbolic statement of the Equality and Human Rights Commission’s overarching purpose. After the debate and Division in the House on Monday, the Government reflected further and decided to no longer press for its removal from the Equality Act 2006. However, as I argued on Monday, the general duty has a practical effect, as Section 12 of the Equality Act 2006 requires the commission to monitor and report on society’s progress against the aims set out in the general duty. We continue to believe that the commission will be more effective if the monitoring and reporting that it is required to do focuses clearly on its core equality, diversity and human rights duties.

The Motion we are considering today enables the commission’s general duty at Section 3 to remain in the Equality Act 2006. It also proposes that the commission should monitor progress against the duties specified in Sections 8 and 9 of the Equality Act 2006 —equality, diversity and human rights—the very areas where the commission can make a difference in society as our national equality body and national human rights institution. I should make clear that the commission will continue to be required to monitor and report every five years on changes in society in areas that it is uniquely placed to influence and change: in other words, those specified in Sections 8 and 9.

I come now to some technical amendments and beg the patience of noble Lords. Retaining the general duty at Section 3 also requires a consequential amendment to ensure that the word “groups” in the general duty is defined effectively. Amendment 36C, agreed by the other place, reinserts the parts of Section 10 that define “groups” for the purposes of the Act. Amendments 36D and 36E are technical and consequential amendments.

These proposals, which were fully supported yesterday in the other place, address the concerns raised during debates in this House. They build on the good progress already made. The Equality and Human Rights Commission is now well placed to go from strength to strength. I beg to move.

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Moved by

[Baroness Stowell of Beeston]

That this House do not insist on its insistence on Lords Amendment 37 and do agree with the Commons in their Amendments 37C to 37F in lieu.

[Baroness Stowell of Beeston]

My Lords, this House has debated caste and caste discrimination at each stage of this Bill since Grand Committee. I pay particular tribute to the noble and right reverend Lord, Lord Harries, and my noble friends Lord Avebury and Lord Deben, for their important, impassioned and at times moving contributions to these debates. I also acknowledge many other noble Lords who spoke in heartfelt and well informed ways, many for but some against the different amendments relating to caste discrimination being incorporated into the Equality Act 2010.

Earlier this week we considered this issue again in some detail, and this House repeated its view that caste should be directly included in the Equality Act 2010 as an aspect of race. The Government have always said that we are against any form of caste prejudice or discrimination. What has been at issue is how best to tackle any such prejudice and discrimination that may occur.

We have listened carefully to what this House has said, and we acknowledge the strength of opinion that has been expressed. While I need to record that we remain unconvinced that the evidence shows that legislation is the right way to resolve problems associated with caste prejudice or discrimination, we none the less accept the need to resolve this matter. We have therefore made the commitment, after full and extensive consultation, to legislate. Noble Lords will recognise that this is the essential difference compared with our earlier proposals.

The amendment that was last debated in this House would have seen caste directly become an aspect of race for the purposes of the Equality Act 2010. Instead, we propose an alternative form, which was originally proposed as an amendment in this House in Grand Committee. Under this amendment in lieu, what is currently a discretionary power in the Equality Act to add caste to the list of race characteristics will become a duty on the Secretary of State. This amendment still gives effect to the need to legislate, while giving us greater flexibility to pick up the key issue of public consultation, which I believe the House recognises to be necessary and useful.

There are important issues on which we need to consult widely. The first concerns the definition of caste in the Act and any associated exceptions. Second is the issue of non-legislative concerns, some of which were highlighted by the Opposition in the other place and raised in this House, for example the guidance needed by business or by courts and tribunals, or the vexed question of caste identification and monitoring. Finally, there are wider issues to do with caste, such as gathering the right evidence that may be needed for the eventual statutory reviews, to which I shall come in more detail in a moment.

The secondary legislative approach, which the Government are proposing today and which I think was supported by a number of speakers, gives us better assurance that we get the legislation right, as well as greater flexibility on its timing. I should add that we intend to continue with our Talk for a Change education programme in relevant communities, which we continue to see as having an important role in effecting cultural change over time. We also wish to involve and work closely with the Equality and Human Rights Commission on broader issues of caste and caste-related discrimination.

Noble Lords will also see that there is a further element in the Motion. We have provided for the possibility of a review of the exercise of the caste power and any order made under it. This safeguard is in response to the various concerns raised by parliamentarians of all parties, here and in the other place. It looks beyond any immediate need for caste legislation, and concerns the importance of ensuring that legislation does not inadvertently embed in British society the concept of caste, together with those aspects of it that are inappropriate to the modern world.

We see no place for caste in today’s Britain, and we want caste distinctions to disappear over time. This power gives us the opportunity to review the ongoing need for such legislation to remain, together with a means for its removal should it no longer be considered appropriate. As I have already said this evening, the Government have listened carefully. We are committing to legislate after we have carried out the consultation which this House has recognised to be necessary, before we exercise the power to make caste an aspect of race in the Equality Act 2010. We are also putting in place the option to review that legislation after it has been enacted. I trust that noble Lords will accept these proposals, one of which mirrors an earlier proposal put forward in this House. The other picks up on a suggestion put forward by the Opposition, among others. I beg to move.

Enterprise and Regulatory Reform Bill

Viscount Younger of Leckie Excerpts

Monday 22nd April 2013 Lords Chamber

Moved by

[Baroness Stowell of Beeston]

That this House do not insist on its Amendment 36, to which the Commons have disagreed for their Reason 36A.

Motion B1

Moved by

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Moved by

[Baroness Stowell of Beeston]

That this House do not insist on its Amendment 37, to which the Commons have disagreed for their Reason 37A.

[Baroness Stowell of Beeston]

My Lords, we come now to the issue of caste and whether it should be made an aspect of race and thus a protected characteristic under equality law.

The whole House agrees that prejudice and discrimination based on caste is wrong. It is unfair and unacceptable in a modern society and is certainly unacceptable in Britain. There is no place for it and we need to take the right action to ensure that there is no place for it. It was your Lordships’ view when we last debated this that caste should be directly and immediately included in the Equality Act as an aspect of race. The other place has taken a different view and said we should not legislate at all without further consultation. There has, as yet, never been a full public consultation on this issue.

I will be absolutely clear. The Government have listened to what your Lordships’ House has said. We acknowledge the widespread support among noble Lords for legislation and the strength of opinion that has already been expressed. Today, I will explain the additional steps the Government are taking in response to the strength of that opinion. Since we last debated this matter, significant concerns have also been expressed about the implications of legislation. These concerns have not come only from those we would expect to be against legislation. Her Majesty’s Opposition also raised legitimate and serious questions during the debate in the other place. As I said during our earlier debates, this Government are not against legislation as a way of tackling caste discrimination. However, we do not have all the information that we believe is necessary to decide that the power in the Equality Act 2010 should be exercised. We think a responsible Government should consider all relevant issues and the implications of legislation before going down that route.

During our previous debate, my noble and learned friend Lord Mackay of Clashfern suggested that having the provision for caste in the Equality Act had given the courts reason, which they might not otherwise have had, to doubt whether the existing legislation protects people against caste discrimination. This helps to illustrate a very important point. We must ensure that whatever we do next does not create new, unintended consequences which could make it harder for people to seek redress. However, at the same time, we must of course be conscious of the need to bring what we do next to a conclusion as quickly as possible.

If we are able, shortly, to reassure ourselves on these points and decide, after consultation, to exercise the power that already exists in the Equality Act, then an advantage of this power is that we can do so via secondary legislation. In other words, I want to reassure your Lordships that there need not be a requirement for new primary legislation and therefore any unnecessary delay. I should note, however, that the amendment brought before the House today would not permit any meaningful public consultation or allow any flexibility through secondary legislation in the way that the Opposition, among others, have been arguing. Caste would simply join colour, nationality and ethnic origin as an aspect of race in the Act, and that would be that.

In a moment I will explain what additional information and steps we think are necessary before the Government will decide, and what the timescale is for that decision. First, I shall summarise some of the concerns that have been raised. First, there are concerns about whether we are actually legislating on the right ground. Some organisations have suggested that descent is more appropriate than caste, and this is an issue that the Opposition have also raised in debates in the other place. I am aware that there are differing and strong views on the question of descent, which we cannot go into today. However, the fact that there is genuine uncertainty over the definition of what we are legislating about clearly suggests that we should not be adding further to the law before carrying out the sort of consultative process proposed by both the Government and the Opposition, although I acknowledge that the Opposition have a different proposal in terms of consultation.

There are also concerns about individuals having to indicate their caste in any monitoring. The NIESR report is clear that some people would not want to do this or indeed admit to caste existing at all. We all have to consider what business would need to do to comply sensibly with such a provision and, if so, what costs this would entail. Would there need to be a code of practice, and if so, would it be reliable in such sensitive matters? To take one important stakeholder in this area, the CBI has stated that,

“on this terribly complex issue time must be taken in order to craft the right intervention, rather than rushing the process in order to comply with the timetable of the ERR Bill”.

At the moment, I believe it is not clear that we have all the information that we need on these and other questions. A significant number of Hindu and Sikh organisations, including some representing people from the perceived lower castes, have expressed concerns that they have not had a chance to provide considered views and would be strongly opposed to immediate legislation on this. For example, the GAKM UK which represents the Mochi community, which is deemed one of the lower castes, believes that by enacting the clause in law, the Government could undo all the work done by our communities over the past 20 years to try to remove the differentiation by caste in all aspects of life.

I am, of course, aware that some noble Lords may say that this is the sort of argument that could have been used to delay the advent of race or indeed of any other discrimination law. However, there is a fundamental difference with caste in that not only do we wish to get rid of caste prejudice from British society, we actually see no useful value in caste itself, or of anyone defining themselves by their caste. In that sense it is not like colour or ethnic origin, or any of the other protected characteristics. We need to ensure that the action we take, particularly if in legislation, sets us towards this aim and not in the opposite direction of embedding caste as a concept in domestic law.

As your Lordships will be aware, on 1 March this year, the Government announced a programme of educational work within the affected communities. At that time we also said that the Equality and Human Rights Commission will investigate the right way of tackling the problem of caste prejudice and discrimination, using the evidence in the NIESR report and earlier material from ACDA and other groups as its starting point. In last week’s debate in the other House, the Minister for Women and Equality announced that in parallel with this work a public consultation will be undertaken on the use of the caste power in the Equality Act. As I have already stated, a full, balanced public discussion is something that has not previously happened, and we think it is crucial that it now does so.

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Moved by

[Viscount Younger of Leckie]

That this House do not insist on its Amendment 38 and do agree with the Commons in their Amendments 38A and 38B to words so restored to the Bill.

[Viscount Younger of Leckie]

My Lords, this is an issue that has already been debated in some detail. Noble Lords will recall that the Government were nearly successful in persuading the House to accept the vote on Report, losing by the smallest of margins—indeed, by just two votes. Nevertheless I reassure noble Lords that the Government have listened to and carefully considered both the extensive arguments made, and the heartfelt concerns expressed, about the possible effects of this change. However, the Government feel strongly that a measure to reassure business is necessary, and the other place clearly endorsed that view by a majority of 75 when it voted on this issue last week.

This measure is one of a number of reforms designed to address the much wider issue of the perception of a compensation culture and the fear of being sued that this generates. It is a fear that drives employers to overimplement the law, incurring unnecessary costs, and that undermines their confidence to grow and develop their businesses. It is a problem that I believe we all recognise needs to be tackled, and one that we have not only considered in relation to this clause but, as many noble Lords will recall, debated in some detail in relation to my noble friend Lord Young of Graffham’s report Common Sense, Common Safety. It is because of this wider context and its detrimental effect that the Government remain of the view that it is not reasonable or fair that employers should be held liable to pay compensation when they have done nothing wrong and taken all reasonable steps to protect their employees.

We acknowledge that this reform will involve changes in the way that health and safety-related claims for compensation are brought and run before the courts. However, to be clear and to avoid any misunderstanding that may have arisen, this measure does not undermine core health and safety standards. The Government are committed to maintaining and building on the UK’s strong health and safety record. The codified framework of requirements, responsibilities and duties placed on employers to protect their employees from harm are unchanged, and will remain relevant as evidence of the standards expected of employees in future civil claims for negligence.

As I set out on Report, the clause provides for a power to make exceptions. It is already planned to make such an exception in respect of pregnant workers in order to comply with the terms of the relevant EU directive. We have thought carefully about whether there are more exceptions that should be made at this stage, but have not identified any other examples. However, I assure the House that we will seriously consider any further exceptions that are suggested.

To be successful in providing the reassurance that businesses need to overcome their fear of being sued, we need to take decisive action that will send a clear and effective message. The Government believe that the proposed single amendment to the Health and Safety at Work etc. Act achieves this by providing a consistent approach to civil litigation across all health and safety legislation, which will be simple for both employers and employees to understand.

To clarify a point of detail, I should also explain that amendments regarding the words “so restored to the Bill” have the effect of reinstating government amendments agreed without objection in Grand Committee. These amendments were made to comply with the Delegated Powers and Regulatory Reform Committee recommendation to remove a new regulation-making power that had been inserted as proposed new Section 47(2B) of the Health and Safety at Work etc. Act. The Government reflected on the committee’s comments and accepted that it was not necessary to take such a power, as there are no current plans to extend the policy to other legislation.

For the reasons that I have set out, I ask that noble Lords do not insist, as the noble and learned Lord, Lord Hardie, asks, on their Amendment 38. I beg to move.

Motion D1

Moved by Lord Hardie

As an amendment to Motion D, leave out from “House” to end and insert “do insist on its Amendment 38”.

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[Viscount Younger of Leckie]

My Lords, I have again listened with interest to the arguments made and thank noble Lords for their careful consideration of this very important issue. I start by challenging the noble and learned Lord, Lord Hardie, and the noble Lord, Lord McKenzie, on whether there is a compensation culture. The noble and learned Lord raised that point. I clarify again that my noble friend Lord Young and Professor Löfstedt underlined that health and safety regulations, more than any other area of regulation, suffer from misinformation and overcomplication in the media and elsewhere. I was grateful for the intervention by my noble friend Lord Faulks on this issue.

As Professor Löfstedt found in his independent review, these myths lead to confusion about what the law requires and a fear of being sued which drives employers to overimplement the law in an effort to protect themselves. This does not lead to better protection for employees but means that employers are spending significant time and resources on activities and services which are not necessary or far in excess of what the law requires. Concern about “getting it wrong” discourages employers from looking at ways to develop and grow their business and consequently from taking on new employees. I reiterate to the House that this is a real issue and that there is a perception in this regard. We believe as a Government that we should be tackling it.

The noble and learned Lord, Lord Hardie, referred to certain cases which were raised in the other place by the honourable Member for Middlesbrough. We have been able to check the facts of two of those cases. In both of them there is prima facie evidence of negligence on the part of the employer. We would expect that such cases would still be brought as negligence claims if brought after this amendment to the Health and Safety at Work etc. Act. It is important to clarify that point.

The noble and learned Lord, Lord Hardie, mentioned removing the right to compensation and depriving families of it in the event of an employer’s breach of statutory duties. The Government’s view is that it is fair and reasonable that this burden should be removed from an employer who has done nothing wrong. The fact that someone has been injured at work does not mean that they are automatically entitled to compensation. Ours is not a no-fault system. Many health and safety duties require the injured employee to show fault on the part of their employer. It is interesting to note that currently claimants do not recover compensation in about 30% of claims.

There can be cases of misfortune to which I alluded on Report, which cannot and should not be laid at the employer’s door. In order effectively to tackle the fear of being sued and of unjustified reputational damage, and the costly burdens on business this brings, employers need to know that they have a fair opportunity to defend themselves.

The noble Lord, Lord Pannick, spoke of the burden of proof shifting to the employee, as he put it, being unreasonable. However, the cases that will be most significantly affected by this change are those which would have previously relied on an absolute or strict liability duty. Under the existing system, employees have to prove that their employer breached the standard required in the regulations and that the breach caused the injury. In practice, the issues and evidence that will need to be examined in relation to a claim for negligence will be similar to those currently examined in relation to a claim for breach of a duty which is not a strict one and qualified by, for example, the wording,

“so far as is reasonably practicable”.

That point was raised earlier. Indeed, most cases are currently brought for both breach of statutory duty and negligence, so it is anticipated that most claims will still be able to be brought.

The noble Baroness, Lady Turner of Camden, said that a different approach had been taken to Professor Löfstedt’s recommendation. The Government agreed with Professor Löfstedt’s recommendation in principle, recognising the unfairness which results where employers are liable to pay compensation regardless of having taken all reasonable steps, and agreed to look at ways to redress the balance. Excluding civil liability only in relation to specific strict liability offences would mean making a large number of amendments to more than 200 regulations and could result in different approaches to civil liability being applied within a single set of regulations and across the regulatory framework. This would add a layer of complexity to the current system leading to greater uncertainty for both employers and employees about the duties that apply in respect of compensation claims. Making a single amendment to the Health and Safety at Work etc. Act has the significant advantage of delivering a consistent approach across all health and safety legislation.

I reiterate that this reform is not about reducing the number of claims made, but about establishing the important principle that employers should always have the opportunity to defend themselves against a compensation claim when they have done nothing wrong and have taken all reasonable precautions to protect their employees. By providing the reassurance that they will not be liable if an accident happens which is totally outside their control, this change will support responsible employers who take care to protect their employees by giving them the confidence not only to take sensible steps to manage health and safety risks but also to expand their businesses into new areas and activities and to take on new employees to achieve this. The Government believe this to be a fair and proportionate response to the impact that strict liability duties currently have in the civil litigation system.

Business is fully behind the need for action in relation to the perception of the compensation culture. More specifically, it is supportive of the approach that the Government want to take in relation to the issue of strict liability duties. I am most grateful to my noble friend Lord Faulks for his succinct intervention, backed by his experience in the field. This support was also reaffirmed by both the British Chambers of Commerce and the Federation of Small Businesses in correspondence received in the last few days. I therefore ask again that noble Lords do not insist on their amendment on this issue.

[Lord McKenzie of Luton]

Before the Minister sits down, can he just help us with one issue? If it is the Government’s position that the problem to be addressed is the perception of a compensation culture, why should that be addressed by making the reality of accessing compensation claims more difficult?

[Viscount Younger of Leckie]

I reiterate that the balance is not right. We have been much helped by the report from my noble friend Lord Young and Professor Löfstedt, who have provided this perception and provided the evidence to allow us to act. This is the right approach for the Government to take.

[Lord Hardie]

Does the Minister accept that regulations that have the qualification of reasonable practicability afford an employer the opportunity of defending himself against a breach?

[Viscount Younger of Leckie]

The noble and learned Lord makes a fair point. Employers will continue to need to have to defend themselves. The issue depends entirely on the particular case in hand but this government action redresses a balance that is long overdue.

[Lord Faulks]

Before the Minister sits down, I am sure he will agree that, while some of the regulations have the defence referred to by the noble and learned Lord, quite a few of them do not provide this defence at all and there can be automatic liability without any fault. Does he agree that one of the problems of the perception of a compensation culture—there was perhaps an inadvertent hint of this—is the fact that these changes are not welcomed by safety consultants or those who are concerned to gold-plate some of these regulations?

[Viscount Younger of Leckie]

I am grateful for the points made by my noble friend. That is a very helpful intervention.

[Lord McKenzie of Luton]

Can the Minister give us some examples of where there is gold-plating of regulations under health and safety provisions?

[Viscount Younger of Leckie]

I believe that I covered in Committee and on Report all the aspects that I need to.

[Lord Hardie]

I am grateful to noble Lords for their contributions to this short debate. I note that the Minister and the noble Lord, Lord Faulks, accept that there are a number of regulations which have the qualification of reasonable practicability. Those regulations afford the employer the opportunity of defending his actions by saying, “I complied with these regulations so far as was reasonably practical”. If he proves that to the satisfaction of the court then he will avoid liability.

That brings me back to a point that I sought to make earlier. Why should a right of action be excluded from those regulations? If the intention of the Government is that employers should not be blamed for something that they have not done and should have an opportunity to defend themselves, then the qualified regulations do precisely that. There is no justification in law or in logic for removing the right of action in those regulations, which, as I have said, comprise the majority of the regulations.

I am grateful to the noble Viscount for researching the cases mentioned in the other place by Mr McDonald. I accept what the Minister said—that two of the cases would have succeeded at common law, contrary to what Mr McDonald said. However, according to the Official Report, there was a specific finding by the court that there was no common-law liability in the case of the roofer and slater, Mr Hill, who,

“fell from scaffolding during the course of his work and suffered very serious injuries resulting in incomplete tetraplegia. The accident occurred as he came down the scaffolding on a portable ladder that was not fixed or in any way secured; he fell to the ground, causing the injury. His injuries were so severe that damages were agreed at just under £2 million. The court held that there was no liability at common law, but there was liability under the Work at Height Regulations”.—[Official Report, Commons, 16/4/13; col. 236.]

That is a specific example of a case where common-law liability was unsuccessful but the plaintiff managed to secure damages because the employer had failed to comply with regulations designed for the safety of his employees and that failure was the cause of the accident. If Clause 61 had been in force, Mr Hill would have received no damages because he would have failed to have established his common-law claim for negligence.

The issues have been well canvassed and I feel strongly that this clause interferes with a fundamental right. No justification has been put forward for it and the Commons has not really considered the Lords’ discussions on this matter and has given no reasons for disagreeing with Amendment 38. I would welcome the opinion of the House.

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That this House do not insist on its Amendment 40 and do agree with the Commons in their Amendments 40A to 40H.

[Viscount Younger of Leckie]

My Lords, on Report we debated the amendment in the name of the noble Baroness, Lady Hayter, on letting and managing agents. I made it clear then that the Government could not accept her amendment but that we were giving most serious consideration to the issue of redress. The noble Baroness confirmed that it was a redress mechanism that she was seeking in her amendment.

The Government have given serious consideration to these issues. We have considered reports by the Office of Fair Trading, Which?, the Royal Institution of Chartered Surveyors and others, and we have listened carefully to the debate here and indeed in the other place. The Government recognise that the fact that not all agents belong to a redress scheme has been an issue of growing concern. We are satisfied that making this a requirement would provide both the means of addressing complaints when things go wrong and a means to improve service quality across these important parts of the housing sector.

Providing access to redress would deal with many of the failings that people are concerned about in their day to day dealings with letting and managing agents. At the same time, the existing consumer protection and leasehold legislation remains in place and is already available, and is indeed used for the more serious matters.

Having listened to the concerns raised most specifically in this House by the noble Baroness, Lady Hayter, and others, including my noble friend Lady Gardner, the Government have introduced in the other place an amendment in lieu of the amendment tabled by the noble Baroness, Lady Hayter. The government amendment gives powers to require letting and managing agents of privately rented and residential leasehold homes to belong to a redress scheme. It gets to the heart of what the noble Baroness, Lady Hayter, was seeking, but without subjecting letting and managing agents to the additional layers of regulation that are in the Estate Agents Act and on which her amendment was based.

I am pleased to say that, while clearly some would have liked the Government to have gone further than redress, this amendment has been warmly welcomed and was approved without Division in the other place. Indeed, the honourable Member for Streatham, shadow Business Secretary Chuka Umunna, described it as,

“a victory for tenants and landlords””.—[Official Report, Commons, 16/4/13; col. 229.]

The Government’s approach has also been welcomed by key organisations. For example, the National Approved Letting Scheme welcomed it as a common-sense approach to improving the consumer experience of renting and letting and a sensible alternative to the heavy-handed bureaucracy of a formal regulatory regime. Similarly, the National Landlords Association has endorsed the Government’s approach of meeting the challenge of regulating letting agents head on, rather than simply applying the standards of estate agency to a distinct sector with its own significant risks.

If these clauses are enacted, the next steps will be for the Department for Communities and Local Government to consult on the details of the measures and to go through the formal scrutiny processes so that the necessary orders can be brought forward for approval in both Houses. We would expect consultation to be under way by the summer.

In their consultations, the Government will wish to take account of a number of the points that have been raised in the other place, for example on how existing codes of practice will be reflected in the redress schemes. There were also questions in the other place about the residential leasehold sector, generally echoing concerns that have been raised by my noble friend Lady Gardner of Parkes. The Department for Communities and Local Government is taking forward work on these issues, following its recent round table meeting, which my noble friend attended. I know that it will continue to involve my noble friend and a broad range of other interested parties on these matters.

My honourable friend in the other place, the Housing Minister, Mark Prisk, has spoken to the honourable Member for Worthing West about the points that he raised on the Leasehold Advisory Service and has now written to him.

The Government consider that this amendment can make a real improvement to the operation of letting and property management agents, for a very modest and proportionate regulatory burden. I am grateful to bodies such as the Office of Fair Trading and Which? for rightly bringing attention to these issues, and to noble Lords who have worked hard to bring these measures within the current Bill, in particular the noble Baroness, Lady Hayter, and my noble friend Lady Gardner. I also acknowledge my honourable friend in the other place, the Housing Minister Mark Prisk, who has a long-standing interest in this issue and has worked hard to deliver a workable redress mechanism within the current Bill.

I therefore ask that noble Lords do not insist on their amendment and instead agree with the other place on its amendments in lieu. I beg to move.

[Baroness Hayter of Kentish Town]

My Lords, I welcome and support Motion E. I pay tribute to a number of key players who have brought us to this happy position. First, there is the coalition of those interested in the well-being of tenants and landlords, as the Minister has mentioned, such as Which?, Shelter and RICS, which have given me a lot of help not only in drafting but in the persuasion, if I may say, of this House and then the Government, who perhaps were a little reluctant to start with but have made a very large step forward. The coalition that came together included representatives of tenants and landlords, as has been mentioned, but also the British Property Federation, the Mayor of London and various London councils, as well as the professional organisations to which some of these bodies belong.

The amendments in lieu are not exactly the whole of what the House asked for in passing my original amendment, in that they do not include a role for the OFT in debarring agents who go seriously astray. However, I am confident that with the build-up of intelligence by the various redress schemes, evidence will come to light on which the OFT or Trading Standards will be able to take action.

Furthermore, as happened with estate agents and as has been suggested in the consultation, ombudsmen will develop codes of conduct for letting and managing agents—based, no doubt, on the professional codes that they have in place now—to give member agents guidance as to how an ombudsman will decide a case. That is perhaps a backdoor way to the adoption of a code, but is very welcome for all that.

In due course, I and consumer groups will no doubt be asking for further regulation of letting and management agents if this measure proves insufficient to protect landlords and tenants, and I have a feeling that the noble Baroness, Lady Gardner, is not about to let this wider issue drop.

For the moment, I conclude by thanking our Lords PLP staff, Beth Gardiner-Smith, Sophie Davis and Ian Parker, for their help, and saying a very genuine thank you to both the Ministers who are with us this evening. They took a lot of trouble to listen to our concerns very carefully and—I am sure at some personal risk to themselves—battled with their colleagues at the other end to win through. This House has brought some good home sense to an issue that is of great importance to thousands of our fellow citizens.

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[Baroness Gardner of Parkes]

My Lords, I congratulate the noble Baroness, Lady Hayter. This is a great personal success on her part. She has been persuasive. She has managed to encourage us all by winning that important amendment, and without that we would never have got to this point where people have really looked at things and decided that something can be done.

As the noble Baroness said, this is not something that we are going to let die, or lie, because there is still so much more to be done. Another hopeful thing has been the new Minister for Housing. With experience and work in the field as a surveyor, he knows what we are talking about, and this has made a big difference, particularly when we have had various round-table meetings. People have adopted the attitude that they want to look into things further. We have been given hopes that that they will look into everything much further later in the year, and I will be pressing that in my questions. As you know, I am particularly interested in reducing the percentage of people required to have commonhold instead of leasehold, because that would solve a lot of problems, but everyone agrees that 100% is an impossible requirement.

I pay tribute to the two Ministers. My noble friend Lord Younger has done a great deal, and it is marvellous that he has allowed housing to come into this, which was such a BIS affair. I cannot speak too highly of my noble friend Lady Hanham, who knows the housing issue so well. It is due to her persuasiveness that we have managed to get things to this point and have received notice today of these amendments. As has been said, perhaps they do not deal with everything, but they go a long way and are a huge first step. That is what we need, and again I am delighted to welcome these changes.

[Viscount Younger of Leckie]

My Lords, I am grateful for the contributions to this short debate. We have heard a small number of contributions today on the amendment on the letting and managing agents. As we know, this is a practical measure that can be taken forward rapidly to make a real difference to the experiences of landlords, tenants, freeholders and leaseholders.

In an attempt to answer my noble friend Lord Sharkey’s question, although the timetable is unclear at the moment I am not out of step to say that we fully expect orders to be brought forward by the end of the summer. It might be earlier.

In conclusion, I commend this Motion to the House.

Motion E agreed.

Enterprise and Regulatory Reform Bill

Viscount Younger of Leckie Excerpts

Monday 4th March 2013 Lords Chamber

That the report be now received.

[The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Viscount Younger of Leckie)]

My Lords, I beg to move that this Bill now be further considered on Report.

[Lord Foulkes of Cumnock]

My Lords, before we move to consideration of the matters before us today, I wonder whether I have missed something. Has this House appointed the noble Lord, Lord Geddes, to adjudicate on matters of order? I ask because my noble friend Lady Turner was interrupted disgracefully by a loud heckling by the noble Lord, Lord Geddes, from a sedentary position, because of his interpretation of what is right and wrong in this Chamber. It is disgraceful that she was treated in such a manner.

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Moved by

[Viscount Younger of Leckie]

70A: Schedule 17, page 248, line 6, leave out paragraph 18 and insert—
“18 (1) Section 93 (regulations and orders) is amended as follows.
(2) In subsection (4) after “8(5),” insert “26C,”.
(3) In subsection (5A) after “section” insert “26C or”.”

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[Viscount Younger of Leckie]

My Lords, government Amendment 70A corrects an error made in government Amendment 26P, tabled in Committee. The purpose of Amendment 26P was to change the procedure for making a national class consent order, to ensure that it is subject to affirmative resolution. This responded to a recommendation made by the Delegated Powers and Regulatory Reform Committee. Unfortunately, Amendment 26P replaced the wrong paragraph of Schedule 17 and therefore did not achieve the intended result. Amendment 70A is a minor and technical amendment to put this right. I beg to move Amendment 70A.

Amendment 70A agreed.

Enterprise and Regulatory Reform Bill

Viscount Younger of Leckie Excerpts

Thursday 31st January 2013 Grand Committee

Moved by

[Viscount Younger of Leckie]

32A: Clause 68, page 65, line 2, leave out “that amend an enactment”

[The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Viscount Younger of Leckie)]

My Lords, in its 10th report of this parliamentary Session, the Delegated Powers and Regulatory Reform Committee considered that the exercise of a number of the powers in these provisions should be subject to the affirmative procedure, at least the first time that they are exercised. The amendments in this group take heed of this recommendation. I am pleased to say that, in fact, they go further by requiring that not just the first use of the powers but all uses be subject to the affirmative procedure. I trust that this additional, significant safeguard in the Bill gives due comfort and assurance to those who have expressed concerns about the exercise of these powers. I beg to move.

[Lord Clement-Jones]

My Lords, I shall say just a few words on the Minister’s very welcome amendments in response to the 10th report of the Delegated Powers and Regulatory Reform Committee. It is very interesting. The committee demonstrated the value of a collective memory, as it took us all back to the Digital Economy Act and the comments that it made at the time; it has been entirely consistent. It is good to see that the Government have responded. However, I wonder, especially in light of the fact that the Minister has confirmed that the affirmative process will be used for Clause 68, whether he will also confirm that the affirmative process will be used when the Hargreaves exceptions are introduced under the European Communities Act. The Minister has clearly stated that the Government will not be using Clause 66 when those exceptions are introduced; it will be purely for penalties. We very much welcome the assurance that the Minister gave on Monday. However, will he take the opportunity to confirm that the scrutiny process will be by the affirmative procedure of both Houses when those draft statutory instruments come under the ECA procedure?

[Baroness Buscombe]

My Lords, I add my welcome for these amendments and thank the Minister.

[Viscount Younger of Leckie]

My Lords, I begin by expressing my thanks to my noble friend Lord Clement-Jones for the important part that he has played in the passage of the Bill so far. This is indeed a complex area and his contributions have demonstrated an unrivalled depth of knowledge and a robust grasp of the intricacies of this debate. I appreciate and respect the vigour with which he has presented his position to the Committee. The Government know that at the core of his work on the Bill is his determination to see a stronger and fairer copyright framework in the UK. In answer to his question concerning the affirmative procedure when the Hargreaves exceptions are implemented, I can confirm that we will use the affirmative procedure. This will, I hope, go some way towards answering the question raised by the noble Lord, Lord Stevenson.

I am pleased that these amendments have been accepted in the spirit in which they were intended. The Government recognise that the powers in these provisions could have a significant impact on creators and users of copyright works. I am confident that these amendments ensure that any use of those powers will be subject to significant parliamentary scrutiny.

Amendment 32A agreed.

Moved by

[Viscount Younger of Leckie]

32B: Clause 68, page 65, leave out lines 5 and 6

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[Lord Stevenson of Balmacara]

My Lords, we on this side of the Room support the introduction of the measures to do with orphan works and believe that the extended collective licensing system represents a good way forward, albeit, as has been pointed out by the noble Lord, Lord Clement-Jones, that it has to be done in conjunction with the copyright hub, which provides the missing ingredient in a lot of what we have been discussing recently.

As was made clear, we have some reservations about how the Government intend to ensure high standards of operation for collecting societies which are, after all, effectively monopolies in many sectors, so we are keen to see, at a very minimum, clarity on the standards to be set for collecting societies and transparency over the way the powers that the Government are taking will operate in practice. We also want to make sure that everything that needs to be done is done to make the copyright hub work well. The new regime and the copyright hub should ideally be brought into existence contemporaneously.

However, we are confident that things are moving in the right direction, and we hope that there will be opportunities for your Lordships’ House to be regularly updated on matters such as this so that we can feed in our continuing thoughts and support. I particularly refer to the point about photography, which I absolutely endorse. There is an issue there that we will need to keep an eye on. Assuming that everything is going well, we cannot support the noble Lord, Lord Clement-Jones, in opposing Clause 68 standing part of the Bill.

[Viscount Younger of Leckie]

My Lords, the very limited extent to which orphan works can be used is not just a cultural issue, but a real economic issue. The clause will allow for commercial and non-commercial use of orphan works in the UK. The Government estimate this could lead to benefits of up to £220 million a year. Nine out of 10 respondents to the Government’s consultation were in favour of commercial use of orphan works. The UK scheme has more safeguards than the EU orphan works directive. It includes a requirement that any diligent search is verified by an independent authorising body. The authorising body will not be able to license itself.

We are also making provision for remuneration of rights holders at an appropriate rate for the type of work and type of use. The directive is less restrictive about this. Remuneration will be paid whenever a work is used. It is yet to be determined how long such money should be kept on escrow for the returning rights holder. However, after a certain period it is envisaged that unclaimed money will be redistributed. Where the money has come from publicly funded institutions, such as archives, it may be possible for that money to be returned to fund archiving, preservation and digitisation costs.

The Government are pleased that the digital copyright hub is developing but have not yet made any decisions about who will run the orphan works scheme. However, regardless of its final decision, these powers are needed to enable the chosen organisation legally to operate the scheme.

The noble Lord, Lord Stevenson, my noble friend Lord Clement-Jones and other noble Lords raised concerns about the potential impact of these proposals on photographers. The Government continue to work with the photography sectors. The working group on orphan works and extended collective licensing contains significant representation from the world of photography, including the Association of Photographers, the British Association of Picture Libraries and Agencies and Stop43.

The Government appreciate that the stripping of metadata is a real problem for photographers. As noble Lords have noted, this is a current problem, and the practice continues despite the existence of legal instruments making it an offence. I am willing to meet noble Lords, who, in the course of this Committee session, have raised concerns, to discuss possible solutions to the problem of metadata stripping. This is an issue that is also being examined by the industry-led digital copyright hub, following Richard Hooper’s July report. However, the Government do not believe that the introduction of the orphan works scheme will negatively affect photographers, because historical photographs held in museums, archives and libraries, will form the bulk of photographs licensed under the scheme. If anything, the orphan works scheme will very likely improve matters, as it will become more obvious if works are being used unlawfully. Officially licensed orphan works, whether sourced from digital or analogue sources, will carry a reference to the authorising body. Courts may also take a dimmer view of infringement, if there is a legitimate and legal means of using orphan works.

The provisions on extended collective licensing are designed as a tool to help streamline rights clearance, but only where the sector wants it. We know that some collecting societies already operate extended collective licensing-type schemes, which are unregulated and unlawful. This means that rights holders are unprotected and could be missing out on money owed to them. A statutory basis for such schemes would help remedy this. The Government know that extended collective licensing might not be appropriate for all types of works or rights, which is why it can be initiated only by a representative collecting society acting with the explicit support of its members. The Government would have no power to impose extended collective licensing on a sector. Collecting societies tend to be monopoly suppliers in their sectors, so members and licensees cannot simply shop elsewhere.

The clause and schedule introduce provision for the statutory regulation of collecting societies, where self-regulation fails. Any collecting society that fails to meet the Government’s minimum standards for self-regulation would be required to adhere to a statutory code of practice. Collecting societies would have to comply with specified criteria, including on compliance and enforcement. The Government welcome the progress that the industry has made on a self-regulatory framework. Self-regulation remains the Government’s preferred approach. The safeguard of enforceable minimum standards will help to ensure that collecting societies operate in a manner that promotes open and efficient markets. If it works effectively, the reserve power will not be used.

Noble Lords have raised a number of questions. My noble friend Lord Clement-Jones raised the issue of having to wait for the hub before undertaking extended collective licensing, and pointed out that we need extended collective licensing because we have the hub. Both schemes are designed to facilitate legal and properly remunerative use of works; they are two sides of the same coin. The fact that ECL-type schemes are already in use in the UK demonstrates that there is a need. ECL cannot be imposed on a sector; if rights holders prefer to use direct licensing through digital copyright exchange, the hub or another method entirely, that is their decision. The hub cannot act on orphan works without the legislation in Clause 68 in place.

My noble friend Lord Clement-Jones raised an issue that the noble Lord, Lord Stevenson, raised previously, on photographers suggesting that we delay the implementation of the orphan works directive until the October 2014 deadline, and then implement only to relieve any restrictions that the copyright hub failed to address. I understand the concerns behind this suggestion, but this is not an option because we need to implement the orphan works directive in full, and we cannot go outside the requirements of the directive without this clause. This means that no one, including the copyright hub, would be able to license orphan works without the power of this clause.

My noble friend Lord Clement-Jones, in a further question, raised the issue of foreign rights holders who would not be able to monitor what is going on in the UK. The collecting society must produce evidence with its application to show how it deals with those affected, including foreign rights holders. I hope that that answers his question. He also raised the question of FOCAL and BAPLA, which were unhappy with the ECL. Photographers do not have to have ECL—it is voluntary and can be initiated by the collecting society only with the consent of members, as I mentioned earlier.

I believe that my noble friend Lady Buscombe stated that extended collective licensing in Nordic countries is different and guarantees remuneration for rights holders. However, collecting societies in the UK must also show how they will find non-member rights holders and distribute money that is collected to them. I hope that that goes a little way to answering my noble friend’s question. I commend the clause to the Committee.

Clause 68, as amended, agreed.

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[Lord Lucas]

My Lords, I rise not least for the pleasure of supporting entirely what my noble friend Lord Clement-Jones and the noble Lord, Lord Stevenson of Balmacara, have just said. This is a very present problem in the way that the world is developing. We are getting some very large corporations controlling a lot of the flow of copyright material. The noble Lord mentioned the likes of Facebook but Amazon is just as bad, given the rights you are left with as an author as it moves into the publishing of e-books. If you put an e-book through to Amazon, you have to sign over to Amazon the entire control over what your work is sold for. The terms that it goes for are most astonishing. Generally, we need to remember that copyright is about enabling people to create and remunerating them properly for it, not enabling vast corporations to reap the benefits that we intend for the creators. I entirely support this change and very much hope that the Government, if not accepting this exact amendment, will see their way to doing something equivalent.

[Viscount Younger of Leckie]

My Lords, a change to the scope of the Unfair Contract Terms Act 1977, as envisaged by this amendment, would warrant considerable investigation and public consultation. For example, contracts governing copyright are specifically excluded from that Act. The Government would need to assess the potential implications of amending the Unfair Contract Terms Act to insert copyright within the scope of that Act. We believe that we understand the intent behind this amendment, which is to address issues surrounding contracts between individual creators and other businesses. However, it is unclear whether the amendment achieves this, since some parts of the Unfair Contract Terms Act would not apply to business-to-business contracts. I would be very happy to have further discussions on this complex matter with my noble friends Lord Clement-Jones and Lord Lucas, and indeed with the noble Lord, Lord Stevenson. I hope that in the light of the above, my noble friend Lord Clement-Jones will be able to withdraw his amendment.

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Moved by

[Viscount Younger of Leckie]

33A: Schedule 21, page 255, leave out lines 1 to 6 and insert—
“(2) The regulations may provide that, if a licensing body fails to adopt such a code of practice, any code of practice that is approved for the purposes of that licensing body by the Secretary of State, or by a person designated by the Secretary of State under the regulations, has effect as a code of practice adopted by the body.
(3) The regulations must provide that a code is not to be approved for the purposes of provision under sub-paragraph (2) unless it complies with criteria specified in the regulations.”

[Viscount Younger of Leckie]

The government amendments in this group are in response to the Delegated Powers and Regulatory Reform Committee’s 10th report of this parliamentary Session. Government Amendments 33A, 46A and 46B are intended to put additional safeguards into the Bill. In particular, Amendment 33A seeks to ensure that when a code of practice is put in place for a licensing body, it must comply with the criteria specified in the regulations. As the regulations will have been through the affirmative procedure, this gives parliamentary oversight of the code being put in place for a licensing body.

Amendment 46A makes it clear that all the provisions under sub-paragraph (1) are included, while Amendment 46B is intended to clarify that both the determination that there has been a breach and any related sanctions are subject to an appeal process. Amendment 46B, I should mention, gives effect to the intention behind Amendment 47, tabled by my noble friends Lady Buscombe and Lord Clement-Jones. Finally, Amendment 50A removes the power to make regulations which impose requirements on licensing bodies by reference to guidance.

I trust that these additional safeguards will reassure the Committee and demonstrate that the Government have listened to the recommendations of the Delegated Powers and Regulatory Reform Committee and have taken action. I will not at this point speak to the amendments in this group that other Peers have tabled. I will instead wait to hear what they say, but I beg to move Amendment 33A.

[Baroness Buscombe]

My Lords, I thank the Minister for bringing forward the series of amendments in this group and for his explanation. Although the government changes to Schedule 21 are to be welcomed, I suggest that the Government could edge even closer towards improving the Bill yet further. Briefly, I should like to respond to the government amendments and then introduce those in my name; namely, Amendments 34 through to 51, excepting Amendment 49, which is in the next group.

Amendment 33A responds to the concerns of the 10th report from the Delegated Powers and Regulatory Reform Committee. Its concern, as we have already heard, was that the Bill will allow the requirements of the default code, enforced by penalties, to be imposed or revised without parliamentary scrutiny, given that failure to comply may lead to sanctions. Equally important as parliamentary scrutiny, in my view, is the fact that it is indispensable that the code criteria should be subject to consultation by interested, informed parties. That would be the effect of my Amendments 43 and 51.

I very much welcome the Minister adding his name to Amendment 46, which I tabled. That will help to ensure that the regulations must now set out the process for determining non-compliance, determining the type or size of the sanction and for providing a right of appeal. I also welcome Amendments 46A and 46B. As financial penalties will ultimately be borne by the collecting society’s members, fines should be imposed as a last resort. A right of appeal is essential. Also Amendments 50A, 51A and 51B are welcome additions to the Bill.

I turn to the series of amendments that I have tabled. Although the government amendments put forward are very welcome and a big step in the right direction, my amendments address separate issues which, with respect, still need to be considered. The purpose of these amendments is to provide even greater clarity in the Bill for Schedule 21, which would help to ensure that the Bill meets the stated aim of fostering successful self-regulation. The effect of the changes would be to reduce the considerable uncertainties surrounding future regulations because the powers currently provided for by this legislation are simply too vague, even with the Government’s latest amendments.

Collecting societies have invested considerable time and money in adopting and operating voluntary codes of conduct. PRS for Music introduced a voluntary code of practice for licensees as far back as 2009 and then one for its members in 2010. Many other collecting societies have followed suit. The British Copyright Council’s Principles for Collective Management Organisations’ Code of Conduct, known as the BCC principles, are important to reference here, as many of these codes of conduct for members and users comply with these guiding principles, which have at their heart a commitment to transparency, accountability and good governance. I suggest that those are all good Conservative principles.

These collecting society voluntary codes also have regard to the Government’s recently published minimum standards for collecting societies and, therefore, include an independent complaints review ombudsman. Independent adjudication of a complaint is obviously an important feature of any sensible self-regulatory system. Those BCC principles also include provision for an independent code review process. This first such review is intended to start in November 2013. In short, the principles of good self-regulation are established and are generally being operated successfully by collecting societies.

Amendments are necessary to the Bill to make the path from voluntary to statutory regulation much clearer than is currently outlined in the legislation. It is only reasonable, I suggest, to give businesses the certainty that they deserve. After all, it is a big step to move from self-regulation to underpinning with state regulation.

First, it should be clarified that the majority of the powers in Schedule 21 are exercisable only in a scenario where it has been adjudged through a fair, robust and transparent process that there has been an unremedied failure of self-regulation. The imposition of a statutory code, and/or any statutory appointment of an ombudsman or code reviewer, will lead to significant additional costs and potential exposure to penalties, and should therefore be imposed only when it is clear that self-regulation has failed. Collecting societies need to have visibility of what triggers the imposition of statutory regulation so that they are not left in the dark about whether they are close to or far from crossing the line.

Equally, given that collecting societies are already offering, or on the point of offering, ombudsman dispute-resolution services and providing for a code reviewer, the regulations should also make it plain under what circumstances the Secretary of State would appoint a statutory ombudsman or code reviewer. Amendments 34 and 50 serve to clarify the processes and specific circumstances that would enable the Secretary of State to impose such regulation.

Improvements to the Bill can also be made so that the penalties for non-compliance much clearer and more proportionate. This is why I am proposing Amendments 44, 45 and 48. The Bill provides for sanctions in case there is failure to abide by a code. These sanctions include financial penalties that may be imposed on directors and other personnel. The highest fine stated in the legislation is £50,000. Under the Companies Act 2006, penalties on individuals arise in relation to very specific failures. Codes of conduct are typically of a general nature. I therefore believe it is unacceptable to impose personal liability and financial penalties for undefined offences that are less specific than UK company law.

Let us remember that all collecting society revenues are distributed to members after management costs are deducted, and fines are therefore a direct penalty on the membership itself. Any fines would be paid for by the members of the collecting society. There is a strong argument that fines on societies should be imposed only as a last resort. Instead, it would be more sensible to provide appropriate help or assistance to a society that has been deemed to have failed, as opposed to simply punishment.

I have also tabled Amendments 35 to 42, which are effectively technical. Paragraph 3 refers to a licensing code ombudsman. Codes of practice typically govern a collecting society’s relationship with its members and its licensees. I propose that the phrase “licensing code” should be deleted because it is not appropriate.

Let me conclude by saying that we should not forget that compliance with regulation is costly; and, ultimately, the resources which are devoted to regulation must in effect be paid for by the creator members themselves. It is entirely reasonable that the penalties for non-compliance are clearly set out and proportionate. This Government support the principle of good self-regulation; they should therefore take this opportunity to do just that and reduce the uncertainties provided for by the current drafting.

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[Lord Young of Norwood Green]

My Lords, these government amendments, brought forward in response to the DPRRC recommendations, put flesh on the points that we made in respect of the previous group. As we said, we support the introduction of measures to deal with orphan works and believe that extended collective licensing is the way forward. We also want to see the copyright hub being developed, as we have said. These amendments go some way towards ensuring greater clarity over the standards to be set for collecting societies and transparency in how the powers that the Government are taking will operate in practice, and we are happy to support them.

The amendments proposed by the noble Baroness, Lady Buscombe, aim to put more detail into the Bill on how the Government intend to supervise collecting societies and on what might constitute the minimum conditions and procedures that might be required, which would ensure that the Government can step in and require a body to adapt the Government’s standards for collecting societies. I shall listen carefully to what the Minister says in response to the amendments proposed by the noble Lord and the noble Baroness, but at present we take the view that much of what is requested is more appropriate for secondary legislation.

I take the opportunity to say, as somebody who spent a few months of my life dealing with the previous Digital Economy Bill, of which orphan works were a part, but they unfortunately disappeared in the wash-up process, it is nice to know that at long last we seem to be getting near to liberating orphan works for the collective benefit of society as a whole. I welcome the Minister’s comments.

[Viscount Younger of Leckie]

First, I appreciate the general support of the noble Lord, Lord Young of Norwood Green.

On Amendments 34 and 50, there is already provision in the Bill for consultation before the appointment of a code reviewer. We have considered the proposals to put all processes for the appointment of an ombudsman and the implementation of a statutory code on the face of the Bill. However, the Government, together with stakeholders, need to learn how the schemes work in practice and respond as they evolve. This will help us quickly to remedy any unforeseen issues that result in problems or injustices for rights holders. We have considered Amendments 35 to 42 carefully and believe that the term “licensing code ombudsman” more accurately describes the functions of the role. That role is to investigate and determine disputes about a collecting society’s compliance with its code of practice.

On Amendments 43 and 51, as I noted with regard to Amendments 34 and 50, the Bill already makes provision for consultation when appointing a code reviewer. This is important to ensure independence of process. Codes of practice will be subject to specific criteria, which will be set out in regulations subject to consultation. Therefore, the Government do not consider that additional consultation is necessary.

We have spent some time looking at Amendments 44 and 45 on the power to impose sanctions on individual directors. Where it can be demonstrated that a director is responsible for non-compliance with a code, it is only right that they should be sanctioned. The default should not be to penalise collecting society members. The Government agree with the intent behind Amendment 46, which is consistent with the comments made by the Delegated Powers and Regulatory Reform Committee. Therefore we accept this amendment.

On Amendment 47, I confirm that an appeal mechanism will be available for decisions on non-compliance and for any resulting sanction. This was earlier clarified in government Amendment 46B.

Finally turning to Amendment 48, the Government can confirm that these fees will apply only to a licensing body being regulated. If a licensing body adopts a code of practice which complies with the criteria specified in the regulations, no fees arise in connection with paragraph 1 of the schedule. In addition, paragraph 6(2) of the schedule contains a protection for licensing bodies, limiting the aggregate amount of fees payable for administration and operation of the regulations.

I shall respond to a number of questions raised by noble Lords. In her general comments, my noble friend Lady Buscombe raised the code criteria, which should be subject to consultation. Although I may well have covered this in my previous speech, the code criteria will largely be based on minimum standards on which there will already have been consultation. Specified criteria will be part of the regulations and will be consulted on.

In her general comments, my noble friend Lady Buscombe also raised the work done by the collecting societies on self-regulation. The Government welcome the work they have done and what they have achieved. I repeat that self-regulation is the preferred option, but we need a back-stop if it fails, a protection for licensees and members when dealing with monopoly suppliers. My noble friend Lady Buscombe also said that fines should be used only as a last resort. I entirely agree that they should be a last resort. We do, however, need an ultimate sanction, and fines would provide that.

My noble friend Lady Buscombe also mentioned collecting society revenues which are distributed to members, who are affected by fines, instead of giving help to failing collective societies. I agree with her; this is why, if a director is responsible, he or she, rather than the collecting society members, should be held accountable. Finally, my noble friend Lady Buscombe asked what triggers statutory regulation. The provisions for an independent code reviewer, who will independently assess the performance against the code, are the trigger. I hope that I have answered all the questions raised by noble friends and, if not, I will certainly write to them.

[Baroness Buscombe]

My Lords, I thank the Minister for his explanation of the various amendments to which I have spoken today. Of course, I want to think about what he has said, but the confirmation of an appeal mechanism is very welcome. I am always concerned about leaving too much to regulations. I remember that when we were in opposition the previous Government too often left so much to regulation, and we always complained about that. I find now that we are in a similar situation. It all comes down to certainty and clarity, hence the main purpose behind the amendments we have tabled. It is a huge step to go from pure self-regulation to having a back-stop power. I think it is right to say that the industry in large part does not oppose that back-stop power in principle. It is asking for as much certainly and clarity as possible and for the Government to recognise the work the industry has done and is continuing to do to put and keep its house in good order, so that creators and the works that they do are protected, and properly so.

We welcome the Minister’s support and understanding of the position of creators and their concerns in this regard. For my part, I think that the key to successful self-regulation is that all the parties involved in it are positive and buy into the system. It works extremely well as long as there is no uncertainty or a spectre of what they would deem unfair or disproportionate state interference. So often, the bottom line is that state interference leads to delay and cost. Just as within any court of law, delay and cost never produce a happy outcome, even for the person who comes out on top. It is not a happy resolution, and that is why I also referred to dispute resolution. I am pleased that the Minister has said that the Government want to be seen to be helping the industry as opposed to coming in with something of a cosh to deter those working in the industry doing the right thing or feeling that what they are doing is worth while and is properly protecting their members.

I do not want to delay this further, so I thank the Minister for his supportive comments. I will take his thoughts away and consider further whether we should come back on Report with further amendments, just to provide certainty in the Bill.

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Moved by

[Viscount Younger of Leckie]

46A: Schedule 21, page 256, line 41, at end insert “any provision made under”

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[Viscount Younger of Leckie]

My Lords, I shall begin with Amendment 49. I can confirm that it would not be possible to make unconnected changes to the jurisdiction of the Copyright Tribunal under the power in Schedule 21.

Turning to Amendments 56A and 56B, I can assure the Committee that the proposed schemes already take account of the range of interested parties affected by them. Let me explain how. First, on extended collective licensing, the Government intend that the regulations will allow any affected party the chance to comment on a collecting society’s application before a final decision is reached. A collecting society authorised to grant licences must take into account the interests of affected parties including its members, its licensees and non-member rights holders. These obligations are required to be in the collecting society’s code of practice. An independent code reviewer will measure performance against these obligations. Where there has been an alleged breach of a code, rights holders and licensees will have recourse to an independent ombudsman.

Turning to orphan works, the orphan works authorising body is independent and will not be able to license itself. I submit that this is a stronger safeguard than that proposed by these amendments. The Government concur that representative rights holders, wherever possible, should be on the governing body. In practice, this will not always be possible with some types of orphan works, for example, old diaries, correspondence and other material never intended for publication or commercial use.

I would like to clarify an issue which was raised by my noble friend Lady Buscombe concerning Amendment 49. Any changes to the jurisdiction of the tribunal should be subject to full parliamentary scrutiny. All regulations, including changes to tribunal jurisdiction, are now subject to the affirmative procedure.

The Government have carefully considered these amendments, and I hope that in the light of my response my noble friend Lady Buscombe feels able to withdraw her amendment.

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Moved by

[Viscount Younger of Leckie]

50A: Schedule 21, page 257, leave out lines 40 and 41

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Moved by

[Viscount Younger of Leckie]

51A: Schedule 21, page 257, line 44, leave out “that amend an enactment”

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Moved by

[Viscount Younger of Leckie]

58A: Schedule 21, page 260, line 23, leave out “that amend an enactment”

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[Baroness Turner of Camden]

My Lords, I support my noble friend on this amendment. I sat through the earlier discussions which were not within my particular area of involvement but this certainly is. Of course, transparency is very important in employment relations. My noble friend has just said that my party has no problem with high pay, but we all have problems with low pay. Taxpayers have problems with low pay because it involves the Government paying out welfare. That is the sort of problem that shareholders should be forced to face from time to time, and would be bound to do so under the terms of this amendment. Therefore, I hope that the Government will understand that this is in line with good practice, that it operates throughout the best part of English commerce and industry and that it is something that we should have in the Bill. I hope that the Government will feel inclined to support it.

[Viscount Younger of Leckie]

My Lords, noble Lords are very familiar with the arguments in favour of action on directors’ remuneration in quoted companies. In my opening remarks, I will be echoing many of the sentiments expressed by the noble Lord, Lord Mitchell, and particularly picking up on the transparency aspect, as expressed by the noble Baroness, Lady Turner.

Over the past decade, directors’ pay packages have risen on average by 13% per year, while the value of many of the companies they run has remained broadly static and workers’ wages have risen at a much slower rate. Business and investors recognise that this disconnect between pay and performance is damaging and not in the long-term interests of the economy. As Sir Roger Carr, president of the CBI has said:

“Now is the time to be more transparent, more responsible and more accountable”.

It is not government’s role to micromanage company pay, but there are actions that we can take to address what is a clear market failure.

Eighteen months ago, the Government initiated a broad, national debate on this issue. This has encouraged shareholders to become more engaged as owners of companies during the so-called shareholder spring. In 2012, several firms saw their remuneration reports voted down, including big companies such as Aviva and WPP. We have also seen many companies taking the initiative and engaging constructively in response. This is an important step for encouraging more responsible paysetting.

The Government’s reforms will build on this, and promote better engagement between companies and shareholders. By giving shareholders clearer information about what directors are paid and binding votes on pay policy, shareholders will be better equipped to hold companies to account. Business and shareholders agree that this comprehensive package of reforms strikes the right balance. It will promote a stronger link between directors’ pay and company performance but avoid placing unnecessary or inappropriate burdens on companies. The head of the Association of British Insurers has said that these proposals,

“are practical, workable and should help tackle excessive executive pay”.

The amendment requires that companies report on high and low pay outside the board. The issue of high pay below board level is most prevalent in the financial services industry because poorly designed remuneration structures can incentivise excessive risk-taking—a point alluded to by the noble Lord, Lord Mitchell. The Government are committed to improving remuneration disclosure in banks and achieved progress on disclosure below board level as part of Project Merlin. At the same time, Europe has proposed bringing in its own disclosure rules. We await the outcome of these negotiations before deciding on how to proceed with any domestic proposals for disclosure below board level at banks. The Government will argue strongly for the right outcome and remain committed to ensuring that the UK has a transparent and comprehensive remuneration disclosure regime for all companies, including the financial services sector.

However, we do not believe that high pay below board level is a major issue in other sectors. Through our consultations with investors, we learned that there is no demand for such a disclosure, which, if adopted, would place an unnecessary regulatory burden on companies.

Regarding the pay of employees more generally and how directors’ pay compares to that of lower-paid workers, the Government recognise that this is an issue of concern for shareholders, employees and the public in general. We want remuneration committees to consider the broader context when setting top pay. That is why, under government proposals, companies will have to say more about how they have taken into account pay of employees at all levels, and publish the percentage increase in pay of the chief executive officer compared to that of the workforce.

Last year, we published a draft of the regulations that will implement these proposals. These regulations will determine the content of remuneration reports in future. We invited people to comment on the draft regulations and a copy is available in the House Library. Noble Lords will have the opportunity to debate this matter thoroughly later this year when these regulations are brought forward.

Amendment 58BB would mandate that regulations prescribing the content of directors’ remuneration reports must require companies to disclose information about fees paid to remuneration and recruitment consultants in respect of directors’ remuneration. Noble Lords will be aware that the Secretary of State already has the power to require companies to disclose this type of information in the directors’ remuneration report and that we have published draft regulations that would give effect to this. Under these proposals, companies would be required to explain how consultants have been appointed, what services they have provided and how much they have been paid. By way of an update for the noble Lord, Lord Mitchell, we invited comments on these draft regulations and are currently considering the responses.

The noble Lord, Lord Mitchell, rightly drew attention to pay in banks, which I alluded to in my remarks. However, it is worth re-emphasising that high pay outside the boardroom is most prevalent in financial services, and we want to see greater scrutiny of how senior executives in large banks are incentivised because their behaviour can have a material impact on a firm’s risk profile. That is why we have committed to extending pay disclosure in large banks to highly paid non-board executives. This would mean that the UK had the most transparent bank pay of any major financial centre, but we do not propose to apply this in other sectors, as mentioned earlier, where it is less relevant. We consulted on this and found that there was no demand from investors for this extra information. Indeed, it would be an unnecessary extra reporting burden on companies.

I thank the noble Lord for raising this issue, but I suggest that the amendment is unnecessary, given that the Government already have the power to do this and have proposed considerable action in this area. I therefore ask the noble Lord to withdraw the amendment.

[Lord Mitchell]

I thank the Minister for that reply. I think we are not too far away in our philosophy and in what we would like to do in this section of the Bill. What we are suggesting would perhaps give the Bill a little more bite than it has at the moment. It is something we need to think about. My instinct is that we need to pursue these amendments.

I shall say one thing in particular. I do not understand why non-financial companies are not part of this. If I were a shareholder, I would like to know this information, even if it were—to name one company—WPP, which is not in financial services. There are many companies out there that pay pretty massive salaries, and I do not understand why they should be excluded from this. The Minister said that consultation with the investment community showed otherwise, but for all of us who invest in companies, this is key information that we should have. I hope the Minister takes into account what I have said. I beg leave to withdraw the amendment.

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My amendment represents a modest proposal. There are those who argue that there should be a representative on the remuneration committee of the board, so this is a modest step that would make a positive and constructive contribution not only to directors’ pay but to the performance of the company as a whole. Fairness would be evident and there would be more transparency. I look forward to hearing the Minister’s comments and I beg to move.

[Viscount Younger of Leckie]

My Lords, I concur with the noble Lord, Lord Young, in his interesting remarks that the interests of employees are important as a company cannot excel, or indeed properly function, without a workforce that is committed, motivated and content. This includes being content with their remuneration package in relation to their peers and superiors.

I should also like to pick up the point he raised concerning companies taking into account employees’ pay and their views. He is quite right: in revised remuneration reports, companies will now have to say whether, and if so how, they have taken into account employees’ views on executive pay and policy. In addition, they will have to publish the percentage increase in pay of the chief executive officer and that of the workforce, as I mentioned earlier. These will be discussed in more detail when we debate the regulations.

Amendment 58BC would require companies to consult an employee representative if they propose to change their remuneration policy before the next AGM. The Government agree with the view that it can be useful for companies to engage with their employees when considering directors’ pay. It is important that remuneration committees make their decisions based on a broad range of reliable and robust information. We know that some companies are already doing this and we want to encourage more to do so. That is why we have proposed that, in their annual remuneration reports, companies disclose whether, and if so how, they have sought employee views. They must also say how they have taken employee pay into account.

We also encourage employees to take up existing mechanisms to air their views, such as information and consultation arrangements, employee representative committees and works councils. However, we do not believe that it is necessary to create a statutory duty to consult employees on this matter. It is up to companies and their shareholders to decide whether, and if so how, to go about it. I therefore ask the noble Lord to withdraw Amendment 58BC.

[Lord Young of Norwood Green]

I thank the Minister for his comments, some of which I found helpful. I will read the points he has made carefully in Hansard. Some of them were a step in the right direction and we will consider whether they have gone far enough. I beg leave to withdraw the amendment.

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[Viscount Younger of Leckie]

My Lords, Amendments 58BD, 58BF and 58BG would make the vote on remuneration policy a special resolution, requiring companies to secure the support of 75% of shareholders to pass. The level of support required for remuneration resolutions is a matter that the Government have consulted on extensively. The vast majority of investors agree that the vote on pay policy should remain an ordinary resolution. They would be concerned if a minority of shareholders could overturn the views of a majority. In cases where voting turnout is low, it would take only a small number of activist investors to reject the pay policy.

Investors have welcomed the Government’s decision to keep this as an ordinary resolution. They have shown this year that a majority of shareholders are often willing to vote against egregious pay policies. In 2012, we saw a succession of companies lose the vote on pay policy with at least 50% opposition from shareholders, as the noble Lord, Lord Mitchell, said. Special resolutions should be reserved for rare issues that have a major impact on shareholder rights or company value, such as recapitalisation or changing the articles of the company.

However, the Government agree that companies should have to take action when a large minority of shareholders reject a remuneration resolution, even if legally it has been passed. Therefore, the Government welcome the Financial Reporting Council’s commitment to look at whether companies should formally respond when a significant number of shareholders vote against a pay resolution and to consult on this being in the Corporate Governance Code.

Amendment 58BE would remove the requirement for companies to put their remuneration policy to a shareholder resolution at least every three years—triennially—and instead require that this is done annually. We considered that carefully when consulting with investors and companies. They welcome the option of a three-year pay policy, which encourages companies to plan for the long term and discourages them from making annual tweaks to pay packages. Investors agree that this will help to put a brake on annual pay ratcheting.

Major investors and investor bodies, including the Association of British Insurers, have backed this approach. The ABI has said that it will,

“help the task of keeping executive pay proportionate and aligned to corporate strategy”.

Of course, companies can choose to have an annual vote on pay policy and will be required to if they make any change to it. However, if the policy remains totally unchanged, it is an unnecessary burden on both companies and shareholders to require a vote on it.

We have, however, built in a safety net. Shareholders will continue to have an annual advisory vote on how the pay policy is being implemented. If they are not satisfied, they can oppose the advisory vote and this will trigger a requirement to have a binding vote on the pay policy at the next AGM. Shareholders also have the existing right to force a resolution at an EGM. That means that shareholders could force an annual binding vote on remuneration policy, should they wish to.

The noble Lord, Lord Mitchell, asked whether the high-profile votes against pay last year were a flash in the pan. As he said, last year we saw several such votes against high pay—he cited some examples—which were a step in the right direction. We are pleased that shareholders and businesses are increasingly working together to sort out pay issues, but it will take more than one year to do so. The government reforms will come into force in October this year and will give shareholders more power to push for change. Looking further ahead at least 18 months, if we see less public anger over pay because companies have sensible pay packages, we will have gone some way towards succeeding.

The noble Lord, Lord Mitchell, echoing remarks made by my noble friend Lord Razzall, raised the recent Kay review, and I am grateful to noble Lords for their welcome of that review on how to encourage a more long-term view in our equity markets. This is one of the reasons why, after consultation, we considered that a three-year vote best enabled us to focus shareholders and directors on the long-term value of the company.

Given the wide support for the approach that the Government have taken on this issue, I ask the noble Lord to withdraw his amendment.

[Lord Mitchell]

My Lords, I thank the Minister for his comments. We are perhaps a little further away from each other than we were on the previous amendments. As the noble Lord, Lord Razzall, said, it is some event when the TUC and the CBI come together on such a key issue, but we still feel that the annual side of this is an important issue.

I shall deal with the special resolution and the 75%. It is part of what we are saying about the need for this issue to be treated as important. In the next round, we would probably want to keep it as it is, but I will think about it. As for the annual side, and the request that it stays on a triennial basis, every single year at annual general meetings a series of issues go through, such as the approval of auditors and accounts. I do not see any reason at all why there should not be an approval of directors’ remuneration principle and package; it should slot in: one; two; three. I am sure that is the correct way for it to be. It does not matter what companies want to do. It is what we should be telling companies to do, so that those who invest and are stakeholders in those companies can really understand what has been going on in the past 12 months.

Having made those points, I beg leave to withdraw the amendment.

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Moved by

[Viscount Younger of Leckie]

58BH: Clause 72, page 71, line 11, after “concerned,” insert—
“( ) particulars of any remuneration payment (within the meaning of Chapter 4A of Part 10) made or to be made to the person after ceasing to be a director, including its amount and how it was calculated,”

[Viscount Younger of Leckie]

My Lords, Amendments 58BH, 58BJ and 58BK relate to the information that must be published by a company when a person ceases to be a director. They seek to clarify the information that must be disclosed and ensure complete transparency. Whenever a person ceases to be a director, shareholders want to know the details of their exit package. At present they may have to wait several months before they find this out. We believe that requiring companies to publish this information as soon as possible after a director departs will help to put pressure on companies to moderate such payments. Clause 72 introduces this requirement and requires the company to publish on its website details of payments for loss of office. However, because of the complexity of directors’ pay, some payments made after loss of office will technically be classed as remuneration payments rather than loss of office payments, so, legally, companies would not have to include details of them. Such payments can represent a substantial part of an individual’s exit package and so should form part of the disclosure on a company’s website. These amendments address this gap, bringing within scope,

“particulars of any remuneration payment … made or to be made to the person after ceasing to be a director, including its amount and how it was calculated”.

This will close a loophole which could otherwise have been exploited by companies attempting to evade the spirit of the legislation by not making full disclosures on exit payments. I beg to move.

[Lord Mitchell]

My Lords, we welcome this amendment. It is in the spirit of giving shareholders more information. We are very happy to support it.

[Viscount Younger of Leckie]

I am pleased to have support for these minor and technical amendments.

Amendment 58BH agreed.

Moved by

[Viscount Younger of Leckie]

58BJ: Clause 72, page 71, line 13, leave out ‘Chapter 4A of Part 10” and insert “that Chapter”

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Moved by

[Viscount Younger of Leckie]

58C: After Clause 73, insert the following new Clause—
“Supply of customer data
(1) The Secretary of State may by regulations require a regulated person to provide customer data—
(a) to a customer, at the customer’s request;(b) to a person who is authorised by a customer to receive the data, at the customer’s request or, if the regulations so provide, at the authorised person’s request. (2) “Regulated person” means—
(a) a person who, in the course of a business, supplies gas or electricity to any premises;(b) a person who, in the course of a business, provides a mobile phone service;(c) a person who, in the course of a business, provides financial services consisting of the provision of current account or credit card facilities; (d) any other person who, in the course of a business, supplies or provides goods or services of a description specified in the regulations.(3) “Customer data” means information which—
(a) is held in electronic form by or on behalf of the regulated person, and(b) relates to transactions between the regulated person and the customer.(4) Regulations under subsection (1) may make provision as to the form in which customer data is to be provided and when it is to be provided (and any such provision may differ depending on the form in which a request for the data is made).
(5) Regulations under subsection (1)—
(a) may authorise the making of charges by a regulated person for complying with requests for customer data, and(b) if they do so, must provide that the amount of any such charge—(i) is to be determined by the regulated person, but(ii) may not exceed the cost to that person of complying with the request.(6) Regulations under subsection (1)(b) may provide that the requirement applies only if the authorised person satisfies any conditions specified in the regulations.
(7) In deciding whether to specify a description of goods or services for the purposes of subsection (2)(d), the Secretary of State must (among other things) have regard to the following—
(a) the typical duration of the period during which transactions between suppliers or providers of the goods or services and their customers take place;(b) the typical volume and frequency of the transactions;(c) the typical significance for customers of the costs incurred by them through the transactions;(d) the effect that specifying the goods or services might have on the ability of customers to make an informed choice about which supplier or provider of the goods or services, or which particular goods or services, to use;(e) the effect that specifying the goods or services might have on competition between suppliers or providers of the goods or services.(8) The power to make regulations under this section may be exercised—
(a) so as to make provision generally, only in relation to particular descriptions of regulated persons, customers or customer data or only in relation to England, Wales, Scotland or Northern Ireland;(b) so as to make different provision for different descriptions of regulated persons, customers or customer data;(c) so as to make different provision in relation to England, Wales, Scotland and Northern Ireland;(d) so as to provide for exceptions or exemptions from any requirement imposed by the regulations, including doing so by reference to the costs to the regulated person of complying with the requirement (whether generally or in particular cases).(9) For the purposes of this section, a person (“C”) is a customer of another person (“R”) if—
(a) C has at any time, including a time before the commencement of this section, purchased (whether for the use of C or another person) goods or services supplied or provided by R or received such goods or services free of charge, and(b) the purchase or receipt occurred—(i) otherwise than in the course of a business, or(ii) in the course of a business of a description specified in the regulations. (10) In this section, “mobile phone service” means an electronic communications service which is provided wholly or mainly so as to be available to members of the public for the purpose of communicating with others, or accessing data, by mobile phone.”

[Viscount Younger of Leckie]

My Lords, we announced at Second Reading our intention to introduce into the Bill a new provision on Midata. There are three elements to this new provision. The first relates to the supply of customer data, the second relates to the enforcement regime for the supply of customer data and the third is supplemental and explains how regulations would be introduced. I will explain each of these in more detail, but let me first say a little about what we are seeking to achieve by these amendments.

Midata is currently a voluntary programme led by an independent chair, Professor Nigel Shadbolt. Its aim is to encourage suppliers of goods and services to provide to their customers, upon request, their personal historic transaction and/or consumption data in an electronic machine-readable format. The provision we are seeking to introduce into this Bill is a power to impose a duty on business to supply certain data upon request from a consumer. Let me be clear that business already holds this information electronically and is simply being asked to give it back to consumers.

Let me reassure the Committee that the Government remain keen to see businesses continue to engage with the voluntary programme so that quick progress can be made without the need to resort to regulation. What we want, however, is flexibility to give the Midata programme legislative backing, if it is appropriate to do so, for the benefit of consumers and business in this area of increasing economic potential for the UK.

Midata gives consumers more control and access to their personal and transaction data, and UK businesses will be able to take advantage of new opportunities as potential developments in the data market continue to emerge. There are two main benefits from Midata. First, services which analyse and make sense of consumers’ transaction data will emerge and will help people to manage their spending much more effectively, putting them in a stronger position and better able to deal with the increased cost of living.

How valuable could that be? The company, billmonitor, estimates that 74% of UK mobile users with a contract spend an average of £171 more each than they need to every year, equating to almost £6 billion per year in unnecessary costs. A better alignment between consumer need and purchasing will enhance competition and this in turn will reward firms offering the best value products in particular markets, allowing them to win more customers, make profits and better utilise resources.

Secondly, Midata will act as a platform for innovation and will help to strengthen the competitive digital economy in the UK. It will lead to the creation of new businesses which will help people to manage, interpret and interact with their consumption data in many innovative ways. So what might people do? Services such as Money Dashboard or lovemoney already provide people with an instant, true view of their finances in one place, which helps individuals aggregate information about their money from multiple different financial services providers to gain a rounded picture of their financial affairs but are hampered by constraints in accessing the data. At present, consumers cannot always receive this information through existing mechanisms, or they may struggle to find it in a format that can be easily reused.

Giving consumers the right to obtain their own transaction and consumption data in portable electronic format will make it easier for them to use tools such as those I have described. They would simply be able to plug their past transaction or consumption data in at the press of a button. Automating the provision of data will also make such services cheaper to provide while making it easier for companies to provide innovative new services which can make use of the data. In this way, Midata can help turn a niche market for sophisticated money management tools into a mass market.

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There are serious data protection issues in this, and some comfort from the Minister would assist us.

[Viscount Younger of Leckie]

My Lords, I welcome the general support given to Midata by the noble Baroness, Lady Hayter, in her initial remarks. I listened carefully to the large number of points that she raised. She has clearly put a lot of thought into the issue and I would like to address as many of the concerns that she raised as possible. It may well be that I do not cover them all, in which case, I will write to her.

The first issue I want to address is the point that the noble Baroness, Lady Hayter, raised concerning the British Retail Consortium and the objections that they have expressed on Midata. To re-emphasise the point—the focus of the power of this Bill are the four core sectors of energy, mobile phones, current accounts and credit cards. We cannot say that there will never be circumstances where Ministers believe including supermarkets within the regulations is worthwhile. But, before they do so, they will have to take account of the factors set out in proposed subsection (7) in Amendment 58C. The relevant legislation to effect such a change would be subject to enhanced parliamentary scrutiny through the affirmative procedure.

The noble Baroness, Lady Hayter, asked whether it was true that consumer bodies had been warning about the risk of this programme for some time. It is true that the Government continue to work with consumer representative groups and business to tackle any potential risks to consumers—the point that she raised. A range of consumer bodies endorsed the principles of Midata published by the Government in 2011, such as Citizens Advice, Consumer Focus and the Office of Fair Trading. Members of these consumer organisations also sit on the Midata strategy board, which is responsible for driving the direction of the overall programme. However, the Government are taking these concerns seriously and the Department for Business, Innovation and Skills will continue to work closely with consumer groups to ensure that consumer privacy is protected.

The noble Baroness, Lady Hayter, asked whether the Information Commissioner actually wanted the role of enforcement. I can reassure her that Ministers have discussed this with him directly and he was, indeed, willing to take on the role. The noble Baroness also asked if this was an appropriate role for the Information Commissioner and whether he had enough resources to undertake this particular role. We have had detailed discussions with the ICO on how the enforcement regime could work for Midata. If regulations are brought forward in the future, we are confident that the ICO’s existing expertise in data protection will help it to effectively enforce the Midata right for consumers. In addition, we did not want to place any additional cost burden on business, but we have included provisions enabling other bodies to be designated as enforcers, if that is later decided to be more appropriate than the ICO. For example, if we were to regulate for one sector only, it might be appropriate to designate a particular sector regulator.

The noble Baroness raised the issue of data protection. Existing consumer protections would still apply under Midata. All organisations that process personal data in the UK, including for the purposes of the Midata initiative, must comply with the Data Protection Act’s eight data protection principles. The DPA is enforced by the independent Information Commissioner’s Office, which has powers of prosecution and can issue monetary penalty notices requiring organisations to pay up to £500,000 for serious breaches of the DPA.

The noble Baroness also raised the issue of exclusions for smaller companies. I mentioned earlier that she will remember the issue of micro-businesses. The power allows flexibility for smaller companies to be excluded at the regulation stage. I hope that reassures the noble Baroness on that particular point.

The noble Baroness, Lady Hayter, also raised the issue as to whether consumers would be charged. The regulations could allow for consumers to be charged if that is considered appropriate at that particular stage. The new clause already limits such charges to the cost of complying with the request for data.

There are two more questions raised by the noble Baroness. First, she asked why there has been no government lead on providing public sector data. These measures will not apply to the public sector. However, in parallel, the Government are looking at issues of public sector data. The Open Data White Paper sets out the Government’s position and plans on public sector data release.

The noble Baroness also asked what form the regulations would take. The Government want first and foremost to encourage voluntary progress on this particular Midata programme. If regulations are subsequently brought forward, they will be shaped by consultations with stakeholders first.

The Government will continue to engage with business, consumer groups, regulators and trade bodies involved in the voluntary programme to accelerate progress as well as to broaden our engagement with other sectors. In bringing forward these amendments, we are conscious that a balance needs to be struck between the rights of individuals, the costs to businesses and wider benefits to the economy. This balance also needs to reflect the digital age and the increasing amount of data that is now unavoidably available.

We believe that giving consumers the right to obtain their own transaction and consumption data in portable electronic format, thus enabling them to use tools to manage this information in a smart way, is an effective way to empower consumers in the 21st century, which is good for business and good for the economy.

[Lord Whitty]

It seems to me that the Minister was talking about charging by the current owner of the information, or provider—the person with whom you are dealing through your mobile phone company. But I understand that the Government envisage there being new intermediaries in this area that will obviously be looking for a profit out of it for themselves and to use that data in different ways. Would that restriction on charging apply to them? In a sense, you have doubled the administrative time with a provider and an organisation that is being subcontracted by that provider to deal with the consumer. It also complicates data protection and potential liability and redress.

[Viscount Younger of Leckie]

The noble Lord, Lord Whitty, makes an interesting point. I will need to double check and revert to him to clarify his point.

[Baroness Hayter of Kentish Town]

My Lords, I thank the Minister for his reply. I am particularly reassured by the ongoing discussions with consumer groups. Perhaps it was not clear in what he said—I did not quite hear it—but it seemed to me that he said that no extra resources would be made available to the Information Commissioner. If that is not the case, perhaps that could be clarified.

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Moved by

[Viscount Younger of Leckie]

58D: After Clause 73, insert the following new Clause—
“Supply of customer data: enforcement
(1) Regulations may make provision for the enforcement of regulations under section (Supply of customer data) (“customer data regulations”) by the Information Commissioner or any other person specified in the regulations (and, in this section, “enforcer” means a person on whom functions of enforcement are conferred by the regulations).
(2) The provision that may be made under subsection (1) includes provision—
(a) for applications for orders requiring compliance with the customer data regulations to be made by an enforcer to a court or tribunal;(b) for notices requiring compliance with the customer data regulations to be issued by an enforcer and for the enforcement of such notices (including provision for their enforcement as if they were orders of a court or tribunal).(3) The provision that may be made under subsection (1) also includes provision—
(a) as to the powers of an enforcer for the purposes of investigating whether there has been, or is likely to be, a breach of the customer data regulations or of orders or notices of a kind mentioned in subsection (2)(a) or (b) (which may include powers to require the provision of information and powers of entry, search, inspection and seizure);(b) for the enforcement of requirements imposed by an enforcer in the exercise of such powers (which may include provision comparable to any provision that is, or could be, included in the regulations for the purposes of enforcing the customer data regulations).(4) Regulations under subsection (1) may—
(a) require an enforcer (if not the Information Commissioner) to inform the Information Commissioner if the enforcer intends to exercise functions under the regulations in a particular case;(b) provide for functions under the regulations to be exercisable by more than one enforcer (whether concurrently or jointly);(c) where such functions are exercisable concurrently by more than one enforcer—(i) designate one of the enforcers as the lead enforcer;(ii) require the other enforcers to consult the lead enforcer before exercising the functions in a particular case;(iii) authorise the lead enforcer to give directions as to which of the enforcers is to exercise the functions in a particular case.(5) Regulations may make provision for applications for orders requiring compliance with the customer data regulations to be made to a court or tribunal by a customer who has made a request under those regulations or in respect of whom such a request has been made.
(6) Subsection (8)(a) to (c) of section (Supply of customer data) applies for the purposes of this section as it applies for the purposes of that section.
(7) The Secretary of State may make payments out of money provided by Parliament to an enforcer.
(8) In this section, “customer” and “regulated person” have the same meaning as in section (Supply of customer data).”

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[Baroness Hayter of Kentish Town]

My Lords, we very much welcome the amendments tabled by the noble Lord, Lord Razzall, and the noble Baroness, particularly their intention to clarify investors’ fiduciary duty. The amendments, as have been suggested, would clarify that institutional investors are not legally obliged to maximise short-term profits at any cost but “may”—that word was emphasised—take into account wider factors, such as the long-term sustainability of returns. This is modelled on Section 172 of the Companies Act 2006, which similarly clarified that company directors may take account of longer-term and wider factors, such as their impact on communities or the environment.

We on this side tabled remarkably similar amendments to the Financial Services Bill last year. We remain of the view that the position of those who hold money or assets on behalf of others, and who take decisions about those assets, should have their real owners’ or beneficiaries’ interests centre stage. The Kay Review of UK Equity Markets of July 2012 acknowledged a problem with misinterpretations of fiduciary duties, based on what he said was,

“a narrow interpretation of the interests of … beneficiaries which focused on maximising financial returns over a short timescale and prevented the consideration of longer term factors which might impact on company performance, including questions of sustainability or … social impact”.

This can lead to unhelpful short-term behaviour by investors and is a barrier to the adoption of the stewardship approach. The Kay report concluded that,

“there is a need to clarify how these duties should be applied in the context of investment, given the widespread concerns about how these standards are interpreted”.

The Bill in front of us is about enterprise and long-term growth. The Government are giving shareholders additional rights, which we welcome, but these must be balanced with duties to the underlying beneficiaries, who may have wider interests than just immediate returns. These amendments propose that there should be no legal barriers to consideration of those beneficiaries’ interests. They do not mandate anything but they clarify the law. The amendments are, we would say, permissive rather than prescriptive, and would ensure that the law does not prevent trustees from taking a broader approach. The provision does not mandate them to do so; in fact, it restores the primacy of trustees’ discretion in deciding how best to serve their beneficiaries, as opposed to assuming that the law restricts them to taking a particular approach.

The amendments make it clear that the duty of fiduciary investors is solely to their beneficiaries, and that the interests of beneficiaries must be the basis for all decisions. They clarify that this need not always mean maximising short-term profits: if trustees believe that their beneficiaries’ interests will be better served by taking into account wider factors, they will be empowered to do so. Indeed, where trustees choose to take account of purely non-financial factors—such as beneficiaries’ ethical views or implications for their quality of life—the amendments specify that this must not be to the detriment of beneficiaries’ long-term financial interests.

Perhaps I may give one example to show why this amendment is so needed. A large pension fund, which I fear does not wish to be named in this debate, received legal advice to the effect that its policy on shareholder engagement and responsible investment might be unlawful. Its policy stated that the fund would seek to exercise voting rights in listed companies in which it held shares, and that it would take into account environmental, social and governance issues with the potential to affect the long-term value for the fund’s beneficiaries. This position is firmly grounded in the financial interests of beneficiaries, and is widely accepted as best practice within the industry. The Government endorsed such an approach by promoting the stewardship code, through its package of enhanced shareholder rights on executive pay, and, in the Commons, where Pensions Minister Steve Webb said that,

“the coalition Government fully support the highest standards of corporate governance and ethical behaviour. We agree that a socially responsible investment strategy is a sound choice for pension schemes”.—[Official Report, Commons, 20/1/12; col. 1044.]

Despite this, the advice from a large and reputable law firm took an extremely narrow view of beneficiaries’ best interests, and suggested that the costs involved in exercising voting rights might render the policy unlawful unless the firm could demonstrate that such stewardship brought monetised benefits to the individual fund. The opinion cast doubt on whether such benefits could be demonstrated. This illustrates why the Government’s approach to responsible capitalism, which has focused on giving shareholders more rights, needs to be complemented by measures to remove any perceived legal barriers to the responsible exercise of these rights.

For long-term, sustainable growth and returns, we want responsible shareholder engagement with listed companies. The Kay review recommended, and the Government agreed, that the Law Commission be asked to review the question of fiduciary duty, with Kay himself indicating that statutory clarification may be necessary to resolve this. We would therefore ask Minister to confirm today that, if the Law Commission thereby recommends such statutory underpinning, the Government will take action.

[Viscount Younger of Leckie]

My Lords, these amendments would introduce a statutory requirement for institutional investors to act in the best interests of their clients and beneficiaries. They seek to clarify that these investors are not legally obliged to maximise short-term financial returns, but may take into account longer-term considerations, including the social and environmental impact of the companies in which they invest.

I am grateful to my noble friend Lord Razzall, supported in name by my noble friend Lady Brinton, for giving us the opportunity to debate the vital issue of fiduciary standards in the investment industry. As noble Lords may be aware, the duties of investment intermediaries were considered by Professor John Kay in his 2012 independent review of equity markets and long-term decision-making. The noble Baroness, Lady Hayter, mentioned this in her speech. The Government have broadly accepted the recommendations of the Kay report in this area. Specifically, they have made clear their support for the view expressed by Professor Kay, and echoed in Amendment 58F, that institutional investors should not automatically assume that maximising short-term returns is sufficient to serve the interests of their clients or beneficiaries. Instead they should take into account long-term factors relevant to their clients’ interests over the time horizon of the investment. However, the Kay report also found that there was no clear agreement on what the law currently requires of those investing on others’ behalf, and recommended that the matter be referred to the Law Commission.

The Government have therefore asked the Law Commission to undertake a review of the legal obligations arising from fiduciary duties that dictate what considerations are appropriate for trustees and other intermediaries acting in the best interests of their clients and beneficiaries. The Government also support Professor Kay’s view that there should be a common minimum standard of behaviour required of all investment intermediaries. While I therefore have great sympathy with the spirit of my noble friends’ intentions, I do not believe that the approach taken in these amendments would achieve this. The amendments attempt to enshrine aspects of the common-law concept of fiduciary duties in statute, and to apply these to certain institutional investors in all circumstances. This includes applying them to certain FSA-authorised firms without due regard to the FSA’s existing regulatory requirements. This approach would add to confusion and uncertainty about the meaning of the word “fiduciary”, the circumstances in which a fiduciary relationship already arises and the standards already expected of investors in regulation.

The government response to the Kay report is very clear in setting out the principle that all investment intermediaries should act in the best interests of their clients or beneficiaries in line with generally prevailing standards of decent behaviour. In order to embed this principle effectively, the Government have asked the FSA, and its successor organisation, the FCA, to consider to what extent current regulatory rules in this area align with this principle and to determine what action might be desirable. This includes, if necessary, changes to regulatory requirements at EU level.

With these reassurances, I hope that my noble friends will feel able to withdraw their amendment.

[Lord Razzall]

My Lords, I must say I am slightly disappointed by the Government’s response to this. This amendment is not about looking at the issues that the noble Viscount has suggested need to be looked at. It has nothing to do with the FSA or European regulations. Its entire purpose is to clarify the existing law. For example, it seeks to clarify that institutional shareholders which had a shareholding in Cadbury’s were entitled to take the view that they did not have to accept a very successful financial bid if they were concerned about other characteristics. That is not an FSA point or a European regulation point; it is a simple matter of clarifying the law. That is all we are asking for.

I have serious reservations and concerns about the matter being referred to the Law Commission because I predict that we will be debating this in five or 10 years’ time—those of us who are still alive then—when the Law Commission eventually comes back with a recommendation that will cover much wider areas than are dealt with by the amendment, as the Minister has indicated. To my mind, that is typical of the way in which Governments respond to things, in that you propose a relatively small amendment and they say, quite fairly, that the whole area, which is huge, is being looked at, of which the amendment is just a small part, and therefore they cannot do anything about the small amendment until that huge area has been looked at. That is the problem, and that is what I worry about. However, in the mean time, I shall withdraw the amendment.

[Viscount Younger of Leckie]

I would like to clarify this matter or go some way to clarifying it. I re-emphasise that the Government are currently discussing the precise terms of reference for the review with the Law Commission and, as mentioned earlier, will make an announcement in the coming weeks. The objective of the review is to provide clarity for institutional investors on their legal obligations. It would not be appropriate to prejudge the Law Commission’s review on whether there is a need for legislation to achieve that end. I hope that goes a little way to clarify our position, but an announcement will be made in the coming weeks.

[Lord Razzall]

If I may say so, that very short response was more helpful than the Minister’s previous comments. I beg leave to withdraw the amendment.

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[Viscount Younger of Leckie]

My Lords, this amendment seeks to amend the Insolvency Act 1986 to prevent suppliers withdrawing their services from a company after it enters formal insolvency. The amendment also seeks to address concerns about whether all utility providers are bound by an existing provision to prevent them demanding so-called ransom payments as a condition of continuing supply, which is an issue that the noble Lord, Lord Stevenson, highlighted in his speech. In addition, it seeks to extend that provision to IT suppliers.

The Government recognise the concerns that have been raised here and are looking very closely at these issues. My noble friend Lord Razzall recognised the difficulty in creating a balance here. We are committed to exploring any option which might help to rescue viable businesses and jobs, or which would improve the outcome for creditors of insolvent companies. The UK’s insolvency regime is very well regarded internationally. The regime continues to rank highly in World Bank reports for its ability to deliver quick and effective business rescue mechanisms. We want to maintain that standing and, indeed, build upon it.

However, I am sure noble Lords will recognise that this is a complex issue and that proper consideration must be given to the consequences that might result from such a change. For example, forcing suppliers to continue to supply an insolvent business might interfere with commercial behaviours and contractual rights. Freedom of contract is an important tenet in English law. Restricting a supplier’s right to terminate might also lead to knock-on insolvencies and could affect the pricing of contracts. While we recognise the advantages that such an amendment might bring, in the light of the important issues it raises, the Government wish to understand more clearly the consequences before deciding whether, and if so how, to change the law. In that way, we can satisfy ourselves that the right balance is being struck between the competing interests. I thank noble Lords for tabling this amendment and I assure them that the Government will consider this important issue very carefully.

Turning to Amendment 58HZA, this proposed new clause would require the annual report on HMRC’s charter to include a review of how its standards and values interacted with HMRC’s strategic objectives for the relevant year. It would also require the report to be made with the aim of taking a long-term view when considering proposals from individuals to repay their debts. The charter sets out HMRC’s role and the standards of behaviour and values to which the department aspires when dealing with everyone. The charter contains nine rights and three obligations. Examples include: the right to help and support; honest and even-handed treatment; professional behaviour; and acting with integrity. HMRC has six strategic objectives. These include improving the customer experience and maximising revenue to close the tax gap. The standards and values set out in the charter cover all aspects of HMRC’s work to meet these objectives, as well as its interactions with individuals and businesses.

At this point, I want to acknowledge the reference made in the speech of the noble Lord, Lord Stevenson, to StepChange. He produced some statistics and used the word “grim”. They are indeed grim figures, which I listened to extremely carefully. Whether HMRC should report on levels of personal debt was a question that the noble Lord raised. We very much recognise the issues that he raised about vulnerable customers and consumers, and the level of personal debt that he highlighted so eloquently. The Government very much recognise the need to look at these issues and we are doing so, which I should stress goes beyond HMRC’s remit.

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Moved by

[Viscount Younger of Leckie]

58HA: Clause 78, page 75, line 39, after “19” insert “(and section 63(3) so far as it relates to those paragraphs)”

[Viscount Younger of Leckie]

Noble Lords will be aware that the reforms to the debtor-initiated bankruptcy process being introduced by the Bill remove the order-making function from the court and replace it with a new administrative process. These are minor and technical amendments to the “Extent” provisions in Clause 78 relating to those reforms. Individual insolvency law is a devolved matter in Scotland and these reforms will have no substantive effect on legislation in Scotland.

The jurisdiction of the adjudicator is limited to the determination of bankruptcy applications received from debtors who meet the jurisdictional criteria of having resided or traded in England and Wales for the required period. However, certain consequential amendments made by the reforms extend to Scotland. The purpose of these amendments is to ensure that we have the legal power to make all those consequential amendments that are necessary to give effect to the reforms being made in England and Wales. The amendments make no substantive changes to bankruptcy law in Scotland, which is a devolved matter. I therefore beg to move.

[Lord Stevenson of Balmacara]

My Lords, we have read the amendments and recognised the points. Rather surprisingly, given the volume of correspondence that we received on everything else in the Bill, we received no comments from anyone on this matter and therefore have to rely entirely on our own judgments. In this case, we are happy for the amendments to go forward.

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Moved by

[Viscount Younger of Leckie]

59A: Clause 78, page 75, line 40, after “63” insert “(1) and (2)”

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Moved by

[Viscount Younger of Leckie]

60AA: Clause 79, page 76, line 4, leave out “Sections 75 to 80” and insert “The following provisions”

[Viscount Younger of Leckie]

My Lords, given that this is the last group of amendments in our Committee discussions, I would like to place on record my thanks to our Deputy Chairmen and the clerks who have masterfully steered our way through all the amendments; to the Bill teams involved; to the Hansard writers who have admirably recorded our discussions and, indeed, were obliged to stay somewhat later than the extended time allotted last week; and to the Doorkeepers for their unstinting assistance.

We have given the Bill careful and detailed scrutiny and I pay tribute to noble Lords opposite as well as my noble friends who have participated in our debates. Although there have been areas on which we have not wholly agreed, which we will discuss further on Report, as one would expect from this House, they have brought a depth of knowledge and analysis to the wide range of issues covered by the Bill. I would also like to thank my noble friend Lady Stowell for the part she has played and my noble friend Lord Popat and many other noble friends who have assisted and supported me and my officials.

The Government’s amendments to Clause 79 have two effects. The first is to commence all powers to make subordinate legislation by statutory instrument on Royal Assent. This is to assist with the orderly commencement of the Bill’s provisions. I should make it clear that these amendments should not be seen as suggesting that all the powers in the Bill will be exercised straight after Royal Assent, or indeed at all. Some are reserve powers which will be needed only if certain circumstances apply—for example, Clause 45 on the powers of sector regulators. Amendment 60AD adds further provisions to the list in Clause 79(2) which are to come into force automatically two months after Royal Assent without the need for a commencement order. I beg to move Amendment 60AA.

[Lord Whitty]

My Lords, it is probably totally inappropriate for me—as I am probably the person who has been here least in recent days—but I would like to join the Minister in thanking the clerks, the support staff and everybody who has participated on all sides during these debates. I also thank the various Chairs, including our current Chair. I extend that to the Minister and his colleagues and to the noble Lord, Lord Marland, who, many moons ago, started us out on this course.

Lest the Minister think he is going to get away after that, I have a couple of questions on this virtually final clause. As he says, the powers do not necessarily come in at the first date that is stipulated here in terms of implementation, but the Secretary of State will be able to implement them. In Amendment 60AB, he has already referred to proposed new paragraph (b), which relates to concurrent powers in Clause 45. The Minister may recall that during the debate on this there was considerable concern expressed about how the balance between the sector regulator and the new CMA would work. My understanding is that there will be different times in practice when each of the concurrent powers cease or are otherwise redefined; does that mean that, as it stands, Clause 45 would come in all at once on whatever date the Secretary of State determined after the first date? In fact, there may be a different date for Ofcom and the CMA or Ofgem and the CMA or the other sector regulators. It would be heavy work for the Government if they were all to come in at the same time, because there are different considerations in each of the sectors and there will be some inquiries which are still ongoing and some which need to be completed. In any case, we will probably have to return to the substantive issue on Report to get further clarification—if not to move further amendments—but it would seem that if all of Clause 45 were brought in applying to all sectors at the same time, it would be a problem.

My second point is about proposed new paragraph (f) in Amendment 60AB. This effectively says that anything that does not happen to be listed here can nevertheless come into play on the first day after Royal Assent. It seems, since Her Majesty will be signing them off, that this is getting fairly close to his late Majesty, King Henry VIII, in that if you do not specify the date in which various sections come into operation, then bringing any Section forward to an immediate date—even though it is not specified in this commencement clause—could seriously disturb the arrangements of the particular bodies that apply. For example, if there is a commencement of a particular power to either commence or cease, people need to know that in advance. Therefore, it is important that the Bill specifies that rather than have a catch-all ability for the Secretary of State, or some future Secretary of State, to bring any clause into play on the first day. If the noble Viscount tells me that this is normal, of course I shall withdraw it, but it is not something that I see in many pieces of legislation. Perhaps he could clarify the position.

[Viscount Younger of Leckie]

I thank the noble Lord, Lord Whitty, in the sunset of this Bill, for bringing up these issues, which I regard as quite technical in terms of the timing. I appreciate what he has asked and it is obviously my business to get back to him with some answers. It may help him to know that it is the powers only that will be commenced on Royal Assent; the substantive provision will come in separately later. It might help to facilitate the commencement of the Bill. That is the reason for it. It should reduce the number of commencement orders and the commencement dates. It is important for me to re-emphasise exactly why we are bringing in this issue. However, I might not have addressed his concerns entirely but I would be more than happy to take up this matter later and give him a proper response in writing, with a copy placed in the Library.

Amendment 60AA agreed.

Moved by

[Viscount Younger of Leckie]

60AB: Clause 79, page 76, line 4, at end insert “—
(a) section 19;(b) section (Power to remove concurrent competition functions of sectoral regulators);(c) section 51;(d) sections 66 to 69 and Schedule 21;(e) sections 74 to 80;(f) any other provision so far as is necessary for enabling the exercise on or after the day on which this Act is passed of any power (arising under or by virtue of that provision) to make provision by regulations or order made by statutory instrument.”

--- Later in debate ---

Moved by

[Viscount Younger of Leckie]

60B: In the Title, line 7, after “directors;” insert “to make provision about the supply of customer data;”

Enterprise and Regulatory Reform Bill

Viscount Younger of Leckie Excerpts

Monday 14th January 2013 Grand Committee

[Lord Curry of Kirkharle]

My Lords, I declare an interest in that I chair the Better Regulation Executive, which was very much part of recommending these changes. I am delighted that the noble Lord, Lord McKenzie, recognises the value of the scheme and I pay tribute to the previous Government for having introduced it because it is a valuable tool and has reduced significantly the burden on businesses that have participated in it. My concern about the proposed amendment is the definition of “to a material extent”. It will create a lot of debate and potential confusion around how one defines “material extent”. The trade associations that have been consulted and would be keen to participate in this scheme have members who all have a common interest. I see this as providing a real opportunity to take a significant regulatory burden away from businesses that are members of a trade association and would wish to participate in such a scheme, so I have a problem with Amendment 28ZDA.

[The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Viscount Younger of Leckie)]

My Lords, before I turn to these amendments I would just like to thank the noble Lord, Lord Stevenson, for his very kind and extensive words of welcome at the previous Sitting of Committee. I look forward to a continuing and fruitful dialogue with the noble Lord. As he said himself, we sing in the Parliament choir together, although I hazard a guess that his tunefulness is somewhat superior to my own. I look forward to working closely with him and other noble Lords over the coming weeks on this Bill. I also confirm that I intend to propose meetings on the various matters where it was suggested this would be helpful at earlier stages of the Committee.

Turning to this group of amendments, I thank the noble Lords, Lord McKenzie and Lord Stevenson, for their amendments to Clause 59 concerning eligibility for the primary authority scheme, which I shall respond to in turn. This scheme was of course introduced by the previous Government, as the noble Lord, Lord McKenzie, mentioned, and has been much welcomed.

Clause 59 broadens the criteria for businesses to be eligible for the primary authority scheme. It will mean in practice that many small businesses that operate in only one local authority area will be able to join, together with similar businesses which share an approach to compliance. I hope that I can answer the question from the noble Lord, Lord McKenzie, about what that means.

The Government see a shared approach to compliance as one that a business consistently follows in order to fulfil its regulatory obligations. Such an approach should result from guidance or procedures issued from a single point, such as a head office or a trade association. This will mean that franchises of the same brand or members of the same trade association, for example, could qualify. They will be able to enjoy the valuable assurance that a primary authority partnership can bring.

The new eligibility criteria have been intentionally drafted broadly. This is to ensure that as many small businesses as possible can benefit from reduced regulatory burdens. A business will be able to join the scheme only if the Secretary of State is satisfied that the business meets the eligibility criteria, and statutory guidance will provide more detail about the matters likely to be taken into account in assessing eligibility under the new criteria.

It is intended that further detail as to the circumstances likely to constitute a shared approach to compliance will be included in statutory guidance. Adding further detail to the drafting of the clause could inadvertently restrict participation in the scheme for the very businesses that this clause is attempting to help.

Of course, having a broad definition of a shared approach to compliance in the legislation means that a wide variety of groups of businesses could qualify for the scheme and the nature of the resulting partnership will rightly need to vary. For example, where a trade association acts purely to distribute information to its members, the primary authority partnership will be very different from one which involves a trade association that provides a fully audited accreditation scheme for its members.

This type of detail will also be given in the statutory guidance and the statutory mechanism for scrutiny of proposed new partnerships by the Secretary of State provides assurance that shared approaches to compliance will be handled appropriately.

Amendment 28ZDB seeks to impose a statutory requirement for consultation before the Secretary of State issues statutory guidance on shared approach to compliance. Guidance for businesses and local authorities will be very important to provide detail of how the extended scheme will work in practice. The views of all interested parties will be vital in making the scheme work as well as it possibly can. For this reason, a commitment was given during Committee debates in the other place that,

“any guidance published as a result of the clause will be developed in consultation with stakeholders, including businesses, local authorities, trade associations and business groups”.—[Official Report, Commons, Enterprise and Regulatory Reform Bill Committee, 12/7/12; col. 606.]

I should like to pick up on a number of the comments raised. My noble friend Lord Deben asked about continuing the process. The Government are committed to the primary authority scheme. It is a key tool in reducing red tape and ending the tick-box culture of regulation.

The noble Lord, Lord McKenzie of Luton, asked at the beginning of the debate whether there were any extensions to primary authorities in the pipeline. I can confirm that the Government are consulting on extending primary authorities to include several new regulations, including those on sunbeds, if I read the noble Lord correctly. He also asked about statutory guidance and consultation. The Secretary of State already issues statutory guidance in relation to the primary authority scheme, and Clause 59(5) provides that the Secretary of State can also issue guidance on the matters likely to be taken into account in assessing whether a business meets the new “shared” approach to compliance test. In Committee in the House of Commons, a commitment was made to develop guidance in consultation with stakeholders, including local authorities. I can confirm that the existing statutory guidance will be updated to include further content relating to these proposals. This will be in place, in time for the proposed extension of eligibility becoming effective.

In summary, I hope that noble Lords will not press their amendments, because I hope that I have provided sufficient reassurance that these matters will be dealt with by guidance, taking into account the views of interested parties.

[Lord McKenzie of Luton]

My Lords, I thank the Minister for his reply, which has helpfully taken us forward a little bit. The extension proposed is much more focused on the assured advice component of the primary authority, rather than inspection plans. But I will not pursue that at the moment. I welcome the repeated reassurance that consultation will precede any issue of guidance. That is helpful. I am certainly pleased to see the enthusiastic support of the noble Lord, Lord Deben, for this approach, and indeed that of the noble Lord, Lord Curry.

The wording “material extent” was simply a peg on which to hang an amendment so that we could have the discussion that we have just had. I accept entirely that if it appeared in its current form in the Bill it would not be particularly helpful. I thank the Minister for his comments and I beg leave to withdraw the amendment.

--- Later in debate ---

[Viscount Younger of Leckie]

My Lords, I thank the noble Lords for their amendments to the inspection plans clause, to which I shall respond.

Clause 60 strengthens inspection plans so that local authorities must not deviate from a valid plan without prior agreement from the primary authority. This will ensure that inspection plans can have maximum impact to reduce the burden of regulation for businesses and regulators, and target scarce resource where it is most needed. Amendment 28ZDC proposes that the legislation should require inspection plans to have regard to the way other regulatory bodies exercise equivalent functions.

This is an interesting idea and it gives me the opportunity to underline the Government’s view that it is paramount for regulatory bodies to work together consistently within the system. That said, we do not feel that this amendment is necessary. The legislation already requires primary authorities to take into account relevant recommendations of other regulators relating to inspections when developing inspection plans. The statutory guidance reinforces this requirement.

Further, processes have been agreed with the regulatory bodies, which ensure that national regulators have the opportunity to comment on draft inspection plans before the Secretary of State gives consent. There are support mechanisms that allow primary authorities to raise queries and assure themselves that their course of travel is in line with policy and best practice in the area.

Amendment 28ZDD proposes that an exception be made to the binding nature of inspection plans where a local authority believes that it is not appropriate in the circumstances to carry out particular inspection activity in accordance with an inspection plan. The Government agree entirely that there may be circumstances where it is not appropriate for inspection activity to follow inspection plans.

The underlying statutory guidance accordingly makes clear that inspection plans apply only to routine inspections carried out in a proactive way by the local authority. An inspection plan would not impede a local authority in responding to specific complaints or local intelligence. In fact, a plan is likely to strengthen an officer’s ability to react by providing important information about the company and its approach to compliance.

I should like to make it clear that there is nothing in the proposed changes to the operation of the primary authority scheme or inspection plans that would prevent or delay local authority action in response to complaints or specific local concerns. The Government firmly believe that primary authority inspection plans must become binding and I shall give detailed reasoning for that in the stand part debate, which we will come to in a few moments.

I will pick up on a point raised by the noble Lord, Lord McKenzie, concerning the Health and Safety Executive’s role in relation to local authorities. As the noble Lord described in detail, the Health and Safety Executive worked through local authorities for categories of businesses considered as low-risk. I should clarify that “primary authority” applies only to local authority regulators. The Health and Safety Executive responded to Professor Löfstedt’s recommendations separately. I hope, therefore, that noble Lords will not press these two amendments as the existing scheme for inspection plans contains the necessary safeguards.

[Lord McKenzie of Luton]

My Lords, I am grateful to the Minister for his response. I certainly do not propose to press these amendments or take them forward on Report. I am not sure that the Minister’s reply, which was generally helpful, fundamentally dealt with the position of the HSE and the split enforcement role of health and safety between local authorities and the HSE, particularly with the quite clear proposal that came from Professor Löfstedt’s report. I suspect that this is a debate for another occasion and not for the content of this Bill. Accordingly, I beg leave to withdraw the amendment.

--- Later in debate ---

[Lord Curry of Kirkharle]

My Lords, I will also try to reassure the noble Baroness, Lady Greengross. Under the new governance arrangements that exist for the primary authority scheme with the Better Regulation Delivery Office, there is significant representation from local government on that governance body. I therefore hope that she will be reassured that there will be considerable discussion between the Better Regulation Delivery Office and local government on how the scheme will be implemented.

[Viscount Younger of Leckie]

My Lords, Clause 60 strengthens primary authority inspection plans. Its effect is to make it binding for local authorities to act in accordance with a plan which is in force. Strengthening inspection plans in this way is a crucial measure for the Government’s aim of,

“ending the culture of ‘tick-box’ regulation”.

Under the current provisions, primary authorities and businesses can work together to establish an inspection plan. Several businesses have done so, and report more informed and better targeted enforcement as a result. As things stand, local authorities must have regard only to plans, and are not bound by them. We have been told by primary authorities that plans and requests for feedback are not being followed in many cases. This means that the full benefits of inspection plans are not being realised, and many businesses are put off developing them because they do not have confidence that they will be followed.

With this clause, it is our intention to remedy this problem and to improve inspection plans. We are giving them the teeth that they need to deliver as much benefit for businesses as possible. This will ensure that businesses and primary authorities have certainty that inspections will be carried out in accordance with the plans in which they have invested. It will also mean that essential, timely feedback is received to keep the business informed of its key risks. Inspection plans are a crucial tool in enabling businesses to earn recognition for their compliance procedures and to reduce the burden of regulation. They also allow firms to focus on the key risks to their business and optimise their procedures, saving valuable time and wasted effort and allowing them to provide a better service to their customers.

--- Later in debate ---

Moved by

[Viscount Younger of Leckie]

28ZE: Clause 61, page 58, line 34, leave out from beginning to end of line 2 on page 59

[Viscount Younger of Leckie]

My Lords, these three government amendments have the effect of removing new Section 47(2B) of the Health and Safety at Work etc Act 1974, and any references to it from Clause 61. New Section 47(2B) is a new regulation-making power. The effect of the power is to enable the Secretary of State to make regulations, subject to affirmative procedure, which make changes to the extent to which,

“other health and safety legislation”,

is actionable.

“Other health and safety legislation”,

is defined as,

“any provision of an enactment which relates to any matter relevant to any of the general purposes”,

of Part 1 of the 1974 Act.

The general purposes of the Health and Safety at Work etc Act include securing the health, safety and welfare of persons at work; protecting persons other than persons at work against risks to health or safety arising out of, or in connection with, the activities of persons at work; and controlling the keeping and use of explosive or highly flammable or otherwise dangerous substances.

In its report published on 15 November 2012, the Delegated Powers and Regulatory Reform Committee, although content with the other regulation-making powers in Clause 61, was concerned that the power in Clause 47(2B) appeared to be very far-reaching, particularly since the purposes of the 1974 Act went beyond the health and safety of people at work. The committee considered that the power was inappropriate and recommended that the new power in Section 47(2B) should be removed from the Bill.

The Government have reflected on the comments of the Delegated Powers and Regulatory Reform Committee and, on further consideration, accept that it is not necessary to take such a wide power to amend other legislation as there are no current plans to extend the policy to other legislation. I am happy to say that we have therefore accepted the recommendation of the Committee. These three amendments give effect to that recommendation. I trust that noble Lords will support this improvement to the clause. I beg to move.

[Lord McKenzie of Luton]

My Lords, we are happy to support these amendments. They seek to remove a very extensive power which could draw a wide range of circumstances into the ambit of duties which cease to be actionable. As the Delegated Powers Committee put it, there is no discernible policy objective to the inclusion of the proposed new Section 47(2B). The scope could be incredibly wide: any provisions of any enactment which link to any matter relevant to any of the general purposes of the 1974 Act—that is the Health and Safety at Work etc. Act. The Delegated Powers Committee has pointed to just one example: the control and keeping of dangerous substances. It is therefore absolutely right that the Government have backed off on this; they are very wise to do so. It is illustrative of a dangerous desire to accumulate draconian powers, but I am pleased that the Government have stepped back from that on this occasion.

[Lord Deben]

I welcome this, and ask the Minister to carry back the message that it is extremely valuable for people to listen to the advice given by committees. He may be involved in the forthcoming Bill which is entirely incorrectly called the Growth and Infrastructure Bill, in which there are some very uncooked suggestions. It would be of great help to the Committee were he to give an assurance that he will do his best to make sure that the Government listen with the same care to some of the suggestions that come from other committees as they appear to have done on this occasion in listening to the specialist committee that has advised this particular action.

[Viscount Younger of Leckie]

First, I thank the noble Lord, Lord McKenzie, for his support in this respect. I also take note of the comments that have been made by my noble friend Lord Deben.

Amendment 28ZE agreed.

Moved by

[Viscount Younger of Leckie]

28ZF: Clause 61, page 59, line 5, leave out “, (2A) or (2B)” and insert “or (2A)”

--- Later in debate ---

[Viscount Younger of Leckie]

My Lords, I have listened very carefully to the debate this afternoon. I understand the concerns of noble Lords about the importance of protecting people at work from risks to their safety and long-term health so eloquently put forward by the noble Baroness, Lady Turner, and the noble Lord, Lord McKenzie, and, indeed, by the noble Lord, Lord Browne, in an impassioned and extensive speech. If noble Lords will bear with me, there is much to say in response to the many views and concerns expressed.

First, I reassure noble Lords that the purpose of this clause is not to weaken or reduce the existing protections for employees. It is about helping to increase the confidence of responsible employers to continue to do the right things to protect their employees. I stress emphatically that the law, which sets out the standards that employers must meet and the duties which employers must perform, including in relation to self-employed contractors on construction sites, is not affected by this proposal and is not changing. The Health and Safety Executive will continue to investigate serious incidents and complaints about poor practice and will take enforcement action, including, where appropriate, prosecutions, against those employers who fail to meet their responsibilities in line with the executive’s established policies and procedures, so let me explain why it is appropriate to take action.

We all recognise that the world has changed since 1974, when the Health and Safety at Work etc. Act was introduced to replace large numbers of detailed regulations with a proportionate risk-based approach to health and safety. Indeed, the late Lord Robens, on whose recommendations the 1974 Act was based, noted,

“that the sheer mass of this law, far from advancing the cause of health and safety, may well have reached a point where it becomes counterproductive”.

Clearly, every death and serious injury is a tragedy that should not happen. The noble Baroness, Lady Donaghy, referred to this earlier in Committee and has spoken about it again today. However, considerable progress has been made in reducing the incidence of injury and ill health. I listened carefully to the heartbreaking stories of those who have been killed or injured, as outlined in the speech of the noble Baroness, Lady Donaghy. Each one represents a tragic human story for individuals and for their relations.

Progress has been illustrated by the successful delivery of the Olympic Games, where there were no work-related fatalities on the whole of the London 2012 construction programme. This is the first time that any host nation has achieved that. The noble Baroness, Lady Donaghy, specifically raised the issue of construction sites. The substantive law that sets out the duties and responsibilities on employers, and to whom these are owed, including to self-employed subcontractors on construction sites, will not change. Therefore, the ability for such workers to bring a claim for negligence will also remain the same as now. Anyone who directly employs or engages construction workers or controls or manages construction work is a contractor for the purposes of the construction regulations. The duties on contractors apply whether the workers are employees or self-employed or agency workers. There is no distinction.

We are committed to the continued improvement of health and safety standards at work and to building on the progress made to date. The effectiveness of the health and safety regulatory framework has more recently been thoroughly examined by my noble friend Lord Young of Graffham in his report Common Sense, Common Safety.

[Baroness Whitaker]

Will the noble Lord confirm that the noble Lord, Lord Young, did not touch on the matter of Clause 61 in his report?

[Viscount Younger of Leckie]

I would need to refer back to the report to give the noble Baroness a full answer. Indeed I shall do so.

The effectiveness of the health and safety regulatory framework has also been highlighted by Professor Löfstedt, as has been mentioned today by several noble Lords, in his independent review, Reclaiming Health and Safety for All. Both my noble friend Lord Young of Graffham, whose report received much support across the House when it was debated, and Professor Löfstedt found that there is no case for fundamental change of the health and safety framework itself and that the existing regulatory requirements are broadly right. In fact, the biggest problem today is the way in which the regulatory requirements are interpreted and applied.

No one can be complacent. If we are to build on the steady progress made, we need to take action to tackle the current myths about health and safety, myths which the Health and Safety Executive see as such a problem that it has set up the Myth Busters Challenge Panel to provide a mechanism so that anyone who receives advice in the name of health and safety which they believe is disproportionate or inaccurate can challenge that advice.

Businesses consistently report that these myths lead to confusion about what the law actually requires and a fear of being sued, which, in turn, drives employers to overimplement the law in an effort to protect themselves and indeed discourages them from expanding their business. This in turn reinforces the perception that the application of health and safety law is unduly burdensome. I shall have more to add to that later.

This situation results in responsible employers taking an overly cautious approach, which has a detrimental effect on their approach to controlling risks properly in the workplace. For example, spending considerable resources on disproportionate paperwork and record-keeping, far in excess of what is necessary to comply with the law, diverts employers from taking a sensible approach to identifying the risks that actually affect their business and their employees, and taking sensible day-to-day precautions to protect their employees from those risks.

In the interests of both employers and employees, the aim is to improve understanding of what the law actually requires and to allay fears about possible litigation to help build employers’ confidence to take on new activities and further develop their businesses and to include recruiting new employees, which is so vital today.

To address these issues, the Government are implementing a package of measures, based on the recommendations of my noble friend Lord Young of Graffham and Professor Löfstedt, to reform both the civil litigation system and to restore a common sense approach to health and safety. This measure forms part of this package and I would reassure noble Lords that its introduction into the Bill at a later stage is purely due to the timing of the publication of Professor Löfstedt’s report and the Government’s desire to address the concerns he raised at the earliest opportunity.

We have already put in place a programme of work to improve understanding by simplifying the supporting guidance that explains what the law requires and to consolidate and clarify the body of health and safety regulation in a number of key industrial sectors. This programme builds on the work carried out as part of the better regulation initiative led by the previous Administration.

The clause does not change the duties placed on employers, but amends Section 47 of the Health and Safety at Work etc. Act so that in future, unless the legislation provides for an exception, it will be possible to bring a claim for compensation in respect of a breach of health and safety legislation only where it can be proved that the employer has been negligent.

Claims for breaches of the general duties of the Health and Safety at Work etc. Act can already be brought only for negligence. The change in this Bill simply extends this position to regulations made under the Act to create a consistent approach to civil litigation for all health and safety legislation. This means that if an employer fails in their duty of care towards their employee they can of course be successfully sued. However, where an accident has taken place and the employer could not have reasonably done anything about it, they should not be liable.

In the knowledge that they will not be liable if an accident happens which is totally outside their control, this change will support responsible employers, who take care to protect their employees, by encouraging them to take sensible steps to manage workplace risks. I am grateful for the speech made by my noble friend Lady Brinton and the example that she gave to support the helplessness that some businesses can experience where there is no defence for them. This will not assist irresponsible employers who fail to comply with the law as they will have no defence to an accusation that they did not take all reasonable steps to protect their employees.

This amendment to the Health and Safety at Work etc. Act has been adopted in preference to amending each strict liability duty, as Professor Löfstedt suggested, because an approach targeting each strict duty would be much more complex, and therefore complicated for businesses and their employees to understand.

The noble Baroness, Lady Turner of Camden, brought up the concern that the law would go backwards, which I think was her expression, and the employer would hold all the cards. I would like to assure her and all noble Lords that the provision will affect only a small number of duties that are unqualified. In any claim for negligence, the existing regulatory requirements on employers will remain relevant, as the courts will look to the statutory duties, approved codes of practice and established guidance to inform them about what risks a reasonable employer should be aware of and the steps they would be expected to take to manage those risks. I stress again that this change will only assist responsible employers who have done what is required of them and can demonstrate this.

This amendment reflects an adjustment to help rebalance the civil litigation system and, as part of the wider reforms of the system, is a proportionate response to the impact that strict duties currently have in the civil litigation system identified by Professor Löfstedt. It also has the benefit of creating a consistent approach to civil litigation for all health and safety legislation.

Currently, most claims are brought for both breach of statutory duty and negligence and, in practice, it is anticipated that the vast majority of claims will still be capable of being brought for negligence. For the small number of cases where this is not possible, as now, individuals will be able to claim for financial and other support through the state benefit system.

This measure is not about reducing the number of claims. It is about establishing the principle that an employer who has done nothing wrong should have the opportunity to defend themselves on the basis of having taken all reasonable precautions. Providing employers with this important reassurance will help them to manage health and safety risks in a sensible and proportionate way.

[Lord Browne of Ladyton]

At the heart of the noble Viscount’s argument there are general arguments about numbers. The Health and Safety Executive’s impact assessment says that this change will affect 200 sets of health and safety regulations. When it seeks to answer its own question about the number of cases that this will effect, it says that it has not a clue. In the light of that information, which I have here in this assessment before me, could the Minister please tell the Committee on what basis he estimates that this will impact on a small number of regulations and cases? If that is wrong, we are legislating here on a false basis. The HSE has no idea what the statistical base of this is.

[Viscount Younger of Leckie]

I thank the noble Lord, Lord Browne, for that intervention. I shall answer his questions in a moment.

It now falls on me to answer a number of questions, which I will do in a particular order, if I may. The first substantive question came from the noble Lord, Lord McKenzie, and concerns the basic concept of why there was no review or consultation, as he put it. I assure him that the noble Lord, Lord Young, and Professor Löfstedt consulted widely and found that there was significant and consistent evidence from businesses that the perception of a compensation culture and the fear of being sued have a significant effect in driving overimplementation of the law, and going beyond what the law requires creates unnecessary costs for employers, diverting them from focusing on taking the practical day-to-day steps to protect their employees. Professor Löfstedt, in addition, had concerns that the wider reforms to the civil litigation system and changes to simplify the health and safety system would be less effective if business continued to overimplement the law due to a fear of being sued.

[Lord McKenzie of Luton]

If the Government’s case is that there was consultation and that Professor Löfstedt undertook that consultation, why did the Government not follow his recommendations?

[Viscount Younger of Leckie]

As has been mentioned earlier, we are following the vast bulk of his recommendations.

[Lord McKenzie of Luton]

I shall try not to prolong this, because I know that the Minister has a lot to get through and the clock is ticking. Clearly, the Government did not follow the recommendation related to strict liability. Or is the Government’s case that it did?

[Viscount Younger of Leckie]

In answer to the noble Lord, I would say that it is not black and white that we followed all the recommendations from Professor Löfstedt, but I shall certainly write to him to explain which recommendations we did follow and which, perhaps, we did not.

The noble Lord, Lord McKenzie, also raised the issue of whether the issue is wider in scope than the Löfstedt recommendation. Amending each strict liability duty individually, as Professor Löfstedt suggested, would be complex, as I mentioned earlier, requiring a large number of changes to many sets of regulations, and confusing for employers. A single amendment to the Health and Safety at Work etc. Act addresses the same policy objective, is simple to understand and provides a consistent approach to civil litigation for all areas of activity covered by health and safety at work legislation.

The noble Lord, Lord McKenzie of Luton, also raised the question of whether the change would mean that cases were more difficult and costly to prove, and that employers would hold all the information. Employees will still have the right to bring claims when fault on the part of their employer can be proved. Currently, most claims are brought for breach of statutory duty and negligence, and in future it is expected that most claims will still be able to be brought for negligence.

[Lord McKenzie of Luton]

I am sorry, but we are dealing with some very important points here. On this mantra that most claims are brought under negligence and breach of statutory duty—even if it is right, and I am prepared to accept the Minister’s word on that—is it not right that they do not necessarily all proceed to the end of all those processes? The breach of statutory duty process leads to negotiations of settlement way beyond what you get for some of the burdens claimed for negligence.

[Viscount Younger of Leckie]

It is clear that the vast majority of cases will be covered by negligence and that a small number of cases will fall outside. We should be clear about that.

Many health and safety duties are qualified by “so far as is reasonably practicable”, as was mentioned earlier. In practice, the tests applied for negligence and breach of statutory duty, qualified by “so far as is reasonably practicable”, are likely to be very similar. The record-keeping requirements of health and safety legislation will continue to ensure that information is available to employees where an accident has taken place.

I turn to the question raised by the noble Lord, Lord Monks, concerning the European position. Under European Union law, member states can generally decide what sanctions and remedies to put in place to enforce EU obligations, subject to certain rules. In Great Britain, health and safety obligations are backed by various enforcement powers and criminal sanctions as well as the opportunity to claim for compensation in the civil courts, which will remain through the right to sue for negligence. Taken as a whole, the sanctions available for the enforcement of EU directives are, and will continue to be, effective.

I turn to the various points made by the noble Lord, Lord Browne. One of the questions that he raised concerned how much money is currently returned to the state by the Compensation Recovery Unit, and how much will be lost by this amendment. That is a very straight question. It is not possible to disaggregate the amount because the benefits available are dependent on individual circumstances. He also raised a point about the reform in terms of shifting the burden of supporting employees who are unable to make a claim to the state. Again, that was a very straight point. As I mentioned to the noble Lord, Lord McKenzie, it is recognised that a very small number of employees may not be able to claim in future under the new arrangements. None the less, this change is important as part of the wider package of government reforms in signalling an end to the perception of the compensation culture. Provision for non-contributory no-fault compensation payments—I emphasise that—for disablement caused by an accident at work is already available to individuals through the Industrial Injuries Scheme. All serious incidents will continue to be investigated by the Health and Safety Executive.

The noble Lord, Lord Browne of Ladyton, also brought up the perception of the compensation culture. Businesses have expressed concerns about this fear. It is true and it has long been a driver of overcompliance. That was very clear to the noble Lord, Lord Young of Graffham, and, indeed, to Professor Löfstedt.

One of the crucial questions that the noble Lord, Lord Browne, raised, which was also raised rather more obliquely by the noble Lord, Lord Young of Norwood Green, was that of evidence. I should emphasise that, in conducting his review, Professor Löfstedt consulted most widely, including 30 meetings with individual stakeholders and several business forums. He also received 250 written submissions. The findings of his review build on the work completed by the noble Lord, Lord Young of Graffham, in his report, Common Sense, Common Safety. In preparing his report, the noble Lord consulted 132 wide-ranging organisations representing relevant professionals, including personal injury lawyers, businesses and associated organisations. He also spoke to more than 100 individuals, including health and safety professionals, Members of Parliament, councillors and leading academics in the field of law. I hope that goes a little way to answering the noble Lord’s question.

The noble Lord, Lord Browne, also asked what the Government’s assessment was of the number of claims that this change will affect. It is anticipated that there will be only a small reduction in the number of claims made as most will still be able to be brought for negligence, as mentioned earlier. The only claims that are significantly affected will be those which rely on a breach of the law where there is no, or insufficient, evidence to prove the employer was negligent.

Finally, the noble Lord, Lord McKenzie of Luton, raised the issue of negligence and the fact that the breaches of statutory duties were not equivalent and that the tests for negligence were nebulous. I think that was the term he used. Negligence and breach of statutory duty are different tests but most statutory duties require an employer to take such steps “as are reasonably practicable”. The common law requires an employer to take reasonable care for the safety of their employees. In practice, in the vast majority of cases the issues in dispute will be the same and the standard expected of the employer is likely to be very similar as now. As I mentioned earlier, the statutory framework will continue to inform the courts about the standards expected of the reasonable employer.

For the reasons that I have outlined, I commend the clause to the Committee.

[Lord McKenzie of Luton]

The noble Viscount referred to my use of “nebulous”. If I remember correctly, that is the Government’s word, and was in the impact assessment. Coming back to the timing of this clause being introduced into the Bill, he referred to the fact that it could not go in earlier because of the Löfstedt report. Professor Löfstedt reported in November 2011, and indeed the Government responded in November 2011. That was time enough to get it in earlier.

[Viscount Younger of Leckie]

I have certainly noted the point that the noble Lord has made. I was clearly of the understanding that that was the reason but I will certainly revert and check, given the dates that I have just received from him.

[Baroness Turner of Camden]

In responding to the Minister, I begin by thanking everybody who has participated. We had an excellent debate, drawn from a lot of experience and expertise. It really has been very good indeed, and I am very grateful to everybody who has contributed. However, I am sure that the Minister will not be surprised to learn that I do not accept very much of what he has got to say. I still think that Clause 61 should not become law. I cannot understand why he says that it will help good employers. A good employer is helped by the existing legislation, and if the Government are concerned to improve health and safety at work arrangements, then they should be supporting the Health and Safety Executive instead of diminishing its resources. If they think they need to do more on health and safety, the HSE is highly respected and ought to have more resources, rather than fewer—which is what the Government’s present policy seems to be.

I really do not accept a great deal of what the Minister has said today. I cannot understand why he is going on about compensation culture. I have made some contributions about my experience in that situation when I worked for an insurance company. We have been talking about claims by employees which often take years to settle, particularly if it is a death; frankly, what sort of compensation culture is that? There is a case for looking at aspects of our legislation, but certainly not via this clause, which takes away some of the support that people currently have in the area of health and safety at work.

I am not at all in favour of what the Minister has said. Of course, in Committee we do not have votes. However, I can assure the Minister that this will be back again at Report, because a number of us feel very strongly about it. I certainly do and I am sure that my noble friends do as well. He has not heard the last of this. In the mean time, I do not press this question.

Clause 62 agreed.

[Viscount Younger of Leckie]

My Lords, this may be a convenient moment for the Committee to adjourn until Wednesday at 3.45 pm.

Committee adjourned at 7.29 pm.