Universal Credit, Personal Independence Payment, Jobseeker’s Allowance and Employment and Support Allowance (Decisions and Appeals) Regulations 2013

Lord McKenzie of Luton Excerpts

Wednesday 13th February 2013 Lords Chamber

[Lord McKenzie of Luton]

My Lords, I again thank the Minister for introducing the regulations. I wish him well in dealing with those incisive inquiries from my noble friend Lady Lister about the monthly assessment, the monthly payment and supported housing. She gave us a very powerful analysis.

We acknowledge that an updated framework for decisions and appeals that encompasses universal credit, PIP, JSA and ESA is needed. As the Minister will doubtless anticipate, there are two key matters that we will pursue, mirroring those discussed in the other place: mandatory reconsideration and the payment of benefits in the interim. Noble Lords will recall the debates that we had in Committee and on Report on the Welfare Reform Bill on what has ended up as Section 102 of the Act, and a degree of scepticism about why it was necessary to have two powers when a power was already available to decision-makers to revise a decision prior to the determination of appeal. However, we are where are, with two time limits within the system. If a claimant disagrees with a decision, they have one month to ask for a reconsideration. When the result of that is known, they will have one month from the date of the new decision to appeal.

As the Minister has identified, there is no statutory time within which decision-makers are obligated to complete a reconsideration. This is important because it reflects on how long a claimant’s interim benefit position will endure. We therefore register our concerns about the strictness of the time limits imposed on claimants in the current climate.

My noble friend Lord Bach gave a tour de force speech about the current situation, in which legal aid is being denied and advice agencies are being stretched and hit with redundancies and closures. We received last Friday the Universal Credit Local Support Services Framework, with not enough time to peruse it in any detail for today. Perhaps the Minister will tell us whether its envisaged remit will include advice on a decision or a reconsideration. Will the local support services be available to advise and assist on that? Of course, this pressure on advice surgeries is compounded by the raft of changes that we have discussed today and will doubtless continue to discuss, and which are about to enter the system shortly. Can the Minister say something about any discretion that might be available in respect of the time limits imposed by the provision?

It is understood that benefit entitlement pending a reconsideration will be on hold. I think that is what the Minister said: that if someone is seeking a benefit for the first time, they will be left without benefit if and until the claim is settled positively. For those claiming ESA and going through a reconsideration process, this would appear to herald the change. Is it not the case that an ESA claimant will currently be paid at the assessment rate equivalent to the JSA rate pending a reconsideration and appeal? Will the Minister confirm that this will not be the case in the future? The remedy in the short term, as has been suggested, appears to be a claim for JSA in due course where contributory ESA is involved, presumably a claim for universal credit. This appears to be what the Minister still advises. How does that deal with the point that this may require an individual to sign up to a claimant commitment and undertake work for which they are not suited?

Can the Minister please confirm the position for someone in receipt of ESA who, on a reassessment under the WCA, is assessed as being fit for work or subject to all work-related requirements? If someone who is currently on ESA and at risk of being downgraded to universal credit or JSA is subjected to the reconsideration appeal process, what benefit is paid before that appeal is concluded?

These questions touch on the timeliness of the reconsideration process. It is accepted that if a reconsideration and appeal process is successful, any due award will be backdated to the original claim, but that does not help the claimant in the interim. My honourable friend Anne McGuire MP made the point in another place that where high levels of appeals are successful, such as on ESA and DLA, a protracted reconsideration and appeals process will disadvantage claimants, driving them into debt and into the arms of the food banks.

We note that the Government have declined to place time limits on the reconsideration process—the Minister confirmed that tonight—but it seems from their response to the public consultation on mandatory consideration that they will consider making proposals for an interim performance indicator. Perhaps, therefore, I can take the opportunity to repeat some questions posed by my honourable friend Anne McGuire that remain unanswered. What do the Government envisage as the standard length of time for a revision prior to appeal? Will customers be told how long they should expect to wait? What action can be taken if projected timescales are exceeded, and will the department monitor and publish statistics on waiting times for appeal?

My honourable friend also took us back to earlier deliberations in Grand Committee, when the noble Lord, Lord De Mauley, was at the Dispatch Box. In response to an inquiry, he said:

“Alongside implementation of this power, we intend to make further improvements to the reconsideration process, which will include suitable arrangements for monitoring and, where appropriate, improving the speed of the process”.—[Official Report, 23 November 2011; col. GC 456.]

Perhaps we can be told what progress has been made on that.

Finally, I ask a question about the routine publication of appeals data—again going back to our debates on the Welfare Reform Act. At one stage, I think it was envisaged that there would be a cessation of the routine publication of those data. Perhaps the Minister can confirm that that is not the case.

We do not oppose the regulations, but we need to monitor them closely to see that their implementation does not create unfairness.

[Lord Freud]

Again, I thank noble Lords for some very good contributions. This is not the easiest or most digestible set of regulations. They very much replicate the existing decisions and appeals provisions but, just as the welfare reform agenda has provided an opportunity to reduce the complex range of income-related benefits, with the introduction of UC, it has also provided an opportunity to rationalise the rules governing the administration of these new benefits. This consolidated set of regulations does that by ensuring that the rules underpinning decisions and appeal rights are clearer and more accessible, benefiting both claimants and, indeed, the department.

On the detail of mandatory reconsideration, I reassure the noble Lord, Lord McKenzie, in particular, that we will closely monitor the impact on claimants, the quality of decision-making and appeal rates during the early stages of implementation. It is a key change that will improve claimants’ experience of the appeals process if we get it right. We will also monitor appeal volumes more broadly, particularly with the introduction of the new benefits, UC and PIP. We will review and amend the advice for decision-makers guidance as necessary, and if we find that the regulations are at fault there is an option to amend them.

On the point raised by the noble Lord, Lord McKenzie, regarding the time limit, the key issue is that we will be able to handle some cases with extreme speed while others may take more time, particularly where we need to ask for more evidence. I will commit to keeping noble Lords updated on that matter. On reconsiderations, we envisage that the first point of call will be to our staff, but some people may choose to go to an independent advice centre, although we had not been envisaging this as part of the role of the local support service.

--- Later in debate ---

[Lord McKenzie of Luton]

I think I understood what the Minister said, but if during the process somebody has applied for or been in receipt of ESA and there is a challenge, it will have to go through a mandatory reconsideration process first and then out on to an appeal. Once you get to the appeal, you will get ESA at the assessment rate—I would guess until it is settled; is that right?—which is equivalent to JSA. Is that not a change from the current position, under which you in effect go straight to an appeal, however long or short that reconsideration period is?

[Lord Freud]

Under the current position, there is a voluntary process whereby people can go for reconsideration and the ESA is not payable until the decision is taken to go formally to an appeal. The difference is that we are moving from a voluntary process that some people do to a mandatory process that all people will have to do, and there is a gap. That is where concern has been expressed, and my response to that concern is that we need to keep it under control and look at how long that timing really is. I take that specific point, but on a more general point my understanding is that there was a bit of concern from the noble Lord that there was actually a change in payment from appeal. As I say, that is not happening.

Jobseeker’s Allowance Regulations 2013

Lord McKenzie of Luton Excerpts

Wednesday 13th February 2013 Lords Chamber

[Lord Kirkwood of Kirkhope]

It is still a pleasure to follow the noble Baroness because she made a point that I was going to make. I want to make two remarks on which I would like the Minister to reflect. The first is about the contributory system—the national insurance system. In the middle of last year, I remember listening with great attention to a lecture given by a valued friend, Malcolm Wicks, who sadly died recently. He was a great defender of the national contributory system. He gave a lecture on how he melded the concept of citizenship with the national insurance principle. He said that this involved a lifetime longitudinal commitment both ways between the state and the individual, with people paying in and people taking out, and that people understood that. He was an exponent of that all his life and I certainly miss his good counsel and wisdom. I share his view. We cannot allow these regulations to pass without remarking that this is another notch down in the diminishing of the national insurance principle. I regret that. I understand why the Government are doing it because otherwise the misalignment would be confusing. If you are introducing universal credit, I understand the rationale and it makes perfect sense. However, universal credit does not have the advantage that the national insurance contributory principle had of giving a longer-term relationship between the state and the individual. I want to put that on the record in passing.

Secondly, conditionality for people who are paying national insurance contributions suggests to me that people should perhaps pay less because they now have to submit themselves to sanctions. I have a strong view on sanctions and earlier today the noble Baroness, Lady Hollis, reflected some of that. I take the Paul Gregg view that sanctions are positive only if you can get the full commitment of the individual who might be potentially taking on a jobseeker’s commitment that will lead to sanctions, and if they feel that they are in charge of the process. That is not the case with the system of conditionality as it is currently cast, although with a bit of flexibility it might be amended in that direction to put people in a position where they feel they are more in control of what is going on. They are then much more likely to understand the rationale of a sanction being applied to them. That is work in progress. I hope it will be part of the careful evaluation that the Minister explained to us earlier this afternoon the Government will undertake.

My points really comprise two moans about national insurance that I am getting off my chest. I do not expect the Government to do anything about it. However, these regulations change things in a way that is significant for the future of the national insurance system. Indeed, perhaps in the long term, once universal credit gets into a steady state, the Government of the day—whoever they may be—may want to ask themselves whether it is sensible to continue to have a residual diminishing national insurance contributory principle set of benefits running alongside universal credit. I am agnostic about that but I certainly think that it needs to be recognised in this important debate.

[Lord McKenzie of Luton]

My Lords, I thank the Minister for introducing these regulations. I am fully supportive of the probing that my noble friend Lady Donaghy has done, particularly around the construction sector, on which she is very knowledgeable. I agree with the noble Lord, Lord Kirkwood, that, given the increasing demise of the contributory principle, it is important to consider how we re-establish that in this context, if we can. Of course, there has been an accelerated demise in various benefits. We shall talk about contributory ESA in a moment, but that is now payable for just one year and JSA is generally payable for just six months.

The Minister explained that these regulations refer just to contributory JSA and not to earnings-related JSA. I believe that he referred to my next point in introducing the regulations but, to be clear, I understand that as regards the entitlement under these arrangements, the national insurance contribution rules remain exactly the same as they are at the moment. In respect of national insurance credits, under current circumstances these can be obtained when the claimant satisfies the qualifying conditions for JSA, when he or she is not in work and earning. Will the Minister remind us what the credit and entitlement will be under universal credit when JSA is no longer with us? The Explanatory Memorandum recites that the rules for contributory entitlement are, except for the conditionality and sanctions regimes on which the Minister touched, “largely” unchanged. Will he particularise a little any other significant changes outside those two areas? As regards the alignment of the conditionality and sanctions regimes, we obviously see the merit of this and these regulations give us an opportunity to explore further how that actually works across the three benefits, including ESA.

Like others, I am grateful to Gingerbread, which briefed us on this matter, particularly as regards its focus on lone parent flexibilities, which was touched on extensively in our earlier debate. I will not go over that again except to say that I think the Minister said in response to the debate that 10 out of the 12 lone parent flexibilities are being carried forward, albeit in guidance rather than in regulations. I apologise if he covered this point earlier, but will he remind us which two are not being carried forward? We are aware that he has been pressed on flexibilities and that these should be set out clearly in the claimant commitment so that both the adviser and the single parent claimant can share the same understanding of what the regulations and guidance say about balancing work conditionality with caring responsibilities. It is understood that the noble Lord’s colleague in another place was sympathetic to this. Perhaps the Minister can say whether he agrees. It seems an ideal way of ensuring that all concerned are clear on the matter and it would help to focus the minds of advisers who may not always be up to date with the range of flexibilities available.

[Lord Freud]

My Lords, I again thank noble Lords for a somewhat briefer debate although the quality remained high. Clearly, I do not have to remind the House what these regulations do. They remove the income-related element and make provision for an award of JSA based solely on national insurance contributions.

I will touch on some of the questions that were raised. I start with the issues raised by the noble Baroness, Lady Donaghy. She brought some matters to the discussion which are entirely irrelevant to this set of regulations, thereby rather skilfully avoiding the shorter answers that I suspect would have been given in the previous debate, given the pressure of time. I therefore take my hat off to her. She made one or two very valuable suggestions, which I have stolen from her, as she knows. I shall go on doing that. There are some interesting issues on timing. For example, do we have the luxury of time with the self-employed? I am very conscious that we may get the odd one or two people coming in, who I suspect are probably not on the pathfinder, because one of the things that the noble Baroness, Lady Sherlock, teased me on as regards our exclusions was that they made this provision difficult for a self-employed couple to obtain. We therefore have a little time plus the six-months’ grace. Given that we are starting with people probably even in the next phase who are coming in and will find a self-employed job, we would give them the year. All I am saying is that I am absolutely conscious of the noble Baroness’s main point relating to the one-month period and the need for a carryover. I have been looking at that closely, and what she said gave me a good hint about how long that carryover should last, which in her view should be a year. Noble Lords will be pleased to know that that is the kind of period that I am currently exploring.

I am talking to Defra, which is working with the NFU, on how all this works for farmers generally, and so I am very conscious of that issue. As regards the point on the construction industry, which is one of the more interesting industries, what I heard from the noble Baroness was, “Don’t get a Catch-22 situation here about people because of the way we define things”. That is a good point and one of the benefits of guidance is that we can quite flexibly get that in. I commit here to making sure that in that guidance we do not have a Catch-22 situation for this industry which I know has some odd things. If you are working, it should not matter how the position is actually defined if people are making the effort. I will look at that matter seriously.

We have dealt with the irrelevant stuff and I will now move on to the points made by my noble friend Lord Kirkwood. It is interesting, when you look at the figures, that of the approximately 1.5 million on income-related JSA or UC, only 200,000 receive the contracted amount that we are talking about, based on their contributions. Of those, only 70,000 receive it on its own, without a UC or income-related top-up. We have therefore moved a long way into means-testing, as my noble friend observed.

My noble friend’s point about feeling in control was smack right. You do not get a response of the kind that you want if people do not feel part of it. If they do not understand and have not been part of the process that has generated it, the sanction will not work as well and create the right behavioural response. That is what the claimant commitment is doing. Interestingly, the early trials of the claimant commitment are finding that it is working much better than our existing contract.

The noble Baroness, Lady Lister, asked me for another guarantee. I will give the noble Baroness a guarantee that any changes to the ESA and JSA as part of UC would require regulations. There will therefore be a chance to debate that. As to the point about having a contributor on a different platform, the reality is that any Government looking ahead would want to have as few platforms as possible. One will probably end up with the same platform but approval of the process of who gets paid and how would have to go through this House.

In response to the question of the noble Lord, Lord McKenzie, the two areas that were not carried forward were those where the time allowance to attend an interview was moved from seven days to 48 hours. Claimants with children over the age of 13 are expected to show that they have reasonable prospects of getting a job, but they can still have tailored requirements in line with their caring responsibilities. Those are the two specific changes. Regarding the point about national insurance credits, everyone on universal credit will have national insurance credits that count towards the state pension. The difference is that there are class 3 credits for UC, whereas JSA claimants currently get class 1 credits.

[Lord McKenzie of Luton]

Will the Minister drop me a line on the point he made about class 1 and class 3 contributions? I should like to reflect on it because I am not sure that I understood the import of it.

[Lord Freud]

Yes, I would be pleased to provide a letter laying that out for the noble Lord to consider in depth.

We started last year to align the JSA regime and universal credit with the sanctions model. These changes pull them even closer together. We will thereby have a clearer system of requirements and sanctions that are robust and appropriate, underpinned by safeguards for claimants. I seek approval of the regulations and commend them to the House.

Employment and Support Allowance Regulations 2013

Lord McKenzie of Luton Excerpts

Wednesday 13th February 2013 Lords Chamber

[Lord McKenzie of Luton]

My Lords, I thank the noble Lord for introducing these regulations, which run parallel with those relating to JSA, which we have just considered. Before going further with my script, I would like to say that I do not think the Minister dealt with the point I raised earlier about flexibilities being included in the claimant commitment document. Perhaps he might pick up that issue when he responds to this debate.

As we have heard, these regulations relate to contributory ESA, which means that they are generally limited to 12 months, except for people in the support group. Can the Minister confirm that these regulations correctly reflect that position and that days in the support group do not count towards the 365-day maximum, or the days in the assessment period, followed by a period in the support group? Can he further confirm that they reflect the entitlement for someone in the support group to reconnect the contributory entitlement as provided for by Section 52 of the Welfare Reform Act 2012? It would also be helpful if the Minister could put into context the provisions in the regulations relating to youth, given the provisions of Section 53 of the 2012 Act, which preclude further claims under the youth condition.

As for JSA, the Explanatory Memorandum states that any allowance will be paid either alone or together with universal credit, a point probed by my noble friend Lady Donaghy in the earlier debate. How will this work, and who is to decide whether it is paid separately or with universal credit? Currently, universal credit is payable fortnightly in arrears, and the allowance is to be treated as unearned income for the purposes of universal credit. Presumably it is not impacted by the actual payment date. Can the Minister tell us whether ESA is to be sanctioned and whether it is the gross or net amount that is to be taken into account as unearned income? What about hardship payments and repayable hardship payments? How will they work?

The Explanatory Notes make it clear that, with the exception of the conditionality and sanctions regime, the rules will be very similar to the existing rules. I think the Minister repeated that. For the purposes of the record, can he be a little more precise about the lack of similarity?

As regards claimant obligations, the Explanatory Notes at paragraph 7.63 record that the UC model requires more of the claimant than ESA does. In particular, the paragraph suggests that claimants may be required to look for and be available for work that they are capable of doing, which is a more onerous test. Perhaps I can go back to that paragraph. I do not think it accords with what the Minister said in introducing these regulations. It states:

“The requirements placed on Employment and Support Allowance claimants are also based on the Universal Credit model, though there are again some significant differences. For example, claimants can be required to prepare for work and attend work-focused interviews, but are not required to look for work or be available for work whereas in Universal Credit, within limits, claimants may be required to look for or be available for work that they are capable of. The requirements to prepare for work and attend interviews are broadly equivalent to those requirements placed on claimants in the Universal Credit work preparation and work-focused interview only groups”.

I read that to suggest that if the universal credit rules are to apply, claimants may be required to look for, and be available for, work that they are capable of. If that is not the case, it is fine, but if that is correct, one has to ask how these more onerous requirements are to be derived, or are they to be derived from the same WCA process? Will revised guidance be given to Atos and decision-makers?

Similarly, in relation to sanctions, where there is an entitlement to both benefits—contributory ESA and universal credit—the latter will apply. Given that the universal credit requirement on the claimant may be higher than the ESA requirement, what will ensure that there will not be movement up the sanctions scale?

[Lord Freud]

The Employment and Support Allowance Regulations remove the means-tested provisions, because in future universal credit will replace the incremented employment and support allowance. With the exception of the conditionality and sanctions regime, the rules for the new employment and support allowance will be very similar to the existing rules for the contributory element of ESA under the 2008 regulations.

I will pick up some of the questions. The first was from the noble Baroness, Lady Turner, who asked about appeals. As she said, about 37% of appeals overturn the original decision. However, in the context of the total number of decisions made, the tribunal overturned around 15% of around 741,000 fit-for-work decisions. Therefore, the original decision on benefits stood in 85% of cases. Clearly, we will have a further chance to debate this issue later this evening.

All the remaining questions were asked by the noble Lord, Lord McKenzie. He asked about flexibilities for lone parents. Claimants will meet their personal adviser and discuss their circumstances, which will include the hours that the claimant is able to work, taking into account their caring responsibilities. Clearly, the claimant commitment is a living document that will change with people’s circumstances.

There will be separate payments of JSA, ESA and UC. The contributory benefits will not be paid with the same frequency as universal credit, although the monthly amount will be equivalised, and the monthly amount of the contributory benefit will be taken into account as offsetting unearned income. In other words, it will knock out the equivalent amount of UC.

I confirm that days in the support group—the WRAG—will not count towards the 365-day limit. The way in which sanctions will operate if a claimant receives both universal credit and a contributory element is that the relevant sanction will apply to their universal credit award and not to their JSA or ESA award unless they close their UC claim.

The hardship provisions have been removed from both the JSA and the support allowance because it will now be for contribution-based claimants, who will have other income and savings to live on. The noble Lord is correct that there will be no new claims for youth conditions.

I make it absolutely clear that the requirements are for work preparation such as attending a training course, preparing a CV or taking part in the Work Programme. They do not relate specifically to searching for work. Perhaps I may say that there is a bit of clumsy drafting in that paragraph, which states that UC has other elements that are not in the ESA. I know exactly the issue that the noble Lord seized on because I was puzzled by it myself when I read it. However, I can reassure him on that point.

As with the JSA, we are now moving the ESA and UC regimes closer together after the start last year. I commend the regulations to the House.

Welfare Benefits Up-rating Bill

Lord McKenzie of Luton Excerpts

Monday 11th February 2013 Lords Chamber

[Lord McKenzie of Luton]

My Lords, I start by thanking the noble Baroness, Lady Stowell, for her explanation of this Bill, but let me say at the outset that we consider this to be a bad Bill that should not reach the statute book, and we have much to do in Committee.

The Chancellor of the Exchequer has said that it is, in his terms, shirkers who will be affected by these cuts to tax credits and benefits, and of course uprating by less than the rate of inflation is a real-terms cut. However, analysis now shows that two-thirds of those affected by this Bill are actually in work, striving to rise above poverty levels and support their families. The Children’s Society shows that up to 40,000 soldiers, 300,000 nurses and 150,000 teachers will lose out as a result of this Bill. Despite what we are told, disabled people are not properly protected. The Bill penalises working mothers and punishes children, trapping them in poverty. Two-thirds of those hit by cuts to tax credits and benefits are women.

There could be no starker example of this Government’s values than the fact that at the same time as they are introducing this Bill, they are seeking to give 8,000 millionaires an average tax cut of £2,000 a week. Compare this with the 71p increase per week for somebody on JSA. We will seek to ensure that the Bill does not proceed while these tax cuts are being implemented. It is anyway entirely unnecessary. If the Government are so determined to uprate most benefits and tax credits by just 1%, they can do it by way of the annual uprating process, precisely as they are doing for 2013-14.

Those affected by the Bill are having to shoulder the burden of the Government’s continuing economic failure in jobs and growth. The 2012 Autumn Statement made abundantly clear that with a shrinking economy last year and growth forecasts downgraded again for this year, next year and every year up to 2016, the Government are also failing to tackle the deficit and debt.

The Chancellor has been forced to announce that he will not meet his fiscal rule to get the debt down by 2015, with the result that the Government are borrowing a staggering £212 billion more than they planned. Nearly 1 million young people are out of work and the claimant count is forecast to be 275,000 a year higher in 2015. The OBR expects the economy to be 3.6% smaller in 2016-17 than it thought it would be just a year ago.

However, the Government still will not change course. Nothing in this Bill will help growth and jobs. Nothing in this Bill will help build a stronger economy. Everything in this Bill will contribute to depressing demand and putting more pressure on hard-pressed public services. There is no recognition that low-income families have high marginal consumption rates, so restricting their income will impact very directly on demand in our economy. Therefore, the poorest are being asked again to bear more of the burden. The IFS says that this will include 7 million working households, who it calculates will lose on average £165 a year.

Taken together with other changes in the Autumn Statement, the real income of a one-earner family will reduce in real terms by more than £500 by 2015-16. The Government’s own impact assessment shows that the average loss in income is higher for families in the lower deciles than for those in the higher deciles. Those at the bottom lose £4 to £5 a week; those at the top lose £1 to £2 a week.

As USDAW put it in its briefing, this Bill is another blow to working families. Compared with a CPI uprating, the Bill will cost a working family on a modest income nearly £800 a year. We know from the Minister herself —Esther McVey—that it will result in an extra 200,000 children being pushed into poverty on top of the 800,000 the IFS already estimates have entered that state due to the coalition’s policies. This is why we will demand that the Government produce a comprehensive assessment of the Bill’s effects on child poverty.

Any claim that increases in the personal tax allowances will compensate low-income working families for such losses does not bear examination. Many will not reach the tax threshold, being in part-time jobs at the minimum wage. For those who do, a tapering away in housing benefit and council tax support will negate much of the suggested advantage.

Of course, we still do not have from this Government a cumulative impact assessment of all the changes made to tax credits and benefits since May 2010—an issue so brilliantly pressed by my noble friends Lady Hollis and Lady Sherlock in a recent debate. When introducing the Bill, there was not a scintilla of recognition by the Minister of how much the living standards of the poor have already suffered under this Government. There was no recognition either of the tsunami of cuts that are about to engulf hundreds of thousands of our fellow citizens in the form of the bedroom tax and local council tax support schemes.

I accept, as the Minister said, that the Government have not ignored the welfare budget. Under it, they have already taken £20 billion from the poor. We are told that it is necessary to legislate for the 1% restriction to provide certainty for the taxpayer, the markets and claimants. These are entirely specious assertions. Taxpayers will not have certainty about the costs of social security without knowing claimant numbers, which of course are heavily dependent on the growth that this Government have failed to deliver.

It is frankly ludicrous to argue that the markets will take fright in respect of the amounts involved if you have just declared your intentions to uprate by 1% rather than enshrine it in legislation for two years in circumstances where your public sector net debt is heading north of £1.4 trillion. In any event, the market knows full well how determinedly brutal you can be when it comes to cuts.

When it comes to claimants, I am sure that most would forgo the certainty of a 1% increase—a maximum of 1%—for the prospect of a fair review on an annual basis, because what this Bill is doing is placing inflation risks with the most vulnerable members of society. Inflation just three years out is difficult to predict, and should it, contrary to current expectations, dip below 1%, the Government can pocket the benefit. Are the Government really saying that whatever the level of inflation, say in year three, they will allow any level of cut to be visited on the nation’s strivers? The justification for the 1% is that benefits have been rising at a faster rate than earnings over the past few years—we heard that from the Minister—but this means that the families receiving in-work benefit are getting a double blow from the Bill. If you look at the longer trend—the DWP gave us the figures just this morning—average earnings have increased at a much faster rate than benefits over the medium and long term.

However, the reality is that this Bill is not about shoring up the markets. It is about trying to shore up the dwindling political standing of the Government. It is about trying to foster a political climate—a party-political dividing line—that says that recipients of tax credits and social security benefits are feckless and workshy, and stay in bed while others go out to work for a living. The Government, of course, are only for the latter.

I was struck by a contribution when the Bill was debated in the Commons, from which I shall briefly quote. It was stated:

“But the insidious aspect of the Bill is that, in seeking to open up a philosophical divide of that type, it becomes not an issue of political leadership, but of political pandering to some of the fears, insecurities and downright prejudices that can be stoked up in society—the ‘us and them’ mentality and the sense of resentment and envy. When people start playing fast and loose with those factors—and we have seen early examples against the backdrop of this legislation in the last week to 10 days—they are following a very risky strategy indeed”.—[Official Report, Commons 21/1/13; col. 86.]

That was Charles Kennedy. That any Government should seek to prey on the lives of poor people in this way for party advantage is disgraceful. The ploy is anyway unravelling. Of some 14 million working-age households with someone in work—strivers in anyone’s language—around half are disadvantaged by this Bill.

However, it is not only people in work who are strivers. What about a lone parent struggling on income support to nurture a young child to be part of a responsible future generation; or someone on income support because they devote every waking hour to care for someone, saving the state hundreds of thousands of pounds over the years; or someone on JSA who has been made redundant through no fault of their own, desperate to get back into work? These are strivers too.

Any claim that disabled people are being fully shielded from the cuts in this Bill are of course false. Disabled people in the work-related activity group—by definition those found not fit for work—will have their ESA uprating capped at 1%, thereby losing, according to the Disability Benefits Consortium, £87 a year. Those in the support group fare little better, with the support component being out of scope but the core component being subject to the cap. This, at least, we will seek to address in Committee. Of course, disabled people will miss out not only on this basis. Other benefits on which disabled people are disproportionately likely to rely, such as housing benefit, will also be restricted. We will seek, in Committee, to reverse the real-terms cut in statutory maternity pay. That would reverse just part of the losses that working women are suffering from cuts to maternity pay, pregnancy support and tax credits. The House of Commons Library research shows that low-paid new mothers are losing out to the tune of some £1,300 because of this.

This is a wretched Bill with the wrong priorities. It does nothing for jobs, which is why we will press that it not enter into force until a compulsory jobs guarantee can be introduced, focused on the long-term unemployed and paid for by restricting pension tax relief on high earners. The injustice at the heart of the Bill is another attack on the poor, including the individuals and families who subsidise all of us because they work for low wages, meaning that we all benefit from cheaper goods and services. They should not be treated in this way.

If the Government have their way on this Bill, it will mean another spur to poverty, more food banks, more payday loans, more households having to choose between heating and eating, and more despair for those striving to do the right thing. We have a duty to stop it.

Public Bodies (Abolition of the Disability Living Allowance Advisory Board) Order 2013

Lord McKenzie of Luton Excerpts

Tuesday 29th January 2013 Grand Committee

[Baroness Stowell of Beeston]

My Lords, this order was laid before Parliament on 15 October last year under the powers of the Public Bodies Act 2011. It provides for the abolition of the Disability Living Allowance Advisory Board.

The board provides independent advice to the Secretary of State on matters relating to disability living allowance and attendance allowance. It cannot provide advice unless specifically asked to do so and cannot be asked to provide advice on issues other than those relating to DLA or AA. It is not a representative body for disabled people and plays no role in the decision-making process for benefits.

The Disability Living Allowance Advisory Board Regulations 1991 specified that the board’s function was,

“to give advice to the Secretary of State on such matters as he may refer to them for consideration”.

The Secretary of State usually commissioned work on medical matters relating to specific conditions or illnesses. For example, the board undertook a study of cases where the highest rates of benefit had been awarded under special provisions for people who were terminally ill and not expected to live beyond six months, yet a number of such awards had been in payment for more than seven years. The board was supportive of the fact that special rules exist and should continue to exist but nevertheless it recommended that such cases should be reviewed after three years.

Clearly, the board provided some excellent advice in its time. However, the defined scope and membership of the board means that there is a limit to the type of advice it can provide. In fact, the last time the board was commissioned to do any work was in 2008, two years before the end of the previous Government. Since coming into government, we have found that using time-limited, tailored advisory groups and targeted professional advice—as we did with the Harrington reviews of the work capability assessment—is better than the prescriptive approach of a standing board.

We have used this more dynamic approach in relation to the design and development of the personal independence payment, involving experts and consulting disabled people and their organisations. The Secondary Legislation Scrutiny Committee commended the department for its extensive consultation on PIP, including our work with voluntary organisations that represent the interests of disabled people. I will return to this in a moment.

In its 15th Report of Session 2012-13, the Secondary Legislation Scrutiny Committee made a number of points that need to be answered in this debate, particularly on the tests laid down in the Public Bodies Act. I will address the points in turn. The report is clear that it expects me to use this forum to answer some of the points. I hope that noble Lords will forgive me if it takes me a little while to go through them systematically.

I will start with our decision not to consult on the proposal to close the board. The Secondary Legislation Scrutiny Committee accepted the department’s explanation of why there was no legal obligation for us to consult but it did not consider this to be in keeping with the spirit of the consultation requirements. I should restate that the board was not outward facing and did not have free rein to examine the policy, operation or administration of DLA, being able to respond only to concerns expressed by the Secretary of State. In our view, to offer a consultation to groups with no ability to influence the work of the board would not be in the spirit of meaningful consultation.

Moreover, disability organisations have shown little interest in the board over the years. Back in 2007 when it was reviewed as part of the normal process of reviewing non-departmental public bodies, more than 100 organisations of and for disabled people were contacted, but only 11 responded. Out of those, three reported that they could not spare the time to comment and the remainder had little to say about the functions of the board.

During the design of the personal independence payment, which as noble Lords know will replace disability living allowance, we undertook three consultation exercises. I acknowledge absolutely that no specific questions were asked about the board during those consultations, but the respondents had the opportunity to raise anything they wanted to about the reform of DLA. We received more than 5,500 responses, and again not one of them mentioned the board. We also discussed the board in both Houses during the passage of the Public Bodies Act, and the department has not received any correspondence or parliamentary Questions on the subject. There have been several meetings between disability organisations and Ministers and officials, and again the future of the board has never been an issue.

Perhaps I may turn to the issue of efficiency and effectiveness, which is another one of the tests under the Public Bodies Act. The department has an existing medical policy team covering a wide range of policy areas who can provide medical opinion or who can commission work by others, if needed. This is a more flexible resource than that provided by a standing board. The team also produces guidance for operational staff, advice on operational issues and audits the quality of outsourced medical advice. It is our view that short-life working groups can be set up quickly when work is needed, which is more efficient and effective than retaining a standing collection of eminent people whose expertise is not necessarily being put to good use consistently. For instance, during the development of PIP, we set up a group to help develop the assessment criteria. The group encompassed a wide range of expertise across health, social care and disability, including from occupational therapy, social work and a representative from Disability Rights UK. Very importantly, we also sought the views of user-led organisations and disabled people themselves through our implementation stakeholder forum. This group involves more than 60 user-led, grass-roots and national organisations working with us to get the design and delivery arrangements right.

Legislatively maintaining the status quo for the board places a burden on the department because the regulations require that the membership contains specifically qualified personnel. Therefore, if a member leaves the board either by choice or because their tenure has ended, the department is required to recruit even though there may be no actual work to do. The recruitment process is expensive, resource intensive and, in my view, verges on being disrespectful to those people who apply for the post. We consider that using time-limited groups is more effective than maintaining a standing body. We continue to use the expertise of other disability groups, and our recently launched Disability Action Alliance has convened a wide range of disabled people and their organisations who will work alongside the department to deliver results in a less prescriptive manner.

I shall move on now to the test of economy. As the Secondary Legislation Scrutiny Committee acknowledges, it is cheaper to run one NDPB rather than two, while Equality 2025 is a body representing disabled people that helps the Government to understand their needs and wishes. It has been in existence since 2006 and there have been no additional costs to that body since the DLA board has not been used. In addition, I can assure noble Lords that the medical policy team has absorbed some of the work previously undertaken by the board at no extra cost. Commissioning independent advice on an ad hoc basis is more economical than commissioning it from board members because they were paid fees for attending meetings and for contributing to reports, whereas the individuals and organisations who advised the department on the development of the PIP assessment did not receive a fee.

The Department of Work and Pensions considers that the use of time-limited groups will increase accountability. The scrutiny committee is of the opinion that accountability remains the same, as the Minister will commission time-limited groups, much in the same way as the board could meet only at the Minister’s direct request; it disagrees with our view that accountability will be enhanced. However, the board’s composition was laid down in statute. It is required to have members with professional knowledge or experience of physiotherapy, occupational therapy, social work, nursing people with disabilities and medical practice, as well as six or more members who are themselves disabled and at least one carer. Now we can target individuals with the specialist knowledge that we require. For instance, if the department wants up-to-date information on people with mental health conditions, it can specifically target mental health professionals who may be better placed to provide that advice.

In addition, the board could report only to Ministers and only at their request. Time-limited groups have the flexibility to engage with and report to a range of parties. For example, in his independent reviews of the work capability assessment, Professor Harrington took evidence from hundreds of organisations and individuals and ultimately presented his report to Parliament.

On safeguards, I do not consider that the abolition of the board will remove any necessary protection or prevent any person continuing to exercise any right of freedom. I say that because, as I have already mentioned, there is a range of ways in which Ministers receive and seek advice, and consult. There have been scores of stakeholders meetings with Ministers and officials. These will clearly continue.

This is a good and sensible reform, formally closing a body which, although of considerable help to the department in its time, has not been asked to give any advice since 2008. Before I close, I pay tribute and offer sincere thanks on behalf of all current Ministers at DWP to the current chair, Anne Speight, her predecessors and all members who have served on the DLA board over the years.

I hope that I have been able to give the Committee the information necessary to demonstrate that, in abolishing the DLA advisory board, we are in no way diminishing the way in which we will consult properly with experts and ensure that all ranges of advice are taken properly into account. I beg to move.

[Lord McKenzie of Luton]

My Lords, I thank the noble Baroness for her introduction to this order which, as has been described, abolishes the DLA advisory board. I join the noble Baroness in paying tribute to those who have served on the board over the years and all the work that they have done. We acknowledge the extensive consultation that has taken place on the creation of PIP. The extent to which it was always spot on is something we will have the chance to discuss when we discuss the regulations quite shortly. However, we acknowledge that that has been an extensive process.

We have of course debated the proposition of the board being abolished when we considered it during the passage of the Public Bodies Act. Since then, we have had time to reflect on those discussions and the Minister will be aware of the debate at the other end, particularly the strong points made by my right honourable friend Anne McGuire, former Minister for the disabled.

Paragraph 4.6 of the Explanatory Memorandum makes it clear that the board satisfied the three tests of performing a technical function whose activities require political impartiality and needing to act independently to establish facts. Can the Minister say a little more about the assessment that was undertaken to make the judgment that the DWP is better suited to the in-house team of medical advisers? Can we have an update on the size of that in-house team and the range of skills which it encompasses? Paragraph 7.2 of the Explanatory Note refers to “a larger resource”, but how does the range of skills match that which is available to the board? The Minister ranged over the skills that the board has. Paragraph 4.4, on the constitution of the board, sets out the range of skills which the board should have. It should include people from the fields of,

“physiotherapy, occupational therapy, social work, nursing disabled persons, medical practice, and at least one member with experience of caring for a disabled person”.

Employment and Support Allowance (Sanctions) (Amendment) Regulations 2012

Lord McKenzie of Luton Excerpts

Tuesday 29th January 2013 Grand Committee

Moved by

[Lord McKenzie of Luton]

That the Grand Committee takes note of the Employment and Support Allowance (Sanctions) (Amendment) Regulations 2012 (SI 2012/2756).

[Lord McKenzie of Luton]

These regulations are subject to the negative procedure, so the Motion to Take Note is an opportunity for us to bring some focus to these provisions. This follows on from the report of the Secondary Legislation Scrutiny Committee’s 15th report, which draws the regulations to the special attention of the House on the grounds that they give rise to issues of public policy. Indeed they do.

ESA was introduced in 2008 as the replacement for incapacity benefit. It was designed to focus on what individuals could do rather than what they could not, placing emphasis on their functional capabilities. This was all part of the broad consensus concerning the importance of work and of helping people move nearer to the labour market. The introduction of ESA has not been without its challenges, although the basic concept has been validated, but with periodic reviews bringing improvements to the process. However, concerns remain about the process and the role of Atos, so perhaps we can use this opportunity to get an update on some of these matters.

Can the Minister give us an update for last year on how many appeals are entered against decisions, either to access the support group or to the work-related activity group rather than JSA? What is the current rate of success? I probe these points because the quantum of appeals on a success rate is clearly indicative of how effectively the system is making the judgments that it should. It is these judgments, made by DWP decision-makers, which drive the conditionality in the regime and the sanctions which flow from it.

The regulations under consideration introduced from 3 December 2012 a new sanctions and hardship regime. As the Explanatory Memorandum makes clear, the rationale of the change is to align as far as possible the sanctions regime with the equivalent category under universal credit. For those claiming ESA, and in the work-related activity group, conditionality involves attendance at a work-focused interview and undertaking work-related activity. No conditionality of course applies to someone in the support group, but obviously greater conditionality applies to somebody placed on JSA rather than in the WRAG.

These new sanctions have an open-ended period which can be brought to an end when the claimant meets a claimant condition followed by a period of one, two or four weeks, depending upon the number of prior sanctions. The effective date of the sanctions to operate is to be brought forward in comparison with current arrangements. In addition, the amount of the sanction is to be increased; rather than 50% or 100% of the work-related activity component, which is currently some £28, the sanction will be 100% of the prescribed ESA amount, currently £71. This will leave the individual with only £28 plus any premiums to which they might be entitled.

We accept that the regime should involve conditionality and that this implies some form of sanction, but this level of sanction is frankly draconian and unacceptable. Our concerns are about not only the huge reduction of income that it entails but the risks of the system for vulnerable people. There is provision for hardship payments; we can ask about any differences between the regime which is being introduced by these regulations and the existing position in terms of eligibility for payment and the amount of any payment.

The Explanatory Note to the regulations says that in determining whether hardship payments are appropriate, a decision-maker will take the following matters into account: whether a member of the family satisfies the requirements for a disability premium or an element of child tax credit in respect of a disabled child or young person; the household’s likely resources without hardship payments, including whether the claimant can seek assistance from others, such as family and friends; the difference between the claimant’s likely resources and the amount of a hardship payment which can be made; the difference between the claimant’s likely resources and the amount of a hardship payment which could be made; the risk that the claimant’s household will not have access to essential items such as food, clothing or heating, or will have access to such essential items at considerably reduced levels without a hardship payment; and the length of time that these factors will continue.

To what extent does that description differ from the detail of the current regime? I am particularly interested in the suggestion that people have to go outside the household, not only to family but to friends, and that resources that friends may have are taken into account in whether or not the hardship payment is made. We need to know particularly about the protections built into this whole regime. As we have discussed on many occasions, individuals in the WRAG, even if properly judged to be capable of work-related activity, could suffer from a wide range of conditions. There are concerns in particular about those with a mental health condition, with fluctuating conditions, and indeed with hidden conditions. It was the prior intent that nobody with a mental health condition would be sanctioned without a face-to-face visit. Is this still the case?

Can the Minister say something about the process attached to these sanctions and the extent to which it differs from that attaching to JSA? Are the good cause rules identical to the current ones? My understanding is that the following still apply as constituting good cause: if there is any misunderstanding on a person’s part because of learning, literacy or language difficulties, or misleading information given by the benefit authority; attending a doctor’s or dentist’s appointment; difficulties with transport where no reasonable alternative was available; the practice of a religion that prevented attendance at a set time; attending a job interview; the need to work in a business if you are trying to become self-employed; if you or a person for whom you were caring had an accident, illness or relapse; attending the funeral of a close friend; a disability that makes attendance impracticable; and any other relevant data. Are those the rules that still apply? I want confirmation of the extent to which they differ, if at all, from those applying currently. The Explanatory Note makes reference to a comprehensive suite of products being developed for operational staff. This is welcome, provided that the DWP has the staffing resources to cope. For the latest year available, how many individuals in receipt of ESA were subject to a sanction, how many appealed, and what was the outcome of those appeals?

We will be watchful regarding these regulations. We note the monitoring review proposals. Finally, how soon will the revaluation of the JCP offer be forthcoming? I beg to move.

[Baroness Stowell of Beeston]

My Lords, I am grateful to the noble Lord, Lord McKenzie, for his Motion to Take Note, and for giving us the opportunity to discuss these new regulations. Standing back a bit, I think it is worth saying from the start that there is a widespread consensus that the welfare system in this country is in need of a great deal of change. Clearly some of that change is in the structural area, where we are bringing in universal credit, while some changes address the cost of welfare and the fact that the bill for welfare is unaffordable.

Under the heading of structural change, and building on what the previous Government did and on what the noble Lord, Lord McKenzie, referred to, we are putting the emphasis on helping people to get back into work, and on making sure that those who are able to work and those who have been diagnosed as being unable to work but who may be able to return to work at some point in the future have the support that they need in order to return to the workforce. That is what people want. When they are on benefits and find themselves in the very difficult situation of being out of work, particularly at the end of a long illness, they want to know that there is an opportunity for them, as there is for all of us. We proposed the tighter sanctions regime because we place so much importance on the requirements to help people back into work.

As the noble Lord, Lord McKenzie, said, these regulations came into force on 3 December last year. They provide for a more effective and proportionate ESA sanctions system, but they also preserve the important safeguards and clarity that are required to ensure a fair and balanced system. The regulations make no change to the assessment of who is eligible for ESA or to the requirements placed on ESA claimants. They form part of the wider package of reforms that move the employment and support allowance and jobseeker’s allowance sanctions systems substantially closer to that intended for universal credit, helping staff and claimants to prepare for the new benefit.

ESA is designed to place greater emphasis on what the claimant can do, and on the importance and benefits of moving towards work. I will be clear that we never ask ESA claimants to apply for jobs—only to prepare for work if they are able to do so, and to meet their Jobcentre Plus or other trained advisers to discuss this. Most claimants value this support and meet the requirements placed upon them. It is only fair to those who meet the requirements that the sanctions system places due importance on these obligations and provides incentives for all claimants to meet them.

I will now set out how ESA works. Claimants in the work-related activity group have been assessed as having a limited capability for work and are required to attend work-focused interviews to meet a personal adviser and discuss the support available to help them to take steps towards employment. Claimants placed in this group can also be required to undertake work-related activity where this is appropriate in their personal circumstances, such as attending a training course or updating a CV. Whether these work-related activity requirements are imposed by a Jobcentre Plus adviser or a work programme adviser, they must be reasonable in the claimant’s circumstances and cannot include requirements for the claimant to look for work or undergo any form of medical treatment.

If claimants do not meet suitable work-related activity requirements and work-focused interview requirements without good reason, a sanction can and should be applied. This is not new. Sanctions have been a feature of ESA since the benefit was launched in 2008. The regulations we are discussing today did not change what the claimant is expected to do or who might be sanctioned. But until these regulations came into force, the financial consequences of the sanction did not give sufficient weight to the importance of the requirements they enforced. As the Social Security Advisory Committee found, claimants do not always realise that they have been sanctioned. If claimants are unaware that they are losing benefit as a result of a sanction, there is little incentive for recompliance.

An ESA award for single claimants who have been found to be capable of work-related activity is made up of two elements: the work-related activity component of £28.15 and the personal amount of £71. Until December 2012, when these regulations came into force, claimants who failed to attend a work-focused interview or to undertake work-related activity without good reason received an open-ended sanction that was lifted when they re-engaged. The effect of the sanction was to reduce the work-related activity component of their award—£28.15—by 50%, which meant that their award of £99.15 a week would decrease by £14.17. After four weeks of non-engagement, the sanction increased to a 100% reduction of the work-related activity component, so claimants lost the full amount of the £28 which was on top of the original £71.

--- Later in debate ---

[Baroness Stowell of Beeston]

I am sure that if evidence is there that would be relevant to what we are doing, it would be very welcome.

[Lord McKenzie of Luton]

My Lords, I thank the Minister for her response and for dealing with quite a lot of detailed questions. There is not a difference between us on the importance of encouraging people into work and the difference that that can make to their lives as well as to the economy of our country. The key issue around these particular regulations is how these things operate for a range of people who might have a mental health condition, autism, learning disabilities or fluctuating conditions—a whole range of circumstances—where the approach needs to be particularly sensitive, particularly knowledgeable and sometimes very specific, if not individual. I do not think I got the flavour of that from the response.

The statistics for the appeal success rate, which I thought was going to be declining, are worrying because they seem to suggest that the process under way for people in the WRAG or support group, or left on JSA, is still not working as well and effectively as it should be. It has a chequered history. I think the approach is right—indeed we legislated for that approach—but how it works, and is working, in practice, particularly with Atos, remains a cause for concern. That point is not unrelated to these regulations—it is germane to the starting point, so I have residual concerns about that. Helping people to understand their obligations under the system to take advantage of facilities, work-focused interviews and work-related activity is fine. However, a sanction of £71 a week to concentrate the mind is, frankly, outrageous. For us, it is totally unacceptable.

Over the past 12 months, there have been sanctions for people on ESA, and one of the few questions that was not answered was the extent to which there have been appeals and the outcome of those appeals. That goes to the heart of the resources that the DWP will need to address this regime. I would be very grateful if the noble Baroness, in the fullness of time, could follow up on that. The noble Lord, Lord Wigley, made a very pertinent point about the impact assessment and the impact on civil society. Perhaps the noble Baroness will share her answer on that with Members of the Committee. Having said that, we have had one go at this and will keep it in our sights because it is of concern.

Motion agreed.

Growth and Infrastructure Bill

Lord McKenzie of Luton Excerpts

Monday 28th January 2013 Lords Chamber

[Lord Beecham]

Precisely. I do not know whether the noble Lord, Lord Deben, would agree but that might be one of the lines of inquiry that the Treasury could pursue and the Government could adopt. The position is not quite as stark as the noble Lord was suggesting and I certainly support the amendment of the noble Lord, Lord Best.

[Lord McKenzie of Luton]

My Lords, let me say at the start that I support the amendment of the noble Lord, Lord Best. I was tempted to follow the Minister’s suggestion that we do not range more widely over this issue but I was sorely tempted by my noble friend Lord Davies, among others, to get into benefits policy, which I am very happy to talk about for a long time. I share my noble friend’s concerns.

Before I get into the detail of the amendment, I say to the noble Lord, Lord Deben, that the component that seems to be missing from the analysis is the value that accrues to landowners on development from the community granting planning permission and agreeing that they want their community to be in a certain way, as a mixed community. An alternative might be to have special taxes that you get from looking at the uplift in value from planning permission—I will come back on that point—and you might then have your national scheme. For as long as that does not exist, you surely need to recognise that by agreeing to grant planning permission the local community is giving value to the landowner and developer, and to those who are going to occupy the houses that are built on that land.

[Lord Deben]

There are two very quick things that the noble Lord has to take into account. One is: who pays that? I am merely saying that in our present circumstances, when people find it very hard to buy, first-time buyers and the rest of them are paying for that cost. Secondly, we have a little difficulty here because to have the view that planning permission is a privilege seems to be wholly against any concept of the right to property, which says you can do exactly what you like on it, if the community then decides that you are going to have that restricted. The noble Lord is entering a very much deeper philosophical discussion there. However, the crucial issue is: who pays it? If the person who pays is the one at the bottom end of the scale, as it very often is, we ought to ask whether it should be paid rather more generally. That is all.

[Lord McKenzie of Luton]

It seems to me that the value comes from the granting of planning permission in respect of the land. If you are going to argue that that has to be shared by the community as a whole, not just the local community, surely you need mechanisms to get that value raised and to redistribute it. You could not do it on the basis of the current tax system.

This takes me back to a point that I was going to make on the amendment. I recall that when I first went on Luton Council, in the mid-1970s, we had something called the Community Land Act, as I recall it, and the development land tax. It was then very much the name of the game for developers to go and dig a trench to demonstrate that they had started their development before those provisions kicked in. Normally, there was a photograph taken with somebody holding up a copy of the Times, or whatever, to validate that this was when they had actually dug the trench.

[Lord Burnett]

I wonder whether the noble Lord recalls that I referred to the development land tax at Second Reading. It was a good example of the fact that where you have prohibitively high rates of taxation—I think the rate of development land tax was about 80%—it actually sterilised development so that building just did not take place. That was the downturn to which I think the noble Lord, Lord Beecham, was referring.

[Lord McKenzie of Luton]

We did very well out of it in Luton, I am bound to say, but I should stress that it is not Labour Party policy to reintroduce this tax. We should get that clearly on the record.

So far as the amendment is concerned, I agree with the provision to make sure that there are mechanisms to clearly identify when there is a commencement of development. What I was not sure about, having looked at Section 56 of the Town and Country Planning Act 1990, is whether that overrides all the other things listed there as the commencement of development. For example, that section says that,

“‘material operation’ means … the digging of a trench which is to contain the foundations, or part of the foundations”.

I think that the noble Lord, Lord Best, referred to that but I am not sure whether his amendment overrides it. It would technically seem to need to do that to get the solution that the noble Lord is seeking—a solution with which I agree.

There are a range of broader points but I will forgo the opportunity now for my clause stand part debate and come back there as we go through the amendments in due course.

[Baroness Hanham]

My Lords, we are back in the situation we were in last time. I am not sure whether I am answering a Second Reading speech that went totally away from the amendment, a clause stand part or just something that everybody has made up around this amendment. While it has not been made up, I think an opportunity has been taken to have a very wide-ranging debate on the back of the amendment moved by the noble Lord, Lord Best. He will understand that I was trying to confine this debate to his amendment, although I realise now that that was absolutely hopeless and was never going to happen.

If I may start on the philosophical aspect of our whole discussion, I will pin it immediately to my thinking that everybody recognises that we desperately need to build. We need to build housing in this country for several reasons. The first, and most important, is that we have an awful lot of people without homes. As my honourable friend at the other end, Nick Boles, has pointed out, if we are not to have people in their 40s still living with their parents and still unable to buy property in the near future, we have to start building. Secondly, we are not going to jerk the economy back into life if we do not jerk the construction industry back into life. Those are two fundamental reasons why we need to make sure that the growth of housing takes place.

There are many elements to housing: housing for sale; housing that goes to right-to-buy; housing for shared ownership; affordable housing; and housing for rent. A great number of projects are all buried within Section 106. Perhaps I could remind noble Lords that Section 106 is responsible for a very great proportion of the affordable housing being built at the moment. The noble Lord, Lord Davies, said that we were getting rid of that. We are not. In this clause we are not waiving the requirement to build affordable housing. What is being said here, and what we are recognising, is that negotiations which took place some time ago when there was probably a very high market may now not be viable because of the affordable housing element, which may be a very large part of the Section 106 requirement.

We are saying to all local authorities: do what many local authorities are already doing; that is, to look at that obligation to see whether it can be reduced to make the whole project viable. If it does not become viable, developers are not going to develop—and if they do not develop, we can all wring our hands and talk about housing forever but it will not be built. If a small reduction in affordable housing brings that back into viability, it seems an exceptionally good reason to have those discussions taking place.

--- Later in debate ---

[Lord McKenzie of Luton]

My Lords, we have a couple of amendments in this group, but perhaps I might make a few upfront comments now following our early discussions. Our concern about this clause generally is that it will lead to a reduction in the supply of affordable housing. Specifically on that point, I do not think that we have seen the equalities impact assessment for this clause; if we have, doubtless the Minister will let us know, but it would be very helpful if we saw that before we got much further into our deliberations.

The Government’s rationale for this clause is that there are sites where planning permission exists but where development has not started because the affordable housing obligation makes the development not economically viable. This obviously begs the question of how you define and calibrate viability and the extent to which it is the affordable housing obligation that is the cause of the project having stalled. We have received some data about estimates of the number of sites stalled and the housing that might be held up by this, but no real evidence of the extent—if at all—to which this is caused by affordable housing obligations, and our amendments seek to probe this. Can the Minister provide any further information? Will she provide us with a full report with a list of the sites involved and the numbers of affordable housing involved—that is, those sites where it is the affordable housing that is making them unviable?

We think that the clause is unnecessary because local authorities already have the power to renegotiate all aspects of Section 106 and they are using that power, as the Minister has previously accepted. Moreover, the Government have consulted on existing powers and the prospect of reducing the time—I think that it is currently five years—after which an appeal to amend the obligation can be made to the Secretary of State. What is happening with the Government’s response on that consultation?

This clause undermines and potentially discredits the local plan, a process that will have undergone public scrutiny and will have set affordable housing policies. In essence, judgments that have been made about meeting a locality’s housing need may be set aside for the economics of the here and now—set aside, indeed, for generations.

The Government have made play about providing additional funding—£300 million, I think—to support affordable housing. How is that to be applied? Could it not be used in whole or in part to move forward those sites that the Government claim are stored? Is that not a better way forward?

Amendment 55A in the name of the noble Lord, Lord Best, is one that we can support and to which, as the Committee have heard, we have added our name. It restricts the application of the clause to obligations that were entered into prior to Royal Assent. This would act as some restraint on developers overbidding for land and shutting out more responsible bidders that would adhere to local policies, with the prospect of being able to scale back commitments in future.

There is a wider point which we might pursue on Report if this clause remains. As I have said, the Government have been pursuing what they call a separate proposal to allow renegotiation of wider Section 106 planning obligations but only those agreed prior to April 2010. So far as I am aware, we have not seen the response to that. The consultation says:

“We consider that 6 April 2010 is an appropriate cut–off date for this change. New statutory tests were introduced for most planning obligations on 6 April 2010 which ensure that obligations agreed after that date must only cover what is necessary to make the development acceptable, must be directly related to the development and reasonable in scale and kind. It is also clear that a high proportion of stalled developments are dated prior to April 2010 when market conditions were different”.

It is surely the case that this logic applies to affordable homes obligations as to any other Section 106 obligations, so the Government should have no difficulty in accepting the cut-off proposed by the noble Lord, Lord Best, which is apparently less restrictive than the Government’s own thinking.

Amendments 55AA and 55CC provide that an application to modify an affordable housing obligation cannot be made within a certain time of its being entered into. The amendment sets this at two years from the beginning of the grant of planning permission or as may otherwise be prescribed. The purpose of the amendment is obvious. Clause 6 should not run when the Section 106 agreement is reasonably fresh. Consideration of economic viability is not without cost, time and expense and there should be encouragement on applicants and local planning authorities to get it right first time. Knowing that the affordable housing obligation cannot be unpicked for a period of time will at least help to concentrate the mind. It will also strengthen the role of the local planning authority in clearly establishing that its deliberations cannot be immediately brushed aside.

We have added our names to the sunset clause; it has not formally been moved but I will add my comments as I am on my feet. Our preference is for this clause to be removed in its entirety. Failing that, limited by the type of amendments that we have just discussed, time limit in the application of the clause would serve as a backstop to other amendments, giving it a limited life of three years. The rationale for a limited life for this clause was—I think—going to be set out by the noble Lord who was due to move it and follows the analysis in particular of the National Housing Federation. Over the next three years the NPPF should have bedded down and its focus on taking account of the viability of affordable housing should be well established. We are told that the clause is necessary in the first place because of the economic downturn. I presume—despite current GDP figures—that the Government would not argue that this will continue indefinitely. In any event, commitments made in better economic times are washing through the system.

The Government clearly see the clause as having some time limit as Clause 6(4) enables the Secretary of State to repeal by order Section 106BA and 106BB. Perhaps the Minister can say what the Government had in mind for the application of these provisions. What criteria will the Secretary of State have in mind when looking to activate this power and to repeal the clause?

[Lord Tope]

My Lords, I do not think that I can actually move the sunset clause. Amendment 55CD is in a group, so it would be a little premature. I will most certainly speak to it. I was offering the noble Lord, Lord McKenzie, the courtesy of allowing him to speak to the amendments in his name which are earlier in the group.

Amendment 55A is also in my name, and I am very pleased to support it. As both the noble Lords, Lord Best and Lord McKenzie, have spoken to it I do not think there is anything I need to add at this stage other than to listen with interest to the Minister’s reply. The noble Lord, Lord McKenzie, has inevitably done some of my job in speaking to Amendment 55CD and I welcome and endorse what he had to say on that. It is indeed a sunset clause. It would mean that this section will no longer have effect three years after the Bill is enacted. That is because it should no longer be necessary three years after the Bill is enacted.

The NPPF was adopted nearly a year ago and it stressed the importance of ensuring economic and financial viability in all affordable housing schemes. The NPPF should be doing that job and should continue to do that job. Local planning authorities in their negotiations of Section 106 agreements should be taking that very much into account with developers; Section 106 agreements from henceforth, as long as they last, should meet this requirement. Who knows when the current economic difficulties will come to an end? I hope that that will happen one day—they have certainly been in place for rather longer than a year or more.

It is our view that this clause, which has not found universal favour in your Lordships’ House, really should not be necessary after three years. By that time all the existing Section 106 agreements will have either been implemented or expired. Planning consents extant at that time will have been granted under the regime of the National Planning Policy Framework; therefore this clause should cease to be needed and cease to have any effect. That is the reason for the sunset clause which I now speak to, but do not move.

--- Later in debate ---

I hope that that lengthy response answers the questions that noble Lords have raised, lays out the Government’s position and assures the House that we are thinking carefully about the sunset clause, to which, as I have said, we shall return before Report.

[Lord McKenzie of Luton]

I am grateful to the Minister for her detailed replies. Perhaps I may follow up on one or two points. I asked whether an equality impact assessment of this clause had been produced and, if so, whether we could see a copy of it before Report. I did not quite follow the rationale about the £300 million of additional funding for affordable housing. The Minister said that it was for new housing. If we are talking here about less housing than there otherwise would have been, it seems to me that that itself is not a logical reason not to be able to apply it to supplement Section 106 agreements, which are assumed to make a particular site incapable of being economically viable.

The Minister helpfully talked about guidance for issues around viability. I was not quite sure—perhaps I missed it—whether she said that we are likely to see a copy of that guidance before we get to Report.

I revert to the issue of the extent to which sites are stalled by affordable housing obligations. Is the noble Baroness at least able to publish a list of the 1,400 sites where the 75,000 houses are to be built, and say whether it is those plans that are causing the sites to be unviable? Local authorities may have that information but is there no central collection of it that can be shared with us? That would be particularly helpful.

Finally, perhaps I may come back on the cut-off point. As I understand it—and as I think the noble Baroness confirmed—the broader consultation on Section 106 agreements and the current five-year rule will have as its starting point agreements that were entered into prior to April 2010, on the basis that agreements entered into after that point would have recognised the current state of the market. If that logic runs for that scenario, why does it not apply equally to consideration of affordable housing? I am a bit unsure as to how those two different processes will interrelate.

[Baroness Hanham]

My Lords, I can deal with the final point first. As I have said a number of times, the clause is specifically about affordable housing. It is perfectly up to local authorities, even at the moment, voluntarily to renegotiate any aspect of Section 106 applications made before 2010. Regulations are coming out soon to make sure that that can be done anyway.

This clause relates only to affordable housing and the expectation is that this will be a pretty swift operation. Negotiating other aspects of Section 106 agreements may take quite a long time because there may be a lot of elements. However, affordable housing ought to be dealt with swiftly by the local authority or the Planning Inspectorate. We want decisions on this that generate affordable housing. That is why the issues have been separated; there is a single focus here. However, that does not discount other aspects of Section 106 being looked at voluntarily. Ultimately, there will be a statutory requirement.

[Lord McKenzie of Luton]

I understand why the Government are saying that the issues should be separated; whether I accept that logic is another matter. However, in relation to having one cut-off point of April 2010 because agreements entered into after that would have recognised the current market conditions, why does that issue not run for both scenarios—whether it relates to affordable housing or other components of Section 106 agreements? Why is it 2010 for one but an unlimited starting point for affordable housing?

[Baroness Hanham]

My Lords, I think that the answer is simply because affordable housing is such a significant element of this particular argument. I may have to write to the noble Lord about this pinch point and come back to him.

As regards the £300 million, I said that we will not make a blanket commitment to fill the gap regarding the aspiration of affordable housing, which is what we have been talking about—the idea of granting affordable housing requirements in the event of a Section 106 agreement being renegotiated. I have not ruled that out entirely but I have, more or less, said that I do not think that we could have such a provision. However, the matter is still being looked at.

--- Later in debate ---

Moved by

[Lord McKenzie of Luton]

55AB: Clause 6, page 6, leave out lines 11 and 12

[Lord McKenzie of Luton]

My Lords, I shall speak also to our other amendments in this group—Amendments 55AF, 55BB and 55BD.

Amendment 55AB would delete one of the options available to a person seeking easement of an affordable housing obligation—the complete removal of the obligation. To allow that would lead to less of a mix in our communities and less land available for affordable housing. We will come on in other amendments to adherence to the local plan, but I remind noble Lords of the NPPF requirement for local planning authorities to,

“use their evidence base to ensure their Local Plan meets the full, objectively assessed needs for market and affordable housing in the housing market area”.

The prospect of removing the entirety of an affordable housing obligation is not just a short-term issue. The consequences last for years, perhaps a century or more—the chance denied for the creation of inclusive and mixed communities.

Amendment 55AF is the link to Amendment 55BB and is concerned with circumstances where the value of land on which planning consent has been granted with an affordable housing requirement has increased. If the requirement has not been met and the obligation not fulfilled within two years, the amendment would enable the local authority to initiate modifications to the obligation. The implication was that there could be an upward revision of the affordable housing requirement. This is consistent with Amendment 55B of the noble Lord, Lord Best, which would delete provisions that prevent modifications to affordable housing obligations that are more onerous. Such a provision would clearly encourage developers to make speedy progress on their affordable housing obligations and discourage them from sitting on their sites, waiting for land values to increase. This is an issue of basic fairness. If affordable housing is to take the hit when land values fall, why should the reverse not apply? We recognise the need for due process in this approach—perhaps a right to appeal to the Secretary of State—but this amendment seeks just to establish the principle.

Amendment 55BD addresses the timeliness of an implemented and modified affordable housing obligation that has been determined by the local planning authority —that is, an obligation that has not involved an appeal to the Secretary of State under new Section 106BB of the Town and Country Planning Act 1996. It requires the revised obligation to be met within two years; otherwise the original obligation will stand. This approach is consistent with that provided for in modifications determined by the Secretary of State, except that there is a three-year period in that case, which we will seek later to amend to two years. I beg to move.

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[Baroness Hanham]

The noble Lord, Lord Best, has spoken to Amendment 55B, which seeks to allow the modified obligation on first applications to be more onerous than the original obligation. If a developer undertook a voluntary renegotiation, he would neither expect nor agree to more onerous terms. He would expect to come out with something better than he went in with. He would revert to the original, agreed obligation if the negotiation was unsuccessful. Under this application process, we want to replicate these circumstances for the first application. It provides an important incentive for developers to come forward and review their schemes. We need housebuilders to bring sites forward and I hope that this provision will ensure that they do this.

The clause also provides an important distinction between the first and subsequent applications to encourage the developer to proceed quickly. Under the first application, the affordable housing requirement must be reconsidered if it is found to be causing the scheme to be unviable. The local planning authority must modify or remove it so as to make the development viable, and the outcome must not be more onerous than the original obligation.

In relation to a second or subsequent application relating to the same planning obligation, the authority has more flexibility in amending the affordable housing requirement. Where it is justified on the basis of economic viability, the affordable housing requirement could be made more onerous than in the original obligation. The only restriction is that the amended obligation must not make the development economically unviable.

The distinction between first and second applications provides a real incentive for developers to reach a new agreement on their affordable housing requirements on the first application and to get on with building. It discourages repeat applications unless the developer is very clear that viability evidence supports their case. It also provides an important incentive for them to come forward and review their schemes. The purpose of these provisions is to ensure that development goes ahead and is not delayed because of unviable affordable housing requirements.

This amendment prevents a developer requesting the local authority to remove the affordable housing requirement, even if viability evidence justified this. It is not our intention that developers should remove all affordable housing requirements. We want affordable housing to be justified on the grounds of viability. In the clear majority of cases, we expect that evidence will demonstrate that some—probably most—affordable housing is viable

However, there will be some cases where evidence demonstrates that no affordable housing at all can be supported by the development. The developer must have the option to apply for this and the local authority must have the option to agree to this. Stalling development with unviable affordable housing requirements serves no purpose. Stalled development brings no local benefit to anybody. I hope that I can reassure the noble Lord that this clause does not encourage applications to remove all affordable housing but looks to ensure that viable applications are agreed to enable development to proceed.

Amendments 55BB and 55BD propose a review of affordable housing after two years where land value has increased. These amendments aim to put in place primary legislation incentives to ensure that developers build their schemes. They look to allow local authorities some control where obligations have not been delivered within two years. The drafting of Clause 6 does not prevent local authorities agreeing a mechanism with developers to increase obligations should markets improve. I am aware that this is the practice in many local authorities where obligations are “staircased” according to market conditions.

We will be clear in guidance on the options open to local authorities, and I urge that this be allowed to be negotiated locally, according to local circumstances. I do not agree that a fixed period for review in primary legislation would be helpful. I hope that the noble Lord will now think that the clauses are helpful.

[Lord McKenzie of Luton]

My Lords, I thank the Minister for her response. I would like to read the record on the issue between first and second applications, but I think that I have understood the point being made. I will take this opportunity to ask again for a response with respect to the equality impact assessment, which runs through all these groups. It cropped up earlier, and I do not think that we have had a response.

I accept that there is always an opportunity to negotiate an improvement in affordable housing numbers. However, it is the extent to which, under the provisions, the local authority has a right to drive that, just as the local authority has an obligation under these provisions when lack of economic viability suggests that these affordable housing numbers are too great. If that is the analysis, the local authority clearly must do something to modify that in a downward direction. However, where land values have increased, why on earth does it not have the right to reciprocal arrangements and to obtain increased affordable housing? I accept that one can always make these arrangements through negotiations and agreement. However, we are looking for something more positive to balance the other side of the coin. Otherwise, in the words of the noble Lord, Lord Best, this is a one-way bet for developers. Having said all that, does the Minister have any more news on the impact assessment?

[Baroness Hanham]

I enjoy Committee; there is always this bobbing up and down. It seems inconceivable that developers would want to renegotiate affordable housing at the first chance, on the basis that it might end up going up. They must produce a viability assessment to prove that it has gone down. If the assessment does not prove that, they go back to the original number. If they then rethink and decide to have another go with the second application, at that stage, if the local authority assesses that things have improved a lot it can require an increase in the amount of affordable housing. From a developer’s point of view, it is therefore a bit of a gamble to come back a second time. We suspect that it is better to stick to the original commitment and to get on with it. Regarding the equality impact assessment, I apologise. It will be available on Report, and I will see that the noble Lord gets a copy as soon as possible.

[Lord McKenzie of Luton]

I beg leave to withdraw the amendment.

Amendment 55AB withdrawn.

--- Later in debate ---

[Lord Tope]

My Lords, Amendment 55AC is in my name and that of my noble friend Lord Shipley. The intention of the amendment is to ensure consideration of all planning obligation costs, including possibly the cost of the community infrastructure levy.

The concentration of this clause solely on affordable housing has understandably caused a good deal of concern—which I am certain was not the intention—that in some way the Government are downgrading the importance of affordable housing and their commitment to providing it. I know that that is not the case. Nevertheless, that impression is inevitably given when a piece of legislation refers to only one aspect of a Section 106 agreement. The provision of affordable housing is often a very important part of a Section 106 agreement, but it is rarely the only part. There are many other aspects of such an agreement, such as contribution to transport and transport infrastructure, or to education in the local area, and the community infrastructure levy itself. Therefore, if consideration is to be given to the viability of a Section 106 agreement, surely it should take into account all those matters, not just one of them.

The purpose of this amendment is to ensure that all aspects contributing to the viability or otherwise of a Section 106 agreement are considered. Other aspects of it may be varied, not necessarily and certainly not only the provision of affordable housing. That seems to be a fair and equitable way of recognising that economic conditions have changed since the Section 106 agreement was agreed, and of finding the best and most equitable way of varying it, without necessarily focusing solely or even at all on affordable housing. I beg to move.

[Lord McKenzie of Luton]

My Lords, our Amendments 55AD, 55AE and 55CA are in this group. Amendment 55AD touches on the basis on which a local authority views economic viability. It requires the local authority to proceed to determination of the modified requirements if it assesses that the affordable housing requirement is the sole reason that the development is not economically viable. We will come on to discuss viability and how it is to be determined, but the reality under such a determination is likely to be that a number of factors influence economic viability. One problem with this clause is that it can lead to adjustment only of the affordable housing obligation, as we have discussed. This is unfair.

The Minister in the other place sought to differentiate affordable housing obligations from other Section 106 items on the basis that they were somehow discretionary and not in the same category as road improvements or school enhancements, the need for which might flow directly from the development. This gives scant regard to the validity of the local plan, and to the benefits of building sustainable mixed communities, by suggesting that somehow they are far less important than housing or having sufficient road capacity. Obviously, not having the benefit of proposed new Sections 106BA and 106BB does not mean that there are no other remedies for the developer. A negotiated arrangement with the local planning authority would be one, conducted without the Secretary of State’s powers looming large over the process.

Amendment 55AE requires that if a local planning authority determines to modify an affordable housing obligation, the modification must not materially conflict with the strategic policies of the development plan, and it must be the case that any other form of development that would accord with the development plan would not be economically viable. This is to emphasise the point that planning is not only about economic viability but should be anchored in the democratically derived local plan, with the intricate balances that this sometimes entails.

Amendment 55CA excludes from the definition of affordable housing that can be modified under the clause situations where an obligation would include land to be reserved and transferred to the local planning authority or RSL. The purpose of the amendment is to keep available land for affordable housing in the future. We support Amendment 55AC, moved by the noble Lord, Lord Tope, and Amendment 55BA, which would not preclude a modification being more onerous if there was a compensating, less onerous modification.

--- Later in debate ---

[Lord McKenzie of Luton]

I wish to raise a number of points and to refer to the matter that the noble Lord has raised. I thought that the current rule outside these new provisions for affordable housing is that if a Section 106 agreement is not implemented within five years, there is a right of appeal to the Secretary of State. I am not sure whether the same criteria would have to apply to the Secretary of State in making a determination of that appeal, but I thought that it was that process which has been the subject of the parallel consultation. For example, it had a cut-off point of April 2010. That may be wrong and no doubt the Minister or her officials in the Box will tell me if that is the case. However, I thought that that was the issue.

I want to come back on the issue of the local plan and development policies. No one is suggesting that we need to revisit the local plan, but simply to ensure that any change to the affordable housing requirement as a result of these provisions is still consistent with the plan. That does not mean revisiting it.

Perhaps I may also come back on the issue of whether affordable housing is the sole reason for a development not being economically viable. Are we saying that if two reasons of broadly the same magnitude make a development not viable, nevertheless it is right and just that it is the affordable housing that is changed as a result? That does not seem to be particularly logical or fair. If the affordable housing component is the sole reason why a development is not viable, one can see how the logic flows for what the clause provides. However, when it is not the sole reason, why is it that only the affordable housing has to take the hit?

[Baroness Hanham]

My Lords, I have tried to say several times during the course of our debate that this clause relates only to affordable housing. It relates to the developer saying that what is holding things up and why he is not developing is that the affordable housing aspect, for whatever reason, is making it unviable. Any other aspect of Section 106 can be negotiated with the local authority. A developer does not have to do it. It is absolutely only the affordable housing element.

[Lord McKenzie of Luton]

Perhaps I may press the point. I understand that the clause is focused only on affordable housing and changes and modifications to it, but if the reality is that the assessment of viability shows that affordable housing and other things are making the project not viable, you will nevertheless look to the affordable housing component as that which has to take the hit and bear the adjustment. I accept that everything else can be negotiated under the current provisions, but if it is not solely the affordable housing component, why is it that, to the exclusion of everything else in this clause, the affordable housing component is focused on to bear the consequences of the modification?

[Baroness Hanham]

It is because that is what this clause is all about. It concerns situations where it is believed that affordable housing is causing the block. Every other aspect of Section 106 can be negotiated voluntarily. Under Section 106 in its totality consideration can be given to other aspects, but it is only where affordable housing is the only aspect that is said to be causing the lack of viability that this clause will impinge.

--- Later in debate ---

[Lord McKenzie of Luton]

I think that that was a gem for which I am grateful to the Minister. I think she said that if the affordable housing component is the sole reason for it not being viable, that is when the clause operates. I think that that is a different position from that which I thought we debated earlier. Perhaps we should read the record because no doubt we shall come back to the issue on Report.

[Baroness Hanham]

My Lords, unless I have been deluding myself, I thought that that was what I had been saying the whole way through our debate this evening. We will check Hansard and make it clear that that is the situation. I will write to the noble Lord if I have said anything recently which does not bear out what I said before.

[Lord McKenzie of Luton]

I am most grateful to the Minister and, in the circumstances, I beg leave to withdraw the amendment.

[Lord Tope]

My Lords, I think that it will be me who begs leave to withdraw this time, and I was about to do that when the noble Lord intervened some minutes ago. It has been an interesting debate. I cannot help feeling that we have gone around in circles a little, but that is not unknown. I am equally certain that we will return to this issue at a later stage. In the mean time, I beg leave to withdraw the amendment.

Enterprise and Regulatory Reform Bill

Lord McKenzie of Luton Excerpts

Monday 14th January 2013 Grand Committee

Moved by

[Lord McKenzie of Luton]

28ZDA: Clause 59, page 56, line 21, after “shared” insert “to a material extent”

[Lord McKenzie of Luton]

My Lords, I beg to move Amendment 28ZDA and to speak to Amendment 28ZDB. These are probing amendments and I doubt that they will delay the Committee for very long. I should be clear that we strongly support the primary authority scheme, which was set up, of course, under the previous Labour Administration following the Hampton review. Despite its short life to date, it has been a success, and we further support the sensible extension of the scheme. When I last checked the numbers back in November, the scheme encompassed some 602 businesses, 93 local authorities and more than 58,000 premises, with 1.6 million employees and nearly 2,000 partnerships. The Minister may have an update on that.

The current criteria for participation require a business to operate across council boundaries, and the regulatory functions covered are health and safety, environmental health, trading standards, food safety and petroleum licensing. There are two main aspects of the scheme: the primary authority will provide assured advice to businesses, and the primary authority and businesses can prepare a national inspection plan. Clearly, the overall benefits to business come from a consistency of approach and the prospect of reducing the regulatory burden and improving regulatory efficiency.

So far as extending the scheme is concerned—as proposed by the report of the noble Lord, Lord Young, and provided for in Clause 59—there are three main dimensions: first, extending the eligibility rules so that more businesses can be included; secondly, strengthening the provisions relating to primary authority inspection plans; and thirdly, widening the range of regulatory areas covered by the scheme. The first of these is dealt with by Clause 59 and the second by Clause 60. As I understand it, the third will be accomplished by way of statutory instrument, and the Government are currently consulting on a specific proposition. We will clearly have the opportunity to consider these in due course, but I have no particular problem with the areas proposed. However, I ask the Minister if there is anything else in the pipeline, and to confirm that regulation of sunbeds is still included now that the noble Lord, Lord Marland, is no longer part of the team.

Amendments 28ZDA and 28ZDB apply to Clause 59, which looks to extend businesses which might be included in a primary authority scheme. The impact assessment identifies situations where this might be accomplished, and in particular identifies corporate groups, franchise arrangements and trade associations. The test for inclusion provided for in the clause depends upon entities having a shared approach to compliance. Amendment 28ZDA is a probe to better understand the Government’s views on the meaning of this phrase. Of course, the provision is not restricted to just those areas identified above. Clause 59 gives a wide power to the Secretary of State to determine whether the shared approach test is satisfied. The Secretary of State may from time to time publish guidance about what is to be taken into account.

Amendment 28ZDA seeks a better understanding of the Government’s interpretation of a “shared” approach to compliance. The Minister in another place said that it simply means that businesses consistently followed the same centrally issued guidance to fulfil their regulatory obligations. I suggest that this is a bit thin; anyway, it seems to focus on the assured advice benefits of the scheme rather than on the national inspection benefits. I offer the Minister the opportunity to put more on the record about the scope of this. As for the development of guidance, our amendment requires this to be done after due consultation and that this requirement should be in the Bill. When is the first guidance to be available and what consultation is planned for this? Perhaps the Minister can let us know. I beg to move.

--- Later in debate ---

[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.

Amendment 28ZDA withdrawn.

--- Later in debate ---

Moved by

[Lord McKenzie of Luton]

28ZDC: Clause 60, page 57, line 11, at end insert—
“(3B) Where functions equivalent to relevant functions are carried out by other regulatory bodies, any inspection plans shall have regard to the way in which such other bodies exercise their functions.”

--- Later in debate ---

[Lord McKenzie of Luton]

My Lords, in moving Amendment 28ZDC I shall also speak to Amendment 28ZDD.

Amendment 28ZDC is a probing amendment designed to focus on the issue of health and safety and the split responsibility between the HSE and local authorities. This was another issue raised by Professor Löfstedt in his independent review of health and safety legislation. The HSE is the national regulatory body responsible for promoting better health and safety and setting the parameters for enforcement activity, but enforcement and inspection activity is split between the HSE and local authorities. The HSE is responsible for traditionally high-risk places and local authorities for those that have less risk.

As Professor Löfstedt’s review points out, there have been many good examples of joint working and co-ordination between the HSE and local authorities, including joint inspections and flexible warranting. An engagement of primary authorities in this process certainly enhances outcomes. Professor Löfstedt identifies that, despite improvements, there remain inconsistencies across local authorities’ implementation, with some local authorities assigning a lower priority to health and safety than, say, food safety. He also drew attention to the problem that the premises that are considered relatively low-risk within the HSE areas of responsibility are now not subject to proactive inspection at all as a result of the government edict, but may nevertheless be riskier than workplaces falling within the local authority orbit. That is accentuated by the fact that local authorities undertake more inspections than the HSE—nearly 200,000 to the some 33,000 of the HSE—although the latter is of course to reduce.

With greater emphasis on HSE responsibilities and engagement, the primary authority route would be one means of improving the situation, as this probing amendment suggests. However, the professor has a more radical proposition, which is to have a single body directing health and safety across all workplaces, and that this responsibility should pass to the HSE. Can the Minister offer a government view on that proposition?

Amendment 28ZDD touches on the extent to which local authorities may exercise their inspection functions outside the primary authority plan and co-operate in providing feedback. Clause 60 makes following the plan mandatory unless prior written permission has been given. The LGA argument is that this mandate is unnecessary and that encouragement to co-operate will increase the effectiveness of inspection plans. We will hear more of this in a moment.

Our amendment is an attempt—perhaps not a very refined one—to find a middle way. Can the Minister outline circumstances in which the Government consider it reasonable for a local authority to seek and be granted an easement from the inspection plan provided by the primary authority? The impact assessment states that 5% of primary authorities currently use inspection plans, which is a surprisingly low percentage. What are the Government’s estimates of the likely increase in this percentage in the period ahead? I beg to move.

[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.

Amendment 28ZDC withdrawn.

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[Baroness Greengross]

My Lords, listening to the Minister, I felt rather sad that I was going to stand up and say what I intend to say. It is because these primary authority partnerships are such a good thing and have not been around very long that I want to oppose Clause 60 being part of the Bill.

I spoke briefly about this at Second Reading to say exactly that; that they need to be encouraged and that they should not be overturned, through this Bill, by central government when they intervene in local partnerships by directing councils to follow inspection plans. I declare an interest as a vice-president of the Local Government Association and I speak in that capacity. In these difficult times, we know that councils use a wide range of tools to ensure that businesses receive the tailored support that they need. The primary authority is one of the key tools that councils can use when they want to provide individual businesses with tailored support, and when they want to reduce red tape, promote consistent advice from councils and ensure that the limited enforcement resource is risk-based and focused on priorities. I would like to see the removal of this clause, which would make it compulsory for enforcing authorities to abide by the content of inspection plans, which I know is the opposite of what the Minister was saying.

The LGA—I declare an interest—recognises the important role that inspection plans can have in informing enforcement activity but councils are already required by law to have regard to these plans. There are many examples of inspection plans being used to inform the work of councils with companies that have multiple business outlets. Primary authority has only been running since 2009 and has only very recently gained a critical mass of business involvement. It is therefore far too early to identify more than initial findings about the scheme and certainly too early to make wholesale legislative changes. In fact, the evaluation of primary authority involved discussions with only 24 businesses and there are only 11 inspection plans in place.

Furthermore, the evaluation showed that of those councils that had used inspection plans, fewer than 50% found that they enabled a more targeted inspection. It is therefore simply not necessary for central government to intervene in these local partnerships by directing councillors to follow inspection plans. Central direction will reduce flexibility and innovation at a local level. More than that, it will introduce a layer of bureaucracy for both primary authorities and enforcing authorities that fails to accommodate local circumstances and the judgment of competent enforcement officers.

This step also contradicts the Government’s commitment to reduce red tape for councils. It might mean many more delays, in spite of what the Minister suggested. It is an unnecessary use of legislation. I know that the Local Government Association would be happy to discuss opportunities for increasing awareness of inspection plans and how they can be used to achieve more focused and targeted inspections, which would help to achieve the intended outcome without tying councils in unnecessary red tape.

[Lord McKenzie of Luton]

My Lords, I look forward to the Minister’s response. I am bound to say to the noble Baroness, with whom I normally agree wholeheartedly, that I remain unconvinced of the case that has been made. There is an easement for local authorities that want to go down a different route to that provided for in the Bill. As the Minister said in response to my previous amendment, local authorities are free to react to emergency situations or local complaints should they arise. The inspection plans apply only to routine and proactive inspections. I wait to hear the Minister’s response, but this is not a proposition with which we can align ourselves.

[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.

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[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.

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[Lord McKenzie of Luton]

My Lords, I added my name in support of my noble friend’s proposition that Clause 61 should not stand part of the Bill. Notwithstanding the Government’s amendments, which have removed what the Delegated Powers and Regulatory Reform Committee described as a power so far-reaching in its effects as to be inappropriate, what remains is a significant and unacceptable change in the law. It overturns what has been in place since 1898 as a result of the landmark decision Groves v Lord Wimborne. It will radically change the way that injured workers can claim compensation from their employers.

The clause was slipped into the Bill on Report in another place without prior consultation. The Government have claimed that it was the recommendation of Professor Ragnar Löfstedt in his independent review of health and safety legislation. But as my noble friend Lady Turner said, his report stated:

“I recommend that regulatory provisions that impose strict liability should be reviewed by June 2013 and either qualified with ‘reasonably practicable’ where strict liability is not absolutely necessary or amended to prevent civil liability”.

I have spoken with the professor, a distinguished academic, directly about this and he told me, as he would tell others, that his report speaks for itself on this matter. He recommended a review; he did not recommend what is included in Clause 61.

We have received a number of representations from authoritative bodies: the Personal Injuries Bar Association, the Association of Personal Injury Lawyers, the Bar Council, the Law Society, the Scottish TUC, the TUC, Thompsons Solicitors, UNISON and the NUT, to name but a few. They all have the same consistent message about the impact of this clause and the deep concerns it engenders.

The current position is clear. Regulations issued under the Health and Safety at Work etc. Act 1974 contain the vast majority of duties that the law imposes on employers to create and maintain safe workplaces. Some of these—a minority—impose a strict liability on employers, others a less strict liability. In the latter case, an employer will not be held to be in breach of a statutory duty if an accident could not have been foreseen or it was not reasonably practical to avoid it. Those situations fall outside strict liability. However, if a breach of duty is established, an employee is entitled to claim compensation.

Where strict liability applies, the employer is liable for injury caused without proof of fault or failure. As the Personal Injuries Bar Association points out, strict liability applies, for example, to the Provision and Use of Work Equipment Regulations. It is justified because the employee has no control over the selection, buying or maintaining of equipment, so the employer who provides it takes the risk if the equipment injures somebody and is defective. If it is not the employer in those circumstances, who will bear that risk, and where is the fairness if it is the employee? There is a separate issue of the employer being prosecuted by the HSE for committing a criminal offence although such prosecutions are few and far between.

However, Clause 61 does not deal just with strict liability. If enacted, it would remove all the opportunities for an injured employee to seek compensation from an employer for breach of statutory duty. Employers will no longer be liable in the civil courts for the offence of a breach of health and safety at work regulations, so, as my noble friend Lady Turner said, the only remedy available to the injured employee would be to prove that the employer was negligent. We are advised that this situation arises because Clause 61 would reverse the presumption in Section 47 of the Health and Safety at Work Act, with the consequence that no health and safety regulation would impose civil liability unless express provision was made for them to do so. The regulations carry no such provisions and, unless the Minister can tell us otherwise, there are no plans to introduce any. Will the Minister confirm that there are no such plans?

Will the Minister also confirm that Clause 61 therefore goes considerably further than the recommendation in the Löfstedt report, the most far-reaching consequence of which, and one which we could not support, would be the removal of strict liability from those regulations to which it applies?

Indeed, the impact assessment shows the Government declined to follow the recommendations of Löfstedt on the grounds that identifying strict liability duties is complex and would require amending a large number of regulations. However, the Personal Injuries Bar Association and others disagree with this and make clear that instances of strict liability are limited and it is imposed only where it is necessary to do so. Therefore, the Government’s justification for this draconian change is spurious. Can the Minister tell us how many regulations are considered subject to strict liability? Will he explain why the Government have chosen to overturn this long-established position and to do so without prior consultation? Why is it considered that to transfer the risk in no-fault situations from employers— more accurately, the providers of employer liability insurance—to employees, their families and/or the state is justified?

Clause 61 will also mean that the route to justice and compensation where the employer is culpable is far less certain. Because an injured worker’s course of action for breach of statutory duty is removed, the available remedy, as my noble friend has said, is to seek to prove negligence. However, the reality is that negligence and breach of statutory duty are not equivalent avenues to justice and compensation.

Indeed, the Government’s own impact assessment identifies that negligence is a more nebulous concept and more difficult to prove, with the burden of proof switching to the employee. The PIBA briefing on this matter explains this in some detail:

“In order to establish liability for negligence at common law, an injured person must establish: … The existence of a duty of care … The scope of the duty … Breach of the duty … That the breach caused injury … That the resulting injury was reasonably foreseeable”.

These are nebulous concepts indeed, to which even the Government refer in their evidence base.

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[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.

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[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.

Regulation of the European Parliament and of the Council on the Fund for European Aid to the Most Deprived: EUC Report

Lord McKenzie of Luton Excerpts

Thursday 13th December 2012 Grand Committee

[Lord Boswell of Aynho]

My Lords, the intention is that after today’s debate a Motion will be moved in the Chamber on Monday inviting the House to agree that a formal reasoned opinion should be issued.

Our report concerns a proposal to create a European Union fund to provide aid to deprived people, which was examined by our Sub-Committee on the Internal Market, Infrastructure and Employment, chaired by the noble Baroness, Lady O’Cathain, whom I am delighted to see in her place today. Before I explain our thinking on this proposal, I will briefly explain the background because the committee has considered earlier versions of the policy twice before.

The European Union’s food distribution programme began as far back as 1987 as a way to make use of agricultural surpluses. As the report explains, in both 2010 and 2011 the committee considered proposals relating to the programme to distribute food products. On both occasions the committee suggested that the House should issue a reasoned opinion under the Lisbon treaty because the proposal was not consistent with the principle of subsidiarity—in other words, that this was something that was better done at member state or regional level—and that no compelling argument had been put forward that the European Union was better placed than member states to ensure a food supply to its most deprived citizens. Our view was not shared by a sufficient number of other national parliaments so no so-called “yellow cards” were triggered, which would have inhibited the scheme that the Commission had put forward in those years, and the current scheme was extended to the end of 2013.

The proposal before us today is to create a new “Fund for European Aid to the Most Deprived” to operate from 2014 to 2020 in order to address food deprivation, homelessness and the material deprivation of children. The proposed fund would support and co-finance national schemes to provide non-financial assistance to the most deprived persons. I make it clear that we share the Commission’s concerns about EU citizens suffering from deprivation, and that we recognise the very serious impact of the economic crisis. Our report, though, is about whether the European Commission’s proposal is the right way to respond to these important issues.

The Commission has provided little by way of justification that its proposal complies with the principle of subsidiarity. Our committee had to derive some indication of the Commission’s reasoning by looking at the accompanying impact assessment, which argues that European-level action is necessary because of,

“the level and nature of poverty and social exclusion in the Union, further aggravated by the economic crisis, and uncertainty about the ability of all member States to sustain social expenditure and investment at levels sufficient to ensure that social cohesion does not deteriorate further”.

After careful consideration, our committee concluded that such uncertainty could better be met by action through the existing European Union cohesion programmes, from which money would have to be diverted to fund this scheme, without burdening member states with the extra administrative obligations introduced by the proposal. The committee also concluded that the Commission had failed to put forward any convincing argument that the European Union was better placed than member states to undertake this role, and had therefore failed to justify its implied assertion that the proposal meets the principle of subsidiarity.

In summary, this is an issue of concern about process rather than one of substance. We are not seeking to deny that the substantial matter is important and of interest to all Governments—indeed, to all citizens, in our current economic difficulties—but the principle of subsidiarity is a powerful one. It should be complied with, and our view is that it has not been met on this occasion, hence our proposal to issue a reasoned opinion. I beg to move that the Grand Committee take note of the report.

[Lord McKenzie of Luton]

My Lords, I find myself, somewhat surprisingly, dealing with this for the Opposition, but I think it is because the Secretary of State for Work and Pensions has lead responsibility. I thank the noble Lord, Lord Boswell, for the very clear way in which he introduced the report and its recommendations.

The specific issue before us is the recommendation that support should be given to a reasoned opinion to the effect that the draft regulation does not comply with the principle of subsidiarity. As we have heard, a similar issue was considered two years ago and the same conclusion reached, although that proposed regulation was withdrawn after the European Court of Justice ruling that purchases from the market, rather than use from intervention stocks, could not be made under agricultural legislation. This generated an amended proposal a year ago on which the UK took the same position, although that did not, as we heard from the noble Lord, prevent the life of the scheme being extended until 2013.

The proposal considered by the committee was for a new fund for European aid to the most deprived with the fund to address food deprivation, homelessness and material deprivation of children. It would run from 2014 to 2020. It is different from the previous programme, which grew out a need to make use of the then agricultural surpluses. It has the three strands that have been outlined. It is understood that it did not propose any additional overall expenditure, but the cost, which would be some €2.5 billion, would be met from the proposed cohesion policy—structural funds—the budget total for which is some €339 billion, or less than 1% of the total. If adopted, it would to that small extent divert funds from the structural funds.

The Commission’s impact assessment sets out that the EU has the objective of reducing by at least 20 million the number of people at risk of poverty or social exclusion by 2020. However, it reports that poverty and social exclusion are rising in many countries. The explanatory note states that in 2010 nearly a quarter of Europeans were at risk of poverty or social exclusion, which was 2 million up on the previous year, with later figures confirming a worsening trend, and this at a time when the ability of member states to support the disadvantaged is in some cases diminishing. In our own country, we see a rise in homelessness and rough sleeping. The latter is up by 23% in the past year alone. According to the IFS, the number of materially deprived children is increasing, and we have the well publicised growth of food banks, and we are one of the richer countries in the EU.

Paragraph 11 of the committee’s report states that it considers that the uncertainty about cohesion can be met by action through existing EU cohesion programmes. I understand that point, but will the Minister—I am not sure whether I should be addressing the noble Lord, Lord Boswell, the Minister or perhaps both of them—expand a little on that belief? How does it address the comment made in the explanatory note that some of the most vulnerable citizens who suffer from extreme forms of poverty are too far removed from the labour market to benefit from the social inclusion measures of the ESF? Would it propose any changes to the ESF programme?

Will the noble Lord please explain whether there is something inherent in the nature of the expenditure proposed in the programme—food deprivation, homelessness and material deprivation of children— which makes this a social policy matter where member states must act on their own accord or does it depend on the ability in practice of member states to resource appropriate individual country programmes? If the latter, can we hear the evidence base for the assessment that each member state is in a position to do what is necessary for its own people? Indeed, is there any point or any scale of food deprivation, homelessness and materially deprived children where the committee would accept a role for such a fund and an EU dimension?

I do not ask these questions to be difficult, but to understand the routes to addressing this awful poverty. I think the noble Lord, Lord Boswell, made the point that this is not about the substance but about the mechanisms available to deal with it.

[Baroness Stowell of Beeston]

My Lords, I am grateful to the noble Lord, Lord Boswell, and indeed the EU Committee for scrutinising the proposal from the Commission and producing the report that we are debating today. Along with the noble Lord, Lord McKenzie, I am grateful also to the noble Lord, Lord Boswell, for his very clear introduction to this debate. Because he was very comprehensive in going through the history of how we got to the present position, I will not spend any time repeating that history, not least because we are all feeling the chill in this Room and brevity is the key. However, first, it is essential to make the point that the Government share the committee’s view that this Commission proposal is not consistent with the principle of subsidiarity and that we support the Motion put forward today.

In 2011, the Commission sought to extend the existing scheme. It is worth reminding ourselves, as I think the noble Lord, Lord Boswell, already has, that the French and German declaration at that time stated that they considered that the conditions were not met for a proposal for a new programme after 2013—even though they had supported at that time the extension of the existing programme—and that they could not agree with legal and financial proposals by the Commission for such a programme in future. In response, the Commission issued a declaration saying that it,

“takes note of the opinion of a significant group of Member States not to pursue the program beyond 2013”,

and that:

“Without prejudice to its right of initiative under the Treaty, the Commission will take account of this strong opposition to any legal and financial proposal of such a program in the future”.

The Commission has now produced a proposal but it is very difficult to see how the Commission has taken account of this strong opposition that was stated at the time. We have to ask what the main changes are in the new proposal.

First, the new scheme is presented as an instrument to promote social cohesion and to contribute to the European 2020 target on reducing poverty, whereas the current scheme has an agricultural legal base. Secondly, the fund will no longer be financed from the CAP but from the structural and cohesion fund, as has already been mentioned, for the 2014-20 budget. Thirdly, the fund will be used to purchase basic consumer goods for the personal use of homeless people or children, as well as to provide food aid. Fourthly, the new fund will be obligatory—this is a key point—whereas the current scheme is optional. Each member state will receive a financial allocation and be required to set up a single national programme to implement the fund in 2014-20. Fifthly, not only will the fund be obligatory, but member states will be required to provide matched funding of at least 15% of the costs of their national programmes—in other words, on top of the welfare programmes we already have in this country. The fund from the European budget will contribute only up to 85% of the costs of the scheme being proposed in most cases. Sixthly, the new fund will be implemented along similar lines to the structural and cohesion funds.

Despite these changes, the Government’s view has not changed. We remain unconvinced as to the merits or appropriateness of this proposal. The principle of subsidiarity, currently enshrined in Article 5 of the Treaty on European Union, states that the EU should act collectively only where the objectives of the proposed action cannot be sufficiently achieved by the member states acting on their own, and that they can therefore be better achieved by action on the part of the Union.

We consider that measures to assist the neediest members of society, as set out in this proposal, can be better and more effectively delivered by individual member states through their own social programmes and not at EU level. The member states and their regional and local authorities are best placed to identify and meet the needs of deprived people in their countries and communities, and to do that in ways that are administratively simple and efficient. We will therefore oppose this proposal on the grounds that social measures of this sort are a matter for individual member states.

We are also concerned that the proposal does not represent value for money and would be burdensome to administer. Using EU structural and cohesion fund processes to deliver this instrument would lead to heavy and costly administrative burdens on member states and partner organisations, without adding value to existing arrangements in member states.

Not only is this fund inconsistent with subsidiarity, it will use resources that would be better deployed at national or local level. It is worth pointing out that if this fund were removed from the proposals, the UK could argue for an equivalent reduction of €2.5 billion from the EU budget over the seven years of the multiannual financial framework.

I underline that the Government strongly support measures to tackle poverty and social exclusion and certainly agree with the points made by the noble Lord, Lord Boswell. In the UK, we have a full range of social security benefits and tax credits in place to cover financial needs for those who are both in and out of work. We are investing £400 million in the current spending review period to help local authorities prevent and tackle homelessness. We are committed to eradicating child poverty and are taking a new approach to tackling the root causes, including worklessness, educational failure and family breakdown.

On food aid, the Healthy Start scheme provides a nutritional safety net in the form of vouchers for basic healthy foods and free vitamin supplements for pregnant women and children aged under four in disadvantaged and low-income families. Initiatives such as FareShare and FoodCycle are good examples of the essential work that charities are doing to support communities to relieve food poverty.

The noble Lord, Lord McKenzie, asked a couple of questions. I know that he directed them to the noble Lord, Lord Boswell, but it is perhaps worth me responding to them. He asked whether each member state provides for the three issues that the new fund would cover. Obviously, I will allow the noble Lord, Lord Boswell, to respond as he sees appropriate on behalf of the committee. From the Government’s perspective, it is clearly not for us to comment on other member states’ ability. Our approach is to tackle the root causes of poverty, as I just said. Any future proposal will have to be considered on its merits and in the circumstances at the time. If an alternative proposal were put forward by the Commission, we would want to consider it rather than set out our views now on whatever alternative might be proposed.

[Lord McKenzie of Luton]

Just to pick up on that point, a moment ago the Minister said that it is accepted that the EU can act where objectives cannot be sufficiently achieved by member states acting on their own. Does that imply some understanding of the resources that are available to individual member states? Is that part of the judgment about whether, acting on their own, they can deal with the issue?

[Baroness Stowell of Beeston]

The principle of subsidiarity is clear. I set that out clearly in my previous remarks and the noble Lord, Lord Boswell, has done the same. It is not for this Government to comment on whether other individual member states feel that they are in a position to be able to fulfil the objectives of the proposed fund.

[Lord McKenzie of Luton]

I am sorry to interrupt, but who can therefore make that judgment and how? If the judgment is about whether it can be sufficiently achieved by member states acting on their own—that is what the Minister has just said—who makes that judgment and on what basis? If we are saying that each individual member state has to ignore what the resources are and what the position is in each other member state on this issue, how on earth does that make sense of trying to make that evaluation, which she says is important?

[Baroness Stowell of Beeston]

The Commission itself, in bringing forward a proposal, has no doubt made a judgment in order to inform its decision to put forward this proposal to fund the scheme. I am saying that it is not for us as a member nation to comment on the ability of other member nations as to whether they can meet the objectives that the fund is there to meet. It is our view, from the position of a member state, that we are can provide for our citizens in the way that we are. We think that the issues to be addressed are better addressed by nation states and by local communities or regional bodies within those nation states because of the nature of the issue. That is the point that I am seeking to make.

I conclude by saying that we agree with the committee that the Commission has provided no convincing argument that its proposal meets the principle of subsidiarity. I restate that I thank the committee for its report and all its members who have contributed to this debate. I repeat that the Government support the Motion on the reasoned opinion.

Personal Independence Payment

Lord McKenzie of Luton Excerpts

Thursday 13th December 2012 Lords Chamber

[Lord McKenzie of Luton]

My Lords, I begin by thanking the noble Lord, Lord Freud, for repeating the Statement made in another place. As my colleague in another place said this morning, we had the written announcement last week on the closure of Remploy factories, involving more than 900 redundancies; now we have a Statement that is intended to remove a vital benefit from thousands of disabled people.

The Statement gives us an overview of the introduction of the personal independence payment. We look forward to the detailed regulations and the transitional arrangements. As ever, the devil will be in the detail, as it is for universal credit. As the Minister said, we will be scrutinising and debating these measures in the early part of the new year. I thank the Minister for a specific briefing for Peers arranged for Monday. It will be useful.

We should be clear that we are in favour of a process of assessment for a new benefit, provided that it is the right one. In his introduction, the Minister made great play of the increasing numbers of DLA recipients, but does he not recognise that part of the increase is for a good reason, that the lives of disabled people have changed dramatically in the past 30 years? The opportunity to live independent lives in the community, rather than move into residential care, is surely something that we should all welcome.

We acknowledge that considerable expertise has been applied in devising the assessment, involving an extensive engagement and consultation, particularly with disabled people and their representatives. The same was said at the time of the WCA’s introduction. It is understood that the face-to-face assessments are to be undertaken partly by Atos and partly by Capita; there is a geographical split. We know that the work of Atos on the WCA has been heavily criticised, and perhaps the Minister can tell us what assessment was undertaken to establish the capacity of each organisation to deliver. Was the capacity of Atos assessed on the basis of an ongoing involvement with the WCA?

Currently, DLA is not taxable, is ignored when calculating tax credits, is not taken into account when calculating any of the means-tested benefits and, depending on the rate, a recipient can claim exemption on VED, provided that the car is for sole use and that the recipient qualifies for the blue badge parking concessions. Will all this passporting be available to recipients of PIP and be included in the universal credit? Can the Minister confirm—I hope that he can—that receipt of PIP will mean exemption from the benefit cap?

The Minister said that the Government estimated that 170,000 of the 560,000 claimants who will be reassessed by October 2015 will not be eligible for PIP. If this is true, what estimate have the Government made of the impact on carers? We will obviously look at impacts in more detail when considering the regulations, but can the Minister give a broad outline of the current DLA caseload that will make up that 170,000? What sort of needs that are recognised in the current DLA will not be recognised in PIP?

It is welcome that PIP is to be set at the same rates as for DLA, with the standard rate for the daily living component being set at the middle-rate DLA care component. However, of course, the issue is not only the rates but who will be accessing them. Given the Government’s disgraceful approach to uprating generally, we should welcome the fact that PIP, like DLA, will continue to be uprated by inflation.

We also welcome the Government’s recognition that the initial proposals on the speed of reassessment were unrealistic and that there will now be a significantly slower pace. Having said that, we are still looking at June 2013 as the vesting date for all new claims. Is the Minister satisfied that the systems are in place to cope with the timetable, especially given everything else that is going on at that time?

There are some further matters on which we will wish to press the Government in the detailed scrutiny. Given that DLA support allows many people to travel to work, what advice and support will the Government give when such support may be taken away from someone? The Government are protecting the under-16s and those over 65; how does this match with the Government’s ambition to get disabled people into work, when the new PIP changes disproportionately impact on working-age disabled people by reducing their financial support? The new criteria must not push people into social care or the NHS. What discussions has the Minister held with the DCLG, local government generally and the NHS on the impact on those hundreds of thousands of people who will lose benefit?

Finally, what will be the overall impact of these measures on the poverty of disabled people? There is a raft of measures in place or about to come into effect that will affect the lives of thousands of disabled people. We have the bedroom tax, the ESA restrictions, the chaos of the WCA and the management of the Atos contract, and the Work Programme, which is not delivering for disabled people. We know that some 2,000 disabled people have been made redundant through the closure of Remploy, and there is the impact of localised council schemes. That is to mention just some of the measures. We are amazed that the Government continue to refuse to develop a comprehensive impact assessment to cover all these issues, and we will continue to press for that.

Having said all that, it is important that PIP delivers for disabled people. We recognise the hard work that has gone into this by officials, Ministers, disabled people and disability groups. It is our responsibility to challenge where appropriate but to give it a fair wind where we can.