Public Bodies Bill [HL]

Lord Taylor of Holbeach Excerpts

Monday 28th February 2011 Lords Chamber

[Lord Taylor of Holbeach]

My Lords, before I beg to move that the House do now again resolve itself into a Committee upon the Bill, I should like to beg your Lordships’ indulgence by taking a few minutes to update the House on the work that has taken place since the Committee last met to improve this Bill.

During the Second Reading debate, I made it clear to this House that I intended to engage in an open dialogue with noble Lords throughout the Bill’s passage. I feel confident in saying that I have to date delivered on that promise. Since the last day in Committee, 11 January—which seems a very long time ago, and I am sure that noble Lords have shared my withdrawal symptoms—I hope the time has not been wasted. Indeed, it has been well used. The Minister for the Cabinet Office, my right honourable friend Mr Francis Maude, ministerial colleagues in this House and I have participated in a number of meetings with Peers from all sides of the House seeking constructive and proportionate solutions to concerns regarding this Bill. Such discussions are a crucial part of the work of this House, and I have no doubt that they will continue. I pay tribute to the positive spirit in which noble Lords, including those on the opposition Benches, have looked to work with the Government to achieve our shared objectives. As a result of this work, the Government have today laid a number of significant amendments to the Bill. I hope it will be helpful to the House if I briefly describe their effects as they are relevant to the debates that we shall be having over the coming weeks.

First, I am happy to inform the House that the Government continue to engage in constructive discussions with my noble friend Lord Lester of Herne Hill and my noble and learned friend Lord Mackay of Clashfern on the safeguards that should apply to orders made under the Bill, particularly in relation to Amendment 175, which has been tabled by my noble friend Lord Lester of Herne Hill. We intend to reach a solution that will offer further protection for the necessary independent exercise of public functions, including judicial functions, and we will require that orders made using the powers in this Bill are proportionate in their effects. The noble Lord, Lord Lester of Herne Hill, and the noble and learned Lord, Lord Mackay, are working closely with the Government to inform this approach, and I thank them for the rigorous and helpful analysis that they have brought to bear on this process.

I wish to address the overall structure and purpose of the Bill, with particular reference to Schedule 7. Noble Lords will be well aware that the Government’s policy is that all public bodies should be subject to regular review to ensure that their functions are still required and are delivered in the most effective and efficient manner. This is a goal to which the Government remain committed and one which I am sure will continue to receive support from all sides of the House. Schedule 7—and the corresponding power to move bodies between schedules, as described in Clause 11—was designed as a pragmatic mechanism to facilitate this goal by creating a means by which changes to public bodies could be made following future reviews without recourse to further extensive primary legislation.

The Government absolutely recognise that some public functions need to be carried out independently of Ministers. Schedule 7 was never intended to hinder or threaten that independence. However, it has become clear during the passage of this Bill to date that this House is uncomfortable with the nature of Schedule 7. As many noble Lords, including members of the Delegated Powers and Regulatory Reform Committee and the Constitution Committee, have made clear, it is a feeling that is strongly held by much of this House that Schedule 7 represents a significant delegation of power to Ministers and has the potential to hinder the independent delivery of public functions.

Noble Lords will, I hope, forgive me for maintaining a more positive interpretation of the Government’s intentions. None the less, I have listened with great care to the voice of this House and have taken its concerns to my colleagues in government. Indeed, the Minister for the Cabinet Office has met a number of noble Lords, who have taken the opportunity to put these points to him in person. Consequently, I can confirm to the House that the Government have accepted the arguments that bodies and offices should be listed in the schedules of this Bill only where Parliament has given its consent in primary legislation. On this basis, we intend that Schedule 7 and Clause 11 be removed from the Bill. I am therefore adding my name to existing amendments opposing the Question that the relevant clauses of the Bill stand part.

In this context, I should also inform the House that it will be necessary as a result of the removal of Schedule 7 to introduce a small number of amendments that move bodies currently listed in Schedule 7 to one or more of the remaining schedules. These changes shall ensure that all reforms announced as part of last year’s review of public bodies can be implemented. These amendments will be made at a later stage in the Bill’s passage, but I hope that the House will be assured by the fact that these moves, and the reforms to which they relate, will be scrutinised in primary legislation.

I will now reassure those of your Lordships’ House who have concerns about whether the provisions in the Bill on the transfer of functions could be used in a way that could undermine the independence of charities. I make it absolutely clear that the Government have not considered, nor would they ever consider, using the Bill to transfer functions to charities without their consent or make consequential changes to their constitutions without such consent. We continue to work with charities to ensure that that reassurance is made as explicit as possible. The reform of public bodies will ultimately help to empower rather than undermine the role of charities and the independence on which they rely.

Finally, I refer briefly to the clauses in the Bill that relate to forestry. As noble Lords will be aware, my right honourable friend the Secretary of State for Environment, Food and Rural Affairs made a Statement in the other place on 17 February, setting out the Government’s intention to end the consultation on the future of the public forest estate and to remove the relevant clauses from the Bill.

My noble friend Lord Henley will set out the Government's revised approach on this issue in greater detail later today. However, I can confirm that I have added my name to amendments to remove the relevant clauses and schedule entries to the Bill, including the regional advisory committees established under Section 37(1)(b) of the Forestry Act 1967, which is listed in Schedule 1.

Progress on this Bill to date has not always been smooth. It has certainly been drawn out longer than I had hoped. However, I take comfort in the knowledge that the expert scrutiny of this House has improved and will continue to improve the Bill. Again, I thank all noble Lords who contributed to this process. In tabling the significant amendments that I described today and following our existing amendments to introduce both a statutory period on consultation and the option for Parliament to select an enhanced affirmative procedure, the Government have demonstrated their commitment to engage with and respond to your Lordships' House. I hope, following these amendments, that we will be able to make progress on the Bill with a renewed sense of shared purpose and in the constructive spirit that characterises this House at its best. I beg to move.

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[Lord Evans of Temple Guiting]

My Lords, I rise to speak briefly as a great admirer of NESTA, an organisation that works in an exciting and important area of our society to create a viable commercial future for science, technology and the arts. NESTA’s core objective is to combine capital investment with non-financial support to help innovative early-stage companies to turn their ideas into commercial success. These target companies, referred to as seed companies, are vital for the cultural success and economic growth of this country. Without this assistance in the early stages of development, these companies will be held back from reaching their full potential. We should all be grateful to NESTA for its part in facilitating the creative industries’ £50 billion annual contribution to the economy.

NESTA is a unique organisation with a world-class reputation. It is the UK’s leading expert on innovation and carries out some cutting-edge work with the creative industries. Let me give your Lordships three examples. Its creative mentoring programme brings together new creative businesses with successful figures in the industry to help them to grow. It has worked with the National Theatre to bring live theatre to more people through the power of digital distribution. It is also working with our fashion industry to encourage the best UK designers to work more closely with British high-tech manufacturers.

NESTA is also recognised as one of the UK’s leading organisations producing world-class research, concentrating on exploring future areas of economic growth. It has always enjoyed a greater level of independence than any other non-departmental public body because of its unique set-up. NESTA has an endowment from the National Lottery, as we have heard from the noble Lord, Lord Warner, and therefore operates at no cost to the Exchequer. In this case, moving NESTA from the public to the third sector will, in principle, allow it to continue its vital work as an early-stage seed funder and to act as a test bed for innovative solutions to some of our greatest challenges in the commercial creative sector.

In terms of detail, it would be helpful if the Minister could comment on the following points, which have also been raised by my noble friends Lord Warner and Lord Dubs. What consultation have the Government undertaken with the board and different interested groups about the change? What process will the Government use, as my noble friend Lord Dubs asked, to select and appoint trustees? The Minister may also like to inform the House, in light of the Public Administration Committee’s recent report on quangos, why this body is one of the few bodies to have been singled out for charitable status.

[Lord Taylor of Holbeach]

My Lords, I thank the noble Lord, Lord Warner, for introducing this amendment, and the noble Lords, Lord Dubs and Lord Evans of Temple Guiting, for their contributions, which give me an opportunity to explain how the Government see the role of NESTA. It is government policy to reduce the number of NDPBs and NESTA did not meet the Cabinet Office criteria for remaining an NDPB. However, NESTA and its activities are still considered highly valuable to UK growth and innovation. The Government are clear that they want that work to continue. That view will be widely held throughout the House.

We have no intention of winding down NESTA and its activities. Instead, the proposed reconstitution of NESTA as a charity, with its £329 million endowment held in a separate charitable trust, will allow it to continue its valuable work. Far from halting its activities, establishing NESTA as a charity preserves its ability to deliver its public benefit mission at no cost to the taxpayer. I confirm the analysis of the noble Lord, Lord Dubs, that there is no question of saving the taxpayer money in this matter, since the body is independent of taxpayer funding. We can further distance it from government and enhance its independence by making these changes. It will therefore cease to be classified as an NDPB and as part of the public sector. We have already worked closely with NESTA to develop the detail of this reform. We will seek Charity Commission approval for the proposed new model. This model builds on that successfully used by the Millennium Awards Trust, which similarly derived much of its funding from the National Lottery. We want to build on that model.

Once NESTA becomes a private sector charity, the Government will no longer select or appoint the trustees. The separate charitable trust, which will be created to hold the endowment in the public sector, will have a protector. The intention is for the protector to be appointed by Ministers and for NESTA the charity to be the trustee of the trust. The role and powers of the protector are yet to be defined but they will be based on the Millennium Awards Trust model. This is a very positive step that is being taken by the Government. We firmly believe that this model represents an opportunity for NESTA to continue its success. However, we also believe that NESTA’s current status as an NDPB is by no means a prerequisite for it to continue to flourish. Establishing NESTA as a charity is part of the Government’s wider commitment to hand power to the big society and not simply to rely on central bureaucracy to control public life. The Government’s proposed model reflects this objective while safeguarding the public interest in the large endowment managed by NESTA.

I have been asked by many noble Lords about the nature of the discussions that we have had with the Charity Commission. There was an initial discussion with the Charity Commission last December and there has been an exchange of correspondence since then. This is designed to ensure that the objects of NESTA are charitable. BIS and NESTA itself have carried on these discussions. They are positive and we are confident about their outcome. While there have been no public consultations, officials worked closely with NESTA’s senior management team to develop the charitable option and NESTA consulted informally with its board of trustees, which is supportive of the change in status. NESTA also consulted several key stakeholders. Its staff were informed on 14 October 2010, following the Government’s announcement on public bodies reform. Since then NESTA has held regular meetings with staff to inform them of the transitional process and provide the opportunity to address any questions or concerns that they had.

In a statement released at the time of October’s announcement, NESTA’s chair, Sir John Chisholm, said that the board welcomed the decision and described it as an extremely positive move for NESTA. The statement also contained endorsements from Sir James Dyson and from Sir Stuart Etherington, chief executive of the National Council for Voluntary Organisations. Since then, NESTA has written to key stakeholders and engaged with the public via its website and social media sites, giving details of the proposed transition and welcoming any questions regarding the change in status. In the light of these considerations, I hope that the noble Lord will feel able to withdraw his amendment.

[Lord Warner]

My Lords, I am grateful to the Minister for his full explanation. I am still just a shade puzzled as to what will happen if the Charity Commission does not accept that the purposes defined by Parliament meet its requirements as to a charitable purpose. Many of those purposes defined by Parliament have at their heart economic development. Before the next stage, so that we can be absolutely clear, I would like more assurance from the Minister, perhaps in writing, that there is not going to be a slip between cup and lip over this that would damage NESTA and the work that it does. On the basis of an assurance in that area, I beg leave to withdraw my amendment.

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[Lord Taylor of Holbeach]

My Lords, perhaps I should start with the question posed by the noble Lord, Lord Bichard. I hope that he will allow me to write to him, because the question extends somewhat beyond the brief I have on this particular body; but it points to the complexity of the reform of public bodies and why this has not been a particularly easy process.

The proposal today affects two government departments as well as the Cabinet Office, so it is frequently quite complex. However, there is a desire across government to achieve reform of the public body sector which I think is widely shared in this House. I assure the noble Lord, Lord Rosser, that I am always ready to learn from the noble Lord, Lord Faulkner of Worcester, and I have been greatly informed about the work of the Railway Heritage Committee as a result of the dialogue that I have had with him. I join in the tributes paid across the House to the work that the noble Lord did during his period as chairman of the Railway Heritage Committee. I thank him for the energetic and positive way in which he has reacted to the Government’s changes and for what he has done to bring about what I hope will be a satisfactory outcome.

I hope that the noble Lord will understand when I say that the committee’s appearance in Schedule 1 does not reflect on the distinguished service that he and his members have given to the committee over the years. The committee’s current powers are to apply a statutory designation to rail-related items of heritage interest.

The noble Lord’s amendments would move the committee from Schedule 1 to Schedule 5. They would therefore allow the committee’s powers to pass to another body while it retains its status as a public body. I understand the noble Lord’s desire for the committee’s powers to be retained, for example under the National Museum of Science and Industry, which operates the National Railway Museum—and I am delighted to hear of his involvement in that—but he should be aware that that would best be achieved by the RHC remaining in Schedule 1 and the powers being transferred at the time that the RHC is wound up.

The need to reduce the cost of government is an important consideration, but it is not the only one. The review of public bodies that took place last year began by asking whether a function needed to be carried out at all and, if so, whether it was appropriate for it to be carried out by a public body. Our analysis recognised that the railway industry already had a long and proud record of preserving its heritage, and I pay tribute to the industry itself and to the flourishing voluntary railway heritage sector for that undoubted success. Our proposal to abolish the RHC did not imply that we have no interest in railway heritage or that the good work that has already taken place would not be supported by other means. On the contrary, the Government are very sympathetic to rail heritage, and the spending review settlement for the DCMS will ensure our continuous support for the National Railway Museum. I know that the NRM and its parent body the National Museum of Science and Industry will want to engage actively to support the work of the railway industry and the voluntary railway heritage sector.

In the context of the review of public bodies, the question for the Government is therefore not only whether we can justify the cost of the committee but whether we can justify retaining a statutory power of designation in a field where there is already an impressive voluntary record of preserving the industry’s heritage. The noble Lord has presented his arguments in a positive way and they have led to further discussions within government. We see merit in the proposed transfer of the RHC power of designation to the board of the trustees of the Science Museum, the legal entity which stands behind the National Museum of Science and Industry. Positive discussions on the detail are continuing. Noble Lords will know that I am personally committed to supporting further discussions and continuing to engage with the noble Lord on his proposals. In those circumstances, and in view of the fact that his amendment would not in any case be the best means to achieve his desired goal, I hope the noble Lord will feel able to withdraw his amendment to allow the use of time between now and Report to take these positive, detailed discussions forward, and we will update the House at Report.

[Lord Faulkner of Worcester]

My Lords, I thank all noble Lords who have contributed to this short debate. I am a little overwhelmed by the compliments paid in one or two quarters to me on this, but this has been a collective effort by a lot of people who care about railway heritage and railway heritage preservation. Above all, I want to pay my own tribute to the Minister for the generous and gracious way in which he has listened and been willing to accept the arguments that have been put to him. The most important thing that he has said—and this is the change in government policy—is that the Government now accept that there needs to be statutory protection for railway heritage. They did not accept that, and the Department of Transport did not accept that, in the initial press release last autumn when the committee was included in Schedule 1 to the Public Bodies Bill. I accept completely his point that my amendment will not be necessary if the Government are able to come forward at Report with alternative arrangements. On that basis, and on the understanding that he has expressed today and the agreement that we have already reached and will continue to discuss, I am very happy indeed, if the Committee agrees, to withdraw the amendment.