Scottish Government: Devolved Competences

Baroness Goldie Excerpts

Wednesday 13th March 2024 Lords Chamber

[Baroness Neville-Rolfe (Con)]

I hope the noble Lord, Lord Cameron, and myself will be able to take on the challenge of the thistle. I reassure the noble Lord that there have been official-level discussions on these matters, as you would expect. I am afraid that it would not be appropriate to provide a running commentary, but I will update the House in the coming months on the outcome of this work.

[Baroness Goldie (Con)]

My Lords, does my noble friend the Minister agree, in pursuance to the question from the noble Lord, Lord Foulkes, that there has to be concern about the cost to the Scottish taxpayer of the Scottish Government taking unsuccessful court action to hold an independence referendum? They also took court action unsuccessfully to progress the Gender Recognition Reform (Scotland) Bill and, after a vast amount of work, put on ice unworkable plans for a deposit return scheme. Does my noble friend the Minister have any idea of the costs of these endeavours?

Devolved Authorities: Expenditure outwith Competences

Baroness Goldie Excerpts

Monday 5th February 2024 Lords Chamber

[Baroness Neville-Rolfe (Con)]

I know there are strong feelings about this, and people in Scotland want both their Governments to concentrate on the issues that matter most to them: growing the economy, gripping inflation and improving public services. On the point about timing, as I said, the Government only recently, on 24 January, responded to the committee’s inquiry, reiterating the work that is under way. I am delighted that the Cabinet Secretary is back; these issues are being given active consideration.

[Baroness Goldie (Con)]

Does my noble friend the Minister agree that, as Scotland’s educational standards decline, its NHS faces acute challenges—not least the recruitment of consultants—and ferries languish in a Scottish government shipyard, overpriced, overdue and much needed by the operators, the response of the Scottish Government, not only to spend money on completely illegitimate and incompetent objectives, as the noble Lord, Lord Foulkes, said, but to make Scotland the highest-taxed part of the United Kingdom, is, in the face of these challenges, as incomprehensible as it is regrettable?

[Baroness Neville-Rolfe (Con)]

I agree with much of my noble friend’s sentiment, and that the Civil Service should not carry out political work. It has its own Civil Service Code, which replicates the Civil Service Code that is operated across the UK, and it should pursue the priority items that people care about.

Procurement Bill [HL]

Baroness Goldie Excerpts

Report stage
Wednesday 30th November 2022 Lords Chamber

[Lord Alton of Liverpool (CB)]

My Lords, the noble Lord, Lord Wallace of Saltaire, is right to remind us not just of events in Victorian Britain but of what is happening at the moment and the impact that events in Ukraine and elsewhere will have on our procurement programmes.

I serve on your Lordships’ International Relations and Defence Committee. As the noble Baroness, Lady Goldie—it is wonderful to see her in her place—knows, throughout the whole of this year we have been conducting an inquiry into procurement and defence priorities, which the noble Lord, Lord Wallace, touched on. We began it before the second invasion of Ukraine in February. From my discussions with the noble Lord, Lord Coaker, who pressed this issue in Committee, I know how important this is, for all the reasons he described. He has a great sense of patriotism and cares for our Armed Forces, and I strongly associate myself with him and the desire for a probing amendment to test some of these questions.

One reason why I hope the noble Baroness, Lady Goldie, will be able to reply in terms to the noble Lord, Lord Coaker, on Ajax especially, is that the noble Baroness, Lady Anelay, who is chair of our Select Committee, was here during his speech—she was unable to stay—and said that I can tell the House that she strongly agrees with the questions he put. She hopes that the noble Baroness will be able to answer them because they will be part of the terms of our committee’s report, which we have to complete before the House rises for the Christmas Recess at the end of December. So it is important that, if the noble Baroness is not able to answer those probing questions this evening, we are given answers in due course.

One of the witnesses to the Select Committee inquiry was Professor John Louth, who was the director of defence, industries and society research at RUSI from 2011 to 2019. When we asked him directly about the way in which we should go about defence procurement, I asked him specifically about the Bill and whether it would be welcome. He said:

“I have tried to read as much of this as possible … It is hard to identify the end state that the Government are looking for”.


He said that there are

“lines and lines of rhetoric and legalistic reform”,

some of which is incomprehensible even for those of us who are academics.

I asked him specifically about Ajax, which the noble Lord, Lord Coaker, has been raising, and he replied that it has been a “disaster”. As we have heard, it was intended to be a state-of-the-art reconnaissance vehicle for the Army, and it has cost a staggering £3.2 billion to date, yet so far not a single deployable vehicle has been delivered—not one. It was of course supposed to enter service in 2017, but it has been subject to what the Commons committee called a “litany of failures”, including noise and vibration problems that injured the soldiers testing the vehicles. Can the Minister tell us whether those safety issues have been resolved, or whether they are ever likely to be?

The noble Lord, Lord Coaker, reminded us that the House of Lords Select Committee said the programme had been “flawed from the outset” and also that it was illustrative of a deeper failing, commenting that the Ministry of Defence

“once again made fundamental mistakes in its planning and management of a major defence programme.”

Pulling no punches, the Public Accounts Committee accused the department of failing to deliver vehicles which the Armed Forces need

“to better protect the nation and to meet our NATO commitments”.

In the current situation, with one eye eastwards to Ukraine, that is a very serious statement by a senior committee of Parliament—and this Bill, of course, is a Bill that will go down to the other place. It will go as a pristine Bill from the House of Lords, but the other place will be able to amend it, and I have no doubt that people from the Public Accounts Committee will want the answers that the noble Lord has gently been asking for this evening.

I will end by quoting Meg Hillier, who chaired the committee inquiry. She said:

“Enough is enough—the MoD must fix or fail this programme, before more risk to our national security and more billions of taxpayers’ money is wasted. These repeated failures … are putting strain on older capabilities which are overdue for replacement and are directly threatening the safety of our service people and their ability to protect the nation and meet NATO commitments.”


That is good enough reason alone, surely, for the Minister to give the House a comprehensive reply.

[The Minister of State, Ministry of Defence (Baroness Goldie) (Con)]

My Lords, I first thank noble Lords for their contributions. I understand fully that the proposed amendment is well intended, and I accept it in that spirit. I think it has certain implicit difficulties, which I shall move on to. I would never object to the Opposition Benches holding the Government’s feet to the fire—that is what the Opposition are there to do—but I hope they will be patient with me as I seek to explain why the precise terms of the amendment confront the MoD with difficulty.

The proposed amendment would require the Ministry of Defence to commission and publish a report from the National Audit Office, setting out instances of procurement overspend, withdrawal or scrapping of assets, termination of prepaid services, cancellations or extensions of contracts, or administrative errors with negative financial impacts. The reason the MoD rejects the amendment is not because it is not in sympathy with what I have identified as a well-intended sentiment expressed by the noble Lord, Lord Coaker, but quite simply because existing processes already ensure robust scrutiny and accountability of Ministry of Defence procurements.

Before I move on to that more detailed exposition, let me deal with a very specific point the noble Lord raised about the defence equipment plan which was published yesterday. He is more ahead than I am because I have been preparing for this. I have referred it to my officials, and I am told that it is difficult to calculate an accurate figure of inflation at the moment, due to volatility. That is an inadequate response to give the noble Lord from the Dispatch Box, so I offer to write to him. We will do further research in the department, and I shall endeavour to expand on what these particular difficulties are.

[Lord Coaker (Lab)]

That is totally acceptable, and I am very appreciative of it. The reason I asked was because the National Audit Office, commenting on the 2022-23 equipment plan, said it was already out of date because of inflation, Ukraine, the economic situation, et cetera. So I very much appreciate the offer from the noble Baroness to write and put that in context for us. I think it would be helpful if that was put in the Library for other Members as well.

[Lord Fox (LD)]

I join the noble Lord in welcoming that and also ask that the Minister includes currency because, while inflation is important, currency is actually more important in some cases. It is absolutely clear that a lot of these purchases are made in dollars and the dollar/pound rate will determine quite substantially the rising costs of equipment.

[Baroness Goldie (Con)]

I hear both noble Lords. To put a little context around this, the MoD has not been sitting in some splendid ivory tower in isolation as volatile economic circumstances swirled around us. Actually, we have built protective measures into many of our contracts to deal with inflationary pressures—or, indeed, to deal with the currency fluctuations mentioned by the noble Lord, Lord Fox. I appreciate that more detail is sought and I shall certainly look at that, with my officials, and endeavour to return to both noble Lords with some more information.

I was going to explain in more detail what we already do and how the National Audit Office already plays a role in all this. The National Audit Office is independent—we should remember that—and it already conducts a yearly audit on the defence equipment plan and undertakes regular audits of defence programmes. Further scrutiny of the performance of defence programmes is undertaken by the Infrastructure and Projects Authority, which tracks the progress of projects currently in the government major projects portfolio, not just that of the MoD. The details of these are published in its annual report. As an independent statutory body, the National Audit Office decides, independently of government, where to focus its resources and determines what projects and public bodies it audits and when.

It is important to emphasise that the Government do not direct the NAO; nor should we, because an essential feature of the importance and value of the NAO is that independence. Although it may not intend to do so, I argue that the amendment would interfere with that statutory independence. In addition, it would force the NAO to use its limited resources on a specific examination each year, irrespective of changing priorities: something might be significant one year and of far less concern the following year. It might even not reflect the continuing value of such an examination to Parliament: this is where we have to be very careful.

To reassure noble Lords, as I indicated, the Ministry of Defence continues to take steps to control the rise in the price of defence goods and services over time, including through improving the communication of longer-term priorities and requirements, including, as noble Lords will be aware, through the publication of pipelines. That is an extremely important development and signals likely demand to industry far better. It lets industry reflect on preparedness, instead of what was before probably a rather stop-start process, with industry asking, “Do you need anything?” and us suddenly announcing, “Yes, we do,” and everybody trying to create the thing from new.

The Ministry of Defence is utilising a new approach to industrial strategy. This strengthens supply chains and is driving pace and agility into the acquisition system through a range of transformation initiatives. The department has implemented steps to estimate project costs more accurately, including improving our risk forecasts through the use of reference class forecasts; that is, trying to use procurement as it happens, to inform us—what can be learned from the process? We have risk-costing pilots and we use the analysis of systematic, strategic or operational problems to inform us how the contract is proceeding. The MoD is also driving evaluation into programmes through the use of monitoring and evaluation frameworks and creating a process to capture and share lessons learned.

An important area, perhaps not widely understood, is that the MoD, like everyone else, can be hit by the quality and quantity of skills. That may be a significant impediment to us. Improvements are being delivered through the improved provision of training, initiatives to recruit and retain staff, and audits to identify and fill skills gaps.

The noble Lord, Lord Wallace of Saltaire, said that not much has changed. I think he started with the 1980s, then we seemed to regress further, into the Victorian age, when I am not sure we would recognise very much of what our procurement contracts are delivering. I respectfully disagree with him because, in addition to what I have previously mentioned, including the investment appraisal process, we have made other big changes. For example, all category A procurements, which are valued at £400 million or above, go through an extensive internal MoD process before they even get to the Cabinet Office, the Treasury or the Minister of Defence for approval.

Costs are now independently assured by the cost assurance and analysis team, tender and contract documentation is independently assured through the progressive assurance team, and direct award contracts are reviewed and monitored by the single-source adviser team. If that sounds like just verbiage, let me say that behind that are highly trained expert people who are there to identify the shoals, the reefs and the rocks, bring them to our attention, and make sure that we are not inadvertently drawn into areas of contract weakness where in the past we might very well have gone.

We are content that there are sufficient checks and balances in place to ensure that we achieve best value for money, learning from previous procurements. There are some good examples, and I was very struck by visiting Babcock at Rosyth, where it is building a Type 31 frigate. That really proceeded on a new basis of approach—it was born out of the national shipbuilding strategy. That programme was established in 2017, and following competition a contract was awarded to Babcock in November 2019 for the design and build of the five ships; it is currently under way, with the first ship scheduled for float-off in 2023. With barely three years passed since contract-award, the Type 31 build at Rosyth is well under way, with the first grand block now assembled in the Venturer assembly hall. The build programme is set to meet its deadlines of delivering all five ships off-contract by the end of 2028, and the build contract is on course to deliver the five ships at an average cost of £250 million per ship.

I use that as an example because it seems to me, having seen it at first hand, a very modern illustration of where we have moved to. When I say to the noble Lord, Lord Wallace of Saltaire, that I do not agree with his characterisation, I also try to illustrate that argument by pointing out that there are different practices at play, informed—I fully admit—by a number of sources like the national shipbuilding strategy, which was an innovative change of direction for how we procure ships within the UK. But we have also had a very good example with the Poseidon aircraft programme operating out of RAF Lossiemouth in the north of Scotland on the Moray coast. It is an absolutely fantastic facility. That fleet comprises nine aircraft, which were all achieved on time, within budget, and to a challenging timeline.

It is very easy to be sceptical, and I fully understand why your Lordships rightly have been sceptical of some pretty poor experiences in the past, but all that I am pointing out is that we have moved on to a better way of doing things, and I hope that your Lordships understand from what I have been explaining and describing that there is a far better structure within the MoD to deal with these complex procurement contracts. These defence contracts are often complex, they are required quite often at speed to meet emerging threats, and are often needed to provide much-needed support to our Armed Forces, to ensure that we maintain operational advantage and to reduce the risk to our nation.

The noble Lords, Lord Coaker, Lord Wallace of Saltaire, and Lord Alton, all raised the issue of Ajax, and I think I have said before from this Dispatch Box that it was certainly not one of our proudest moments. Intrinsically, it is actually a very good vehicle, and it will provide an important capability. Following agreement from the Ajax safety panel, work has led to resuming the user-validation trials which were paused earlier this year. Results from these trials are being analysed to ascertain whether it is possible to deliver a safe system of work under which to conduct reliability-growth trails. Your Lordships are aware that there were issues with vibration and hearing, and the one thing that we were very clear about was that we were not going to put people at risk; my former colleague as Minister for Defence Procurement, Jeremy Quin, was absolutely insistent. That is why, despite the embarrassment, we paused what was happening until we had a better understanding of what was going wrong; but I make it clear that the MoD will not accept a vehicle until it can be used safely for its intended purpose.

Your Lordships will be aware that Clive Sheldon KC is leading the Ajax lessons learned review, which is looking at ways in which the Ministry of Defence can best deliver major contracts more effectively in future. That is an important review and we await his analysis, conclusions and recommendations, but I emphasise that any delay to Ajax will not affect our commitments to NATO. That is an important point to observe.

The noble Lord, Lord Coaker, asked about the “Prince of Wales” carrier. Rosyth on the Forth is where good things happen: as well as building the Type 31, that is where the Prince of Wales carrier is currently reposing. She is a state-of-the-art aircraft carrier. She has already proved her capabilities in a number of exercises, but there was an issue concerning the propulsion shaft and investigations are now under way. She is a huge vessel, and it was necessary to take her into dock to have the facilities properly to examine what was going wrong. Timelines for the repair of the shaft are being investigated and further updates will be provided in due course. We want her to return to operations as soon as possible. My understanding is that we have brought forward some routine maintenance anyway, so that can be attended to while she is at Rosyth. I have no more specific information at this time, but I expect we will get a further report when more is known about the underlying condition and how long it will take to rectify.

The noble Lord, Lord Coaker, raised the Type 26, which is a first-class ship. I have visited the programme in the yard at Govan being operated by British Aerospace. It is a fantastic piece of maritime equipment and it will be pivotal for the Royal Navy. It is proceeding very well. We have just awarded the batch 22 contract to the yard because we were absolutely satisfied about the professionalism, commitment and effectiveness of what British Aerospace was doing with the first batch. It is true that there has been a delay, but there are two reasons for that. Covid was one factor; it has created delays for our defence industry partners and their supply chain. I understand that there were also issues with locating the necessary corps of skills, but it now seems well under control and we hope that the new timeline can be adhered to. British Aerospace is certainly very keen to demonstrate that and to commit to making it happen.

The noble Lord, Lord Wallace of Saltaire, raised the issue of levels of munitions. He is quite right that particular demands have fallen on that area due to the conflict in Ukraine. Those of us who listened to the extraordinary, courageous address by Madam Zelenska yesterday—I was among those privileged to be there—could not help but feel huge admiration for her, her husband and the people of Ukraine, as well as a sense of pride that we have been able to come to their assistance. We have been able not just to support them in what they have been looking for but, I hope, to give them the reassurance of optimism and hope for the future; Madam Zelenska referred to that. I reassure your Lordships that, in our supply of anything we have provided to the Ukrainian armed forces, we have never compromised our own levels of stocks in relation to meeting our national security obligations.

The noble Lord, Lord Alton, referred to someone—that sounds rather disrespectful; it was someone very eminent—who used to be in RUSI who had certain challenges with the Bill. As a former lawyer, I would say in response that I think the Bill is a welcome clarification and consolidation of procurement law in the United Kingdom. For the MoD, there has been carefully researched tailoring of the Bill to meet the unique requirements of defence. Our industry partners have been positive, so I think the Bill has the potential to introduce far greater clarity to industry—both primes and smaller contractors—and give them a much clearer sense of how they engage, what they can do and what the rules are. That is absolutely to be commended.

In conclusion, I am under no illusions about the challenges the MoD faces in relation to large-scale procurement. We recognise these challenges, and that is why we continue constantly to explore additional actions to mitigate the effects of cost escalation and cost growth. I hope I have been able to explain in sufficient detail what we do already—particularly the very specific character of the National Audit Office, which is independent of government—to enable your Lordships to understand why the MoD is unable to accept this amendment, while it does identify with the sentiment with which it was put forward. I ask the noble Lord, Lord Coaker, to withdraw the amendment.

[Lord Coaker (Lab)]

I thank the noble Baroness for her reply and her offer of a letter. I stress how important that letter is, given the quote I am about to read, which summarises the National Audit Office’s assessment of the equipment plan that the Government published:

“The equipment plan is based on data submitted by the end of March this year and does not take account of the impact of exchange rate changes, rampant inflation, fuel costs and the Russian invasion of the Ukraine.”


It would be helpful to your Lordships’ House if the noble Baroness would respond in a letter and put it in the Library. It would be very useful to hear what the Government are saying about the National Audit Office’s comments.

I know that there are problems with Ajax; we look forward to continuing discussions on that. We have raised a number of other difficulties. I think all noble Lords here recognised that there are significant successes alongside that and we should recognise those—I certainly do. We all want our Armed Forces to succeed. The noble Baroness is quite right to remind us of the support we have given to Ukraine and the bravery of the Ukrainian people. We are right to recognise that once again this evening. With those brief comments, I beg leave to withdraw the amendment.

Procurement Bill [HL]

Baroness Goldie Excerpts

Committee stage
Monday 18th July 2022 Grand Committee

Finally, on the outsourcing of ancillary services, I think this is one area which is hugely important for the morale of our service personnel. If we outsource delivery of catering, if we outsource accommodation and particularly its maintenance, they are exactly the sorts of things that affect the lives of service personnel on a day-to-day basis. Beyond that, it is not the service man or woman; it is their families. Very often, somebody —a spouse, very often a wife—is waiting in for the maintenance that has been outsourced. It is not adequate. It needs to be dealt with. Can the Minister give us some hope that this Bill will deal with the problems? If not, we will require other mechanisms to do so.

[The Minister of State, Ministry of Defence (Baroness Goldie) (Con)]

I am endeavouring, my Lords, not to tip my water down the back of my noble friend’s neck, although he might welcome that refreshment.

First, I thank all noble Lords for their contributions. I am in no doubt about the genuine interest which your Lordships have in defence. The noble Lord, Lord Coaker, articulately expressed that, and I respect that. I thank him for the way in which he expressed his sentiments. I know that he speaks for the other contributors to the debate.

I shall try to address the principal points which have come up, so I want in the first instance to address Amendments 101 and 485 and then proceed to speak to the government amendments in the group, Amendments 520 to 526 inclusive. As I have said, I shall endeavour to address the issues which have been raised.

I turn to Amendments 101 and 485, tabled by the noble Lords, Lord Coaker and Lord Hunt of Kings Heath, and, in relation to Amendment 485, also by the noble Baroness, Lady Smith of Newnham. They relate specifically to defence and security contracts and Ministry of Defence procurement.

Amendment 101 would require a contracting authority to disregard any tender from a supplier which is not a supplier from the United Kingdom or a treaty state or which intends to subcontract the performance of all or part of a contract to such a supplier unless there is no other tender that satisfies all the award criteria. I understand the sentiment behind the amendment from the noble Lord, Lord Coaker, which is laudable, but I will explain why I think this amendment is neither necessary nor indeed desirable.

The Bill already provides a discretion for the contracting authority to exclude from procurements suppliers that are not treaty state suppliers and extends this to the subcontracting of all or part of the performance of the contract to such suppliers. This includes defence and security procurements. It is important to note that, for the majority of defence and security procurement, market access is guaranteed only to suppliers from the United Kingdom, Crown dependencies and British Overseas Territories. For those procurements, a supplier established in another country would not be a “treaty state supplier”.

However, due to the nature of defence procurement and the defence market, a discretion to go outside of UK suppliers or treaty state suppliers is required where doing so would best meet the requirement that the contract is to serve—there may be an immediacy about that—and would offer best value for money. Further, to exclude non-treaty state subcontractors would probably make some defence and security procurement much less effective and, in some cases inoperable, as it would exclude, for example, suppliers from the United States, Australia, France, Sweden or Canada from the supply chain.

I assure noble Lords that industrial consequences and commercial strategies will be given case-by-case consideration—that is already how we conduct business—taking into account various factors, including the markets concerned, the technology we are seeking, our national security requirements and the opportunities to work with international partners, before we decide the correct approach to through-life acquisition of any given capability. Where, for national security reasons, we need industrial capability to be provided onshore or where we need to exclude a particular supplier on national security grounds, we will not hesitate to make that a requirement.

The noble Lord, Lord Coaker, raised the specific matter of fleet solid support ships. He will be aware that in the refreshed National Shipbuilding Strategy there is specific reference to the fleet solid support ships. The procurement is in train; the first ship is scheduled to enter into service in 2028 and the last in 2032. I hope that reassures the noble Lord that the matter is under active consideration.

I turn now to Amendment 485. In a sense, this amendment was preceded by a general observation made by the noble Lord, Lord Coaker, and echoed by the noble Lord, Lord Alton, and the noble Baroness, Lady Smith. In essence it was: what difference does this make? That is a fair question and one that deserves an answer. I would say that the Bill provides greater flexibility to the MoD and includes the use of a single system to encourage participation by small and medium-sized enterprises. That is an area not just of significance to the economy but of particular significance to such smaller entrepreneurial organisations. They have sometimes felt out in the cold when major contracts were being awarded by the MoD, principally because, traditionally, the structure was to have a very large primary contractor, with the primary contractor subcontracting various aspects. This is designed to encourage greater participation by small and medium-sized enterprises, which I think is to be applauded.

MoD derogations, and the Bill itself, provide more flexibility to deliver the defence industrial strategy—I will not rehearse that; your Lordships are familiar with it, but I think it is a very positive strategy and one which I think received support from across the Chamber. That strategy replaces the previous defence procurement policy of defaulting to international competition. I know that was of concern to many of your Lordships and, as I say, the strategy has altered that, and I think that is important reassurance on where we are in defence and the greater flexibility we now have. That is why I said earlier that industrial consequences and commercial strategies will be given much more case-by-case consideration, taking into account the various factors which I previously mentioned.

Amendment 485 would require the Ministry of Defence to commission a report from the National Audit Office setting out instances of procurement overspend, withdrawal or scrapping of assets, termination of pre-paid services, cancellation or extensions of contracts, or administrative errors with negative financial impacts. I would suggest the amendment is unnecessary, as what it seeks to achieve is already being delivered through existing processes or initiatives; let me explain what these are.

The National Audit Office already conducts regular audits across defence, which we know to our discomfort because the National Audit Office is an independent entity in that it does not spare its comments when it comes to the MoD, and that is right—that is exactly what it is there to do. In these audits, it regularly includes recommendations for improvement to which we pay very close attention. These include value-for-money studies, such as the yearly audit on the defence equipment plan, regular audits on defence programmes such as Ajax—which the noble Lord, Lord Alton, mentioned—and carrier strike, as well as financial audits. As I say, MoD pays close attention to what the NAO says.

The Infrastructure and Projects Authority also publishes an annual report. That tracks progress of projects currently in the Government Major Projects Portfolio and it provides an analysis of how they are performing. The MoD has successfully introduced several initiatives following on from such recommendations to improve capability and deliver and obtain better value for money, including the defence and security industrial strategy, the defence and security 2025 strategy and the introduction of the Single Source Contracts Regulations 2014.

[Lord Alton of Liverpool (CB)]

My Lords, I am sorry to interrupt the noble Baroness. On the question of the National Audit Office, I was wondering whether the Minister could tell us whether there had been any formal discussions between her department and the NAO about whether something more formalised—as anticipated in the amendment before your Lordships—would be beneficial. If not, might she consider having such a discussion before we return to this issue on Report?

[Baroness Goldie (Con)]

What I think is important is that we accord the National Audit Office the absolutely critical character of independence, which is necessary for it to do the job it does. I think that part of that independence is that it is quite separate from government departments, and, with the greatest respect, I think that is what the MoD should not be doing. The National Audit Office should be saying, “If we think you’ve got dirt lying under the carpet, we’re going to rip the carpet up and have a look at the dirt”, and I think that is the freedom we expect the National Audit Office to have and that is the freedom it has got. As I say, everyone, I think, will understand that the Ministry of Defence knows well the feeling of being on the receiving end of a National Audit Office report which makes uncomfortable reading.

[Baroness Smith of Newnham (LD)]

My Lords, the Minister has spoken about the legislation giving the MoD greater flexibility, but following up from her response to the noble Lord, Lord Alton, to what extent does it enhance accountability, which is at the crux of what we have all been asking about?

[Baroness Goldie (Con)]

As the noble Baroness will be aware, the National Audit Office reports not to the MoD; it reports to Parliament. It is a very powerful line of accountability that introduces the legitimacy in any democratic society for elected parliamentarians—or Members of this House—to ask on the basis of a report what the department has been doing. It has never inhibited Members of the other place or Members of this House from doing just that, as your Lordships are very well aware.

The noble Lords, Lord Alton and Lord Coaker, raised particularly the very legitimate question of what we are doing within the MoD to try to improve our procurement performance. I think your Lordships will understand that, probably more than any other department, the Ministry of Defence carries out massive procurement contracts. Then again, that is a very justifiable reason for asking us to demonstrate that we are doing that effectively and efficiently, being fair to the taxpayer and to our industry partners.

--- Later in debate ---

[Lord Coaker (Lab)]

Will the Minister address the point about the treatment of contracted staff for the MoD’s ancillary services? I will just remind her that the Defence Select Committee report published recently says in its summary:

“It is an absurd state of affairs that the MoD is not allowed to look at a contractor’s previous performance when assessing their bid—a state of affairs that needs to be rectified immediately.”


Will the Procurement Bill rectify what the Defence Select Committee says is an appalling state of affairs that the supplier’s previous performance cannot be looked at?

[Baroness Goldie (Con)]

My understanding is that the Government’s response has been framed to that report and is currently under review. I have no more up to date information, but I will write to the noble Lord. The department is under an obligation to respond to that proposal.

[Lord Coaker (Lab)]

The Government cannot answer the point about whether the Procurement Bill will allow the MoD to look at a contractor’s previous performance when assessing its bid—a state of affairs that needs to be rectified immediately. Every time we have talked about what is an excluded supplier or an excludable supplier, we have been told that previous performance is one of the criteria that can be looked at, yet from what the Defence Select Committee said, and the Minister just said, is that it is not clear whether the MoD can do that.

[Baroness Goldie (Con)]

Well, yes, within the law the MoD can, and this Bill provides more flexibility for past performance to be taken into account. However, there are legal constraints which govern how any party entering into a contract can responsibly consider previous conduct. The Bill allows the MoD to exclude a supplier, and there are various grounds in the Bill to clarify when the MoD can make such a decision. Our view is that there is the necessary flexibility within the Bill. The Government will be looking at the observations of the Committee.

[Lord Coaker (Lab)]

It would be really helpful if the Minister, as she suggested, wrote to me and copied it to noble Lords in the Committee, because she said it was not allowed and then she said it was allowed, but the Defence Select Committee report, which was published just a few weeks ago, said the MoD was not allowed to look at a contractor’s previous performance when assessing its bid. So either the Defence Select Committee is wrong, or the MoD has changed the regulations or the Bill changes the regulations. All I am trying to seek is what the situation actually is.

[Baroness Goldie (Con)]

What I said to the noble Lord was that, as happens with any committee report, the department is preparing a response to the committee, and that is currently being done. I do not want to pre-empt that, but, when the response has been submitted to the committee, it will for the committee to determine whether it wants to make that response public.

On the issue that is perplexing the noble Lord and causing him anxiety, we believe that the Bill as drafted gives the MoD the power to exclude suppliers if we have reservations.

[Baroness Smith of Newnham (LD)]

My Lords, when the noble Baroness is writing to the noble Lord, Lord Coaker, could she undertake to clarify which point of this Bill deals with the issue, so that Members can look and assess whether we believe it is adequate, or whether a further set of amendments might need to be brought forward on Report?

[Baroness Goldie (Con)]

There is a part of the Bill that allows the Secretary of State to exclude a supplier; that is a specific provision in the Bill. Where defence and security contracts are concerned, I think these are powerful provisions. I am very happy to take the advice of my officials and see if I can clarify the position further for your Lordships’ Committee.

Moving on, government Amendments 520 to 526, to which I referred earlier, are what I would describe roughly as Schedule 10 amendments. Schedule 10 amends the Defence Reform Act 2014 principally to enable reforms to the Single Source Contract Regulations 2014. The regulations are working well to deliver their objectives of ensuring value for money for the taxpayer and a fair price for industry. That is the balance against which we always have to work. Delivering the Defence and Security Industrial Strategy and building on experience since 2014 means that some reforms are needed. This will ensure that the regulations continue to deliver in traditional defence contracts and can be applied across the breadth of single-source defence work in the future, providing value for money for the taxpayer while ensuring that the UK defence sector remains an attractive place in which to invest.

We are making two government amendments to Schedule 10 which will clarify the wording and deliver the full policy intent. The first relates to paragraphs 3(2) and 3(8) of Schedule 10, where we are increasing the flexibility of the regime by taking a power to enable contracts to be considered in distinct components—this is an important development—allowing different profit rates to be applied to different parts of a contract where that makes sense. Secondly, we are simplifying the contract negotiation process by an amendment to paragraph 8(3)(a) of Schedule 10, which ensures that the contract better reflects the financial risks involved, and in paragraph 8(3)(c) of Schedule 10, taking a power that will clarify how the incentive adjustments should be applied. We are clarifying the wording currently in paragraph 8(3)(c), which will become paragraph 8(3)(ea)—I am sorry that is a little complicated; it is just to achieve accuracy of reference—by government amendment in Committee to ensure that the schedule fully delivers the policy intent.

In short, these government amendments provide improved clarity and greater flexibility in the defence procurement process, and I hope your Lordships will be minded to support them.

[Lord Coaker (Lab)]

My Lords, I thank the noble Baroness for that informative reply, and I look forward to the letter to clarify the point that we had some discussion on. I apologise to the noble Lord, Lord Alton; I knew that he had signed the amendment and forgot to mention it. It is in my notes: “Don’t forget Lord Alton”—and I did. I apologise for that but thank him for his support.

For reasons of allowing us to move on to the next group, which I know a number of noble Lords are waiting to discuss, I would just say that Amendment 101 is almost like an encouraging amendment; it is trying to encourage the Government to do more. I accept what the noble Baroness said with respect to contracts and some of the difficulties that there are—to be fair, the noble Baroness, Lady Smith, raised that as well. The amendment is just an attempt to ask whether we can do a bit more to support our own industry and small and medium-sized enterprises. I know that the noble Baroness agrees with that and will take it on board.

As far as Amendment 485 is concerned, we need to look at what the noble Baroness has said, look again at the Bill and reflect on it. The important part of Amendment 485, as usual, is tucked away. Proposed new subsection (4) says:

“The Secretary of State must commission the National Audit Office to conduct a similar review annually.”


It is that continual microscope that is needed. I accept the point that the National Audit Office can conduct the reports and that it is independent. I accept all those sorts of things; the noble Baroness is right about that. I just think that all of us want to get this right. Therefore, that point about an annual review is particularly important. With that, I beg leave to withdraw.

Preparing Legislation for Parliament (Constitution Committee Report)

Baroness Goldie Excerpts

Wednesday 12th June 2019 Lords Chamber

[Lord Norton of Louth]

That this House takes note of the Report from the Constitution Committee The Legislative Process: Preparing Legislation for Parliament (4th Report, HL Paper 27).

[Baroness Goldie (Con)]

My Lords, the noble and learned Lord, Lord Judge, finds himself addressing matters of sentencing in the Moses Room. By agreement through the usual channels, it has been arranged that the noble and learned Lord will speak after my noble friend Lord Dunlop. All relevant contributors to the debate have been informed.

[Lord Norton of Louth (Con)]

My Lords, I beg to move the first of the two Motions standing in my name on the Order Paper. I do so in place of the noble Baroness, Lady Taylor of Bolton, who chairs the Constitution Committee, which has produced the two reports we are considering. She is very sorry to miss today’s proceedings.

It is a pleasure for me to open the debate. In 2004, the Constitution Committee, which I had the honour of chairing, published a report, Parliament and the Legislative Process. We looked at the legislative process holistically, examining not only the process once a Bill was introduced but what happened prior to a Bill’s introduction and after it had received Royal Assent. We took the view that success should be measured not by whether a Bill received Royal Assent—seen by some Ministers as the end of the process—but rather by whether it achieved its intended effect.

Among our recommendations were that Bills should be subject to pre-legislative scrutiny as the norm and not the exception, and that there should be a structured process of post-legislative scrutiny, assessing Acts against the criteria set for achieving their purpose. We also advanced proposals for the more effective examination of Bills as they pass through Parliament, including that every Bill should at some stage during its passage be subject to scrutiny by an evidence-taking committee. Some of our recommendations were subsequently adopted, and now form an integral part of the legislative process, such as improvements to explanatory materials and the Government undertaking a review of most Acts within six years of their commencement.

I fear that Governments have shown less enthusiasm for implementing some of our other recommendations, such as pre-legislative scrutiny of draft Bills being the norm and the establishment of a House business committee. Perhaps our most high-profile recommendation —that the Committee stage of each Bill should provide the opportunity for the public to give evidence—has been adopted for Bills that start in the House of Commons but not for those that start in your Lordships’ House. This is a matter to which the committee may return in a subsequent report.

We felt that more than a decade after our first report, it was time to take a step back from individual Bills, to look again at the entirety of the legislative process and examine how laws are developed, drafted, scrutinised and disseminated. Rather than producing one report, we decided to publish four focused reports, targeted at discrete aspects of the legislative process: preparing legislation for Parliament; the delegation of powers; the passage of Bills through Parliament; and after Royal Assent. Two of those have now been published, and are the subject of today’s debate.

The first of these, The Legislative Process: Preparing Legislation for Parliament, was published in October 2017. The purpose of this stage of our inquiry was to look at the policy preparation undertaken by the Government before legislation is introduced to Parliament. In this report, we are broadly positive about how the Government develop policy using embedded mechanisms to gather and evaluate evidence. We also welcome the Prime Minister’s commitment to a greater use of Green and White Papers.

We reiterate the conclusion of our 2004 report—that it should be the norm for Bills to be published in draft, to afford more opportunities for pre-legislative scrutiny. It is regrettable that Governments have generally seen draft Bills as an optional extra, when, in our view,

“pre-legislative scrutiny should be considered an integral part of the wider legislative process”.

Although several Bills have undergone pre-legislative scrutiny in this elongated Session, they constitute the exception, not the rule.

Perhaps the biggest area of our concern is the quality of legislation that the Government introduce to Parliament. This is not a reflection on the standards of the drafting of legislation and the work carried out by parliamentary counsel. Our concern is with the quality control function of the PBL Committee of the Cabinet. That control is not what it could and should be. In our report, we endorse the proposal for the creation of a legislative standards committee, to develop and monitor a set of standards that legislation must meet before it can be introduced. This work would ensure that Bills introduced to Parliament are ready for its scrutiny, and that the essential explanatory materials accompanying Bills are complete and satisfactory.

We also address the important parts of the statute book that have become inaccessible to practitioners and the public alike because of a succession of Bills that have amended previous Acts. One has to think only of the changes in immigration law in recent decades. The challenge of navigating that area of the law is now considerable. We urge the Government to consider the pressing need for greater consolidation of the law. With that in mind, we strongly welcome the introduction of the Sentencing (Pre-consolidation Amendments) Bill, paving the way for the Law Commission’s sentencing code to simplify sentencing legislation. The standard line from the Government on consolidation and Law Commission Bills is that they might happen when parliamentary time allows. Given the current lull in legislative activity, this might be an especially appropriate time to introduce more consolidation measures.

I turn to our second report, The Legislative Process: The Delegation of Powers. Delegated powers are, of course, an important and necessary part of the legislative process. When they are used appropriately, they provide the Government with the flexibility to fill in some of the blanks or update aspects of the policy detail without the need to go through the extensive and rigorous primary legislation process. The Delegated Powers and Regulatory Reform Committee does an outstanding job in policing such matters. If the Government heeded its advice more frequently, the quality of legislation would improve markedly. Regular readers of the Delegated Powers Committee’s reports, as well as our own, will know that the Government’s use of delegated powers is regularly found to be inappropriate. It is constitutionally unacceptable that the Government seek to create criminal offences as well as new public bodies by secondary legislation, to which only limited parliamentary scrutiny applies.

The Government’s response to our report suggested that such uses of delegated powers are,

“likely to be few and far between”.

We do not find this persuasive. Indeed, on Monday we published a report on the Rivers Authorities and Land Drainage Bill—a Private Member’s Bill supported by the Government—which contains a delegated power to create new public bodies in the form of river authorities. It is not clear why the Government acknowledge that these powers,

“must be approached with caution”,

yet they continue to appear in Bills.

Similarly, the committee found that “skeleton Bills”—Bills comprising little more than delegated powers—“inhibit parliamentary scrutiny”. We concluded that it was,

“difficult to envisage any circumstances in which their use is acceptable”.

Perhaps the most egregious recent example of this is the Agriculture Bill. I quote from the report of the Delegated Powers Committee:

“Parliament will not be able to debate the merits of the new agriculture regime because the Bill does not contain even an outline of the substantive law that will replace the CAP after the United Kingdom leaves the EU. Most debate will centre on delegated powers because most of the Bill is about delegated powers. At this stage it cannot even be said that the devil is in the detail, because the Bill contains so little detail”.


The Government’s response on skeleton Bills was that the term was sometimes used to describe bills in which the overall policy framework was clearly set out, and states that,

“there have been and will continue to be sound reasons”,

for the use of skeleton Bills in a limited number of cases. It is not clear what the sound reasons are. The response is one of assertion and not justification. I shall return to its inadequacies.

Henry VIII clauses were another area we consider,

“a departure from constitutional principle”,

and we conclude:

“Widely drawn delegations of legislative authority cannot be justified solely by the need for speed and flexibility”.


Although, as the Government acknowledge,

“a full and clear explanation and justification”,

is clearly helpful, Henry VIII powers should be sought much less frequently than has been the case in recent years.

This House has shown notable restraint towards the Government’s approach to delegated legislation. Indeed, the House has shown remarkable flexibility in accommodating several hundred EU exit statutory instruments. We pay tribute to the work of the Secondary Legislation Scrutiny Committee for undertaking that task on top of its other important work. However, there are limits. We call on the Government to be more responsive to issues raised about statutory instruments and to use the flexibility of the system to withdraw and re-lay amended instruments when parliamentary scrutiny has identified concerns. We suggest that if the Government do not use their delegated powers appropriately, the restraint shown by this House may become unsustainable.

I turn to the Government’s responses to the reports. The two responses were clearly written by different hands; one, on the delegation of powers, addressing each recommendation, and the other, on the legislative process, being more general and thematic. Both, though, have one thing in common: they seek to defend existing practice and concede nothing. The way in which they are written is not persuasive. Some of our proposals are matters for the House, not the Government, such as the recommendation for a legislative standards committee. I very much hope that this recommendation will be taken up by the Liaison Committee as part of its current review of committees, and likewise with the proposal for a post-legislative scrutiny committee.

On matters that are within the remit of the Government, I have a number of questions for my noble friend Lord Young of Cookham. What do the Government now do that they did not do before because of the committee’s reports? Following my earlier comments, can he confirm that the Government will maintain the practice of publishing Green and White Papers? What is the Government’s strategy for pre-legislative scrutiny: is it integral or an optional extra to the legislative process? Do the Government have plans to introduce any further consolidating measures, and in what circumstances does he think skeleton Bills are appropriate?

I conclude by putting on record our thanks to all those who gave evidence to us, our staff and our two legal advisers, Professor Mark Elliott and Professor Stephen Tierney. Professor Elliott is about to step down from his role to take on enhanced responsibilities in the law faculty at Cambridge, and I place on record the committee’s thanks to him for his outstanding contribution to the work of the committee. I beg to move.

European Union (Withdrawal) Bill

Baroness Goldie Excerpts

Tuesday 30th January 2018 Lords Chamber

[Lord Triesman (Lab)]

My Lords, despite what has just been said, it was inevitable that this Bill would arrive here with such obvious defects. Because of the ideological drive to leave at any cost and a Prime Minister who is obviously unable to contain the excesses of her Eurosceptic colleagues, we now have no declared detailed objectives other than that we do not want a fight among them. We have a Bill which is constitutionally deficient, and a Constitution Committee report, introduced by my noble friend Lady Taylor, that is clear and precise, and justifiably tough.

The Bill is deficient on the constitutional issues of granting Ministers untrammelled powers that sideline Parliament, deficient in the neglect of devolved interests and deficient on the human rights implications—and it is all tied to a timetable that is almost certainly incapable of being accomplished. The Bill will need significant amendment if it is to be made simpler and clarified, and it had better be accurate. I thank my noble friend Lady Taylor and also the noble Lord, Lord Norton, for his clarity on this point.

I cannot square the difficulty posed by the problems outlined in the debate with the complacency of Ministers in saying that they have all the aspects covered. This House will expect and welcome a positive attitude to amendments aimed at improving the Bill. Ministers ask us to trust in a bargaining process in Europe where it is plain that the two sides are not even on the same page. These are the same Ministers who will ask us to allow them Henry VIII powers at a later stage, and it is the same Ministers who conducted the referendum campaign on the basis of what I can describe only as deliberate deceit.

I complained about the overstatements on the remain side, unashamedly, and I say to your Lordships that the straightforward lies on the other side have brought our politics to a miserable low, as the right reverend Prelate the Bishop of Leeds said earlier today. We have surrendered our largest constitutional issue in modern times to hucksters and snake oil salesmen. To take these steps on the basis of a referendum conducted in that way will, I suspect, be seen historically as a form of certifiable insanity—a malady comprising crude populism and a sense of profound fantasy.

I do not really want to focus on the economic prospects post Brexit, other than to agree with my noble friend Lord Mandelson, who emphasised a possible route through the miasma: by staying in the single market and customs union while leaving the EU. It is sub-optimal but it is at least an intelligible route. I remind the House that my noble friend was also a former Northern Ireland Secretary and, like the noble Lord, Lord Patten, has grasped the profound danger of dismantling the customs union.

I mean to focus on the subject of defence, if I may, and the alliances which keep our country safe. It is fundamental; if Governments do nothing else they must do this. When we leave the EU, I have little doubt that our erstwhile partners will rate our exceptional forces very highly. They will know that they are capable and do not shrink from tasks that they are set. Even with our capacity sharply reduced by government cuts, our partners will no doubt welcome our contribution to military activity. But we will not be at the meetings or councils where the strategic decisions are discussed and decided. We will be asked to contribute without having helped to decide the objectives. We may try to find ways to take part in discussions—and we should—but, as the noble Lord, Lord Hague, told the European Union External Affairs Sub-Committee, we will have no rights in those forums.

I know with certainty that the United Kingdom will not commit its forces if it cannot share in shaping their objectives. That would be an absurd position for any state to take. When I am told that NATO will fill the gaps—I am completely committed to that alliance—I am not confident. American commitment is at best half-hearted. It is not only what President Trump says, which is bad enough, but the septic pool of populism from which his policies have emerged and which will greatly outlast him. The United States is more isolationist and nationalistic than for a long time, and there is small reason to feel that we have compensating alliances and doctrines. Indeed, the things he has said suggest to me that the underpinning values of NATO are themselves at risk.

At the level of military leadership, we seem ready to give up the positions we have traditionally held, including Deputy Supreme Allied Commander Europe, which was ably filled for many years by General Sir Adrian Bradshaw. My noble friend Lord Robertson, the former Secretary-General of NATO, has asked how a non-EU country can hold that position. It is a good question. We have elected to be marginal and, inevitably, weaker. I hope that the deepening relationship with France and some other countries may partly compensate, but our decline seems obvious and unacceptable. We have not thought it through.

Finally, in starting this process David Cameron turned our country inward. I doubt that I will be reconciled to the noble Lord, Lord Framlingham, for example, or to any other zealots for leave, because they want a very different country from the one that I want—and I doubt that they will ever be reconciled to views such as mine. In short, our differences may be resolved if some middle way is found but it is entirely possible that they will never be resolved, at least in a generation. The right reverend Prelate the Bishop of Leeds put this eloquently today. The ugliness of the debate, the name calling and the lies have all demeaned the United Kingdom. I am afraid that I see a country with deeper xenophobia and more unashamed hate crime than I have ever seen in my lifetime, and with a view of people from other countries which should shame us—and it is getting worse.

Two generations ago, two ladies in my family left Paris, where my family had lived for generations. That was in 1932. Their letters showed that they thought that the French would never resist the Germans when they inevitably advanced on France and that French anti-Semitism would find a terrifying ally. Other members of the family thought that they were mad. Paris? Amazing city. What could possibly go wrong? Well, they left in 1933, and the two of them—and two others who spent the war hiding in Paris’s sewers—survived. The rest of the family went to the extermination camps. For the first time in my life, I know a number of people who are asking the question: when the economy goes pear-shaped and the bogus promises are seen to be the frauds that they have always been, what will happen then, and who will be blamed? How will we avoid repeating some of the mistakes of European history that occur in these circumstances? Their bet will be that the same people historically will be blamed in Europe. Like the Paris relatives, sadly they are beginning to make their plans to leave when it becomes sensible, and in advance of a catastrophe. They are not the familiar lot who plan to leave because a tax increase is rumoured, and do not tell them it cannot happen to them, because it has happened—in our lifetimes and to our families.

If there are serious solutions to taking on crimes and attitudes of prejudice, let us see them, not just hear words about them. Nothing about this outcome is inevitable. But there is a requirement for confidence that people take it seriously and are prepared to confront it and deal with it. If they are not, I fear that the consequences will be as I have rehearsed.

The noble Lord, Lord Newby, in a fine speech at the beginning of these proceedings, said that it was not a reform Bill but a dreadfully incoherent transfer Bill. I remind noble Lords that the football transfer window closes at 11 pm tomorrow—about the same time as we will close. Let us hope that Ministers can tell us how Team UK can answer the problems set out in this debate rather better than the authorities in football clubs. No bland assurances—

[Baroness Goldie (Con)]

I think the noble Lord has got the message.

Intergenerational Fairness in Government Policy

Baroness Goldie Excerpts

Thursday 26th October 2017 Lords Chamber

[Baroness Altmann (Con)]

My Lords, I too congratulate the noble Baroness, Lady Smith of Newnham, on securing this important debate. The issue of intergenerational fairness has been rising up the political agenda, and I find this trend deeply troubling. By pitting one generation against another, instead of generations working together and supporting each other, society is damaged.

First, like my noble friend Lord Willetts, I understand the concerns that young people express, particularly when it comes to housing, student debt and irresponsible credit card and loan practices. But those are issues related specifically to the housing market, the financial system and higher education. They are not really generational fairness factors.

The enormous rise in house prices across the UK has also driven up rents, which means that tenants of all ages have less disposable income for other expenditure. But that relates to the shortage of new homes and, to some extent at least, the Bank of England’s policy of quantitative easing, which was deliberately designed to inflate asset prices as an indirect means of stimulating the economy. Problems of housing affordability for younger people will not be most effectively solved just by giving young people more money to buy a home. In fact, such policies may further increase upward pressure on house prices. Increasing supply would be more beneficial. We are probably at the top of the housing price cycle. The ratio of house prices to earnings is clearly unsustainable, but it may not last. We have seen house price cycles before. Indeed, just because house prices have risen and many older people own their own homes does not actually improve living standards for older generations. They live in their homes and their income is not normally improved when house prices rise. The noble Lord, Lord Best, however, is right to focus on the need to encourage older people to downsize and free up family homes for younger people.

Another significant problem for younger generations is the sharp increase in the cost of funding higher education. Once more, that is not the fault of older generations, most of whom never had a chance to go to university—less than 10% of today’s retirees actually went to university. Older people are too often portrayed as undeservedly wealthy, having been lucky throughout their lives in ways that young people cannot hope for. But, quite frankly, I feel that such stereotypes are dangerous simplifications. There is an enormous range of income and wealth among pensioners. Lumping all those over pension age together and looking at their average wealth or income per person gives a misleading picture. Also, lumping the entire age group together is highly misleading. Most over-75s and certainly over-80s are not well-off at all. They live on low incomes with half or so needing means-tested assistance.

UK state pensions are among the lowest in the developed world. Pensioners overall are no more likely than other groups to be in poverty, but that is success and marks real social progress. It is not a signal that somehow we have done something wrong. In fact, pensioner poverty is most pernicious, because once a pensioner is poor they cannot normally hope to improve their future financial position. Younger people have their future career and earnings to look forward to, whereas pensioner poverty is most often permanent. However, the triple lock has been another example of a political construct that has become totemic and has proved damaging. I agree with my noble friend Lord Tugendhat that it may have outlived its usefulness, but it is also important to remember that the triple lock is rather misleading because the poorest pensioners are not actually protected and the triple lock gives much more protection to the younger, better-off pensioners than to the oldest and poorest, which is clearly the wrong way round.

Another factor that is too often overlooked is that young people are starting their careers and their earning years much later than previous generations did. Comparing today’s twentysomethings with those of prior cohorts is not quite comparing like with like. If young people today are starting work, say, five years later than was previously the norm, their income position should be compared with people five years older than them rather than of the same age. If the young also ultimately benefit from the extra qualifications, they should increase their earnings more as they progress through their careers and should not therefore stay behind previous generations. The best route out of poverty is employment, and we should congratulate the Government that employment rates for young people are around record levels with very low unemployment. Meanwhile, older generations are staying in work much longer than ever before. The numbers of older people in work are at record levels, as older generations keep contributing more to the economy.

I find it strange that there is so much concern about the so-called baby boomers having good pensions and owning more assets. Surely, in a societal sense, that is to be welcomed, partly because they are at the end of their careers rather than at the beginning or halfway through, but also because as more older people live longer, increasing numbers will need more money to support them through their expected extended later life. Extreme old age will increasingly become the norm rather than exception. More will need money to pay for social care, and if they have no money they will have to be supported by younger taxpayers.

We should perhaps be celebrating that today’s older people are better off than previous generations, while also encouraging those who can to earmark some of their money in case they need later-life care. I urge my noble friend the Chancellor to introduce measures that will address that, such as incentives to keep some of their pensions or ISAs or allocate a share of the value of their home to a fund that would be set aside for later-life care in case they need it. That would at last begin to bring in much-needed funding before the care crisis brings down the NHS and places ever more burdens on young taxpayers. It is also true that there is an intergenerational imbalance in pension coverage, but that is partly a function of the unrealistically expensive pension promises that were made by past employers, who did not anticipate the range of changes that have increased the costs of providing a final salary-type pension to around 50% of salary.

I caution strongly against pitting one generation against another. Older generations already do much to support the young. Society is a nation of generations, each of which needs to live together in harmony. The bank of mum and dad—and often the bank of grandma and grandad—is helping younger generations. Relationships between old and young people are so important, both in our communities and in the workplace. I urge noble Lords to be mindful of the need for intergenerational cohesion.

[Baroness Goldie (Con)]

My Lords, we are tight for time, so I ask your Lordships to pay attention to the seven-minute timetable, please.

--- Later in debate ---

[Lord Balfe (Con)]

My Lords, I also begin by thanking Lady Smith for a wide-ranging and useful debate. I am a member of silent generation; however, I am not a member of the silent party. One of the most astonishing things about the debate is the total absence of Labour speakers, apart from the noble Lord, Lord Hunt. It is not as though Labour has nothing to say on the subject. I would be interested if the noble Lord could tell us whether this was an instruction from the Whips—or is the Labour Party genuinely mute? I will try to make up for them by making one or two mildly radical suggestions.

First, we are told that pensioner poverty has halved between 1997 and today. That means there are still a lot of pensioners living in poverty. We should not forget that. Secondly, this intergenerational argument should not be regarded as an opportunity to bash the old. The basic problem is that the wage economy has collapsed in the last 15 years but the pensioner economy has been maintained thanks to the input of largely public money.

The great problem that exists between the generations, including this third generation, is that some of us are much better off than others, often because we bought our houses many years ago and were in defined benefit pension schemes if, as in my case, you spent your entire life in the public sector. I left school at 16. I did not have a single day’s unemployment until I retired at the age of 60. I did not have to sign on. I was in a number of jobs but they linked, one to the other. That is a quite different experience from today.

I shall make a few suggestions on having a slightly fairer taxation system for the elderly. The first concerns TV licences. In a couple of years mine will be free. Why should it not be a taxable benefit? I am not saying it should not be free for poor pensioners, but why not make it a taxable benefit so you declare on your tax return that you have a television licence, just as you declare you have a pension? The winter fuel payment is another. It is astonishing that, seven years into our Government, we are still defending what Labour did in creating a benefit that goes to millionaires, tax free. At the time I remember saying this was impossible. Gordon Brown had a very wishy-washy explanation as to why it was needed, but I still do not see why I, as a 40% tax payer, should get a benefit that is substantially more for me than it is for an old-age pensioner. You do not have to save the money; you could redistribute the winter fuel payment so the poor pensioner has more and the richer pensioner pays for it.

It is high time to look at the administrative costs, as well. There are nonsenses such as the £10 Christmas bonus, introduced by Barbara Castle, of blessed memory, 30 years or more ago. Some of these benefits hang around for ever, such as the 25p a week extra that I will get in my pension when I reach 80. All this has an administrative cost. We could look at that.

Reference has been made to the exemption from national insurance. If I am lucky enough to earn extra money on which I will pay tax, why should I not pay national insurance, when the noble Baroness who moved this Motion—who is also not in receipt of a bus pass—would pay? Yet, I could be lecturing, as I have, in the very same building she works in. We could be in the same classroom giving a talk to the same people—even that has happened—and we could receive cheques on which I would not pay national insurance and she would. Frankly, this does not make sense.

The old are healthier and they also live longer. They can cost more in end-of-life care, but there is a tendency for us to think that because they get old, they cost a lot more. In fact, most health expenditure is in the last 24 months of life. The two basic problems we have are, first, the rise in the cost of the NHS, which has always moved ahead of inflation—most of the savings the Government have made have been swallowed up in this. Secondly, we have to look at the fact that the elderly are not smoking or drinking as much, so they are not putting as much back into the Exchequer in excise duties. I am not suggesting they should, but the pattern of excise duties is moving.

I will say a quick word about the young. Earnings have fallen and housing is difficult, but, to echo the sentiments of some noble Lords, more needs to be done. Messing around at the margin with tax relief and other reliefs will only generate price increases, as, of course, has quantitative easing. The fact that mortgages are so cheap makes them much more affordable, which means house prices go up.

At some point we need to recognise that for the older generation, class continues to divide the income groups more than anything else. For every poor pensioner there is a rich pensioner, but for both there is a strong class factor. If you live in the north on a council estate and start work at 18, you are more likely to be poor. It is as simple as that.

My final suggestion is: when we look at pension ages, why do we not base them on years of national insurance contributions? Why do we not say that if you start work at 18, work for 45 years and pay into the NI fund, you should be able to retire at the age of 63? If you go to university and pay for 45 years into the NI fund, you would retire at 68. We know that there is a mortality differential associated with income and occupation. These are one or two of the things we should look at when we consider intergenerational fairness. It is a far more complex issue than many outside this House imagine.

[Baroness Goldie]

My Lords, I apologise for further interruption. We have a quite serious slippage of time. When the Clock shows seven, will noble Lords please terminate their remarks and sit down?