House of Commons

Monday 28th October 2013 Commons Chamber

Monday 28 October 2013

The House met at half-past Two o’clock

Prayers

Monday 28th October 2013 Commons Chamber

[Mr Speaker in the Chair]

Oral Answers to Questions

Monday 28th October 2013 Commons Chamber

The Secretary of State was asked—

[Kerry McCarthy (Bristol East) (Lab)]

1. What support her Department provides for sanctuary schemes for victims of violence.

[The Secretary of State for the Home Department (Mrs Theresa May)]

The Government have put stable funding in place, ring-fencing nearly £40 million for specialist local domestic and sexual violence support services, rape crisis centres, and national helplines. Decisions on whether to fund the provision of sanctuary schemes for victims of violence are for local authorities, based on their assessment of local need.

[Kerry McCarthy]

I thank the Home Secretary for that response, but I understand that funding for sanctuary schemes has fallen by over a third under this Government. Freedom of information requests have shown that about 21% of victims of domestic violence who make use of such schemes are now falling foul of the bedroom tax. Does the Home Secretary think that such people, who are in a place where they are safe from their abuser, should be evicted because of the bedroom tax?

[Mrs May]

The sanctuary schemes obviously have value for a number of people. They are not right for everybody, but for those for whom they work, such schemes are important when put in place. Latest statistics show that last year, 2012-13, 7,100 households had homelessness prevented or relieved thanks to the installation of a sanctuary scheme—a 17% rise on the previous year. On the spare room subsidy, the Government are providing baseline funding of £20 million annually to the discretionary housing payment scheme, which is available to local authorities to help people in such circumstances. The Government have also provided an additional £25 million per annum on top of the baseline funding until the end of the spending review period.

[Mr James Gray (North Wiltshire) (Con)]

In addition to sanctuaries, which are terribly important, does the Home Secretary agree that it is time to re-examine sentencing guidelines on domestic abuse? In one case in my constituency, the ex-husband, who has been convicted twice of domestic abuse, is now living in the same estate as his terrified ex-wife, and no custodial sentence was handed down. Surely such a person should be in prison.

[Mrs May]

My hon. Friend makes an interesting point, and the Minister for Policing, Criminal Justice and Victims is sitting on the Front Bench and will have heard that question in relation to responsibilities of the Ministry of Justice. Importantly, I have asked Her Majesty’s inspectorate of constabulary to look at the policing of domestic violence, and we must examine how the police respond to such incidents. I am pleased that the Government have introduced a number of pilot schemes and are considering various ways that victims of domestic violence can be further protected. Domestic violence protection orders, for example, enable the victim to remain in their home, rather than the perpetrator remaining and the victim being forced out.

[Michael Fabricant (Lichfield) (Con)]

Last week I wore pink, in common with 100 others in Lichfield—pink trousers, pink shirt, pink feather boa—to walk for the Pathway project in my constituency. It looks after those—not only women, but men too—who suffer from domestic violence. Will the Home Secretary or one of her team please come to Lichfield to see the good work the Pathway project is doing?

[Mr Speaker]

The hon. Gentleman must have looked even more exotic than usual.

[Mrs May]

I know that my hon. Friend has a fondness for taking photographs, and I wonder whether he has taken a photograph of himself that could perhaps be circulated to Members of the House for their edification. He makes an important point, however, and I commend the Pathway project in Lichfield. I have noted the hon. Gentleman’s invitation, as has the Minister for Crime Prevention, for one of us to come and visit. May I say what excellent work people in the Pathway project and similar schemes are doing on this important issue?

[Dr Phillip Lee (Bracknell) (Con)]

2. What assessment she has made of the latest crime figures.

[The Secretary of State for the Home Department (Mrs Theresa May)]

Our police reforms are working and crime is falling. Recorded crime has fallen by more than 10% under this Government, and the independent crime survey shows that crime has more than halved since its peak in 1995.

[Dr Lee]

Between 2011-12 and 2012-13 recorded street-level crime in Bracknell fell by 12%, and recorded antisocial behaviour by almost one third. Does the Home Secretary agree that it is possible to save taxpayers’ money and reduce crime at the same time?

[Mrs May]

I absolutely agree with my hon. Friend. Both our constituencies are served by Thames Valley police, and I am pleased that since 2010, crime has fallen by 25% in the Thames Valley police area, including a fall of 30% in my constituency. My hon. Friend is right. Those who said that when police budgets were cut the only thing that would happen would be for crime to go up have been proved wrong. I commend the work of all the police officers and staff who have contributed to those good crime figures.

[Fiona Mactaggart (Slough) (Lab)]

There has been a 30% increase in reports of rape, and yet a dramatic fall in the number of rape cases referred for prosecution. What is the Home Secretary doing about that?

[Mrs May]

The hon. Lady is right to draw attention to that—we need to look at the matter very seriously. I am happy to say that the Minister for Crime Prevention is doing so. In addition, the Home Office has sat round the table with national policing leads and the Crown Prosecution Service to consider why we are seeing that most recent trend, and to develop a plan for ensuring that cases are referred to the CPS when it is right to do so.

[Duncan Hames (Chippenham) (LD)]

The 12% fall in crime excluding fraud will be welcomed in Wiltshire by my constituents, but businesses repeatedly find themselves victims of seemingly invisible but none the less criminal behaviour online. What support is being given to businesses to tackle those online thefts?

[Mrs May]

First, the Office for National Statistics now includes figures on fraud reported to Action Fraud in the police recorded crime count. That is an important step forward—we now get a more accurate picture. Crucially, following the launch of the new National Crime Agency, we have established within it an economic crime command, which will enhance our ability in this country to deal with a variety of economic and financial crimes, including the fraud my hon. Friend describes.

[Emily Thornberry (Islington South and Finsbury) (Lab)]

The Home Secretary will be aware not only that rape statistics have gone up, but that the figures for child abuse have gone up hugely as well. Five years ago, 50% of rape offences were referred to the CPS, but now only 30% of rape and abuse of children offences are referred. What will the Home Secretary do about that? Does she believe that 20% cuts to the police might have something to do with it?

[Mrs May]

No, I do not accept the premise on which the hon. Lady’s question is based. We are looking very seriously at the question of child abuse. That is why my right hon. Friend the Minister for Policing, Criminal Justice and Victims was involved in setting up a group across Departments on the question of child abuse and child sexual exploitation to ensure we can deal as effectively as possible with that most horrific crime.

[Mr David Ruffley (Bury St Edmunds) (Con)]

Crime will fall even further if we can make bigger reductions in police bureaucracy. Front-line officers using body-worn cameras have the potential to reduce the amount of paperwork they have to do back at the station. Will my right hon. Friend indicate how many police hours she believes could be saved by that new technology, which has been endorsed recently by the Minister for Policing, Criminal Justice and Victims?

[Mrs May]

My hon. Friend makes an extremely important point. I had informal discussions about the use of body-worn cameras at the college of policing last week. I am pleased to say that a number of forces have piloted the use of such cameras. The college will look at best practice so it can ensure they are used as effectively as possible. They will not only reduce the bureaucracy that the police are involved with, but provide greater and enhanced ability to deal with crimes and provide the evidence in criminal circumstances. They will also benefit officers when accusations are made about their behaviour—often, the body-worn camera will show when such accusations are not correct.

[Jack Dromey (Birmingham, Erdington) (Lab)]

Crime has fallen overall thanks to the development of neighbourhood policing under a Labour Government. With the thin blue line stretched ever thinner, there are disturbing signs of a generation of progress in some areas being reversed. Since the general election, shoplifting is up in 23 police areas and mugging is up in 15 police areas. There has been a staggering 44% increase in mugging in London. Does the Home Secretary therefore share the concerns of Her Majesty’s inspectorate of constabulary that that which has proved to be so successful and is so valued by communities throughout our country—neighbourhood policing—“risks being eroded”?

[Mrs May]

May I first welcome the hon. Gentleman to his new role on the Opposition Front Bench? I am not sure that his question was the best approach for him to take. I am very sorry that he has failed to recognise the work being done by police officers and staff around the country to ensure that overall levels of crime have fallen since 2010. I would hope he welcomes the work they are doing. HMIC has made it clear that forces, in taking the budget cuts, have focused on ensuring front-line resilience. That is a very good example of how it is possible to do more for less.

[Mr Jonathan Djanogly (Huntingdon) (Con)]

5. What steps she is taking to restrict immigration routes into the UK without limiting the ability of UK universities to attract international students.

[The Minister for Immigration (Mr Mark Harper)]

Since 2010, the Government have taken steps to reform all routes into the UK to deal with abuse, but we have been careful to protect our world-class universities. In the past year, we have still seen a rise in visa applications to universities.

[Mr Djanogly]

Given that we have significantly restricted the ability of foreign students to stay on after the end of their studies, is it worth retaining their inclusion in the immigration figures?

[Mr Harper]

I am grateful to my hon. Friend for that question, as it gives me the opportunity to say that they should be in the figures. Those who come here for more than a year are migrants in the same way others are, and use public services. It also gives me the opportunity to say that we have not restricted the ability of students to work where they have a graduate-level job that earns £20,300. We welcome the best and the brightest to do exactly that.

[Keith Vaz (Leicester East) (Lab)]

On the Chancellor’s recent visit to China, he made a big and open offer to the most populous country on earth: all Chinese students are welcome to study in the United Kingdom. If they take up that offer, that will have a serious effect on the Government’s aim to restrict immigration to under 100,000. What does the Minister for Immigration think of that big and open offer?

[Mr Harper]

First, I do not think the Chancellor was suggesting that the entire population of China will come to the United Kingdom all in one go. The right hon. Gentleman makes a sensible point, but it is worth remembering that students who come to the UK will stay for their course and then leave. They do not, over time, make a contribution to net migration. We have, however, already seen strong growth in the number of students coming from China. They are welcome at our universities and we want to see them come.

[Jeremy Lefroy (Stafford) (Con)]

What is the latest assessment the Minister has made of the value of international students to the UK economy and society?

[Mr Harper]

We welcome international students as long as they study at a genuine university or other genuine institution. We have dealt with abuse, which we inherited from the Opposition, but we welcome students and the best of them are welcome to stay here to create businesses, wealth and jobs.

[Pete Wishart (Perth and North Perthshire) (SNP)]

The Minister knows that almost the entire Scottish higher education establishment despise the immigration reforms, which do nothing but make Scotland a less attractive place to come. This is not working for us and we do not have the issues of the rest of the United Kingdom. Can we now make our own course, so that we can make Scotland an attractive and welcoming place for international students?

[Mr Harper]

If the hon. Gentleman looks at the facts, he will see that there is an increase in the number of international students going to the excellent universities in Scotland. Scotland is attractive to international students, as is the rest of the United Kingdom. I see no evidence that our immigration reforms are turning students away.

[Julie Elliott (Sunderland Central) (Lab)]

International students play a vital role in Sunderland university, which is in my constituency. The changes to immigration rules since the Government came to power have made a lot of areas of the world feel that we are closed for business. What is the Minister doing to address that view and change it back, so that they know we are open for business and welcome international students?

[Mr Harper]

Ministers take every opportunity to make the case that we welcome genuine students and to set out the attractive offer we have. As the right hon. Member for Leicester East (Keith Vaz), the Chair of the Select Committee, said, both the Chancellor and the Mayor of London were in China recently to make that case. The Prime Minister has been to India, as has my right hon. Friend the Home Secretary. We make the case at every opportunity and I am glad the hon. Lady is doing so, too.

[Paul Uppal (Wolverhampton South West) (Con)]

6. What steps she is taking to tackle gang crime.

[The Minister for Policing, Criminal Justice and Victims (Damian Green)]

The Government have a programme for ending gang and youth violence, which provides support to local areas. It focuses on preventing vulnerable young people from joining gangs, helping those who want to leave gangs and tough enforcement against those who commit violence. We will publish our second annual report later this year.

[Paul Uppal]

I commend Wolverhampton police, through Operation No Deal and a general clampdown on crime and drug gangs, on recent significant arrests. Will the Minister assure me that significant steps are being made to continue that work? From anecdotal evidence in recent canvassing sessions, I have noticed a pick up in drug dealing, particularly in the south of the city.

[Damian Green]

My hon. Friend raises a serious issue. As he knows, Wolverhampton is one of the 33 priority areas to which the Home Office is giving particular help on this issue. We are working with Wolverhampton and other areas to tackle gang-related drug dealing as part of the ending gang and youth violence programme, and we will continue to do so and also use the new National Crime Agency and the serious organised crime strategy to ensure that we continue to attack the organised crime routes of drug dealing in too many of our cities.

[Mr Philip Hollobone (Kettering) (Con)]

The good news from Northamptonshire is that overall crime is down 14% in the last three years, but the bad news is that for every 1,000 people in the county, there are 11 crimes of violence, compared with eight per 1,000 in Merseyside and 10 per 1,000 in Greater Manchester. Surprising though these figures may be, will my right hon. Friend ensure that when the Home Office allocates funds to regional police forces, it takes such statistics into account?

[Damian Green]

My hon. Friend is a doughty campaigner for the local interests of his constituents, as he should be, and we hear all the recommendations he makes to us. His county is lucky to have a particularly good police and crime commissioner, who will, I know, bear down hard on crimes of violence.

[Sheryll Murray (South East Cornwall) (Con)]

7. What steps she is taking to curb metal theft.

[The Minister of State, Home Department (Norman Baker)]

We have already seen significant reductions in metal theft following targeted police action and the banning of cash payments for scrap metal. The implementation of the Scrap Metal Dealers Act 2013 earlier this month will further clamp down on rogue dealers while supporting legitimate businesses.

[Sheryll Murray]

Following visits I have made to bona fide metal recyclers in my constituency that do carry out checks on their clients in Cornwall, will my hon. Friend tell me what action his Department is taking to ensure that rogue dealers are prosecuted and punished, and does he agree that all metal recyclers must have a level playing field on which to operate?

[Norman Baker]

Yes, I absolutely agree. The Scrap Metal Dealers Act, which I mentioned, is designed precisely to ensure that rogue traders are dealt with properly, and a properly funded licensing scheme will see more effective compliance activity by local authorities and stronger enforcement by the police, ensuring a level playing field for law-abiding scrap metal dealers. For example, we see from the British Transport police that offences are down 44% in the last year.

[Tessa Munt (Wells) (LD)]

My local paper still carries adverts providing only a mobile phone number and offering free collection of any scrap metal, cars, vans, caravans and electrical items for cash payments. What can my constituents in Somerset expect by way of checks and investigation into those who place these adverts, especially since fly-tipping of these very items is such a bane to Somerset residents and adds to the cost of their council tax bills?

[Norman Baker]

We have created a new criminal offence to prohibit cash payments to purchase scrap metal and therefore my hon. Friend ought to report that matter to her local police. If it is a registered scrap metal dealer who holds a licence, the local authority will want to look into the matter.

[Harriett Baldwin (West Worcestershire) (Con)]

8. What steps she is taking to reduce illegal immigrants’ access to housing.

[The Minister for Immigration (Mr Mark Harper)]

The Immigration Bill will require private landlords to make some simple, straightforward checks so that illegal migrants do not have access to private housing. Existing legislation already makes it clear that illegal migrants do not have access to social housing.

[Harriett Baldwin]

Farmers in my constituency offer temporary housing to the seasonal agricultural workers who pick the delicious crops we grow in West Worcestershire. Will it be the farmers or the gangmasters who are required to verify their immigration status?

[Mr Harper]

If employers make available tied accommodation —meaning it is tied to their employment—they will not have to make further checks, because, as employers, they already have to check someone’s right to work in the United Kingdom, and we do not want to overburden them with bureaucracy.

[George Freeman (Mid Norfolk) (Con)]

I congratulate and thank the Home Secretary for the excellent measures in last week’s Immigration Bill, which is strongly welcomed by my constituents. Have Ministers seen the recent report stating that the NHS is currently losing £2 billion a year on health care to non-UK residents who should not be here? May I encourage the Home Office, with other Departments, to do everything possible to continue the good work to clamp down on illegal citizens taking public services from our citizens?

[Mr Harper]

We will be doing the first stage of that in the Immigration Bill by ensuring that people who come here as temporary migrants make a fair contribution to the NHS before they can have access to it. The Secretary of State for Health will also introduce separate measures to ensure that hospitals become more effective at charging people who have no right to free access to health care paid for by our taxpayers.

[Steve Brine (Winchester) (Con)]

9. What steps she is taking to tackle the use and supply of legal highs.

[The Minister for Crime Prevention (Norman Baker)]

We already control hundreds of so-called legal highs and are working with law enforcement partners to disrupt the supply of these often dangerous substances. The Home Office has led communications activity targeting young people and students to advise of the risks of legal highs. We also regularly update public health messaging on those risks. We are not complacent, and we continue to look at ways in which we can enhance our response.

[Steve Brine]

The UK is fast becoming a hub for the European legal highs market, and a recent report from the all-party group on drug policy reform claimed that more than one new substance was coming to Britain each week. Does the Minister share my concern that many legal highs are now purchased online and delivered direct to people’s homes? Will he also look again at the Misuse of Drugs Act 1971 to see whether it is still fit for purpose, given the new web-based market for legal highs?

[Norman Baker]

I am not sure that I accept my hon. Friend’s premise that we are a hub for that activity. First, however, let me say how sorry I was to learn of the recent incident in which one of his young constituents died, possibly as a result of taking a substance known as AMT. The cause of death has yet to be confirmed. That particular substance is legal, but as a result of that case I asked officials on Friday to look at the matter urgently, and action was taken under our drugs early-warning system at 6 pm on that day. My hon. Friend mentioned internet sales, but only about 1% of drugs are sourced in that way. Nevertheless, we take that avenue seriously and the National Crime Agency is undertaking operational activity accordingly.

[Tracey Crouch (Chatham and Aylesford) (Con)]

The Minister will be aware that there are shops on our high streets, such as UK Skunkworks in Chatham, that sell legal highs alongside other drug paraphernalia. Those shops abandon any responsibility for the sometimes tragic consequences of their activities by labelling the products as being unfit for human consumption. Will he commit to including the over-the-counter sales, and the labelling, of legal highs in his review, so that we can prevent further deaths similar to that of Jimmy Guichard?

[Norman Baker]

I entirely agree with the premise of my hon. Friend’s question. Those so-called head shops often behave irresponsibly. She will know that a study of international comparisons is currently under way, and the consideration of legal highs is very much part of that process.

[Mr Julian Brazier (Canterbury) (Con)]

My hon. Friend will be aware of the three deaths in Kent, two of which were in my constituency. I welcome his early-warning system and temporary banning orders, but may I suggest that the best way to cope with this is simply to say that if someone dies or becomes severely ill as a result of taking a drug that is a close chemical cousin of a banned drug, that should throw up a criminal offence?

[Norman Baker]

The Home Office already takes steps to ensure that when a new substance appears that could be injurious to health, we seek to ban analogous drugs—the family of drugs—as a consequence. Some of the banned drugs have often not yet been created, but if and when they are created, they are already covered. We are trying to deal with this through anticipatory methods as well as by other means. We also try to have an early response system, so that when a substance appears, it can be picked up and banned very quickly.

[Justin Tomlinson (North Swindon) (Con)]

10. What steps she is taking to address domestic violence.

[The Secretary of State for the Home Department (Mrs Theresa May)]

Domestic violence is a dreadful form of abuse and is totally unacceptable. Our approach to tackling it is set out in the Government’s updated violence against women and girls action plan. Key initiatives include piloting domestic violence protection orders, which I referred to in a previous answer, and a domestic violence disclosure scheme. We have also extended the definition of domestic violence to include 16 and 17-year-olds and to include the use of coercive control.

[Justin Tomlinson]

I have visited the women’s refuge in Swindon and was extremely impressed by the help and facilities that it provides. What steps is the Home Secretary taking to support the work of those vital safe havens for victims of domestic violence across the country?

[Mrs May]

Like my hon. Friend, I pay tribute to all those who work in refuges and provide refuge for the victims of domestic violence. They are predominantly for women, as the majority of such victims are women, but we must never forget that men can also be the victims of domestic violence, as my hon. Friend the Member for Lichfield (Michael Fabricant) said earlier. The Government are providing stable funding of £40 million to support specialist domestic and sexual violence services, such as the independent domestic violence advisers who offer further valuable support to victims.

[Julie Hilling (Bolton West) (Lab)]

The last Girl Guides survey showed that 5% of girls thought it was okay to be threatened with violence for spending too much time with friends, and that 25% thought it was okay for a person’s partner to check up on them and read their texts. What are the Government doing to combat domestic violence by educating young people, particularly young women, about what is acceptable in relationships, and—

[Mr Speaker]

Order.

[Mrs May]

Although cut off in her prime, the hon. Lady makes an important point. It is shocking to see the number of girls and young women—and, indeed, the number of boys and young men—who think that violence in a relationship is okay and part of a relationship. She is absolutely right that we must do what we can to educate young people about what a proper relationship should be and what should not be part of it. That is why the Home Office has supported a very successful national teenage rape prevention campaign, which we were able to extend into a teenage relationship abuse campaign. The figures and responses show that those campaigns have had a real impact on young people’s understanding of the nature of relationships.

[Andrew Stephenson (Pendle) (Con)]

19. Victims of domestic violence in my constituency sometimes find the first step of talking to someone about it to be the hardest one to take. Residents are well served by the Pendle domestic violence initiative helpline, as well as the national domestic violence helpline. Will my right hon. Friend tell us what she is doing to ensure that the victims of domestic violence are aware of these helplines, which provide them with valuable support at the time they need it most?

[Mrs May]

My hon. Friend is absolutely right to commend the work of those who provide helplines, and I would like to congratulate him on the success of the Pendle domestic violence initiative. Helplines indeed play an important role in supporting the victims of domestic and sexual violence. That is why the Home Office provides £900,000 to five national helplines each year. We take every opportunity to publicise these helplines, and we have done so through the two campaigns to which I referred in my previous answer—the teenage rape prevention campaign and the relationship abuse campaign. It is important to keep telling people about the availability of these helplines.

[Helen Jones (Warrington North) (Lab)]

The Home Secretary is astonishingly complacent given that reported domestic violence has risen by 31% on her watch, while at the same time as funding for refuges and specialist advice has fallen by 31%, the number of independent domestic violence advisers is falling and specialist domestic violence courts are being axed. Is this a deliberate attempt to target the victims of this violence or does it simply show that she has no influence over her colleagues in other Departments?

[Mrs May]

First, I welcome the hon. Lady to her new role on the shadow Home Office Front Bench, but I have to say that I thought that the nature of that question was beneath her. [Interruption.] The hon. Lady says “facts” from a sedentary position, and she quoted a figure of 31%. I understand, however, that that came from a survey based on the average from 63 local authorities, and that survey did not take into account responses from 201 authorities that said cuts had not been made in their provision. If the hon. Lady wants to cite facts, I suggest she looks at them more carefully in future. This Government take domestic violence very seriously. That is why it is this Government who have put in place stable funding of £40 million and why under this Government rape crisis centres are opening, when under the last Labour Government they closed.

[Mr Michael McCann (East Kilbride, Strathaven and Lesmahagow) (Lab)]

13. What recent assessment she has made of the level of referrals from the police to the Crown Prosecution Service for domestic violence offences.

[The Minister for Crime Prevention (Norman Baker)]

The Home Office chaired a meeting with the Director of Public Prosecutions last month. This has led to a six-point plan to increase the number of referrals from the police to the Crown Prosecution Service. However, it should also be noted that last year saw the highest ever conviction rate for domestic violence prosecutions.

[Mr McCann]

I am grateful for that answer and for all other answers given on this subject this afternoon. Since the general election, however, there has been a 13% fall in the number of cases of domestic violence being referred to the CPS from the police. Will the Minister ban the use of community resolutions in all cases of domestic violence?

[Norman Baker]

We have heard from the Home Secretary that the ministerial team in the Home Office take this matter very seriously. We will discuss it later this week with chief constables and others. We are determined to ensure that domestic violence is given the prominence it should have within the legal system. I have also had a discussion about this matter with my colleague, Lord McNally, at the Ministry of Justice.

[Alec Shelbrooke (Elmet and Rothwell) (Con)]

14. What steps she is taking to reduce abuse in the immigration system.

[The Minister for Immigration (Mr Mark Harper)]

We have taken a number of steps to deal with abuse in the immigration system, and the Immigration Bill will go further. It will ensure that people do not have access to public services when they should not, it will reform the appeal system, and it will establish the House’s and Parliament’s views on how judges should make decisions relating to article 8 of the European convention.

[Alec Shelbrooke]

Housing pressure in my constituency is huge as a result of the last Government’s unfettered immigration policies. Can my hon. Friend confirm that he intends to continue his endeavours to cut immigration further, thus relieving the pressure that is undermining the level of new housing being demanded by Labour-led Leeds city council?

[Mr Harper]

My hon. Friend has made a good point. Our reduction in net migration will reduce the pressure on housing, and the provisions in the Immigration Bill ensuring that people who have no right to be here have no access to housing will increase the amount of housing stock available to British citizens and to lawful migrants who are following the rules.

[Jim Fitzpatrick (Poplar and Limehouse) (Lab)]

I accept the need to tackle abuse in the system, but may I draw the Minister’s attention to a disturbing anomaly? Families in which neither parent has been given the right to work become dependent on local churches and friends, and experience great distress. Is there no way in which the immigration system can take account of their circumstances, and allow one parent to work? That ought to be the norm, but it seems to be happening less and less often.

[Mr Harper]

If neither parent has the right to work because neither has the right to be in the United Kingdom, the solution to the problem is for them to leave. If the reason is that their case is being examined because they are, for example, claiming asylum, the state will support them while the case is under way. If the hon. Gentleman wishes to raise a specific case in his constituency, I should be delighted if he got in touch with me, and we can have a look at it.

[Nick de Bois (Enfield North) (Con)]

17. What advice would the Minister give councils when residents with dependants have exhausted the immigration appeal process and therefore have no recourse to public funds, but, because they have not left the country either voluntarily or as a result of enforcement, the councils are still continuing to have to meet their high costs?

[Mr Harper]

In most cases, councils will have no liability to support such people, but they should carry out a human rights assessment. In a limited number of cases they may have to support them, but in most cases they will not. Indeed, by continuing to support those people when they need not do so, all that councils are doing is encouraging them to remain in the United Kingdom when they have no right to be here.

[Diana Johnson (Kingston upon Hull North) (Lab)]

Baroness Warsi has said of “Go Home” ad vans:

“I don’t think it was a particularly positive experience and I am glad that we won't be going back to it.”

She also said:

“I think it’s always important for government to be clear when they are speaking to their communities that all people who are part of this nation legally are absolutely welcome.”

Does the Minister agree with that Cabinet Minister, and what steps will he take to reduce the use of dog-whistle politics?

[Mr Harper]

I entirely agree that everyone who is in the United Kingdom legally, obeying our laws and rules, is very welcome indeed. We have always made that clear. As the hon. Lady knows, the campaign was focused squarely on those who were here illegally. My right hon. Friend the Home Secretary made it clear last week that we had looked at some of the evidence, that we did not think the pilot had been successful enough, and that we would not be rolling it out further.

[Diana Johnson]

Having considered the evidence and decided that the campaign was not successful and should not be repeated, why does the Minister not publish the assessment of that policy, and let us see how many people left the country as a result of it?

[Mr Harper]

During last week’s debate on the Immigration Bill, my right hon. Friend made it clear that we would indeed publish the assessment when we had finished carrying out the evaluation. We are going to do the work properly, and we will publish the information in due course.

[Mr David Heath (Somerton and Frome) (LD)]

One of the parts of the immigration system that has been least open to abuse historically is the seasonal agricultural workers scheme. I know how carefully the Minister looked at the evidence before deciding to end the scheme. Will he now commit himself to monitoring the position, along with his colleagues in the Department for Environment, Food and Rural Affairs and the Department for Work and Pensions, so that we can ensure that the ending of the scheme does not damage either the economy or food availability?

[Mr Harper]

I have a constituency interest, as constituents of mine took advantage of the scheme. The hon. Gentleman is right—it was not abused, but it was nearing the end of its natural life this year, because it was open only to those from Bulgaria and Romania, and they will be able to come to the United Kingdom in any event after transitional controls have been withdrawn. We had to choose whether to create a new scheme, and we decided that we did not need to do so because sufficient labour was available in the European Union. However, I can assure the hon. Gentleman that we will continue to keep the matter under review, along with other Departments, to ensure that our agricultural industry is not damaged in any way.

[Mr Robert Syms (Poole) (Con)]

15. What plans she has to make it easier to deport foreign terrorists and criminals.

[The Parliamentary Under-Secretary of State for the Home Department (James Brokenshire)]

The Immigration Bill will put the law on the side of the public, deporting criminals first and hearing appeals later wherever possible, and cutting the number of appeal routes available. Importantly, the Bill also addresses the abuse of the right to a family life under article 8 and upholds the view of Parliament that convicted criminals should be deported.

[Mr Syms]

My constituents in Poole welcomed the deportation of Abu Qatada but want to be reassured that the changes in the Immigration Bill will ensure that the law is on the side of law-abiding people from now on.

[James Brokenshire]

I know that my hon. Friend spoke in the Second Reading debate on the Bill and underlined those points. I was closely involved in the deportation of Abu Qatada, an important success for this Government, which was not achieved by the previous Government. That case showed the number of appeals that are possible and the slowness of the process. That is why it is right that we tackle the number of appeals. Seventeen potential appeal routes are available. We want to reduce that to four and to cut down on the abuses of the system.

[Chris Bryant (Rhondda) (Lab)]

The changes in the Immigration Bill will mean that those who are caught trying to enter a sham marriage will be deported from this country. I wholly welcome that, but when the Minister eventually answered some questions from me three months late, he revealed that the number of occasions when a registrar has written to the Home Office under section 24 of the Immigration and Asylum Act 1999 to notify it of significant concern about a possible sham marriage has risen dramatically since 2010. There are measures to deal with that in future, but why has that happened?

[James Brokenshire]

It is important to tackle sham marriages, and that is why the Bill has specific measures to address that. The Government are very focused on deporting those who should not be in this country. That is why we are taking the steps we are in the Bill.

[Simon Hughes (Bermondsey and Old Southwark) (LD)]

16. When she expects to respond to the recently closed consultation on stop and search powers; and if she will make a statement.

[The Minister for Policing, Criminal Justice and Victims (Damian Green)]

The consultation on the powers of stop-and-search ran for 12 weeks over the summer and generated a high volume of responses from national and local community groups to the police and members of the public. There were over 5,000 responses to the consultation, all of which are being analysed. We aim to publish the findings of the consultation and a response by the end of the year.

[Simon Hughes]

I am entirely in favour of appropriate stop-and-search, not least because an hour ago in Bermondsey, someone was clearly doing a runner having nicked stuff from a shop not far from my constituency office—they were a bit too far away for me to rugby tackle them, unfortunately. However, will the Minister ensure that the Government’s policy ends the excessive arrest of people who clearly should not be subject to stop-and-search, and the excessive stopping and searching of black, Asian and other minority groups?

[Damian Green]

That is precisely what the consultation is about. I regret that my right hon. Friend was prevented from being the “have a go” hero that I know he wants to be. I am happy to tell him that, even before the results of the consultation are published, the Metropolitan police have taken their own steps to improve the situation and that, from June 2011 to June 2012, in London, the arrest rate following stop-and-search went up from 10.6% to 17.3%. That suggests that the police are becoming much more sensitive about using that power in a way that leads to arrest.

[Annette Brooke (Mid Dorset and North Poole) (LD)]

18. What steps she is taking to tackle human trafficking.

[The Parliamentary Under-Secretary of State for the Home Department (James Brokenshire)]

We intend to publish a modern slavery Bill to strengthen further our response to this abhorrent crime. The Bill will consolidate existing offences, increase the maximum sentence available, limit future activities of perpetrators and introduce an anti-slavery commissioner. The National Crime Agency is also prioritising action against those involved in these appalling crimes.

[Annette Brooke]

I thank the Minister for that answer and welcome the introduction of the legislation. I fear that too many trafficked children currently do not receive the support they need. Will the Government consider including a proposal in the forthcoming legislation to appoint independent guardians to ensure that these vulnerable young people have advocates to access support?

[James Brokenshire]

My hon. Friend is right to highlight this approach to the support provided to those who are trafficked into this country. I note that the report recently published by the Children’s Society and the Refugee Council made a number of the points my hon. Friend has made. Local authorities already have a statutory duty to safeguard and promote the welfare of trafficked children in their care. That is not applied as well across local authorities as it should be. We have a major programme of work in place to transform the care system and we will be focusing on this specific vulnerable group.

[Ian Lucas (Wrexham) (Lab)]

Last week I attended a very worrying human rights briefing about human trafficking in Libya—the trafficking of people to Europe generally and the United Kingdom—and the impact of the difficult political situation there. Will the hon. Gentleman urgently discuss the situation with the Foreign Office and see what steps are being taken to limit the criminal activities emanating from Libya?

[James Brokenshire]

The hon. Gentleman makes a very important point about the need for work overseas to prevent people from being trafficked into this country. The recently formed National Crime Agency very much focuses on each element of this, really tackling the organised crime groups, and we are already in close contact with our ministerial colleagues at the Foreign Office, but I will certainly note the specific point he makes.

[Mike Freer (Finchley and Golders Green) (Con)]

20. What steps she is taking to address domestic violence amongst hard to reach groups.

[The Minister for Crime Prevention (Norman Baker)]

The coalition Government acknowledges that some victims of domestic violence have specific needs and require a specialist response. The updated violence against women and girls action plan sets out a series of steps to address these needs, and outlines additional measures to protect hard-to-reach victims.

[Mike Freer]

Many women in observant religious communities find it hard to leave a domestic violence background. What specific practical support can be given to these women so they feel comfortable about leaving a violent background?

[Norman Baker]

The Government acknowledges that victims face a variety of pressures when leaving violent relationships. In order to provide a specialist response for hard-to-reach victims, we have, for example, funded projects aimed specifically at those at risk of forced marriage and female genital mutilation, to raise awareness of the law, legal rights and support services. They can also be helped through the five freephone helplines the Home Secretary referred to earlier.

[Stephen Gilbert (St Austell and Newquay) (LD)]

21. What steps she is taking to help tackle unlicensed sexual entertainment venues.

[The Minister for Crime Prevention (Norman Baker)]

The Policing and Crime Act 2009 determined that decisions on licensing applications for sexual entertainment venues are best made at a local level. It also sets out the limited circumstances where such a licence would not be required. Hosting regular sexual entertainment without the relevant licence would represent a significant breach of broader licensing conditions, and local authorities are responsible for monitoring and enforcing those requirements.

[Stephen Gilbert]

I am grateful to my hon. Friend for that reply. Some pubs and clubs in my constituency have been regularly exploiting the loophole in the 2009 Act to which he refers. That puts patrons and performers at risk. Will he meet me to discuss how we can tighten up regulations in this important area?

[Norman Baker]

I understand my hon. Friend’s concerns. There is a balance to be struck between having rigorous and appropriate licensing conditions and imposing unnecessary bureaucratic burdens, but I will, of course, be very pleased to meet with my hon. Friend to discuss this further.

[Lorely Burt (Solihull) (LD)]

T1. If she will make a statement on her departmental responsibilities.

[The Secretary of State for the Home Department (Mrs Theresa May)]

May I first thank and congratulate the police, and, indeed, all the other emergency services, on the excellent work they have been doing overnight and continue to do today for the victims of the terrible storm?

Earlier this month the new National Crime Agency was launched to lead the UK’s fight against serious and organised crime. For the first time we have a single national agency harnessing intelligence in order relentlessly to disrupt organised criminals at home and abroad. I have also announced that we will introduce in this Parliament a modern slavery Bill, which will include measures to send the strongest possible message to criminals: “If you’re involved in the disgusting trade in human beings, you will be arrested, prosecuted and locked up.” Modern slavery is an appalling evil in our midst and no man, woman or child should be left to suffer through this terrible crime. Finally, I have recently introduced an Immigration Bill which will stop immigrants using certain services where they are not entitled to do so, reduce the pull factors which encourage people to come to the UK, and make it easier to remove people who should not be here.

[Lorely Burt]

On the last point, what is the Secretary of State doing to ensure that her plans to introduce charges for foreign nationals using the NHS will not deter bright young talent from coming here to work or study?

[Mrs May]

My hon. Friend is right to draw attention to the fact that in the Immigration Bill, we will ensure not only that a better process will be put in place to deal with situations where people come here for a very short time, use the NHS and should be charged but the charges are not being retrieved, but that those who come for a temporary period and may use the NHS will actually contribute to the NHS. That is only fair to hard-working people up and down the country. We will be looking, in particular, at the issue of students, and we have been very clear that we will set the surcharge for the use of the NHS at a rate that is competitive, because a number of other countries across the world do exactly this and at a higher charge.

[Yvette Cooper (Normanton, Pontefract and Castleford) (Lab)]

I join the Home Secretary in thanking the police and all the emergency services for their excellent work in response to today’s storm. I know that the House will also want to send sympathies to the families of those who are reported to have tragically lost their lives as a result of the storm.

It is because the police do such a valued and vital job that it is also important to have effective investigations when things go wrong, so that they do not cast a shadow over the excellent work that so many police officers do each day. So does the Home Secretary agree that in order to do that, it is time to replace the police watchdog, the Independent Police Complaints Commission, with a new organisation with stronger powers?

[Mrs May]

I join the shadow Home Secretary in sending condolences to the families and friends of those who, it is reported, have lost their lives as a result of the storm, and she is right in saying that the whole House will wish to pass our sympathies on to those who have lost loved ones. On her question, I think it is right that we beef up the IPCC—that we give it a greater ability to deal with serious and sensitive cases and complaints that have been made against the police, rather than seeing so many of those complaints referred back to the police for their investigation. I think the public are concerned at the number of cases where they see the police investigating themselves, and the Government are committed to increasing resources at the IPCC. We have given it new powers and, if necessary, we will continue to do that.

[Yvette Cooper]

The Home Secretary’s response is welcome, but it does not go far enough. Let us consider some of the problems we have seen for the IPCC. So far, the IPCC has proved that it is powerless to direct action in the case of West Mercia police; it is powerless to get seven former police officers to come to interview over Hillsborough; and it is unable to keep the confidence of families over the Mark Duggan case, over undercover policing and Stephen Lawrence, or over the death of Ian Tomlinson. Surely the Home Secretary agrees that the public need to have confidence not only in the police, but in the watchdog, in order for an effective job to be done? The resources are not sufficient, and the watchdog needs the powers to be able to launch its own investigations and ensure that lessons are learnt. That is the best way to ensure that a shadow is not cast over the excellent work the police do. We have been urging her to do this for more than a year now, so why will she not introduce these reforms to give the watchdog the much stronger powers that it needs?

[Mrs May]

The right hon. Lady knows full well that not only the issue of the investigation of complaints against the police, but the whole question of the integrity of the police goes further than simply the IPCC. We have taken a number of steps: for example, the register of struck-off police officers, which will be introduced as a result of action taken by this Government. It is exactly the sort of thing that would have helped in respect of the police officer involved in the issue relating to the Ian Tomlinson death, to which she referred. This Government are taking action on the IPCC. We are going to increase the resources, we are increasing the powers for the IPCC and we will ensure that it will be investigating the serious and sensitive cases which currently are passed back to the police. I think it is right that these investigations are done by a body that is not the police themselves.

[Mr Speaker]

We need short questions and short answers. Let us be led by Mr Marcus Jones.

[Mr Marcus Jones (Nuneaton) (Con)]

T3. Several constituents of mine who have made complaints against the police to the IPCC feel that it did not have the necessary teeth to act on their grievance. Notwithstanding my right hon. Friend the Home Secretary’s previous answer, will the Minister say what more can be done to deal with this situation?

[The Minister for Policing, Criminal Justice and Victims (Damian Green)]

As my hon. Friend will just have heard, it is precisely to address this genuine public concern that we are increasing not only the resources available to the IPCC but its powers, so that it can take on the serious and sensitive cases. The powers we have given it are ones the IPCC has requested because it has identified the gaps in its own powers.

[Nic Dakin (Scunthorpe) (Lab)]

T2. Will the Home Secretary confirm that for the past year, police have had to destroy the DNA of people arrested for but not charged with rape without the right to appeal to the DNA commissioner, which the Prime Minister promised they would have?

[The Parliamentary Under-Secretary of State for the Home Department (James Brokenshire)]

We have amended the rights to retention of DNA to ensure that those convicted of offences are properly on the database, which the previous Government failed to do. We have introduced a new process whereby the police will be able to appeal to the commissioner, and they have not sought to address that in respect of historic DNA cases.

[Robert Halfon (Harlow) (Con)]

T5. As the Minister will be aware, Essex unfortunately has one of the highest levels of domestic violence in the country, with nearly 27,000 cases reported to the police in 2011-12. Many more victims are afraid to come forward. What specific training is being given to police officers to spot domestic violence cases, given the vulnerable state victims are in following such abuse?

[Damian Green]

We have taken a number of actions under the ending violence against women and girls action plan, including domestic violence protection orders and the domestic violence disclosure scheme. Her Majesty’s inspectorate of constabulary has conducted a review of all forces and their response to domestic violence to ensure that the good practice available in some force areas is spread as widely as possible—including, I am sure, my hon. Friend’s local force.

[Ann McKechin (Glasgow North) (Lab)]

T4. Will the Home Secretary confirm whether she has held any discussions with her fellow European Union Ministers on developing a common approach to how we will handle the increasing flood of Syrian refugees, particularly so that we can try to avoid disasters such as those we have witnessed in recent days?

[Mrs May]

A number of discussions have been held at EU level in relation to Syrian refugees both at the Justice and Home Affairs Council and at the European Council that took place at the end of last week, on which the Prime Minister will be making a statement after questions have finished. We have been considering, and the UK is supporting, a regional programme close to Syria to enable us to work with those countries that have borne the brunt of accepting refugees from Syria, to ensure that the right and appropriate support is given. The United Kingdom has given more humanitarian aid for Syrian refugees than all the other members of the European Union put together.

[James Morris (Halesowen and Rowley Regis) (Con)]

I recently took part in a knife crime summit in Birmingham following a series of incidents that have taken away more young lives. Does the Minister agree that stop-and-search powers for the police can be an effective way of clamping down on the carrying of knives in certain of our inner-city communities?

[Damian Green]

I absolutely agree that stop-and-search is an extremely important tool in the hands of the police. My hon. Friend will be aware that the consultation is not about reducing police effectiveness in the use of stop-and-search, but increasing it by making it more targeted, so that it is more effective for the police and gives rise to more confidence in communities.

[Heidi Alexander (Lewisham East) (Lab)]

I recently met a young Tamil man who had previously been deported back to Sri Lanka by the Home Secretary. He showed me his torture scars resulting from the Sri Lankan terrorist investigation department having tortured him. Will the Minister give me a categorical assurance that we are no longer returning men to Sri Lanka to be forcibly abused by the Sri Lankan authorities there?

[The Minister for Immigration (Mr Mark Harper)]

The hon. Lady will know that we make decisions on asylum on a case-by-case basis and very carefully. We look at the country information we have and use the best available data. Everyone whom we determine does not have the right to our protection has the opportunity to have their case heard by an independent judge. We only return people to countries where we do not think that they need our protection, and we always keep the situation in the country under close review, working with our international partners.

[Sir Tony Baldry (Banbury) (Con)]

Is there any possible reason for a chief constable or another warranted police officer not to respond to a reasonable request or recommendation from the Independent Police Complaints Commission?

[Damian Green]

Obviously, all chief constables will take full notice of what the IPCC says and will respond to reasonable requests. I think I know the matter to which my hon. Friend refers, and he will have seen that in that case chief constables have responded to what the IPCC recommended.

[Kerry McCarthy (Bristol East) (Lab)]

T9. According to Refuge, three women a week commit suicide because of domestic violence and their abusers usually escape scot-free. Some campaigners are calling for a specific offence of liability for suicide to be introduced. What does the Home Secretary think is the answer?

[Mrs May]

Of course, it is horrific to see the number of women who die at the hands of their abusers or who commit suicide as a result of the abuse they are suffering. This is an issue we have looked at in the past, and for a variety of reasons we decided that we would not go ahead with the proposal the hon. Lady puts forward, but I am happy to look at the issue again.

[Mr Ian Liddell-Grainger (Bridgwater and West Somerset) (Con)]

One of the stubborn points that I hear from my constituents is that although crime is dropping, which is obviously welcome, rural crime is still not coming under control. Will the Minister please take a very close look at the police community support officers? Most of the stolen property turns up in Exeter or Bristol. If we had the resources for PCSOs, we would be able to detail a lot more of the thefts that are going on across places such as Exmoor, get some of the stuff back and deter these criminals if they thought they were going to get caught when they get back with the stuff that they had stolen.

[Damian Green]

I am happy to tell my hon. Friend and the House that in Avon and Somerset crime is down 21% since June 2010. We should pay tribute to the police in Avon and Somerset for doing that. I will look carefully at the recommendations that my hon. Friend makes about rural crime.

[Mr Nigel Dodds (Belfast North) (DUP)]

A moment ago the Home Secretary welcomed the setting up of the National Crime Agency, as do I, but unfortunately, as she will know, in Northern Ireland it has been blocked by two parties. What steps is she taking in conjunction with the Secretary of State for Northern Ireland and the Minister of Justice in Northern Ireland to address this very big failing in relation to tackling crime and criminal gangs in Northern Ireland?

[Mrs May]

The right hon. Gentleman raises an important point. We have had a number of discussions with both my right hon. Friend the Secretary of State for Northern Ireland and the Minister of Justice in Northern Ireland on this matter. The National Crime Agency will be working with the Police Service of Northern Ireland on matters relating to serious and organised crime and all matters under the National Crime Agency’s responsibilities, and we continue to talk both to my right hon. Friend and to the Minister of Justice and look for a further way forward on this issue.

[Julian Smith (Skipton and Ripon) (Con)]

Following the disturbing reports in The Sun this morning about the impact of the Snowden files on our intelligence services, may I urge the Home Secretary to continue to balance national security with press freedom as she deals with this issue?

[Mrs May]

My hon. Friend has raised an important point, which he has rightly raised on a number of occasions in the House. It is important, of course, that we protect press freedom, but we also need to ensure that we are able to protect our national security and that we do not see information being published which could give any succour to those who wish to do us harm through terrorism.

[Mr Speaker]

Extremely briefly now. I call Mr Nick Raynsford.

[Mr Nick Raynsford (Greenwich and Woolwich) (Lab)]

The Minister for Immigration will be well aware that I have had to draw his attention to unreasonably long delays in implementing tribunal decisions which have reversed Home Office refusals in individual cases. When will he put an end to the scandal of people waiting six months or, in some cases, more than a year for legally binding decisions to be implemented by his Department?

[Mr Harper]

The right hon. Gentleman is quite right: he has drawn some of those cases to my attention. Sometimes, when tribunals make rulings that require a change in policy, it is important to get that policy right to make sure that we can implement the tribunals’ decisions in the way they intended. If the right hon. Gentleman has any further cases, which he seemed to have, will he please get in touch with me and I will be happy to take those up for him.

[Several hon. Members]

rose—

[Mr Speaker]

Order. I am sorry to disappoint remaining colleagues, but we must now move on.

EU Council

Monday 28th October 2013 Commons Chamber

15:33

[The Prime Minister (Mr David Cameron)]

In the past 24 hours the country has been hit by one of the worst storms for many years. I know the thoughts of the whole House will be with the families and friends of the four people we know have lost their lives. I am sure the whole House will join me in paying tribute to our emergency services and to all those who have been working to clear up the debris and get our transport system moving again. All the agencies involved are working as fast as possible to get things back to normal.

Let me turn to last week’s European Council. The key subjects under discussion were business regulation, competitiveness and monetary union. We also discussed migration policy following the Lampedusa tragedy and the importance of the EU’s eastern partnership, specifically with respect to Ukraine, so the background to this Council was the state of the European economy. There is no doubt that the outlook is better than it has been, particularly here in Britain, where Friday’s figures showed the fastest growth for three years. My aim at this Council was to do everything possible to enhance the prospects of a sustained and balanced recovery here in the UK. We made good progress in three areas in particular: cutting red tape; promoting trade and the completion of the single market in digital and services; and protecting British interests as the eurozone integrates further. Let me briefly say a word about each.

First, on cutting red tape, Britain’s business taskforce produced an excellent report, which was endorsed by 100 European businesses. I chaired a meeting bringing members of the business taskforce together with President Barroso and the leaders of Germany, Sweden, Italy, Poland, Finland, Estonia and the Netherlands. Those countries, which represent all parts of Europe and all political traditions, agreed on the need to make more progress in cutting regulation and helping businesses across Europe to create jobs. The strong language adopted in the communiqué by all EU member states reflects that ambition. It calls for rapid implementation of REFIT, the Commission’s own bureaucracy-cutting initiative, and a proper scoreboard to measure exactly how much regulation is being cut. Deregulation is now part of the EU agenda in a way that it simply has not been before.

Secondly, on trade, we welcomed the conclusion of the new EU-Canada trade deal, which could be worth £1.3 billion to the British economy, with estimates suggesting that British exports to Canada could go up by as much as a fifth. Last week’s agreement also means that we can now move on to focus on the EU-US talks that we began at the G8 at Lough Erne. There were some attempts to link that potential US trade deal with the concerns about US intelligence, but the Council rejected the idea.

On the digital single market, once again a commitment was made to complete that by 2015, potentially boosting growth by as much as 4% of the EU’s total GDP. As Britain is a world leader in e-commerce, that is very much in our interests. We made good progress at the Council on issues such as portability of data, e-identification, e-invoicing and payment services, and an EU-wide copyright regime for the digital age. But we also agreed not to rush ahead with the data protection directive on an artificial timetable, because the current draft has disproportionate burdens on small business that need to be removed. With regard to the services directive, we also agreed that it was time to look at a new sector-by-sector approach, rather than just trying to remove all the outstanding barriers to free trade in services in one go, a process that has stalled in recent years.

Thirdly, on defending Britain’s interests, as I have argued repeatedly in this House, the European Union is changing and the eurozone needs more integration and co-ordination, but Britain is not in the single currency and is not going to be, so we should not have to take part in those additional pieces of co-ordination, whether they cover economic or social policy. Therefore, while eurozone members agreed to even more intrusive policy co-ordination, including on social policy, I was clear that Britain will not take part. That is reflected in the communiqué, which states that all changes are voluntary for those countries not in the single currency.

On the tragedy at Lampedusa, we agreed the next stages of the work of Frontex, which is responsible for trying to stop people coming into the EU in the first place, but we rejected the idea that there should be additional burden sharing for so-called “front-line states”, not least because the figures show that Britain, France, Germany, Belgium and Sweden received almost 70% of asylum applications recorded in the EU in the last 12 months. What is most important of all is to help stop the problems at their source. The UK will continue to play a leading role in that, for example through support for border security in Libya and the focus of our development assistance on helping countries at risk of instability.

On the eastern partnership, we agreed that countries that look to Europe for support, such as Ukraine, should be free to enter into agreement with us, while of course continuing to insist on proper standards of governance and justice that such a relationship should entail.

Finally, because of the recent controversies there was much discussion of the role of intelligence agencies. We agreed a statement, which we signed as Heads of Government—because there is no EU competence in this area, and nor should there be—saying that European countries and America should have a relationship based on trust and referring to the damage that had been done by recent revelations. The UK has a very strong, long-standing, trust-based relationship with the US, not least as part of the “Five Eyes” partnership, together with Canada, Australia and New Zealand.

With regard to our own intelligence services, it has been a long-standing stance that we do not comment on their activities, but it is worth saying this: we have parliamentary scrutiny of our intelligence agencies through the Intelligence and Security Committee, and we have strengthened that oversight. Our agencies operate under the law and their work is overseen by intelligence commissioners. Of course, as technology develops and the threats we face evolve, we need to ensure that the scrutiny and frameworks in place remain strong and effective, but we have every reason to be proud of our intelligence services and the way they are properly constituted in our country.

Since 2000, we have seen serious attempts at major acts of terrorism in Britain, typically once or even twice a year. Since 9/11—this is a significant figure— 330 people have been convicted in our courts, here in the UK, of terrorism-related offences. This year alone, there were major trials related to plots including plans for a 7/7-style attack with rucksack bombs, two plots to kill soldiers, and a failed attempt to attack an English Defence League march using an array of lethal weapons. There were guilty pleas in each case. Twenty-four terrorists were convicted and sentenced to more than 260 years in jail. I quote these figures just to demonstrate the scale of the ongoing threat that we face in our country. Our intelligence has also allowed us to warn our EU allies about terrorist plots aimed at their people, about cyber attacks on their businesses and infrastructure, and about attempts in their own states to traffic drugs, people, arms and money illegally.

Our intelligence officers serve our country without any public recognition. Some have given their lives in this service, and yet their names are not known and their loved ones must mourn in secret. We owe them, and every intelligence officer in our country, an enormous debt of gratitude. They are silent heroes and heroines keeping our country safe, and they deserve our support. I commend this statement to the House.

15:42

[Edward Miliband (Doncaster North) (Lab)]

I thank the Prime Minister for his statement. May I start by joining him in sending my deepest condolences to the families of the four people who have died during the storm conditions of the last 24 hours? Let me also join him in thanking the emergency services for the work they have done overnight to protect people and the work they are now doing to clear the debris. Will he take this opportunity to update the House on the hundreds of thousands of homes without power in south-west England, East Anglia and the midlands, and on how long it is expected to take for it to be restored?

On the European statement, I join the Prime Minister in his support for the work of our intelligence services. It is vital, it keeps us safe, and, as he said, by its very nature it goes unrecognised. I join him in applauding the men and women who work for our intelligence services. I also support the summit’s statement on this issue. We can all understand the deep concerns that recent reports have caused in some European countries, especially Germany, so as well as providing that support for intelligence services, it is right that every country ensures proper oversight of those activities.

Turning to the formal agenda of the summit, first, on trade, we welcome and support the conclusion of the Canada-EU trade deal and agree with the focus on the US-EU trade agreement. At the start of this year, a timetable for December 2014 was set to complete negotiations. Will the Prime Minister set out any further developments on that challenging timetable and its feasibility? Does he agree that the possibility of this agreement is an important reminder, including perhaps to his Cabinet, that a prosperous future for Britain lies inside, not outside, the European Union?

Secondly, completion of the digital single market could have a significant impact on our prosperity. On numerous occasions, the Prime Minister has come to this House stating his commitment to expand the single market in digital services. What has been achieved at this summit that was not achieved at previous summits? Can he reassure us that the delay to the data protection directive is a delay and not simply a pushing of this into the long grass for it never to be completed?

On regulation, we will look at the proposals of the Prime Minister’s taskforce. We agree with the need to restrain unnecessary regulation and welcome any progress on this, but we do need to distinguish between good and bad regulation. That takes me to a couple of questions about his taskforce’s report. In the light of the horsemeat scandal earlier this year, does it really make sense, as the taskforce seems to be suggesting, to scrap new rules providing transparency about where slaughtered meat has come from? What about rules on agency work? Those rules play an important role in deterring employers from using low-wage migrant labour to undercut local workers, but his taskforce says they should be watered down. What reassurance can he provide that this will not simply mean cuts in wages and conditions, and a race to the bottom?

On broader economic policy, I note that the Prime Minister said at the end of his European summit press conference that his priority was now to

“make sure...it is a recovery for all”.

Does this represent an acknowledgement that despite the welcome news on growth, millions of people still feel worse off because of the cost of living crisis? Talking of that crisis, did he share with other European countries the fact that the UK has the highest inflation in Europe and in the last quarter we saw the lowest wage growth in Britain on record?

The Prime Minister also said after the summit that he wanted to help people “excluded from our economy”. This includes youth unemployment, which is mentioned in the communiqué. [Interruption.] I know that Government Members do not want to hear about youth unemployment, but it is a very important issue. The shameful truth is that nearly one in five unemployed young people in Europe lives in Britain, and the Prime Minister’s youth contract has recently been branded a failure by his own advisers, so what did he say at the summit about the changes needed here in Britain when it comes to youth unemployment?

For people who are struggling with their energy bills and whose wages are falling, and for young people looking for work, is it not the truth that nothing is different after this summit from what it was before? To be fair, in his heart of hearts, I think even the Prime Minister realises that, because he began his press conference after the summit with the stirring words: “Another European Council concluded.” Is not that the best that can be said for this summit?

[The Prime Minister]

I make no apology for coming to this House and repeating the policy prescriptions we need to achieve in Europe. We have a very consistent record of going after completing energy, completing digital and completing services. That is what will make a difference. It is hard work in Europe—it is hard going —but we are making progress.

The Leader of the Opposition asked a number of questions; let me answer all of them. On electricity disconnections, more than 200,000 people are currently disconnected and work is under way to reconnect them. Obviously, circumstances will differ in each case, so it may take longer for some than others.

I very much welcome the fact that there is cross-party agreement on the intelligence services. Over recent years, we have put in place—under Governments of both parties—very good arrangements for governing our intelligence services and we should be proud of the work they do.

On the EU-Canada trade deal, the right hon. Gentleman is right that there is still more to do. I think that the most difficult decisions in principle have been made, particularly on key areas such as beef and dairy, so I do not expect this to take a long time. The pressure is on, because everybody knows that the EU now wants to turn to the bigger deal with America, so the Canada deal needs to be wrapped up.

On digital and the single market, there is quite a lot of detail in paragraphs 5 to 9 of the communiqué about the specific progress on individual items. Whether they are telecoms, data or rules for e-commerce, a huge number of detailed changes have to be made.

I reassure the right hon. Gentleman that we have looked very closely at the data protection directive. The effect of the current draft would be to add more than £300 million to the costs of UK business. It would mean that quite small businesses that do market research, for example, would have to employ one extra person simply to comply with the directive. We need a directive in order to make the digital single market work properly, but the current draft is wrong and we should hold it up so that we get it right.

On deregulation more generally, I hope the right hon. Gentleman will read the report, which is excellent because it comes up with good principles that should be adopted in Europe, such as the one-in, one-out principle that we have adopted in the UK. It also makes 30 recommendations for directives to be scrapped, amended or in some cases completed. It is a good report.

On unemployment, let me answer the right hon. Gentleman specifically. The UK youth unemployment rate is below that of France, Italy and the EU average. It is down over the quarter. The youth claimant count is down 79,000 since the last election. There is much more to do, but the fact is that just this morning we announced 100,000 extra training opportunities for young people and there are record numbers of apprenticeships—they are now running at twice the rate they were under the previous Labour Government.

The right hon. Gentleman made a number of economic predictions that rather reminded me of other predictions he has made over the years. He told us in 2010 that our policies would lead to a loss of 1 million jobs. That was completely wrong: we have added 1.4 million private sector jobs. In 2012 he was still saying, amazingly, that the loss of public sector jobs would not be made up for by the growth of private sector jobs. Again, he was wrong: we got 1 million more people in work.

As late as June this year, the shadow Chancellor, who is not in his place—presumably he is sorting out Labour’s HS2 policy—said that we would choke off growth, and yet the truth is that this year we are forecast to grow more than twice as fast as Germany. Those are the results we are getting both here and in Europe.

[Mr John Redwood (Wokingham) (Con)]

During the summit, did the Prime Minister manage to raise the issue of energy prices? EU regulations mean that we have much dearer energy than America or Asia, and I seem to remember the previous Government willingly signing up to those proposals. They are clearly a competitive impediment to us.

[The Prime Minister]

There was no specific discussion about energy prices, but one of the proposals of the business taskforce report is to ensure that we do not add to the cost of, for instance, shale gas extraction. That was very much welcomed by other member states. We need to consider how regulations add to the costs for energy consumers.

[Mr Jack Straw (Blackburn) (Lab)]

I welcome the Prime Minister’s efforts in respect of deregulation. May I ask him to pay particular attention to the REACH—registration, evaluation, authorisation and restriction of chemicals—regulation? As I have explained to the Secretary of State for Environment, Food and Rural Affairs, that regulation is likely to have a deleterious effect on one company in my constituency, which does not wish to be named for obvious reasons. We all support health and safety measures in respect of chemicals, but will he look at the over-elaborate enforcement of the regulation, which is unnecessary and could do gratuitous damage to companies in this country?

[The Prime Minister]

The right hon. Gentleman makes a good point. That issue is covered in the excellent document by the business taskforce.

May I take this opportunity to say how much the right hon. Gentleman will be missed in Parliament by Members on both sides of the House? I worry that if he retires to his house in my constituency, he might be a rather frequent correspondent when he has so much time on his hands. However, his contributions are always welcome.

[Simon Hughes (Bermondsey and Old Southwark) (LD)]

May I join the Prime Minister in offering my condolences to those who are suffering from bereavements as a result of today’s weather, and my thanks to the emergency services? I also echo his warm words about working with our eastern European neighbours, including Ukraine, at the European Council.

Following last week’s very good economic news for Britain, does the Prime Minister agree that we can best show that the EU provides more jobs and trade in this country not only by making good trade deals, but by developing a digital common market in which Britain can lead, because English is our language, and which can open the telecoms market and end the nonsense of roaming charges, which are onerous and expensive?

[The Prime Minister]

Ending roaming charges would be a good step that would demonstrate that EU directives can sometimes make people’s lives easier, rather than more difficult. The challenge is that, all too often, we find that a directive will add to business costs, rather than reduce them. That is why it is vital to hardwire into the EU’s systems a greater belief in deregulation and cost-cutting.

[Mr Peter Hain (Neath) (Lab)]

If we are giving impetus to association agreements with Ukraine, Moldova and Georgia, where does that leave Turkey? What assessment has the Prime Minister made of the reports that Germany and France may be revising their attitude to Turkish membership of or association with the European Union? Surely Turkey should be a greater priority, given its crucial role as a gateway between Europe and Asia and between the Christian and Muslim worlds.

[The Prime Minister]

We should take the two cases separately. We are in accession negotiations with Turkey and another chapter has just opened in relation to its membership of the EU, which I support. Ukraine and the other Eastern Partnership countries are a different matter. They are obviously under an enormous amount of pressure to join a trade area dominated by Russia. We want to say to those countries that if they want to have a relationship with Europe and to trade with it, they can. This is an opportunity to say to countries such as Ukraine that they must continue to make progress with governance and justice if they want to have that relationship. That is an important part of the EU’s relationship with those eastern countries. I therefore think that the two cases are slightly different.

[Andrea Leadsom (South Northamptonshire) (Con)]

The Prime Minister is determined to achieve proper reform of the EU. Does he agree that it is ridiculous that the EU spends only 2% of its annual budget on trade and more than two thirds of its annual budget on structural funds and agricultural policy? Does he think that that needs to change?

[The Prime Minister]

That does need to change. We made some progress at the recent budget negotiations, because the deal for the seven-year period involves a cut. The EU will, to coin a phrase, have to do more with less. Hopefully it will do less with less—that would be even better. It should focus on things that will improve living standards in European Union countries. Obviously, trade deals are chief among those things.

[Kevin Brennan (Cardiff West) (Lab)]

Did the Prime Minister discuss with Chancellor Merkel the targeting of her phone by the American intelligence services? Will he tell the House whether his phone has been targeted and, if not, why not?

[The Prime Minister]

There was a good moment at the dinner when one EU Prime Minister said how disappointed he was that clearly no one was interested in his conversations. I will not reveal who that was. We do not comment on these issues. The White House has made the situation perfectly clear and I do not need to add to what it has said.

[Mr Speaker]

I call Alistair Burt.

[Hon. Members]

Hear, hear!

[Alistair Burt (North East Bedfordshire) (Con)]

Thank you, Mr Speaker, and I thank colleagues very much.

I welcome what the Prime Minister had to say on migration and avoiding the tragedies in the Mediterranean, but will he reaffirm the long-term nature of support to Arab countries in transition? There is a sense that just two years after the events of 2011, countries should be settling down and sorted out, but the impact on politics, economics and security has been significant. If we are to avoid the tragedy of deaths in the Mediterranean, and greater migration, an assurance from the United Kingdom and the EU that there will be long-term support for transition would be helpful.

[The Prime Minister]

My hon. Friend did a huge amount in the Foreign Office to ensure proper relationships between the EU and those north African countries, and that we put in resources to try to help stabilise them. Clearly there is much more work to be done, and we must keep on with that initiative because the best way to stop those migratory flows is to help heal those countries at source.

[Alison McGovern (Wirral South) (Lab)]

May I push the Prime Minister a little further on that point? He said in his statement that the next stages of work for Frontex were agreed at the Council? Will he say what that amounted to and what part the UK will play, both by itself and as part of necessary EU co-operation? Nobody in this country wants any more of the terrible incidents that we have seen in the Mediterranean.

[The Prime Minister]

As the hon. Lady said, the tragedies that have happened were appalling, and we must therefore improve all the ways we deal with this issue. Frontex is, as its name suggests, absolutely on the front line, and it needs the resources necessary to carry out its work. There will be a bigger and broader debate in the EU about the whole issue of migration, and we should try to avoid the sense that there are somehow front-line states such as Italy or Malta that are under particular pressure. When we look at the figures and see how many asylum seekers per 1,000 people there are coming to Britain or countries such as Hungary, we see that there is a fair burden share. All those issues will be discussed at European Council, probably after the next European elections.

[Mrs Anne Main (St Albans) (Con)]

Were there any discussions at the European Council about the role that the EU might play in the forthcoming election in Bangladesh, in observing and ensuring free and fair elections?

[The Prime Minister]

That issue was not discussed, because we were focused on trade and the single market, and additional issues of migration and the eastern partnership. Observers can play a role, however, and I am sure my friends in the Foreign Office who are sitting next to me will respond to my hon. Friend on how Britain and the EU can help with those elections.

[Mr David Winnick (Walsall North) (Lab)]

Given the orchestrated campaign and witch hunt against The Guardian, is this an appropriate time to congratulate it on publishing details of how the mobile phone of the German Chancellor has been monitored? Does the Prime Minister consider that that sort of information should be in the public domain?

[The Prime Minister]

I certainly would not congratulate The Guardian newspaper, because I can see what has been done. Information has been published about the work of our security and intelligence services that will, quite frankly, make this country less safe. We live in a free country, so newspapers are free to publish what they want. We have not been heavy-handed and come in with injunctions and all the rest, but we appeal to newspapers to use judgment, common sense and responsibility when they make such decisions.

[Mr Bernard Jenkin (Harwich and North Essex) (Con)]

I congratulate my right hon. Friend on his emphasis on deregulation for British business. To get such deregulation, what kind of treaty change does he think we will need in the end?

[The Prime Minister]

We must ensure that the way Europe works is not always by reaching for regulatory changes and costs when it examines a problem. Sometimes that will just be about Europe behaving in a different way—as I hope it will on shale gas, for example—but on other occasions it will require institutional changes, such as the red card system that my right hon. Friend the Foreign Secretary has suggested, or further treaty changes to try to reduce the burden of regulation, or indeed take this country out of areas of regulation. All those things should be on the table.

[Mr Elfyn Llwyd (Dwyfor Meirionnydd) (PC)]

I thank the Prime Minister for an advance copy of the statement. It is unclear whether the UK will be allowed to rejoin some measures following the block opt-out of EU criminal law because, of course, rejoining will be subject to veto by other members. What discussions on that did the Prime Minister have with his counterparts? Would it not be better to address any concerns he has by trying to reform the system rather than by leaving it, as was so clearly said in the recent Cambridge university law faculty paper on the subject?

[The Prime Minister]

I did not have discussions about that at this European Council—it was not on the agenda—but it is absolutely right to exercise the UK opt-out. That means coming out of all the areas and having the opportunity, if we so wish, to negotiate our way back in to those that matter most. That is the right approach. Europe should be focused on prosperity, growth and trade, and not on other issues.

[Dr Julian Lewis (New Forest East) (Con)]

Did the Prime Minister have any conversations with our EU friends about his welcome commitment to an in/out referendum on British membership? Will he make it a condition of any future coalition that any future coalition partner must agree not to stand in the way of such a referendum?

[The Prime Minister]

My hon. Friend is always keen to get such conditions in black and white, but I can satisfy him on this occasion. I have said clearly that I would not be Prime Minister of a Government unless they put in place that EU referendum by the end of 2017. I could not be more clear. I did not have any specific conversations about the referendum pledge. It is well known by EU members. Interestingly, while holding the referendum, Britain is perfectly capable of leading the way and bringing countries together on issues such as deregulation to pressurise the rest of the EU to take up an agenda that would be good for all of us.

[Jeremy Corbyn (Islington North) (Lab)]

Will the Prime Minister tell the House what discussions took place on relations with Iran, on the future of a sanctions policy against Iran and, importantly, on Iran’s participation and that of every other partner in the region in a Geneva II peace process to try to end the ghastly war in Syria?

[The Prime Minister]

There was not a Council-wide discussion, but I took the opportunity to speak with Cathy Ashton, who is doing an excellent job on behalf of this country and the EU. It has rightly taken a tough line in negotiations with Iran, because steps by Iran on the nuclear front need to be seen. On Syria, the first thing that has to happen is that Iran needs to sign up to Geneva I and those principles before being able to move forward to Geneva II.

[Sir Edward Garnier (Harborough) (Con)]

Turning back to the issue of the refugees coming across the Mediterranean and the tragedy at Lampedusa, did the Italian Government or Italian leaders ask my right hon. Friend whether there was any assistance by Royal Navy patrols? On Libyan border security, was my right hon. Friend referring to Libya’s African land border or to the maritime border?

[The Prime Minister]

The Italians have been doing very good work to up their naval patrols in a particular operation to try to assist with the problem. They have not asked us for any assistance, but relations between Britain and Italy are extremely good. On Libya, Britain’s focus is more on helping on the land borders that have been particularly porous and dangerous in recent years. Obviously, we are also working with Libya to try to increase its level of domestic security, because one key to preventing such migratory flows is ensuring that countries have Governments who work.

[Keith Vaz (Leicester East) (Lab)]

Further to the question from the hon. and learned Member for Harborough (Sir Edward Garnier), the Italians have been doing a good job but, even last weekend, 800 migrants were prevented from going to Lampedusa by the Italian authorities. Although support for Frontex and agreements on an EU basis with origin countries are useful, it might be necessary for Britain to have bilateral arrangements with some origin countries. Does the Prime Minister support that?

[The Prime Minister]

I always listen carefully to the right hon. Gentleman on such issues—his Home Affairs Committee does such good work on them. My point is that Britain already does over and above our share of taking people who are fleeing torture and persecution, or people who are fleeing for a better life but who claim asylum. We share a very big part of the burden and I do not want to do things that add to it.

[Julian Smith (Skipton and Ripon) (Con)]

I welcome the Prime Minister’s robust defence of our security services. Following this morning’s revelations in The Sun on the impact of the Snowden leaks, is it not time for any newspaper that may have crossed the line on national security to come forward and voluntarily work with the Government to mitigate further risks to our citizens?

[The Prime Minister]

I thank my hon. Friend for his consistent championing of the intelligence services, who do such important work to keep our country safe. As I said, we have a free press and it is very important that the press feels it is not pre-censored in what it writes. The approach we have taken is to try to talk to the press and explain how damaging some of these things can be. That is why The Guardian destroyed some of the information on disks it had, although it has now printed further damaging material. I do not want to have to use injunctions, D notices or other, tougher measures; it is much better to appeal to newspapers’ sense of social responsibility. However, if they do not demonstrate some social responsibility, it will be very difficult for the Government to stand back and not to act.

[Jenny Chapman (Darlington) (Lab)]

What is the Prime Minister going to do about the fact that even people with as many as three jobs are unable to make ends meet? Prices in the UK are rising faster than anywhere else in the EU.

[The Prime Minister]

The first thing to do is to keep inflation down. The Bank of England has that responsibility and we have seen better figures in recent weeks. Even more important is to help people with their living standards by making sure that we continue to grow the number of people in work—up by 1 million since the election—and, crucially, that we cut taxes. We are now seeing people earn £10,000 before they pay any income tax. That means someone on a minimum wage working a full-time week is seeing their tax bill cut by two thirds —that is good news for them.

[Christopher Pincher (Tamworth) (Con)]

Will my right hon. Friend say whether at the EU Council there was any attempt by our EU partners to raid our rebate further? They were quite successful at it when the Labour party was in power. What would his response be to such a raid?

[The Prime Minister]

It was one of the few EU Councils that I have been to where there was not a specific attempt to raid our rebate. However, because the corset, as it were, that we put around the EU budget between 2014 and 2020—the seven-year deal—is so tight, the European Parliament is trying to spend as much money as possible before 2014. I think that what we will see, depressingly, is amending budgets to the 2013 budget, on which, of course, we can be outvoted, but from 2014 onwards we are going to see the EU budget cut. That is good news, because it means less contribution from us, and our rebate is safe.

[Chris Bryant (Rhondda) (Lab)]

Talking of the Prime Minister’s constituents, Mr Phil Ball is one of the Greenpeace activists in prison in Murmansk, along with five other Britons, including Kieran Bryan, who is a journalist. There are no German nationals in Murmansk, but Angela Merkel rang President Putin to say that this is a sledgehammer to crack a nut. Has the Prime Minister already rang President Putin? If not, will he do so as a matter of urgency?

[The Prime Minister]

This is a serious issue, which I have spoken about in the House previously, not least because one of my constituents is involved. The Minister for Europe has been on this case day after day. I will look at every single intervention I could possibly make to help. If contact directly with President Putin would be helpful, I am certainly prepared to consider it.

[Harriett Baldwin (West Worcestershire) (Con)]

I note that the EU Council agenda now includes the social dimensions of economic and monetary union. Will the Prime Minister confirm that welfare systems continue to be a national competence and that he will fight any attempt by the Commission to interfere with the UK’s important welfare reforms?

[The Prime Minister]

I thank my hon. Friend for her question. There are two points here. What the eurozone countries want is a sort of social score card to go with deeper integration. I said that we did not want to be involved in that and insisted on a voluntary system. We not only need to see that welfare issues remain for national Governments; we need to look at the habitual residence test and some of the problems with the welfare system. This is not now a uniquely British complaint about European systems. We hear it from German and Dutch Ministers and others, so we need to build an alliance to try to ensure that we have a better system in Europe.

[Mr Pat McFadden (Wolverhampton South East) (Lab)]

What progress—or lack of it—was made on banking union and did the Prime Minister find any support among fellow EU leaders for the idea that it would benefit Britain’s very important financial services industries to pull out of the EU and erect barriers between us and our most important market?

[The Prime Minister]

There was some progress on banking union, but this is an issue predominantly for members of the eurozone. A single currency necessitates some form of single bank regulation and resolution system, and that is what its members are putting in place. They are doing so quite tentatively, however, because they are beginning to realise what an enormous transfer of sovereignty it could amount to—theoretically, of course, it would see German citizens standing behind Greek banks and vice versa. Some progress was made. Britain is not taking part in this banking union, of course, but we have achieved some excellent safeguards to ensure that we have a real say over those parts of financial services regulation to which we are still subject. I suspect that progress towards full banking union will be fairly slow, but in any case Britain will not be involved.

[Mr Ben Wallace (Wyre and Preston North) (Con)]

I join my right hon. Friend in paying tribute to our security services, whose members not only risk their lives to keep us safe, but have to sit in silence while ludicrous conspiracy theories are often thrown at them. If the first rule of intelligence is the “need to know” principle, the second is do not throw stones in glass houses. At the European Council, did he have a chance to speak to his French counterpart, the French President, about his intelligence services’ record on industrial espionage, and will he seek assurances that the French will not use the Snowden affair as a political football for another agenda and therefore undermine the EU’s and Britain’s intelligence capabilities?

[The Prime Minister]

First, I insisted that we were clear that intelligence services were a national competence, not an EU competence, which was why the statement, of which my hon. Friend can see a copy, was issued by EU Heads of State and Governments, not the European Council or the European Commission. That is very important. Certainly, there was a lot of discussion at the dinner of the point my hon. Friend raises. Different Prime Ministers and Presidents made different points and I listened carefully to their contributions.

[Mr Nigel Dodds (Belfast North) (DUP)]

The Prime Minister has rightly paid tribute to the work of the intelligence services, and I am sure he will agree that hundreds of lives have been saved in Northern Ireland over many decades as a result of the excellent work of many intelligence officers. Does he agree that it is important to put on the record the excellent life-saving work of people in the security forces and intelligence services, at a time when it has become ever so fashionable to degrade and denigrate that work and to revise the roles of various groups during the troubles in Northern Ireland?

[The Prime Minister]

The right hon. Gentleman makes an important point. It is not always possible—in fact, it is hardly ever possible—to identify even the specific pieces of work done by the security services in foiling various crimes or bomb plots, but the fact is that they have done extremely good work on that basis. That is why I quoted the figure of 330 people going through our courts and being convicted since 2001. If we asked people what number they would expect that to be, I think they would come up with something much, much lower. The figure points to the scale of the threat and therefore to the need to maintain a very strong security presence.

[Philip Davies (Shipley) (Con)]

Further to the question from my right hon. Friend the Member for Wokingham (Mr Redwood), will the Prime Minister tell us how much the EU’s renewable energy target has added to UK consumers’ energy bills already and how much it is likely to continue to add in the future? Will the EU get rid of this ridiculous target and does my right hon. Friend agree that the Energy Secretary who signed up to that directive, the current Leader of the Opposition, has a brass neck to claim to be the champion of low energy prices?

[The Prime Minister]

I will not be able entirely to satisfy my hon. Friend, which is always a difficult job. There is no doubt that green levies and charges add to consumer bills—the figure is over £100 and rising. I would argue that it is necessary to help some renewable technologies to get going, but the moment we can remove those levies is the moment that we should remove them. One of this Government’s first acts was to remove the £179 levy placed on every single bill by the renewable heat initiative, which was put in place by none other than the Leader of the Opposition.

[Pete Wishart (Perth and North Perthshire) (SNP)]

The Scottish people are of course pleased and delighted that the Prime Minister has found time to engage in debate with European leaders, but we are still wondering why he has been such a big fearty in refusing to debate with Alex Salmond, the First Minister of Scotland.

[The Prime Minister]

This is such an old chestnut that I could almost put the answer to music. The fact is that the debate about Scotland’s future in the United Kingdom is not a debate between the leader of the Scottish National party and the leader of the Conservative party. It is not even a debate between the Scottish First Minister and the British Prime Minister. It is a debate between two groups of people in Scotland: people such as the hon. Gentleman, who want to break up the successful partnership of the United Kingdom and put all that at risk, and people in Scotland who very sensibly want to stay part of the United Kingdom. Because the SNP is not winning the argument, it is looking for some distraction therapy; well, I am not going to fall for it.

[Sarah Newton (Truro and Falmouth) (Con)]

We are a nation of garden-loving, nature-loving people. Will my right hon. Friend consider carefully the real concerns expressed by the Royal Horticultural Society about the unnecessary and costly proposed EU regulations on seeds and plants that would do so much harm to businesses and gardeners the length and breadth of our country?

[The Prime Minister]

I try to keep up with all EU legislation, but I am afraid that that one has passed me by, which I am particularly sad about because I am very proud of my vegetable patch and of the investment that I make in seeds every year, even though it does not always pay off in the form of good results. I will look carefully at the issue that my hon. Friend has raised.

[Diana Johnson (Kingston upon Hull North) (Lab)]

Having gone some way towards reforming parliamentary scrutiny of the intelligence services through the Intelligence and Security Committee, does the Prime Minister think that it is now time for some parliamentary scrutiny of the intelligence commissioners?

[The Prime Minister]

We have just done a major piece of work to see how best we can strengthen the ISC, and put those proposals in front of the House. I think we should let those settle down before we consider other changes.

[David Rutley (Macclesfield) (Con)]

I welcome the Prime Minister’s statement and, particularly, the recommendations of his business taskforce. It is good to hear that those recommendations were endorsed by more than 100 businesses in the EU. Will he tell the House what further steps will be taken to engage yet more businesses across the EU to ensure that we make even faster progress on this vital agenda?

[The Prime Minister]

My hon. Friend raises an important point. There is a good dialogue in this country between business and the Government on the cost of regulation and the things that need to change. I am not sure that that debate takes place in the other European countries, so I have asked the authors of the excellent report—who include a number of very senior business leaders in Britain—and Ministers to do a tour of European capitals to try to get European business leaders and European alternatives to the CBI together and to encourage them to lobby their Governments, so that we can really get the issues of deregulation and cost reduction hard-wired throughout the European system.

[Mr William Bain (Glasgow North East) (Lab)]

Does the Prime Minister agree with the assessment that a successful transatlantic trade and investment partnership would increase our exports to the United States by as much as three fifths, and be worth as much as £10 billion a year to our economy? Does he also acknowledge that the only way to achieve those benefits is to make the case for being part of the European Union, instead of appeasing those who want us out of it?

[The Prime Minister]

I agree with the hon. Gentleman in that I think an EU-US trade deal can add to the economies of the EU and the US. Britain is particularly well placed to benefit because these complex trade deals now help quite a lot with trade in services, where we have real expertise and a real comparative advantage. I do not agree with him, however, in that I do not think that we will secure Britain’s place in a reformed European Union if we just stick our head in the sand and pretend that there is not a real question mark hanging over our membership. The fact is that consent for our membership is wafer thin, and we need to change Europe and then have a referendum so that we can rebuild it.

[Mr Peter Bone (Wellingborough) (Con)]

The Prime Minister is leading Europe in the efforts to end modern-day slavery. However, there are two countries in Europe that are in denial that it even exists. Did he have a chance to talk to the German Chancellor and the French President about this? If not, could he call them on their mobile phones, so that the Americans can find out about it too?

[The Prime Minister]

As I mentioned in the statement, the issues of trafficking and slavery were mentioned briefly at the Council. Britain is doing a good job in leading the way not only in applying the relevant European rules but in going above and beyond them to wipe out modern-day slavery here in the UK. That will put us in a stronger position to be able to turn round to other countries and say, “Look, this can be done in a way that does not add massively to costs but that is absolutely right for our countries.” I am very happy to have those conversations.

[Nia Griffith (Llanelli) (Lab)]

US protectionism has long been detrimental to some poorer countries that are trying to sell certain products. What pressure can the Prime Minister bring to bear on the US-EU trade treaty negotiations to ensure a better deal for some of the poorest countries in the world?

[The Prime Minister]

The hon. Lady raises an important point. As part of these negotiations, we should push for what we have here in the EU—basically, duty-free and quota-free access for the poorest countries in the world. That has worked well, has not cost European jobs, and has created wealth in other parts of the world. We should encourage other countries to do the same thing.

[Margot James (Stourbridge) (Con)]

Between the end of 2011 and the middle of 2013, exports from the west midlands grew by 30%—almost twice the rate of the next strongest regional performer. Does my right hon. Friend agree that the EU-Canada trade deal and the progress he has made in cutting EU red tape from the digital economy will provide a further boost to exporters in the west midlands and across the entire country?

[The Prime Minister]

I would certainly commend exporters in the west midlands. This morning, I met apprentices from across the country, and a number of them were from Jaguar Land Rover, which has seen staggering growth in its business. We need that to happen across the board—not just in manufacturing, but in the digital economy. That is what these changes are all about.

[Mr Andrew Love (Edmonton) (Lab/Co-op)]

I refer to the answer given to my right hon. Friend the Member for Wolverhampton South East (Mr McFadden) on banking union. The Prime Minister said in his statement that he would be defending Britain’s interests if he ensured greater integration and co-ordination in the eurozone. The stability of the eurozone is in our interest, but is he not worried by the lack of progress and about the signals coming out of the eurozone that progress will be much more difficult and much slower. Is it not in our interests to be concerned about that and to do whatever we can to ensure that it is carried through at the earliest opportunity?

[The Prime Minister]

The hon. Gentleman is absolutely right: it is in our interest to have a working and stable single currency on our doorstep, and that will require a banking union, just as we effectively have a banking union and single currency in the United Kingdom. Some progress has been made. In terms of our efforts, the most important thing for us is to make sure that, as that goes ahead in the eurozone, we are not left out in respect of the regulations that affect the single market. Financial services is, of course, a vital business not just for the City of London, but for the cities of Belfast, Glasgow, Birmingham and the like. It is there that we should focus our negotiating effort to make sure that we have real safeguards in how those regulations are written.

[Guy Opperman (Hexham) (Con)]

The north-east of England has a positive balance of payments. Did the Prime Minister have the chance to point out in respect of trade and employment that general unemployment in the north-east has fallen by 18% and youth unemployment by 24% over the last 18 months—due, I suggest, to the policies of this Government?

[The Prime Minister]

I thank my hon. Friend for standing up for the north-east. I had a good meeting in Brussels with Martin Callanan, the leader of Britain’s MEPs, who strongly represents the north-east in the European Parliament. We are seeing better employment figures and falls in unemployment in parts of the country, but we have more work to do to make sure that the recovery is spread right around the country.

[Stephen Metcalfe (South Basildon and East Thurrock) (Con)]

Which approach to EU relations does my right hon. Friend think will deliver the best outcome for Britain —more regulations, surrendering our rebate, increasing the EU Budget and signing up to the EU bail-out mechanism, or reducing regulation, defending our rebate, cutting regulation and getting out of the bail-out?

[The Prime Minister]

I absolutely agree with my hon. Friend. Taking a tough approach on issues such as deregulation, the bail-out and the EU budget can be done at the same time as winning friends and allies in these important negotiations. What was interesting about this European Council was that, on the traditionally British issue of deregulation, we had the support of the French, the Finns, the Swedes and the Italians. We thus had people on the centre, the centre-right and—in the case of the Italian Prime Minister—the centre-left of politics, agreeing with us.

[Chris Heaton-Harris (Daventry) (Con)]

I welcome the statement, and, indeed, a report on cutting red tape published by the business taskforce, which estimated that if we opened EU markets in the digital economy alone, we could add 4% to Europe’s GDP. Did the other European leaders around the Council table agree with the Prime Minister about the level of excess regulation, are the effects of such regulation being felt throughout Europe, and does the Prime Minister agree that the Commission should spend less time consolidating EU legislation and more time repealing it?

[The Prime Minister]

I do agree with my hon. Friend about that. However, to be fair to the Commission, I must tell the House that it has changed its stance in recent years, and is leading some of the efforts to cut the number and costs of regulations in Europe. That is extremely important, but we need to keep up the pressure at national level as well.

[Geoffrey Clifton-Brown (The Cotswolds) (Con)]

Did my right hon. Friend have a chance to discuss Europe’s competitiveness vis-à-vis the rest of the world, particularly in view of the sensible measures taken by the Irish Republic to ensure that it will be out of the bail-out mechanisms in December?

[The Prime Minister]

One of the reasons for pushing the deregulation agenda is the need to keep pointing out that Europe will be in danger if we go on adding to our regulatory costs while other parts of the world are becoming more competitive. This is not, as the Leader of the Opposition says, a race to the bottom. It is a recognition that we want highly skilled, high-end, high-network jobs to enable us to compete with the Chinese, the Indians and the Malaysians. We in Europe must play to our strengths in areas such as the digital single market. We have a market of 400 million people, but unless that market works properly, we shall not benefit.

[Mr Robin Walker (Worcester) (Con)]

As a key trading partner and long-standing ally of our Commonwealth partners in Canada, the United Kingdom is particularly well placed to benefit from the £1.3 billion free trade agreement. May I urge the Prime Minister not just to press on with the broader transatlantic free trade agreement, but to ensure that other Commonwealth countries appear high on the list of the EU’s free-trade partners?

[The Prime Minister]

I can certainly give that assurance. We have pushed for all the EU free trade agreements that have taken place in recent years, such as the agreements with Singapore and Korea, but I think that we have many more opportunities to move further and faster. We must recognise that we are operating in a competitive world. As the New Zealand Prime Minister said to me recently, there is only a certain amount of capacity in that Government to do free trade deals. We must ensure that what we are offering is attractive.

[Michael Ellis (Northampton North) (Con)]

I congratulate my right hon. Friend on the excellent work that he is doing in cutting red tape. It is clear from what has been said by businesses in my constituency that they were inundated with, and stifled by, more EU regulations and red tape under the past Government than they had ever been before. Does my right hon. Friend agree that not only is the Labour party responsible for more red tape than ever before, but it clearly loves red tape more than it loves the red flag?

[The Prime Minister]

I do not think that enough attention was paid to the problems of regulation and red tape, but I think that proper attention is being paid to them now. We are showing that it is possible to win allies in Europe, including the European Commission, and to ensure that red tape is cut.

[George Freeman (Mid Norfolk) (Con)]

I strongly welcome the Prime Minister’s leadership in regard to the small business deregulation and the business taskforce, and particularly welcome the delaying of the badly drafted EU data protection directive relating to e-commerce. The UK is plainly leading the way in the use of data transparency to drive the empowerment of citizens, taxpayers and consumers, and the creation of new markets. May I encourage my right hon. Friend to continue his strong resistance to the EU’s attempts to do for our data pioneers what it would have done for our currency?

[The Prime Minister]

My hon. Friend has made a good point. A single e-commerce market requires proper rules on data protection, but if those rules are much more onerous than what we have today, they will add to costs, destroy jobs and send those jobs elsewhere. That is why, although we are the biggest enthusiasts for the completion of the digital single market, we must get the directive right rather than just signing it through, as the Labour party would have done, without caring about the consequences.

[Nadhim Zahawi (Stratford-on-Avon) (Con)]

We have 4.9 million small and medium-sized businesses in our country. The number has risen by 400,000 since 2010. Did the Prime Minister have a chance to talk about those businesses and the regulatory burden that has been imposed on them?

[The Prime Minister]

My hon. Friend has made an important point. Given that 400,000 net new small businesses have been created since the Government came to power, we should be trying—at both European and UK level—to exclude micro-businesses altogether from some of these classes of regulation.

[Nick de Bois (Enfield North) (Con)]

Businesses throughout the country will welcome the Prime Minister’s drive to cut barriers to growth. Does he agree that one simple and effective way of doing just that would be to change the current public procurement thresholds in the EU, thus releasing more opportunities? Did he discuss such action, and will he continue to press for it?

[The Prime Minister]

We did not discuss public procurement on this occasion but it is worth looking at. One of the things that the Government are looking at domestically is whether we can get rid of a lot of these pre-qualification questionnaires to make it far easier for businesses to compete for Government contracts.

[Neil Carmichael (Stroud) (Con)]

I welcome the Prime Minister’s emphasis on deregulation and trade, but does he agree that more competition, more connectivity and more investment in technology, such as one can find in my constituency, would exert downward pressure on energy prices, not the state intervention proposed by the Opposition?

[The Prime Minister]

There is no doubt that a more competitive energy market both in the UK and in the EU would put downward pressure on prices. It is the same in every industry. If one sees a tendency towards monopolies and oligopolies, one tends to see higher prices, less competition and less choice for consumers. That is why we see eight new companies coming into the energy market. Is it not good that the Leader of the Opposition has followed my advice and switched to one of the small upstart businesses for his energy supply? The only problem he has is that the new business that is accepting his custom does not support his policy and thinks that it will be a disaster.

[Alun Cairns (Vale of Glamorgan) (Con)]

The reformed UK Trade & Investment is making a significant difference in helping British businesses to export at record levels, contributing to last week’s excellent growth figures. Does the Prime Minister agree that UKTI can now focus on a major new opportunity following the EU-Canada agreement?

[The Prime Minister]

My hon. Friend is right. UKTI now has more areas to look at around the world. It has excellent leadership from Stephen Green, the Trade Minister whom we hired from HSBC, and I am pleased that Ian Livingston, who until recently ran BT, will bring even more impetus to the vital work that UKTI and our trade bodies do around the world.

[Mr Julian Brazier (Canterbury) (Con)]

I welcome my right hon. Friend’s strong defence of our intelligence services. Does he agree that it is a great shame that the very modest measure that we enacted last year to protect them from wholly spurious civil actions did not receive full bi-partisan support?

[The Prime Minister]

My hon. Friend makes an important point. As I said, I think that we scrutinise our intelligence services in the correct way in this House. I am always happy to look at other suggestions but I do not at the moment think that there is anything else we need to do.

[Mr Philip Hollobone (Kettering) (Con)]

Did my right hon. Friend have the chance to ask the Prime Ministers of Romania and Bulgaria for their estimates of how many of their citizens are likely to head our way from 1 January? Given that the level of youth unemployment in this country remains stubbornly high, despite the tremendous progress in the economy, even at this late hour, will the Prime Minister consider enacting the emergency provisions buried deep in EU treaties to prevent the end of transitional controls on Romania and Bulgaria, which will send a firm signal to our EU partners that we are serious about renegotiation?

[The Prime Minister]

We have kept the transitional arrangements for as long as we possibly can. I do not believe that there are powers in the EU arrangements to extend them any further. As I said to 600 apprentices I spoke with this morning, the key to the issue is that, as well as having tough controls on immigration from outside the EU, we need to improve our education system so that young British people are capable of doing the jobs that our economy is clearly creating, and reform our welfare system so that it is not an option to live on benefits when one can work. Education and welfare are two things that can make the biggest difference to immigration and controls on immigration, which I know that everyone on this side of the House wants to see.

[Mr Marcus Jones (Nuneaton) (Con)]

On Friday, I met a number of small business people from across the west midlands. What message of support and reassurance can my right hon. Friend give those people in relation to regulation and red tape, following his excellent contribution to the EU summit?

[The Prime Minister]

First, I thank my hon. Friend’s constituents for the work that they do. Running a small business means taking a huge amount of risk and working extremely hard. They are the wealth creators of this country. They are likely to be the ones who create the most jobs in this country. Our job is to try to work out how we can make it easier for them to operate, to hire people and to grow. That is the challenge for the Government and it is one that we take on with relish.

Point of Order

Monday 28th October 2013 Commons Chamber

16:34

[Mr Peter Bone (Wellingborough) (Con)]

On a point of order, Mr Speaker. Is there anything you can do to increase attendance on the Opposition Benches when the Prime Minister has the courtesy to come to this House and make an important statement? At the end of it just five Labour Back Benchers were present, and the last 20 minutes were taken by Tory Members. What does that say to the public?

[Mr Speaker]

As the hon. Gentleman knows, I am not responsible for attendance or the factors that contribute to it. The hon. Gentleman’s inquiry was, I suspect—I say this non-pejoratively—a largely rhetorical inquiry, but he has satisfied his taste buds on the matter and his sentiments are on the record.

Local Audit and Accountability Bill [Lords]

Monday 28th October 2013 Commons Chamber

[Relevant documents: The First Report from the Communities and Local Government Committee, Session 2010-12, Proposed Code of Recommended Practice on Local Authority Publicity, HC 666, The Fourth Report from the Communities and Local Government Committee, Session 2010-12, Audit and inspection of local authorities, HC 763, and The First Report from the Draft Local Audit Bill ad hoc Committee, Session 2012-13, Draft Local Audit Bill: Pre-legislative Scrutiny, HC 696.]

Second Reading.

16:34

[The Secretary of State for Communities and Local Government (Mr Eric Pickles)]

I beg to move, That the Bill be now read a Second time.

This Bill is a natural progression of the coalition Government’s programme for reform. It decentralises power away from quangos to local people, it saves taxpayers money by cutting waste and red tape, and it replaces top-down inspection with local accountability and transparency.

The Bill will do three things. First, it will abolish the residual Audit Commission. We have already abolished its interfering and ineffective inspection regimes, such as comprehensive area assessment. We have successfully outsourced its local audit contracts, building on the fact that a lot was already outsourced. This Bill provides for the primary legislation to finish the job. There is an obvious question to ask at the outset: if companies and charities can choose their own auditors, why should councils be any different?

The Audit Commission was born of good intentions, but in a different age. Local government has changed since the 1980s, in part due to the reforming legislation of that decade which helped stamp out corruption and jobs for the boys, but by the end of the century the Audit Commission was no longer the protector of the public purse under the new regime. It had become a top-down regulator of local government, micro-managing local services and imposing excessive and questionable red tape.

The Audit Commission was a creature of the centralised state, more interested in the views of “central Government stakeholders”—to use a dreadful phrase—than of local taxpayers. For example, it failed to act on the real problems of dysfunctional administration in Doncaster. It praised Corby council for its financial controls, missing wholly the Corby cube scandal. It was caught up in the Icelandic banking collapse, and then tried to shift the blame on to councils, while it had itself badly invested £10 million in Iceland. Meanwhile, councils, like my own in Brentwood, were marked down for having weekly rubbish collections because Millbank-based inspectors did not like them.

Research before the general election suggested that local government inspection and performance regimes added up to 40% to core council expenditure. Even the Department for Communities and Local Government’s own documents admitted that the performance management regime was “unbalanced”, with 80% focused on meeting top-down requirements.

Meanwhile, the Audit Commission itself wasted taxpayers’ money with a culture of excess. The Audit Commission hired lobbyists to stop the abolition of comprehensive area assessment, and indeed, to

“combat the activities of Eric Pickles.”

I have no idea how that ended. It splurged on corporate credit cards, including £770 for a lavish meal in an oyster bar for its board members to discuss better “corporate governance”. The commission subsequently lost the bill for its own dinner. It spent £53,000 on designer chairs for meeting rooms in 2010, with some costing as much as £900. The Audit Commission spent, in its latter time, far too much time sitting comfortably.

We have already shut down most of the Audit Commission. This Bill will close it down for good and introduce a new, localised audit regime, with estimates suggesting it could save £1.2 billion over the next 10 years —with councils saving the most. Local bodies will appoint their own auditors from an open and competitive market, with thousands more contracts up for grabs. There will be a significant opportunities for small firms to bid and expand their businesses. Local bodies will be able to choose their own auditors, join forces to appoint auditors together or establish a body to appoint auditors on their behalf. The key principle is that they can choose auditors in a way that best suits their needs.

[Mr John Redwood (Wokingham) (Con)]

Does the Secretary of State agree that what we want is an audit system that does not equate amounts of money with outcomes without proper testing of that? We seem to have an audit system that says, “This council spends twice as much as that council, so it must be twice as good.” We want to know what we get for the extra money.

[Mr Pickles]

My right hon. Friend makes a reasonable point. The audit regime is just part of the process of transparency; the publication of amounts above £500 and the right to be able to see what the council is doing increase the opportunity for the taxpayer, the voter and the local press to investigate.

[Robert Neill (Bromley and Chislehurst) (Con)]

I entirely agree with my right hon. Friend’s observation about the great opportunities we are giving to the council tax payer. Does he also agree that the perverse consequence of the previous system was that council policies were often skewed towards obtaining the result required to get approval by the Audit Commission, rather than towards the priorities that the council tax payers would have wished for?

[Mr Pickles]

My hon. Friend makes a reasonable point. There was a box-ticking culture, and local authorities were often spending an enormous amount of time on increasing their scoring as opposed to delivering decent services for local people.

Protection remains in place for whistleblowers and to prevent Enron-style conflicts of interest. We need to remember that the Westminster homes scandal was uncovered not by the Audit Commission, but by an outsourced auditor from Touche Ross. There is no reason why private sector auditors cannot be independent and fiercely robust. Reserve intervention powers will remain to tackle systemic failures such as those at Doncaster, working with the local government sector, but they are the exception that proves the rule. There will be a continuing role for both Members of Parliament and Ministers to use their public voice to challenge local government when bad decisions are made—that is called democracy.

The second provision in this Bill will protect the local press from unfair local competition. Where local newspapers thrive, local democracy thrives. Local newspapers not only inform residents of what is going on, but play a vital role in exposing local waste, mistakes and corruption, and, thus, in holding councils to account. When councils put out their own glossy free sheets to compete with local newspapers, local democracy is the loser. Tackling that abuse was a key pledge in not just the coalition agreement, but the general election manifestos of both parties.

In 2011, Parliament previously strengthened the local government publicity code, but a small number of councils have intentionally ignored it, with Tower Hamlets being a case in point. Ofcom has found it guilty of breaching broadcast rules for political advertising, but no power exists to tackle its political propaganda sheet, and local auditors have recently refused to intervene. Such actions are not just a misuse of public funds; they are, ultimately, harmful to local democracy and the independence of the free press. They are also further evidence of a worrying pattern of divisive community politics and mismanagement of council staff and resources by the mayoral administration. So provisions in the Bill will ensure that we will act when Parliament is ignored. Yes, this is central intervention, but it is being done to protect the free press and deal with the serious abuse of power. Even in a localist system, there is a role for central Government to set an ethical framework and maintain checks and balances on local government to prevent corruption. Without such backstops, there would be a siren voice for a return to top-down inspections or to set up a quango such as the Audit Commission.

The third and final provision in the Bill will close a legal loophole and ensure that all councils’ bills will be set so that they are fully accountable to local taxpayers. Some unelected bodies are setting a levy on council tax bills with little or no accountability for local voters—from waste disposal authorities and integrated transport authorities to crematorium boards. We will ensure that the direct democracy provisions in the Localism Act 2011 allow council tax referendums to apply also to that quango state.

The Bill has already been scrutinised in the Lords, where the Government listened to a range of views and made a number of minor amendments. Subject to the will of the House, we intend to make the Bill even stronger. We will modernise the archaic rules on parish polls, for example by allowing longer voting hours and postal votes. Perhaps our most significant proposal is to give people the right to film, blog or tweet at council meetings. Some councils would prefer meetings to be held behind closed doors, but the public has the right to see decisions being taken and how the money is spent.

A private Member’s Bill promoted by Mrs Thatcher introduced the right to attend council meetings back in 1960, and that in turn built on a law introduced by the Liberal Government of 1908, so this is truly a coalition of minds. It is right that we should now bring her legacy up to date for the digital age. We have previously amended secondary legislation to open up councils’ executive meetings and have encouraged councils to open up their full council and committees. Many have refused, however, citing health and safety, data protection or just standing orders. Tower Hamlets said that such a change would lead to “reputational damage”. Well, yes, it probably will when people see what is going on in their council chambers. There have even been cases of the police being called to threaten bloggers with arrest. We will therefore make the necessary changes to primary legislation to allow full councils and committees to be open as well.

Our argument is that the coalition Government are scrapping the top-down red tape of Whitehall inspection and micro-management. That will save taxpayers’ money and help to devolve power, but it must go hand in hand with local transparency and accountability. We must ensure an independent free press and scrutinise and challenge bad decisions by councils. Individual taxpayers and the new wave of citizen journalists must be let in to conduct their own scrutiny. We are localising audit and scrapping protection, while ensuring that there is protection against the bad old days of municipal corruption. In short, the Bill will deliver greater openness, stronger local democracy, accountability and significant savings for the taxpayer. I commend it to the House.

16:48

[Hilary Benn (Leeds Central) (Lab)]

The Bill might appear to some to be rather dry—[Hon. Members: “No!”] I am relieved to hear that.

As the Secretary of State has said, the Bill principally concerns how we ensure the probity, economy, efficiency and effectiveness of the spending of billions of pounds of public money. As we have heard, it might be said that the Bill, introduced by one of the late Baroness Thatcher’s great supporters, seeks both to extend, through greater transparency in council meetings—the subject of her private Member’s Bill, as the Secretary of State has reminded us—and to overturn, through the abolition of the Audit Commission, part of her political legacy. The Audit Commission was of course set up by the noble Lord Heseltine. As he explained in his autobiography—it is important to remember this:

“I thought it wrong in principle, as the 1976 Layfield Report had said, that councils should be able to appoint their own auditors. Awkward auditors do not get reappointed.”

That was his judgment.

Lord Heseltine’s creation did have achievements to its credit, although we did not hear them from the Secretary of State. It contributed to savings in local government and it developed value-for-money comparisons. I think I am right in saying that it was the Audit Commission that appointed John Magill under section 13 of the Local Government Finance Act 1982 to investigate Shirley Porter and the homes for votes scandal in Westminster.

[Mr Redwood]

On the point about the value-for-money component of the audit, I and a friend of mine, John Hatch, wrote that idea up and persuaded Conservative Ministers to introduce it. It did not come from the Audit Commission.

[Hilary Benn]

I shall come to the need to maintain a value-for-money focus in the work of the successor bodies for precisely the reasons that the noble Lord Heseltine set out, but I accept that the Audit Commission had its critics and in some respects it lost its way. The Opposition accept that there is no going back on its abolition—rather suddenly announced, to the surprise of many, by the Secretary of State in August 2010. Clearly, it is personal.

The fact that it has taken three years for the Bill to reach this House is a sign of the complexity of what has been removed and what has had to be created to replace it, and of an unfinished task. It took the dedicated probing of my noble Friends Lords McKenzie and Beecham—I pay tribute to them for their expert scrutiny in the other place—to draw out all the questions to which the Government still do not have answers, despite having had so long to think about them. I wish to acknowledge the helpfulness of the noble Baroness Hanham during consideration in the other place. She indicated the Government’s willingness to move on some of our areas of concern, but on one occasion she was famously reduced to saying that

“this matter is still under consideration, as are all the other matters.” —[Official Report, House of Lords, 15 July 2013; Vol. 747, c. 557.]

I shall now turn to these outstanding matters.

First, the Bill needs to provide for the joint procurement of audit for principal authorities, and we are told that this will be added in Committee. It must be, because significant savings can be made this way. The Government’s own impact assessment recognised that individual audit procurement was unlikely to match joint procurement when it came to producing lower fees. There is a limited market in public audit. In the last financial year 800 councils, health bodies and fire and rescue authorities were audited by private firms. How many auditors were appointed? Seven. We believe, and many others agree, that the intended savings may not appear at all—quite the contrary.

A central procurement system with the power of appointment could yield savings of up to £200 million over five years, according to the Audit Commission’s own analysis. I do not understand why the Government spent quite so long in the other place resisting what is a very sensible idea, and we look forward to seeing the promised amendment.

Secondly, there seems to be a marked lack of enthusiasm on the part of Ministers for the kind of comparative value-for-money studies that the commission has undertaken. We are not yet sure how the value-for-money profiles, which help to ensure best practice and are currently maintained by the commission, are to be managed in future and by whom. When he introduced the original legislation to create the Audit Commission, the then Secretary of State, Lord Heseltine, said:

“Audit involvement in value-for-money work is not new, but the Bill gives much greater emphasis to it. The commission will have a duty to undertake comparative studies . . . and the auditor will have a duty to satisfy himself that the authority has made proper arrangement for securing value for money.”—[Official Report, 18 January 1982; Vol. 16, c. 52.]

This Bill puts less emphasis on it. Only a residual role is being given to the National Audit Office. Is that really the right thing for Ministers to do, given the pressures that councils face today, and the changes they are having to make to the way they work? Surely, this is a time when value-for-money studies—learning from others—are even more important than they were.

[George Hollingbery (Meon Valley) (Con)]

The right hon. Gentleman will know that the Bill enables the National Audit Office to provide value-for-money studies, but because he is well informed about local government matters, he will also know that the Local Government Association has expressed considerable enthusiasm for conducting these reviews itself. Is it not better that local government finds what it needs to make value-for-money judgments on, and starts those reviews itself?

[Hilary Benn]

I entirely accept the hon. Gentleman’s point. It seems to me that there is a case for both. Having read the deliberations in the other place, I am just reflecting that Ministers there really lacked enthusiasm for the continuation of central value-for-money work, but I take his point about local authorities coming together to learn from each other.

Thirdly, the Bill as drafted requires the appointment of new auditor panels. The health bodies, as we know, will have panels based on their existing audit committees. On the one hand, the ad hoc Committee that scrutinised the draft Bill described that as an added layer of governance and made a case for strengthened audit committees in order to meet the independence requirements of best practice. On the other hand, the contrary argument has been made that there would be difficulties in asking audit committees to do the work of the panels, not least because in many local authorities the audit committees have a much wider range of responsibilities. Perhaps when he replies, the Minister will explain how he sees audit panels working as sub-committees of audit committees.

Fourthly, on freedom of information, the Bill will weaken the public’s right to know. The Audit Commission is covered by the Freedom of Information Act, but, generally speaking, private auditors are not, so transparency, which the Secretary of State repeatedly tells us he supports, will be diminished. That is really important, especially as more councils are outsourcing work to private companies. We all remember the Government’s recent unhappy experience with the tagging contract scandal. Given that the Government’s view on applying the Act and the arguments they advanced in the other place have changed over time, it would be helpful if the Minister indicated whether there is any chance that their view might change again.

[George Hollingbery]

I am grateful to the right hon. Gentleman for being so generous in giving way. Is it not the case that clauses 21 and 22, when combined with clauses 24 and 25, mean that freedom of information requests are completely superfluous? Clauses 21 and 22 allow the auditor to request any and all documents not only from the council but from connected parties, and clauses 24 and 25 make that information available to the public, so why would one need an FOI request?

[Hilary Benn]

I do not accept the argument that the Freedom of Information Act is superfluous, because it depends on whether auditors seek the information in the first place. I think that, regardless of the action that auditors might or might not take, the public should be protected by having the right to request the information. That point was made extremely forcefully and eloquently by my noble Friend Lord Wills in the other place.

There are some other concerns. We need clarity on who will maintain the outsourced contracts when the Audit Commission finally disappears. What about certification relating to reimbursement of housing benefit claims? We welcome the movement of the national fraud initiative to the Cabinet Office, but the provisions on the purposes for which data matching can be used do not include the prevention and detection of maladministration and error, which we would like to be reflected.

That is what is in the Bill, but there is a great big hole in it. It is principally a backward-looking piece of legislation giving effect to the Secretary of State’s decision of three years ago. He has completely failed to make provision for auditing in the new world being built before our very eyes, which I think is an astonishing omission. The proposed audit arrangements simply do not provide for that changing world in which public services are managed and provided. We have shared services, community budgets, city deals and combined authorities, which are all part of a shift towards much stronger working between central and local government, yet the current and proposed audit arrangements still focus much too narrowly on institutions—the arrangements in the Bill for local government and the National Audit Office for Whitehall—rather than the work they do. Therefore, as community budgets develop, does it really make sense for different auditors to examine the use of the local government pound while the NAO examines the use of the Whitehall pound when they are being spent together? If the service is shared and common, so should the audit be. I hope that Ministers will reflect on that point.

Robust independent audit of public bodies is essential to ensuring public confidence in Government. It is up to us to ensure that we get it right, especially after the three years that have intervened, followed by a Bill that—I gently point out—took longer to gestate than a baby African elephant.

I turn now to clause 38. Let me say at the outset that one local authority publication, which the Secretary of State mentioned, is pretty clearly outside the letter and the spirit of the code—that is, East End Life, which is weekly, advertises property, and carries local news. The Labour leader in Tower Hamlets says that it is an expense that residents cannot afford. The question for the House is therefore a simple one: why has the Secretary of State not done anything about it already? Why has he not sought judicial review? It is no good his shaking his head—he could have taken action, given the fuss he is making, but he has chosen not to do so, and he gives no answer.

[Robert Neill]

On precisely what grounds does the right hon. Gentleman think that judicial review could take place, since non-compliance with the code has no sanction attached to it?

[Hilary Benn]

It would be a very important legal argument as to whether the courts would attach weight to what is a code. If the Secretary of State is that worried about East End Life, why did he not take action before coming to this House to ask for clause 38 and the extraordinary powers it contains?

The Secretary of State is asking the House to give him the right, if he feels like it, to control local council publications. We have recently had a great deal of debate about the royal charter following the Leveson report. [Interruption.] The Secretary of State is chuntering, but there is a lot more to say about this clause. The charge has been levied, quite wrongly, that politicians are trying to control what appears in the press, yet this clause really would give a politician the power to control, if he wanted to, what is written, how often, and in what way. This shows that underneath a lot of localist rhetoric, the right hon. Gentleman is nothing more than a centralist. I am astonished that Liberal Democrats appear to be happy to go along with a thoroughly illiberal proposal.

The clause would allow the Secretary of State to issue an order directing that one authority, or every authority, comply with his interpretation of one or all of the provisions of the code. I remind the House that the code covers paid advertising, leaflet campaigns, publication of free newspapers and news sheets, the maintenance of websites, the frequency of publications, the content of publications, and even display stands at party political conferences. Clause 38(1)—the first time I read this I could not really believe it—says the following—[Interruption.] I know that Government Members do not want to hear it. Perhaps the right hon. Gentleman could explain why he wants to be given this power:

“The Secretary of State may give a direction to an authority whether or not the Secretary of State thinks that the authority is complying with the code to which it relates.”

Roughly translated, he wants the power to give direction to a council even though he does not think that it is not complying with the code, and nor does anyone else. We are sometimes mystified by the way his mind works, but under this Bill he will not even have to answer to himself for his own thoughts and actions.

That prompts the question why the Secretary of State has put this measure forward. He advanced two arguments, the first of which is about competition with local newspapers. I agree that local newspapers are a very important part of our democracy. Their independent reporting holds us to account, and they give us important news and information about what is happening in our area. However, many local newspapers are in real difficulties as readership declines and people get more of their news from the electronic media. Sir Merrick Cockell, the highly respected Conservative leader of the Local Government Association, says:

“We’ve simply not been shown any evidence that council publications compete unfairly with local newspapers.”

Such evidence as we do have suggests that the amount of advertising revenue taken by council publications is relatively small, especially compared with the amount of revenue contributed to local newspapers by way of statutory notices.

It is therefore very curious that, despite great play being made in the Secretary of State’s speech and in all the consultation documents of unfair competition and the loss of advertising revenue, it was reported a little while ago that he had indicated to a private meeting of Conservative councillors at the LGA conference that the requirement to place statutory notices in local newspapers is going to be phased out within a couple of years. I would be happy to give way to the right hon. Gentleman if he would like to clarify the Government’s position on the future of statutory notices. The House will have noticed that he has nothing to say. That is because on the one hand he is arguing that council magazines and the advertising revenue they take are a terrible threat, while on the other hand it seems, as reported by Conservative councillors who were at the meeting, that he is thinking of withdrawing a much larger amount of money that papers get from local councils in the form of statutory notices. The truth is that his position is utterly inconsistent.

[George Hollingbery]

I am grateful to the right hon. Gentleman for giving way; he is truly being generous with his time. Is he able to give any particular reason why local papers could not report statutory notices as a news item rather than as something that they are paid to do? Does he think it is right that the public purse subsidises commercial organisations like local newspapers when they have plenty of other opportunities to make money?

[Hilary Benn]

The hon. Gentleman makes a perfectly fair point, partly because of the changing way in which people are getting their news. He is right that there is nothing to prevent papers from publishing those notices anyway, and I think that everybody recognises that we are moving towards a different era. The point I am making is that the Secretary of State has jumped up and down to complain about advertising revenue, which is very small compared with the much larger revenue that comes from statutory notices, hence the inconsistency of his argument.

[Annette Brooke (Mid Dorset and North Poole) (LD)]

Should the main concern not be the best use of council resources? Is it really a good use of those resources if they are paying for statutory advertisements that most people manage to miss?

[Hilary Benn]

That is a fair point, as I have said, but perhaps the hon. Lady should have a conversation with the Secretary of State about what his policy is, because we are none the wiser. Indeed, when the code of practice was originally published, the Government specifically rejected a prohibition on authorities taking third-party advertising in their magazines. That is what paragraph 8.25 of the explanatory memorandum had to say.

[Ian Mearns (Gateshead) (Lab)]

Does my right hon. Friend agree that, while an awful lot of people may miss statutory notices, some organisations—like estate agents, property agents and anybody involved in the licensing trade—trawl through the papers deliberately looking for them?

[Hilary Benn]

I accept my hon. Friend’s point. If the system is changed in the future, as long as people knew where they should look, they could trawl through council websites or other publications.

On the frequency of publication, the vast majority of councils that produce magazines publish them four times a year or less. A very small number publish more frequently, but does that constitute justification for the power in clause 38? Does it actually matter if a small parish council puts out an A4 newsletter once or even twice a month? What business is it of the Secretary of State anyway? Has he not got more pressing things to do?

The second argument we have heard is that Ministers are exercised by propaganda on the rates. The Under-Secretary of State for Communities and Local Government, the hon. Member for Great Yarmouth (Brandon Lewis), has talked about a

“corrosive abuse of taxpayers’ money.”—[Official Report, 14 February 2013; Vol. 558, c. 840W.]

The Secretary of State has talked about pocket Pravdas, town hall Pravdas and shutting down the Pravda printing presses. Members will detect a bit of a theme there, so I thought I had better have a look. I spent a little time reading through council publications, copies of which I have with me.

Given what Ministers have said, I was expecting to find a hotbed of raw, red propaganda and party politics, but I have to say that I was sorely disappointed. There was not a single proclamation from local authority supreme Soviets, no diktats from executive board commissars and—this was especially disappointing—not a single article on the latest tractor production figures. There was nothing on collective farms. The nearest I got to that was an article about a community garden where “residents developed plots”. Is that the sort of dangerous, collectivist revolutionary activity—plotting in the garden—that keeps Ministers awake at night? Actually, the piece is from an excellent publication, South Kesteven Today—the local magazine of the Under-Secretary of State for Communities and Local Government, the hon. Member for Grantham and Stamford (Nick Boles)—and is about a community garden in Stamford.

I continued my search for the cause of all this anxiety. I had a look at Bradford’s Community Pride. The Under-Secretary of State for Communities and Local Government, the hon. Member for Keighley (Kris Hopkins), who has responsibility for housing, has left the Chamber, but the magazine had an article on deadlines for primary school applications and an explanation of council tax. Is that a problem?

I had a look at the Epping Forest magazine, Forester, which had an article about parking charges. We know how that subject gets the Secretary of State going, but it is also a very good publication. And what has Luton done? What has Luton done?

[Mr Pickles]

Just tell us.

[Hilary Benn]

The Secretary of State obviously forgets that he criticised Luton for its publication. I have the latest edition of Luton Line. It is a very good publication. On the front page is a photograph of the former Transport Minister, the hon. Member for Lewes (Norman Baker), holding a spade and standing next to the Labour leader of the council—now that is a coalition to reckon with. They are celebrating work starting on a new relief road.

These publications contain articles about recycling, articles on health, pleas for foster parents, adverts for MPs’ surgeries, and lists of councillors. Pocket Pravdas? What a load of nonsense.

Moving from the fanciful to the serious, the LGA has taken independent legal advice on clause 38, and Sir Merrick Cockell says that it

“confirms our fears that a government could hand power to one individual in Whitehall to restrict councils from campaigning on important issues such as HS2 or hospital closures if they so wish.”

[Roberta Blackman-Woods (City of Durham) (Lab)]

He doesn’t know his own Bill.

[Hilary Benn]

No, the Secretary of State does not know his own Bill and he does not want to hear what his Conservative colleague, Sir Merrick Cockell, has to say about it.

Members should remember what the code says. Paragraph 15 states that local authorities should

“avoid anything likely to be perceived by readers as…being a commentary on contentious areas of public policy.”

High Speed 2 is contentious, as are hospital closures, the removal of fire engines, and whether Heathrow should expand. Is the Secretary of State really saying that there is something wrong with local councils representing the views of their residents? Sir Merrick’s conclusion is that clause 38 “sets a dangerous precedent”. I could not agree more.

The National Union of Journalists says:

“There is no evidence that extra statutory powers are required”.

The National Association of Local Councils opposes clause 38. Birmingham city council said in its response:

“we do not accept the government’s starting point.”

Exactly!

[Mr Redwood]

We all understand that it can be desirable for councils to run political campaigns and that it will certainly happen. Is not the point that they can do so in the usual way—by making speeches in the council chamber, talking to journalists, getting it in the local media and putting it on free websites—but not through paid-for propaganda?

[Hilary Benn]

Let us take the case of High Speed 2 and the concerns that have been expressed by some of the right hon. Gentleman’s colleagues about the route. Is he saying that local councils should not be able, on behalf of their residents, to express a view, to make representations and to say that they want the route to be changed? If he is not saying that, I do not see how he can support clause 38, given the advice that the LGA has taken.

[Mr Redwood]

Will the right hon. Gentleman give way?

[Hilary Benn]

No, I have been very generous in giving way.

The great localist is, in this Bill, asking to be given a great big blue pencil so that he can cross out things that he does not like.

[Mr Pickles]

Nonsense!

[Hilary Benn]

The right hon. Gentleman shakes his head and says that it is nonsense, but he is undone by his own words. He has obviously forgotten what he said in the response to the consultation, in which ministers justified the new powers by saying that they would

“ensure that in future effective action can be taken should any council be considering publicity that is of a political or tendentious character.”

The only way in which that can be interpreted is that the Secretary of State is seeking to take a pre-emptive power of censorship. What did he mean by that and how on earth will it work?

Last year, the Secretary of State told the Conservative party conference that

“without constant vigilance—the cigar-chomping Commies will take over.”

What none of us realised then was that the person we needed to worry about was him. Clause 38 is wrong in principle and I cannot see how it will work in practice. We will seek to remove it in Committee.

I turn now to clause 39 and the new matters that the Secretary of State wants to include in the Bill. In responding to the debate, will the Under-Secretary of State for Communities and Local Government, the hon. Member for Great Yarmouth, explain why he is reneging on the deals that his Government signed by making the provision on referendums and levying bodies retrospective?

The Secretary of State well knows that an important element of the Leeds city region deal was the establishment of a significant transport investment fund, partly funded by central Government and partly funded by the transport authority levy over 20 years. A year ago, the former cities Minister, the right hon. Member for Tunbridge Wells (Greg Clark), said that the deal was:

“Giving cities the powers, control over resources, and funding they need to fire on all cylinders”.

Will the Secretary of State explain why, almost a year after his ministerial colleague put pen to paper to sign the deal, he is asking the House to undermine it? Will he set out his assessment of the impact of his decision, and say what effect it will have on holding back investment in transport infrastructure and local growth in the city region? This is an important point of principle, because I fear that the actions of the Secretary of State in imposing the rules retrospectively and going back on a done deal will undermine confidence in the city deal process—which I support—and harm the certainty on which sound financial planning and private investment rely.

To limit the damage of his decision, will the Secretary of State clarify for the record that at the time the city deal was signed, he had no plans, and had had no discussions, about changing the rules on levying authorities? The answer to that must be no, because if he had done so he would—of course—have been honour-bound to disclose that to the people with whom he was negotiating.

[Mr Pickles]

rose—

[Hilary Benn]

I will give way so that the Secretary of State can clarify that point.

[Mr Pickles]

It is important to address this rather silly suggestion. From the published plans and what we know, the extra levy does not make a single percentage share difference. We know what the city deal is for Leeds—it is perhaps the most ambitious of the lot. Even assuming that we have the same referendum threshold as in the past, the proposal comes nowhere near to going over that threshold.

[Hilary Benn]

First, that is not the view held by the Leeds city region, and secondly, the House will have noticed that the Secretary of State did not answer the specific question I put to him about what he knew when he signed the deal.

The Secretary of State proposes to make other changes by widening the scope of the Bill, and there have been discussions about how we deal with the problem of the Leeds city region and the fact that York cannot be a full member of the combined authority because of what is known as the Selby corridor—it is not coterminous. Perhaps he will respond to that point. I am grateful for the indication I have received from Ministers that they are willing to deal with that issue—in the Bill if they can, and if not through other legislation—and it would be helpful if the Secretary of State could place that on the record.

[Mr Pickles]

I am happy to say that what the right hon. Gentleman wants to achieve—to ensure that authorities can work together as part of a deal, even though they are not coterminous—is eminently reasonable. Whether we achieve that through the Bill or through other mechanisms, we are happy to enter into discussions about that, and I am confident we can have a resolution before Christmas. What he seeks is wholly reasonable, wholly sensible, and we will do our best to achieve it.

[Hilary Benn]

I am genuinely grateful to the Secretary of State for that assurance, and I look forward to working with him to bring that change about.

On parish polls, it is clearly not sensible to allow 10 people, in some cases, to trigger a referendum in a parish that represents 10,000, 20,000 or an even larger number of people. We will therefore support that change, and also the proposal that councils in England should allow the recording and videoing of council and committee meetings. In this day and age, big changes in technology make recording and videoing readily possible, and I cannot see the difference between sitting in a meeting, listening and writing down what is being said, or—for those who have shorthand—taking a verbatim record, and making one’s own recording.

As the Secretary of State acknowledged, a new generation of bloggers is relating to politics in a different way, which we should all warmly welcome—frankly, the more people who get to hear what their local council is doing, the better. Who knows? Perhaps this House will one day follow suit and allow those watching us to keep their own records of proceedings—indeed, I may one day be tempted to record the Secretary of State from across the Dispatch Box. I have, however, a sneaking suspicion that Brass Crosby—who, as some Members will know, was committed to the Tower of London in the 1770s for daring as Lord Mayor to release a newspaper editor who had had the audacity to report what was happening in Parliament—and indeed Thomas Hansard, after whom the Official Report is named, would both thoroughly approve of that change.

In conclusion, there is a great deal for the Committee to discuss, and I know that my hon. Friend the Member for Corby (Andy Sawford) will do a sterling job leading for the Opposition and responding to the debate. We owe it to ourselves, local authorities and the people that we—and they—represent, to get the right system in place, and it is clear there is still much to do.

17:19

[Robert Neill (Bromley and Chislehurst) (Con)]

I was delighted to hear my right hon. Friend the Secretary of State finish an important piece of work to which we committed ourselves when we first came into government. I was intrigued to listen to the right hon. Member for Leeds Central (Hilary Benn), the shadow Secretary of State. It was a curate’s egg performance. I grant that there were some near rib-tickling moments—some of which were probably not intended—but it was a classic case of an Opposition searching for something to oppose. My right hon. Friend has introduced and delivered a Bill that the Government said at the very beginning of the coalition we would introduce. I am delighted that it has come to fruition.

Let me deal with the various parts of the Bill. I was fascinated to see some of the Audit Commission’s expenditure when I was part of the Opposition Front-Bench team. In the climate of the 1980s, there was an argument for considering a body such as the Audit Commission. However, two things happened: the Labour Government caused massive mission creep in the Audit Commission, and the climate changed. What caused the massive mission creep? Effectively, the Audit Commission was used as the machine for imposing a centralised performance regime on local government. That was a distinctly and fundamentally un-localist thing to do.

The situation is well described by Professor George Jones of the London School of Economics, whom many hon. Members will know—he is the biographer of Herbert Morrison. Professor Jones would not regard himself as a natural admirer and advocate of the coalition Government’s policies, but he believes in local independence. I disagree with many of the things he says, but he has described the Labour Government as taking “a fateful decision” that

“turned the Audit Commission in effect into an agent of central government…[It] marked the end of its independence, which was confirmed as further tasks required by central government were placed on the Commission: inspecting local authorities’ performance, judging and scoring them.”

Professor Jones is one of the leading independent academics. Most people would say he has a left-of-centre viewpoint—he happens not to be a member of any political party—but that significant academic is condemning the actions of a Government of whom the right hon. Member for Leeds Central was a member. It is therefore a bit rich of him to accuse the Secretary of State of back-door localism. Anyone who knows my right hon. Friend and the history will know that that is nonsense.

The Audit Commission grew beyond its remit to such an extent that it became the elephant in the room in a great deal of local government budgeting. Increasingly, time and again, local authorities—officers and members—felt themselves to be more constrained. They felt they had to play the system and adopt policies and priorities that ticked the box of Audit Commission approval. The system of reward and funding was such that they were incentivised to tick the box to meet central Government objectives rather than those of their council tax payers.

That was initially swept away when the coalition Government got rid of the iniquitous comprehensive area assessments regime, which, at that time, was a huge amount of the Audit Commission’s work. Essentially, the core audit function was left. As I recall, by that stage, the Audit Commission was about the fourth largest audit practice in the country. There was no logical reason why such a large audit practice should not operate in a commercial environment, providing that a proper statutory regime was in place to overarch it and that there was a proper regulation and performance regime, which the Bill introduces.

We saw that when the in-house audit practice was successfully floated in the private sector. It is worth noting that, as a consequence, there has been a 40% reduction in audit fees paid by local authorities. By the time the Bill is implemented and the Audit Commission is finally abolished, there will be a 50% reduction in those bills. That has got to be a good and thoroughly localist thing. Those of us experienced in local government will remember regular complaints about the level of charging by the Audit Commission. There was also the iniquitous situation of its top-slicing, whether it did the job in-house or it was done through private sector contractors, which was clearly unjustifiable. I hope people accept that the Bill recognises a sensible reality.

I have to say with a smile that I note the cost of trying to persuade the Opposition Front Bench team to change our minds was put at £56,000. They were getting my right hon. Friend the Secretary of State and I cheaply at that price. On the other hand, it did not have much effect, so perhaps they were had in any event. I assume that £50,000 was for my right hon. Friend and £6,000 was for me—I am fully aware of the status of these things—but it says something of the level of unreality in the Audit Commission. In the end, that is why it had so few friends in local government and why its departure will be unlamented. Instead, we have a sensible set of checks and balances which need to be put in place, and which I think the local government sector now understands.

It is also worth saying that performance management and improvement in the sector has matured—a point made in interventions on the right hon. Member for Leeds Central. There is a great willingness to collaborate and work closely together; that is a classic case of recognising that the game has moved on.

The Bill seeks to tackle the code of practice on publicity, which is significant. I was the Minister when we introduced the code and there had been a number of egregious examples of abuse by local authorities. East End Life is of course the example most regularly cited, but I am afraid there are others.

[Hilary Benn]

It would certainly help consideration of the Bill on Second Reading if the hon. Gentleman listed those examples. Indeed, Baroness Hanham said that she had a list, but did not want to share it with Members in the other place. Perhaps the hon. Gentleman will now tell us which local authorities are breaking the code.

[Robert Neill]

The right hon. Gentleman obviously knows that the only roles in Gilbert and Sullivan I could do at school were the patter songs—one does not have to sing in tune. I do “have a little list” and will come to it in but a moment.

It is significant that East End Life, run now by an independent council but initiated at a time when the council was otherwise controlled, is one case on which the right hon. Gentleman and I can agree. We agree that that is a particularly bad case, but it goes further than that. Much of East End Life was based on some of the work done by The Londoner, which was produced by the first Mayor of London. By the end of his first term of office, he was a member of the right hon. Gentleman’s party. The current Mayor of London has had no difficulty in getting his case and his arguments across to the London public, and getting information about Greater London authority services across, without the cost of The Londoner. In fairness, even when Ken Livingstone was a member of the Labour party, he supported the current mayor of Tower Hamlets—against a Labour candidate. Perhaps I should not remind the right hon. Gentleman of that.

[Andrew Bridgen (North West Leicestershire) (Con)]

A constituent of mine is a member of an active parish council in my constituency. She raised concerns that the Bill seeks to curtail how parish councils can communicate regularly with their constituents. Does my hon. Friend agree that that would not be right?

[Robert Neill]

Many responsible local authorities communicate sensibly and proportionately with their constituents, and there is no reason why parish councils cannot do that too. There has been a great deal of scaremongering from some commentators and sources, some politically motivated, regarding the extent of the Bill. I am sure that my hon. Friend’s parish council has nothing to fear.

[Chris Williamson (Derby North) (Lab)]

Will the hon. Gentleman give way?

[Robert Neill]

I give way to my former shadow.

[Chris Williamson]

Might the current Mayor of London’s ability to get his message out and his not having to rely on a council newspaper have something to do with the fact that the Evening Standard is his chief cheerleader and ran a vituperative campaign against the previous incumbent, and might that have something to do with the previous incumbent’s inability to get his message out?

[Robert Neill]

Now that, like me, the hon. Gentleman has time to reflect from the Back Benches, he might consider that part of this problem was that he always fought the last battle. That one is dead and gone. The current Mayor gets his message across because he makes the right case to Londoners. I would think it a good thing if an independent newspaper supported my policies; it would be better than having to pay £1.5 million or £2 million to cook up a newspaper to support them instead. So I do not think he has advanced his case with that intervention.

For another example, the right hon. Member for Leeds Central could pop across to Greenwich from Tower Hamlets and have a look at the—taxpayer-funded, of course—Greenwich Time which has been published for several years now by the Labour-controlled council. In one recent editorial, the council leader attacked the Government’s policies of austerity for damaging the people of Greenwich. That is an interesting view which might have come straight from the pen of the shadow Chancellor—perhaps it did, for all I know—but I am not convinced that it is relevant to the role of the local authority.

Neither am I convinced that it is the role of that interesting Greenwich publication to tell me about the football fixtures or the cinema listings or to give me helpful restaurant reviews. It is the same with East End Life. These are all worthy things that a commercial local paper does, but to use the phrase of my hon. Friend the Member for Mid Dorset and North Poole (Annette Brooke), it is not a sensible use of council resources. I am sure we all want leisure or weight-loss ideas, but it is not the job of these supposed newspapers—these council publications—to provide them. It is a deliberate move on to the turf of privately run, independent newspapers. I say “deliberate” because in some cases, I regret to say, local authorities do not like the competition and criticism. That is what this is about.

Moving away from Greenwich, the right hon. Member for Leeds Central could cross the river again to Newham, where The Newham Mag makes great play of the “savage cuts”—an interesting phrase that I am sure the ever-restrained mayor of Newham had nothing to do with—imposed by the Government. In one fascinating passage, it stated that some councils pulled the plug on their Christmas lights this year because of “savage cuts” in their funding from central Government. When we worked on the formula grant, my right hon. Friend the Secretary of State and I did not consider taking out local authorities’ Christmas light funding. It was a clever use of words to try to suggest that central Government were being Scrooge and making it impossible for people to have Christmas lights on their high street. The article did not mention, of course, that Newham council did not cut the publicity budget, which paid for The Newham Mag, and which even on a conservative estimate would run to about 10 sets of high street lights. Interestingly, even in otherwise legitimate advertising—about making benefit claims and where to go—every reference to cuts is prefaced with “savage” or “massive”. It is clearly politically loaded and another example of how councils are acting against the spirit of the code.

[Ian Mearns]

I am following the thread of the hon. Gentleman’s argument. Is he actually saying that the Gateshead Post, which used to be published every Wednesday, but met its demise more than a dozen years ago, was put out of business by a council publication that did not exist at the time it ceased printing?

[Robert Neill]

What I am saying is that the Gateshead Post was entitled to its view because it was not paid for by public money.

If the leader of Barking and Dagenham council or the mayor of Newham want to put across their views, they can put out a press release through their respective Labour party offices, just as I put my views across in press releases paid for by my constituency party. I do not believe that I should get the council tax payers in my area to pay for me to put out my political views. Such activities are happening consistently, however. The London borough of Barking and Dagenham’s News stated that the council had been forced to make cuts to services. The article related to the spending review, but the council made no reduction to the £1.5 million that it was spending on the News. Simply hiding behind East End Life might make the shadow Secretary of State appear reasonable, but there is a lot more to it than that. I regret to say that, as it happens, all the publications on my list are in Labour areas.

[Chris Williamson]

The hon. Gentleman has expressed his opposition to press releases being distributed by local authorities on behalf of the controlling group. When he was a Minister in the Department for Communities and Local Government, did his Department issue press releases on his behalf?

[Robert Neill]

Yes, but I did not use them to attack the policies of the Opposition in party political terms. I would not have been allowed to do so under the ministerial code, and anyway they were dealt with by civil servants. I think the hon. Gentleman is also forgetting that, in all the cases I have described, local authorities that are using publicly funded publicity instruments to protest against Government cuts are using discretionary spend that they could have directed into front-line services. That is a classic example of why the Labour party is unhappy about this issue. I regret to say that it goes well beyond the egregious case of Tower Hamlets.

If local authorities want to get information across, which I accept has to happen, they might like to do as my own council, the London borough of Bromley, does. Rather than going to the expense of running its own newspaper, it puts a four-page wrapper around one of our local papers about four times a year. Those pages set out the information very attractively. They are well designed and contain professional journalistic input, and they wrap round the free-sheet that is delivered to everyone anyway. That is a cost-effective and politically proportionate way of getting genuine information across. Also, it does not offend against the code. It is nonsense that although an independent watchdog has held Tower Hamlets to be in breach of the publicity and advertising codes, there is still no legal means of doing anything about it. The Bill will rectify that anomaly.

I say with respect to the right hon. Member for Leeds Central that it is not good enough to say that we could try a judicial review.

[Hilary Benn]

You could.

[Robert Neill]

Well, we could try to resolve many things by way of a judicial review, but whether that would be a wise or proportionate use of public funds, when the outcome is highly uncertain, is questionable. Surely it would be much better to deal with the problem at source, in the way that is being proposed. The Opposition appear to have little to say on this matter, and they appear to be shedding a great many crocodile tears about this aspect of the Bill.

[Andy Sawford (Corby) (Lab/Co-op)]

The hon. Gentleman has shared his thoughts on a range of publications by London local authorities. I invite him to condemn Hammersmith and Fulham council, which he would surely deprecate for publishing a magazine that not only advertises “Sofas and Stuff” on the local high street but comments on the impacts of Government policy on local residents. Will he also consider the publication from the royal borough of Kensington and Chelsea, which gives its views on the Government’s Crossrail proposals and on funding implications for the council, among other things? Does the hon. Gentleman see any difference between that—

[Madam Deputy Speaker (Dawn Primarolo)]

Order. The hon. Gentleman is new to the Dispatch Box, but I must remind him that interventions must be brief, whether they are made from the Dispatch Box or from the Back Benches.

[Robert Neill]

There is often a material difference, depending on the precise nature of the language used and the objectives sought to be put across. That is precisely why the Bill is framed in such a way as to provide discretion for the Secretary of State to act where a number of triggers are coming into play. I do not think that intervention worked from the hon. Gentleman’s point of view either.

Let me deal with the issue of council tax referendums. A great deal of objection was raised in the other place, but I do not believe that it was all genuinely warranted. I am glad that the right hon. Member for Leeds Central did not pursue the argument of retrospectivity to the extent that it was pursued in the other place. My noble Friend Baroness Hanham dealt with that effectively, making very clear the Government’s intentions in this regard. Levying bodies and their principal councils had clear notice, so that argument has been knocked on the head. I want to take the opportunity to pay tribute to Baroness Hanham’s work as a Minister in the Department for Communities and Local Government. She was a fantastic and unusually hard-working colleague—someone who probably has more experience in local government than many people here will have forgotten about, let alone learned from. I hope I am allowed to say that, Madam Deputy Speaker.

The key objective of council tax referendums is to protect the council tax payer. It could not be right to get to a position where it was possible to have a degree of expenditure shunting. We sometimes hear about cost shunting, but a degree of expenditure shunting is possible in theory, from the constituent member authorities of a levying body on to the levying body in the knowledge that the expenditure moved on to the joint body would not be captured by the council tax threshold referendum. With respect, that would be pulling the wool over the eyes of the council tax payers of the local authority’s area. The council tax referendum proposals are therefore sensible in protecting council tax payers by removing a loophole that could have been open to that sort of abuse. As the Secretary of State said, when we looked at city deals, we found that the amount involved was not such as to cause the extent of the problems suggested.

For a raft of reasons, the levy on some local authority areas amounts to more than the amount of council tax itself. The levies account for something like 56% of council tax bills—in Liverpool, for example. I am sure that all hon. Members who support our proposals for council tax referendums would agree, in principle at any rate, that they exist to protect the council tax payer. It surely cannot be right that under current arrangements over half the spend is exempt from control by a referendum.

[Annette Brooke]

I quite understand the intention behind this measure, but could my hon. Friend help me with this query? Is not an unintended consequence possible? If the referendum were lost, the levy went ahead and the council tax was frozen, might not the penalty fall back on the council, which would have to bear the costs and cut back on its own services?

[Robert Neill]

In the case of the majority of the larger levying authorities—it does not apply to some smaller ones—my experience has often been that they take the form of joint boards or joint authorities, which have elected members of the constituent authorities sitting on them, but who are also in a sense members of a separate legal personality. That is why they are not part of the council for the purposes of the council tax itself. If a council is concerned that its council tax bill should not rise unduly, which might put it in jeopardy of breaching the referendum threshold, it would be perfectly logical and sensible for it to talk to its representatives on the board. If I were the leader of that council, I would talk in clear terms to my colleagues who were the leaders of the other constituent authorities. There is thus a perfectly good and practical means for council leaders and their representatives to avoid that happening. Equally, when they sign up to particular elements of expenditure through a joint board, it is not unreasonable for them to take into account the budgetary consequences of that expenditure for their council tax payers. As I say, these are sensible proposals, which close a loophole.

I hope that the Bill will commend itself to the House. It deals with important issues, and I agree with the right hon. Member for Leeds Central that it is not a purely dry piece of legislation. I congratulate my right hon. Friend the Secretary of State on producing an entirely localist Bill. After all, localism is not just about passing power down to local authorities as institutions; it is also about passing power down to the residents of those authorities, who are the ultimate consumers, and the ultimate people to whom councillors, officers, and we as Members of Parliament ought to be responsible.

17:44

[Chris Williamson (Derby North) (Lab)]

The Government have presented us with yet another very bad Bill. Indeed, it is so bad that it is difficult to know where to start, but let me begin by saying that there is a certain irony in what we are doing today. As was pointed out by my right hon. Friend the Member for Leeds Central (Hilary Benn), the Audit Commission was established by a former Conservative Government 30 years ago, and here we are now, debating this Bill because another Conservative Government want to get rid of it.

Government Members, including the Secretary of State himself, have suggested that the exposure of the gerrymandering of Westminster city council, which was exchanging homes for votes, had nothing to do with the Audit Commission. I wonder, however, whether the regime that the Government are now proposing would have been able to unveil that appalling scandal, as the district auditor did then. It really was an absolute disgrace, and it led to a huge surcharge on the leader of the council.

The role of the Audit Commission has been both extended and reduced over the years, but I often found its interventions very helpful when I was leader of Derby city council. It was able to assess the effectiveness of local public services, thus providing us with a benchmark in relation to local authorities in other parts of the country and the services that they provided. It did so by means of the comprehensive area assessment which has been so ridiculed by the Secretary of State, and which was one of the first things to be ditched when the Government came to office.

It is probably not surprising that the Government made that decision, as it coincided with their imposition on local authorities of unprecedented cuts, which have continued year after year. The comprehensive area assessment would doubtless have highlighted the significant diminution in the quality and breadth of the services provided by local authorities that resulted directly from the Government’s cuts agenda—and a very unfair agenda it was. As we know, the cuts fell most heavily on the local authority areas in greatest need, although, perversely, some authorities in other parts of the country received an increase in Government grant. I think that, had it been allowed to continue, the comprehensive area assessment would have put the Government parties in a highly embarrassing position.

[George Hollingbery]

When I was a portfolio holder on Winchester city council, I had to respond to the comprehensive area assessment. One of my favourite statistics that it made me report was the number of buildings that were open to the public and the number of those buildings that were accessible to disabled people. I managed to improve the ratio in my first year in post, simply because we closed a building to the public. Do Members actually think that that constitutes a useful set of reporting targets for any normal council? If the hon. Gentleman is really so keen on the comprehensive area assessment, may I ask whether he would reinstate it if he were the relevant Minister in a Labour Government?

[Chris Williamson]

The hon. Gentleman makes an extreme point to illustrate his argument. No one is justifying unnecessary targets. There was perhaps an over-burdensome target culture, but surely that is not a reason to throw the baby out with the bathwater. It would be an extreme overreaction to get rid of the whole shooting match just because there were perhaps some overbearing and silly performance indicators, although there was certainly scope for improvement. As my right hon. Friend the Member for Leeds Central said, we accept that the Audit Commission is going, but what is being put in its place leaves a lot to be desired.

Government Members have said that getting rid of the Audit Commission will realise significant savings, but the truth is that most of the savings have already been achieved by axing the inspection work for which the commission was responsible. It seems that this is yet another case of double counting by the Secretary of State, as there is not much evidence to support his statement that there will be a saving. Indeed, many experts say that fees are likely to increase as a consequence of scrapping the commission. The draft Local Audit Bill ad hoc committee called for the publication of a new financial impact assessment and said that the baseline should be 2010-11, rather than 2009-10. If that were done, we might get a clearer picture of what the savings will be, if any, as a consequence of the Bill.

[George Hollingbery]

The hon. Gentleman is being generous in giving way. I am puzzled by the putative ideas on the savings that are being made. The Audit Commission has recently re-let 70% of the business that it did in-house to private contractors and achieved 40% savings—some £40,000 per council, I understand, although that figure may be slightly wrong. Nevertheless, there was a 40% reduction in the costs of audit. Does the hon. Gentleman not recognise that that is a real and proper saving that would not have happened if the Audit Commission were still in place?

[Chris Williamson]

Let me quote people who perhaps know a little more about these things than me. The draft Local Audit Bill ad hoc committee looked at the matter in detail. It

“heard conflicting evidence about whether and how much public money is likely to be saved by implementing this legislation.”

I have struggled to find anyone who thinks that the proposal is a good idea.

The Audit Commission said:

“Under a free market model, the current benefits of pooling auditors’ costs will be lost and councils in remote geographical locations”—

many of the locations represented by Government Members—

“will have to meet the economic cost of the audit. In some cases this may be significantly higher than historical fee levels.”

The Local Government Information Unit said:

“If the market concentrates further, or even stands still, this will eventually lead to higher, not lower, fees.”

The Select Committee on Communities and Local Government has pointed out that the Government’s proposals for local government

“contrast with the situation in central government, where the NAO is reducing the percentage of work that it contracts out to private firms”.

I do not understand why that double standard is being applied by the Government when it comes to local government. Cynics might say that the Government are creating yet another money-making cartel. We know that the Conservative party has form in using taxpayers’ money to enrich vested interests in the private sector. We need look no further than the privatisation of the utilities, with millions of consumers being ripped off on a quarterly basis by the big six utility companies. We could also look at railways privatisation, which has seen the railway companies fleecing the travelling public, or the deregulation of the private rented sector, where we have seen a massive hike in rents. As a consequence, the housing benefit bill has gone through the roof—some £10 billion a year is going into private landlords’ pockets. This is yet another example of the Conservative party flagrantly using taxpayers’ money to enrich vested interests in the private sector. It is a shameful abuse.

The Communities and Local Government Committee hit the nail on the head:

“Unless the Government can crack the problem of the very limited competition in the audit market in the UK, it will be open to the accusation that the abolition of the Audit Commission is not a measure to save public money but merely a mechanism to transfer public money into private hands.”

I could not put it better myself. Clearly, that is an endorsement of my suspicion about the Government’s real motive for introducing the Bill.

[Robert Neill]

How does the hon. Gentleman square that with the Competition Commission’s recent report into statutory audit services, which pointed out that some 90% of audits of FTSE 350 companies are dealt with by what are sometimes termed the big four, whereas they only deal with about 50% of local authority audits and mid-sized firms get the bulk of the rest?

[Chris Williamson]

The hon. Gentleman is a big champion of vested interests in the private sector, so I am not surprised that he tries to argue that what the Government are doing is right. It is not for me to square that. If he has an issue with what the Communities and Local Government Committee has said, I ask him to take that up with the Committee. I am quoting directly from its conclusions after it looked at the matter in some detail. Do not come to me and ask me to square that. I invite him to ask the Committee to square the evidence that it took. This is the reasoned conclusion that it reached—

[Andy Sawford]

It has a Tory majority.

[Chris Williamson]

Indeed. As I understand it, those were the unanimous findings of the Communities and Local Government Committee.

The Bill is misconceived in another respect. My right hon. Friend the Member for Leeds Central dealt with this eloquently. In the Bill, there is no recognition of joint working, which is essential; it was increasingly important when I was leader of Derby city council. We worked to bring other public sector agencies on side with us to get more bangs for the public sector pound that was being spent in Derby, and that is even more essential as the budget at our disposal diminishes.

Therefore, I hope—my right hon. Friend made this plea—that the Government will reflect on the matter. If, as seems likely, they proceed with the Bill, I hope they will consider how the audit process could be made more relevant and up to date, given the situation we find ourselves in and the way in which public services are delivered. It does not make sense to require each public sector body to undertake a separate audit. It would be far better to recognise the fact that local authorities and other public sector agencies are working collaboratively. It is far better to have a collective audit that recognises the reality of the way in which public services are delivered in this day and age.

[George Hollingbery]

I was interested in the comments by the shadow Secretary of State, because the explanatory notes to schedule 4, paragraph 1, say:

“This paragraph sets out the different ways in which a body may meet the requirement to have an auditor panel. It is intended to provide flexibility for different arrangements that can reflect local circumstances and, for example, any joint working arrangements.”

There are clearly provisions in the Bill to deal with that matter.

[Chris Williamson]

But not—[Interruption.]—as my right hon. Friend the Member for Leeds Central is pointing out sotto voce, where there is a national and local collaboration in that sense. That is the point. This is not a partisan matter; I hope that the Government will take that on board and make that sensible amendment so the Bill is more fit for purpose.

I want to touch on the Secretary of State’s Orwellian proposal effectively to take charge of all council communications across the country. Whatever happened to the Secretary of State’s brave new world? When he first came into office he promised the end of what he described at the time as

“the Ministerial command and control system”.

Well, if this is not a ministerial command and control system, I do not know what is. This is the party that promised us localism and that promised it would sweep away the controlling hand of central Government. What a joke!

The Secretary of State has most certainly gone back on that, and his justification for his position simply does not stand up to examination. Let me quote a couple of experts in the field. The National Union of Journalists said:

“We do not believe that this element of guidance reflects the needs of many communities, nor the practicalities of providing prompt, accurate advice and information to them. In areas where there are no, or limited local newspapers”—

that, again, will include the constituencies of many Members on the Government Benches—

“then sharing planning details, service changes and details of consultations on a quarterly basis is insufficient.”

Even coalition Members in the other place have criticised this proposal. Lord Tope said:

“All we have had from the Government is rather silly and misleading statements from the Secretary of State about ‘town hall Pravdas’.”—[Official Report, House of Lords, 22 May 2013; Vol. 745, c. 898.]

Baroness Eaton, who, like the Secretary of State, is a former leader of Bradford city council, said

“there is no evidence that council publications are competing unfairly with local newspapers and, by the Government’s own admission, very few councils are breaking the existing recommendations”

and,

“It is therefore regrettable that many of the proposed measures in the Bill centralise powers to the Secretary of State and allow central government to interfere with matters that should rightly be decided at a local level.”—[Official Report, House of Lords, 22 May 2013; Vol. 745, c. 903 and 902.]

The Conservatives claim to be the great localists. When I was on the Front Bench and said that the Labour party is the true localist party, Conservative Members scoffed, but here we have a clear example of the Conservative party being the true centralisers in this country today.

We must also consider the retrospective impact of the proposed council tax referendums. The hon. Member for Bromley and Chislehurst (Robert Neill) referred to that and suggested that somehow it was not really an issue, but I beg to differ. I genuinely think that there is a real issue, which goes a long way towards undermining city deals—a welcome innovation as they give more powers to local authorities in the major core cities around the country—although I think the Government should go further in terms of devolving powers.

Again, I could not find anybody with a good word to say about this part of the Bill. The LGA says it jeopardises growth-generating investment. The country is on its knees and we are barely back into growth, so it seems absolutely crazy to deny the opportunity of growth-generating investment now. The Chartered Institute of Public Finance and Accountancy says it will confuse local accountability. Baroness Eaton said:

“It is like revising the speed limit downwards and then fining any motorist who has not obeyed the new limit before it was introduced.”—[Official Report, House of Lords, 22 May 2013; Vol. 745, c. 903.]

The truth of the matter is that local authorities are reaching agreements with levy-imposing agencies with whom they are working in partnership. They will have made arrangements going forward and some of the fees will be increasing over time, and that could push the council tax increase above the threshold at which a referendum must be called. That could leave councils in a very difficult situation. What will happen if the referendum results in opposition to the increase being imposed? The fees will still have to be paid. It will simply mean there will be even deeper cuts over and above the unprecedented cuts that have already been imposed on local authorities.

We know that many local authorities are heading towards a situation in the very near future—in the next financial year and certainly the year after that—where it will not be possible to deliver any non-statutory services. The litter will not be removed from streets and grass verges will be growing out of control. What is going on here? This is simply unacceptable. These are services that define a decent and good society, yet they are being put in jeopardy still further by this part of the Bill.

This is a dog’s dinner of a Bill, as is clear from what has been said not only by my right hon. Friend the Member for Leeds Central and me, but all the experts on these matters. They are all saying the Government have got this wrong. I urge the Minister to take a long hard look in Committee at the provisions contained in this Bill, and to perform some serious surgery and agree to the amendments we will be putting forward to try to make a better job of what is a very poor Bill. I think it will create a very difficult situation for local authorities, end up costing more money and ill-serve the people in the local authority areas that will be affected.

18:07

[Annette Brooke (Mid Dorset and North Poole) (LD)]

I had better start by declaring that I am a vice-president of the LGA, as it is being mentioned rather a lot in this debate. I also want to thank the Secretary of State—albeit in his absence—for his introduction of the Bill and his enlightening examples. I thank, too, the shadow Secretary of State for his visual aids and his account of his search for plots, which was interesting.

As the Bill has passed through the other place, it has already been considered in detail, and a large number of amendments were made, although some of them were minor and technical. I was very pleased that the Government undertook to introduce more amendments in the Commons, and I was also pleased by the announcements that consideration will be given to the modernisation of parish polls and the introduction of more openness in the recording of council meetings. It will be very good on occasions for people to be able to watch them at home and be able to switch off, rather than having to set off on what might be a long journey and then have to sit through a great deal of business before getting to the relevant part.

I want to comment on four main areas of the Bill. First, I want to discuss the principles behind the abolition of the Audit Commission, although I recognise that today we are really only talking about abolishing the residual part of it. I thought we had achieved a consensus about the abolition, until I heard the speech of the hon. Member for Derby North (Chris Williamson) and now I am not so sure. I recall the many briefings from all the councils in my constituency that have included reference to the burdens and costs arising from this set-up, always with the rider, “There is never any compensation from central Government, despite all these burdens placed upon us.”

The Audit Commission did become bureaucratic; it changed from its early purposes, there was little incentive to reduce its costs, which were paid for by local bodies, and its approach encouraged local bodies to focus more on the views of the Audit Commission than those of local people. The reforms in this part of the Bill will create a more efficient audit system. They are part of this Government’s wider drive to give greater responsibility to local bodies and encourage local people to hold those bodies to account, and the Bill is a step in the right direction. Councils are perfectly capable of appointing their auditors, as companies, charities and foundation trusts already do, and are best placed to decide what arrangements suit them locally. It should not be for central Government or anyone else to dictate to local bodies the people they should appoint. Under these reforms, they should know exactly what they are paying for and have control over their procurements. I am sure that we will discuss whether we are ending up with a cartel or with competition in greater detail in Committee.

The Secretary of State said that the expected savings from the abolition of the Audit Commission are estimated to be £1.2 billion. Despite the comments made by Labour Members, I felt that it was good to know that, unlike with some other Bills passing through this House, some pre-legislative scrutiny was undertaken on the then draft Local Audit Bill.

The Local Government Association wants the Bill to be amended to allow councils to continue to procure external audit nationally and, in so doing, avoid the need to establish independent audit appointment panels. Lord Tope said on Second Reading:

“In my long experience of local government, I have yet to meet anyone who has been clamouring to be a member of an independent auditor panel. That is not usually the way in which public engagement is sought by the public.”—[Official Report, House of Lords, 22 May 2013; Vol. 745, c. 898.]

I am pleased that the Government have been in dialogue with the LGA and agreed to work up an amendment that will create a sector-led body to offer councils an opportunity to opt in to a national procurement option. The LGA would also like the current audit contracts to be extended until the completion of the 2019-20 audits, in order to lock in significant savings—that is very important in these times of austerity. I imagine that matter will also be discussed in greater depth in Committee.

On council tax referendums, closing a loophole to prevent unaccountable levying authorities from exerting pressure on council tax seems a laudable aim—however, I have two buts to add. As a localist, I am not keen on council tax referendums—an alternative to capping—because they interfere with local decision making. However, I accept that, in these times of austerity, council tax freezes and controlling council tax are very important controls of the cost of living for many hard-working families. Secondly, I am concerned about the unintended consequences if the council and the levying board do not work perfectly together, despite the fact that the council might have representatives on the levying board. A financial risk is also placed on the local authority, which it could well do without in these difficult times. As Labour Members have said, there could also be a perverse incentive in terms of growth, whereby much-needed investment in infrastructure could be curbed, which does not seem right. I also share the concerns about the retrospective nature of the provision. So there are definitely questions to be answered here.

What I really want to see is transparency for the general public. Both on precepts and levies, members of the public are confused by the newspaper headline, “Your council tax is frozen”. They might not go through all the details in the Bill—I accept that the details are in place—but the bottom line for them is that their council tax is not frozen. That makes people very angry, because they do not see the accountability in the system. So I have just a few questions about that proposal.

The publicity code has been much mentioned this afternoon. My experience of local government, public relations departments, and council newspapers and publications has led me to conclude that the administration —the party in power—has a greater enthusiasm for having a big PR department and good, big, flashy newspapers than the opposition. Normally, the opposition will say, “We can find savings in the budget by slashing the PR budget.” That is usually the proposal on budget-setting night. However, if the opposition party then moves into control, it suddenly finds that the PR department is rather useful, after all. There are rightly questions about this money and the way it is spent, but a council publication has an important role to play; it certainly means that the public become more engaged, even if that is just a case of knowing where grit bins will be in icy weather and what provision is going to be made. Such publications are important disseminators of information for the many people who still do not access the internet. We cannot have all the information in that format at the moment, so the newspaper is of importance.

Given that not many examples of abuse are being provided and that most local authorities are probably not going to be affected by this measure, I have a concern that we may be using a sledgehammer to crack a nut—that question needs to be asked. Again, the measure slightly offends my localist principles, because the local council should be making the decisions and standing up to be counted when it is seen by its electorate as wasting money on these “lavish” publications. I am not at all convinced by the argument that such publications are in widespread competition with local newspapers, and the evidence would seem to be against that view; so, again, questions remain. I can see what the Government are aiming to do, but we have to recall that the provision of information and a council being outward looking is a good thing, even if most of the photos in the newspaper are of members of the ruling party.

I wish to end by talking about statutory notices. The LGA has called for the introduction of a new clause that would remove the duty on local authorities to publish statutory notices in their local newspapers. It would not remove the duty on councils to inform their residents about the statutory notices or any other area of council policy; it would just allow councils to decide whether or not the local newspaper was the best place to do that. It has been estimated that adopting the new clause could save local government at least £26 million per year, which is a considerable sum, and more cost-effective methods of conveying this information are available. I believe an Opposition Member intervened to suggest that estate agents and other professionals look at all the public notices, but they should be there for ordinary members of the public, who are the ones who do not spot the notices that affect them. So I do not feel that the most effective method of conveying information to the bulk of council tax payers is being used. The professionals who need to know this information could access it online; perhaps it is paper notices that are needed for residents. Will the Government repeal this outdated and expensive statutory requirement? Such an approach would be strongly welcomed by all parties in local government.

18:20

[John McDonnell (Hayes and Harlington) (Lab)]

I want to address three issues. The first is the Bill’s failure to acknowledge the fears for probity in local government, the second is its failure to address the structural and procedural breakdown of accountability and the third is the new code of practice for council newspapers.

We usually preface such debates by explaining our background in local government, and I am trying to address these matters completely objectively and without being partisan in any way. I do so as someone who has worked on the front line of a social services department, who was the head of policy of a London borough and who then became an elected member of the Greater London council, chair of finance and deputy leader before going back to being a bureaucrat in local government as the secretary—they now call them chief execs—of the Association of London Authorities, then the cross-party body of the Association of London Government. I have done my time, I suppose, over 25 years in local government.

There are fears for accountability and probity that the Bill does not seem to acknowledge or address. I wonder whether Members have seen the report published this month by Transparency International UK. Many of us will have worked with that organisation—which monitors corruption and probity, particularly in developing countries around the world—in the context of our countries of interest. I have, particularly on Kenya and other African countries.

The organisation monitors corruption in government throughout the world—establishing league tables, as some Members will recall—raises awareness of it and advises civil society and Governments on how to combat it. I urge Members to look at the report it has published this month, entitled “Corruption in UK Local Government: The Mounting Risks”. Let me quote the executive summary and some of its recommendations, which I will want to try to insert into the Bill as we discuss it in detail.

The good thing about the report is that it says there is not much evidence of corruption—but that is because what evidence there is, is anecdotal, although part of the problem is that not a lot of research has been done. The report found that although there was no agreement on the levels of corruption in local government, there was agreement across the board about the “disturbing picture” whereby

“the conditions are present in which corruption is likely to thrive”.

The report states that those conditions are

“low levels of transparency, poor external scrutiny, networks of cronyism, reluctance or lack of resource to investigate, outsourcing of public services, significant sums of money at play and perhaps a denial that corruption is an issue at all.”

The report goes into some detail about the checks and balances for accountability and probity in local government and is critical of the previous and current Governments’ performance, which undermined some of the processes of transparency, particularly the awarding of public contracts, the overseeing of their implementation and the growing tendency to outsource provision and transfer personnel between public and private roles—the revolving door syndrome that occurs not only in central Government but has gone into local government. The report also states:

“Planning decisions remain highly discretionary and are vulnerable to corruption in several areas.”

Allegations and incidents have been recorded—not at any high level, but they exist—of bribery in local government, collusion, conflicts of interest and corruption-related fraud. Of course, we have also seen examples of electoral corruption prosecuted in Birmingham and elsewhere. The report refers to a number of changes in legislation, particularly this Bill, that undermine the climate, procedures and structures that would address corruption and protect us from it.

Let me go through some of the criticisms of this Bill and some of the other legislation introduced by the Government. Transparency International UK is concerned about the abolition of the Audit Commission, as there will not longer be a “back-stop” to provide support and work to protect against corruption. There will be

“no institution with wider powers of public audit to enable criminal investigations, which the Audit Commission used to have”.

There will be

“no institution to collect nationwide data on fraud and corruption or analyse trends”,

and:

“New external audit reports will not be adequately covered by the Freedom of Information Act”.

That point has been raised by my right hon. Friend the Member for Leeds Central (Hilary Benn). The report also states:

“Local authorities will have a reduced internal capacity to investigate fraud and corruption, due to austerity measures”.

Those concerns will build up to create a climate in which there are fears for probity. The report also states:

“The responsibility for investigating and detecting fraud and corruption is being delegated to lower-level officers”

in local government. It continues:

“Audit committees are weakened and may disappear because there is no longer a statutory requirement for an audit committee to be a full committee in its own right…External auditors appointed under the new arrangements may face incentives to avoid undertaking investigations or raising concerns about suspicions of fraud or corruption.”

The report expresses its concern that:

“There is no longer a universal code of conduct to provide clarity to members serving on different public authorities and committees…There is no longer a requirement for members to declare gifts and hospitality and no legal requirement for either a standards committee or the monitoring officer to check any register of interests on a regular basis”.

Again, that is not addressed by the Bill. The report goes on:

“There is no longer a statutory requirement for a council to have a standards committee…There is no longer any obligatory sanction for members that violate the local codes of conduct”

and there is an overreliance on party discipline as the main sanction. It states:

“Since the abolition of Standards for England, there is no longer a national investigations body for misconduct.”

As the hon. Member for Mid Dorset and North Poole (Annette Brooke) mentioned, that means that some local authorities might struggle to appoint independent people

“of the appropriate calibre and legitimacy to perform the new role”

under the self-regulatory system of panels. The report says:

“The system relies too heavily on the new offence of failing to declare a pecuniary interest”,

and, of course:

“The ability of chief executives, financial officers and monitoring officers to hold elected members to account would be compromised by proposals to abolish their statutory employment protection.”

That all leads Transparency International UK to conclude:

“The Government’s changes, without apparent consideration of the consequences for corruption, are likely to have unintended consequences. The effect of the changes has been to create a situation in which corruption could thrive.”

The report is worrying and when the Bill goes into Committee, it might be worth inviting the organisation to address the Committee or provide evidence so that these matters can be properly discussed with it and its expertise can be drawn in to our consideration of the Bill, which is about local audit, and therefore probity, and local accountability, and therefore democratic accountability.

Some of the recommendations that Transparency International UK suggests could be built into the Bill are worth examining. The first states:

“Private companies, when operating services in the public interest, should be required to comply with the Nolan Principles.”

Secondly, the organisation recommends:

“Legal employment protections should be maintained for key anti-corruption officials, including Chief Executives and Monitoring Officers”.

Thirdly, it suggests:

“It should be a statutory requirement”

in this Bill

“for a local authority to have an audit committee as a dedicated full committee, with a specific remit to oversee corruption risk assessments and corruption investigations.”

It also suggests that now that the audit will be undertaken by private firms, consideration should be given to creating an auditors’ forum on corruption to bring together the private audit firms involved in local authority audit to share information, advice and good practice on the risks they identify in the audit role.

Transparency International UK also recommends that the Government should insist that the research function undertaken by the Audit Commission should continue somewhere within Government to give a clearer picture of the prevalence and scale of corruption in UK local government.

Again, although work has been undertaken by existing structures, such as the national fraud audit that has been taking place in some specific areas, there is no overall responsibility lodged with a specific body to undertake research at a national level.

The report recommends that each local authority should have a nominated individual responsible for counter-corruption who conducts a regular corruption risk assessment and liaises closely with law enforcement authorities. I will not go through the remaining recommendations except for the final one, which states that as work now goes out to the private sector, it is critical that auditors should be allowed to assess the documents from significant private contractors that a local authority has used.

[Chris Williamson]

On that point, is my hon. Friend familiar with the PricewaterhouseCoopers citizens jury which showed that, when polled, the overwhelming majority of the British public favour public services being delivered by public authorities and by directly employed public servants? If services are to be externalised, the safeguards that my hon. Friend is describing would be the bare minimum that the vast majority of the British public would expect.

[John McDonnell]

There is a general worry about what happens after privatisation. My hon. Friend cited a number of examples—rail, energy and others. People are concerned about standards of probity and issues surrounding the exploitation of the resource. There are similar concerns in relation to local government and the use of the private sector. It is important, therefore, that we build safeguards into the Bill to reassure people. I am a great believer in direct provision by the local authority itself, but if there is to be contracting out or outsourcing, it is important that we reassure people that there is a legislative framework that provides safeguards to ensure probity and to counter corruption. Transparency International suggests that that should be built into the legislation. It is important that we listen to an organisation that has the relevant expertise.

The final recommendation deals with freedom of information, which has been raised a number of times in the debate. Transparency International recommends:

“Private companies, when operating services in the public interest, should be required to comply with the Freedom of Information Act with regards to those services.”

As a specific example, it states that

“audit reports from local authorities should be covered under the Freedom of Information Act or published directly as public documents.”

That is not a particularly challenging recommendation. It should be standard practice.

As Members consider the Bill further, I suggest that they read the Transparency International report “Corruption in UK Local Government: The Mounting Risks”, and invite the organisation to provide them with more detailed information and evidence. That might enable us to address some of the concerns that have been expressed and which we all hear from time to time in our constituencies. These may be anecdotal, but the information from Transparency International suggests that there is mounting national concern as well.

My second point is about examples in my own area. The Bill does not seem to address any of the structural or procedural concerns arising from the degradation of accountability within local government. I was hoping that the Bill would go further in ensuring full accountability and transparency in local decision making. To a certain extent I blame the previous Government for the structural problems that we now have in local government. I use my own local authority as an example. I would like to see amendments to the Bill that ensure full transparency of all decision making.

In my local authority, Hillingdon, we have a leader and cabinet system which has centralised powers in the hands of one person—the leader. The leader is able to use exclusive patronage to appoint all the other members of the cabinet, and that patronage then determines the lucrative business of the payments of himself—£65,000 a year for a part-time job, plus expenses—and of every other member of the cabinet, who receive £50,000 to £55,000 each. If any members step out of line, they are demoted. In recent weeks in my local authority, I have seen long-standing experienced senior councillors prevented even from standing again for the local authority.

Transparency International’s report expresses concern about cronyism in local government. In my local area I am witnessing the worst forms of cronyism where the leader appoints everybody, everybody is responsible to the leader, and there are financial consequences if people step out of line. In addition to that, there is nothing in the Bill about the decision-making process in relation to policy, which has also been centralised. In my local authority all decisions, no matter how minor, go through the leader’s office. If any officer loses the favour of the leader, they are out. If an officer provides unpalatable advice to the leader, that is enough for them to be shown the door. That is described among officers in Hillingdon as a reign of terror.

Whistleblowing is not an option for most. In Hillingdon, when people are asked to leave, they go under a compromise agreement, which includes a gagging order. I would like to see in the Bill an end to all compromise agreements in local government and an end to all gagging orders that are implied as part of those compromise agreements, because they prevent officers from providing independent advice or making public their concerns to all members of the council and to the general public.

I want to see the Bill also address the issue of secrecy. The cabinet system means that all major decisions in my area are made in part 2 of the cabinet agenda—that means in confidence and in secrecy. As an officer in the past, I have advised on what should be in part 2 and what should be in part 1 and in public. Decisions which I considered in the past should be made in open committee and information upon which those decisions are made are almost inevitably put in part 2 in Hillingdon—the confidential part of a cabinet meeting. I want to see a provision in the Bill which restricts the ability of members to avoid accountability by putting decision making into the secret part of cabinet agendas.

I shall give a couple of examples to show how ludicrous the practice has become. For the building of a new school in my area, a matter which I have raised in the House before, a consultant was employed to examine which site the school should be built on. It was controversial because the council wanted eventually to build on a country park—a green-belt field about which even the Mayor of London expressed his concerns. The consultant’s report on which sites were examined, all in council ownership, was put in part 2 of the cabinet agenda—the secret part. Even freedom of information requests were refused on the grounds of commercial confidentiality.

We must address in the Bill how councils are allowed to interpret commercial confidentiality in a way that avoids accountability and avoids their providing even the basic information to local members of the public and also to opposition members. Let me give another example. On the same site there was a recent archaeological find of flints. The report from the archaeologist who discovered the flints was put into part 2 of the cabinet agenda on the basis of commercial confidentiality. It might have been commercially confidential 6,000 years ago, but not now. Eventually both reports were released, but not in a timely fashion.

The problem—I say this from a non-partisan point of view—is that an opposition councillor who seeks to reveal anything that is in part 2 of a cabinet meeting is threatened with criminal sanction, so people are fearful of releasing information from part 2. We should address that matter in the Bill. We need to define more clearly what is commercial confidentiality, and what criteria can be used for putting items into the secret part 2 of the agenda for a committee or cabinet meeting. I believe that is being abused, not necessarily for corrupt reasons, but perhaps for party political advantage or because individual councillors do not want to be held to account by local communities.

The Bill refers to audit and some elements of transparency as best it can, but it does not really address accountability and scrutiny. In my borough, scrutiny is virtually non-existent. Scrutiny committees are packed with a majority of party members loyal to the leader and can therefore be controlled by patronage. Scrutiny committees might have been an excellent idea some years ago, but in many local authorities, including mine, they have proved toothless.

There are real concerns about corruption. Advice needs to be provided to local authorities on how independent investigations should take place when allegations of corruption are made, but again that is not covered in the Bill. I will cite an example I raised in the House some years ago relating to the planning incentive grant introduced under the previous Government by the then Department of the Environment. If a local authority considered its planning applications within 13 weeks, it was given an additional grant from central Government, so it was in incentive to improve efficiency. In my local authority—this was proved, and the details published, as a result of what I said in the House—dates and signatures on documents were found to have been forged in order to bring planning application decisions within the 13-week period, even though many were taken later.

Those forgeries were exposed because fortunately one of the planning applications was submitted by a police inspector. He looked at the documentation and discovered that the dates had been changed. In fact, decisions on his application had been recorded as taking place even before council officers had met him to discuss it. After an investigation, a couple of officers retired from the local authority unsanctioned. Bizarrely, the leader of the section responsible for the planning process was then promoted. There is nothing in the Bill that provides real direction for local authorities on how to deal with such matters. It is extraordinary that these things still go on, yet we turn a blind eye to it by not relating the legislation to the real world of local government.

I could cite many other examples, including Southern Cross and the neglect of the elderly in my constituency, and non-monitoring as a result of the staff cuts that have taken place. Again, elderly people suffered but no one was held responsible. There was a refurbishment programme of an old people’s home—I raised this 12 months ago—which resulted in a year-long delay for elderly people being relocated to their homes. There was laundering of money via contracts to a builder. Again, there was an internal investigation that reported to part 2 of a cabinet meeting and there were no sanctions whatsoever against any officer. I wrote to the Secretaries of States of successive Governments on all those matters to call for an inquiry, but there was no response and no action was ever taken.

I am using my local authority as one example, but there are others across the country. My point is that the Bill seems to be irrelevant to what is happening in my local authority and many others across the country. It is irrelevant to the concerns about corruption raised by Transparency International and to our concerns about good governance and accountability at the local level. I hope that there might be an opportunity to amend the Bill and expand some elements of its remit to tackle some of the concerns that I, many of my constituents and many others across the country have. I hope that the Government are not fearful of grasping this nettle. Their main priority in the Bill should not be simply to let more contracts to the private sector; it should be to improve local audit and accountability. A key element of that is probity.

Let me turn to the proposal relating to local authority publicity. The all-party group on the National Union of Journalists, of which I am secretary, has been expressing concerns about some of the ideas raised throughout the consideration of this proposal. The NUJ represents members of the local press and media as well as local government officers working on the newspapers and journals published by local authorities. It is worth remembering, whatever has been said in the knockabout between the parties, that NUJ members working in local government abide by the same code of conduct as other journalists but, as local government officers, are not allowed to put forward party political views. Indeed, they could be sanctioned legally for doing so.

It has been argued that additional statutory powers are needed to strengthen the existing code of practice. As my right hon. Friend the Member for Leeds Central said, there are existing powers for that and the Government could take action against local authorities that overstep the mark, but they have failed to do so. They have taken no legal action and there has been no judicial review whatsoever of any council newspaper. I find that surprising, given the outrage that has been expressed in this House and elsewhere.

Although many of us would like to see thriving local newspapers reporting what happens in council chambers and providing information to their local communities, in reality it is rare to find a single journalist even at full council meetings. I will circulate the information from the NUJ on just how many newspapers have gone to the wall over the past 20 years, how many jobs have gone in the industry and the impact that has had on quality journalism. The circulation of some of the papers that still exist is also very limited.

The council newspaper is therefore often the only way that local people can get some form of information on what is happening in the local authority. I have looked at this, as has the Communities and Local Government Committee and others, to see what impact council newspapers have had on the commercial viability of local newspapers, and no evidence whatsoever has been found. In some instances it is quite the reverse, with an element of synergy between the local press and the local authority in its publication of information. I am concerned that the proposed measure is unnecessary, because sanctions already exist. It will also undermine the dissemination of information by local authorities to their local communities. From the NUJ’s point of view, it could have as a consequence the loss of jobs at a local level, which we should all be concerned about.

There also needs to be some clarity. I have criticised Hillingdon council, but let me now try to defend it. It is currently seeking to ensure that the local community is properly informed on two key issues of local concern. One of them, as my right hon. Friend the Member for Leeds Central mentioned, is the expansion of Heathrow airport, in which it is up against a large corporation that is sending out large amounts of information to the local community, most of which is inaccurate. It is only the local authority that is providing a balanced analysis of what is happening. The other issue is high-speed rail. I am anxious that Hillingdon council, or any other local authority, should not be debarred from ensuring that local people are kept informed about such pertinent issues, because it is absolutely essential that they are fully aware of the consequences if they are to exercise their democratic right and decide on the actions taken by local and national Government.

I would like assurances from the Minister that the activities of local authorities to inform local residents of matters such as high-speed rail or the expansion of Heathrow airport will not be curtailed by this legislation. I agree that putting press releases out is one thing, but if the local press has declined so badly, with a limited circulation and an inability to report on many issues, a press release will be inadequate. I understand the point the hon. Member for Mid Dorset and North Poole made about other mechanisms, particularly the internet, but not all people are connected, so they rely on the local authority journal that comes through the letterbox. I agree with what she said about having pictures of local councillors on every page, which I could possibly do without.

It is important that we in no way hamper the ability of local authorities to communicate with their residents. There may be opportunities for authorities to work together with the local press. I understand the point made about newspaper wrap-arounds, which have proved effective in some areas. That can assist greatly in communicating local ideas, but it does depend on the local newspaper’s circulation. Even the free sheets do not get everywhere, unfortunately. It might be possible—I would like the Government to look into this—to enable partnerships between local authorities and the local press whereby joint publications or similar could assist in the dissemination of local information.

[Chris Williamson]

Many local newspapers already print the council newspaper, thereby providing an income stream and additional source of welcome revenue for those newspapers, which are often under extreme financial pressure.

[John McDonnell]

I hate the word “synergy” but there is a potential for synergy between the local authority and some of the independent local press and publishers to disseminate information locally. One of the ideas that has come up is about local authorities participating in independent publishing companies—DCMS considered this previously—through joint ownership of a magazine or other communication that can go out to local residents. However, some flexibility from Government and amendments to the Local Government Act 2000 and the Local Government Act 2003 may be required to enable that sort of investment by the local authority in participating in independent companies.

There are constructive ways forward on this issue. If we take away the banter, whether it is about Hammersmith, or East End Life or whatever, we may arrive at a constructive way forward whereby local authorities can communicate with their residents and we can ensure that that is not used for purposes beyond good information dissemination and can protect jobs in the local authority and the local press.

18:52

[George Hollingbery (Meon Valley) (Con)]

Last time I spoke on local government matters of this complexity—this is a complex Bill—a colleague grabbed me from behind after I had finished and said, “By Christ, you seemed to know what you were talking about, but God you were boring.” I think I am likely to get the same response at the end of this speech, so I hope that Members will excuse me before I start.

I welcome the abolition of central auditing and inspection, which was highly bureaucratic and rarely had any real effect. It led to very little action, at least in my council, and was highly burdensome and expensive. Indeed, just putting in the systems to cope with it cost my council £50,000. That seemed completely over the top given that the council raises only £4 million in council tax.

I have already given an example of one of the ludicrous statistics that I had to collect, but I would like to share a couple more. We had to report the percentage of the council work force who were of black and ethnic minority origin compared with the percentage in the local area that we served. In one year, we had a 25% fall in that indicator because one person retired.

We were also asked to report on the time taken to re-let local council housing. Sitting here in Westminster that seems like a sensible thing to measure, but in Winchester we had a serious problem with hard-to-let apartments, many of which had been un-let for a year, perhaps two or even three years, because they were 30 or 40 years old and no longer suited to modern conditions. The better we did on that, the worse our indicator got, because the length of time we had taken to re-let council flats went up and up as we added a year or perhaps two years every time we re-let a council flat. That is not what was intended, and it demonstrates the problem with large central organisations. I very much welcome the abolition of the system.

Members have talked about the amount of money that has been saved by the abolition of the Audit Commission. There is some debate about this, but it is undeniable that the 70% of local government audit business that was previously handled in-house by the Audit Commission has been re-let at a 40% reduction in the amount charged. That is a real gain at a time of money difficulties, and it is to be welcomed.

The reason I have fairly lengthy notes is that the Communities and Local Government Committee, on which the hon. Member for Derby North (Chris Williamson) also served, reported on this issue in July 2011. I should like to go through some of the recommendations that we made, compare them with the Bill, and see whether what we recommended has been delivered. In evidence, we detected some nervousness about violating the principle that public bodies should not appoint their own auditors. I have never understood the problem with that. I cannot see the philosophical difference between the private and public sectors in terms of audit. In both cases, roughly the same requirements hold. Yes, we have to be absolutely confident that public money derived from taxation is properly spent, but why is that, in principle, any different from individuals giving money to private companies that has to be properly handled and is subject to the rules of the land? In both cases, the public must have full confidence that the law is being upheld and that their money is being spent as intended. I recognise that a lack of confidence in how public money is being spent threatens the whole principle of a Government being able to raise taxation in the first place, which lies at the very heart of our democracy. That said, I cannot see that there is any greater need than a general confidence in the true and fair view of the private sector on which so much of our economy rests. I cannot see why this is any more important in the public sector than in the private sector.

The Committee felt that the change was no great threat as long as sufficient safeguards were put in place, and I firmly believe that the Bill provides them. A reasonable summary of our principal recommendations is that any replacement audit regime should be independent, transparent and effective. Let us then look at the Bill to see whether it contains remedies to those three issues. We asked that any scheme be “proportionate and risk based”. Paragraph 1 of schedule 6 deals with that in that it specifically allows the code of audit practice to be different for different authorities. That is exactly as it should be. It is somewhat at odds with our request for “ensuring consistency”, but as long as all audit is driven by the same overarching principles, the need for a proportionate approach trumps uniformity.

We asked that local so-called value-for-money reporting be carried out by each authority rather than the auditor. Clause 19 provides that auditors must be satisfied

“that the authority has made proper arrangements for securing economy, efficiency and effectiveness in its use of resources.”

It is unclear how that will be dealt with in detail, but we must suppose that it will be covered in the code of practice issued by the National Audit Office. I urge the NAO to accept the Committee’s recommendation and leave the form of that to local authorities to supply as they see fit and for auditors to judge adequacy and robustness.

We also asked for

“clear and uncontestable protections for assuring the independence of audit committees and auditors”.

That is unequivocally provided for in clause 9 and schedule 4 for audit committees and in schedule 5 for the auditor. We asked that any appointment decision rest with full council rather than another body of councillors to ensure that the decision could not be made on the quiet. Paragraph 1 of schedule 3 does exactly that.

In the other place, Lord McKenzie tabled amendments to allow local authorities to create a voluntary sector-led body to appoint auditors, thus removing the need for all local authorities to have their own independent audit committee to appoint auditors. That is eminently sensible, and I am absolutely sure that it will lead to competitive tendering that will reduce bills for all authorities. I am pleased, as was the right hon. Member for Leeds Central (Hilary Benn), that Baroness Hanham conceded that in the House of Lords and that amendments to that effect will be tabled in Committee.

In passing I note that where authorities choose not to join such a body, there may be scope for having one committee in a council that deals with all issues that require independent control. I suspect that that does not need addressing in the Bill but is something that councils could do for themselves. To my mind, there is at least one other such committee—that setting councillors’ rates of pay and expenses. There could be one committee that has a majority of independent councillors and/or members and an independent chairman that would be allowed to deal with all issues that required an independent view.

Clause 16 provides for the regulations on the removal of auditors, on which the Committee concluded that there should be a double lock, whereby both full council and the audit committee had to recommend the removal of an auditor before it could happen. Clause 16 specifies only that regulations may be issued on that subject. We will need to see the detail of the secondary legislation to be completely certain about how the issue of removal will be dealt with, but I am confident that the Government understand that protecting auditors and their role in councils is extremely important, and that removal and how it occurs must be dealt with adequately.

On the qualifications of auditors, Lord McKenzie raised in the other place the issue of specific qualifications for auditors in the public sector. Given that I have some experience of both public and private audit, I can vouch for the material difference between the two—some might call it a gulf—and I welcomed the Government’s commitment in the Lords to add words to that effect. Those words now appear in clause 17 and paragraphs 8 and 13 of schedule 5, which will establish a register for qualified individuals. That is a sensible move. If we are going to have independence of audit, we need to make absolutely certain that those who are eligible to be auditors are properly qualified and that there is a register where we can check whether they are properly qualified.

The Committee also commented on the transparency of the process, a topic that was also brought up in the Lords. I do not intend to dwell on it for too long, because I have already made clear in an intervention on the shadow Secretary of State that I think that clauses 21 and 22, combined with clauses 24 and 25, make it unnecessary for the regime to be subjected to freedom of information legislation.

The Committee was concerned that the right to object to accounts should be proportionate and reasonable. Many members of the Committee and witnesses reported that the right to object had been substantially abused in the past. I suspect that many who have worked in local government will recognise that that is a tactic used by people who are dissatisfied with the council in general or perhaps even with one particular councillor.

One individual cost my own council more than £50,000 in a single year by challenging the accounts in what can only be described as a vexatious manner and an angry reaction to a decision that had affected him personally. As such, I welcome clause 26, which, while allowing timely and significant objections, seeks to limit the ability to misuse the power.

The Committee was particularly concerned about the matter of public interest reporting. We asked that that element be safeguarded when the Bill was introduced, but we did not seek to prescribe how that should be done. My reading of the Bill is that the issue is more than adequately covered by schedule 7.

Lord McKenzie probed the question of whether the National Audit Office should be explicitly tasked with performing the role previously played by the Audit Commission as mentor during the public interest reporting process, for which the Committee also asked tangentially. Baroness Hanham responded in the Lords by saying that, given the NAO’s role in the design and scope of local audit, she felt that it would always be there to give advice. I think that that is a reasonable assessment and it seems that Lord McKenzie agreed.

Finally, the Committee felt that the proposal for thematic studies previously undertaken by the Audit Commission to be undertaken by the NAO was entirely workable. Indeed, we said that it “may have some advantages”. We also expressed the view that the Local Government Association was well placed to do more work of this sort outside the more formal NAO structure. My understanding is that the LGA is keen to progress this matter, and I would welcome that.

It seems to me that, given all the measures under discussion, any reasonable observer can safely conclude that the new regime gives more than adequate confidence that the new system will be robust, transparent and independent.

I want to comment briefly on a couple of other aspects of the Bill that deal with matters other than audit, and it will not surprise anyone to know that one of them is “The Code of Recommended Practice on Local Authority Publicity”. At the moment the code is only advisory and continues to be abused by only a very small number of authorities. It is right that public money should not be allowed to pay for partisan political activity, save in very limited instances and when specifically authorised by Parliament; Short money is a particular case in point. The Government are absolutely right to try to stop such abuse. It cannot be right to have political campaigning on the rates, but I ask the Minister to be careful.

At present a number of authorities breach the code, but they do not do so for political gain; usually, it is related to the frequency of publication. There is an argument that quarterly publishing is more than adequate and that to allow more would threaten the viability of local newspapers, particularly if the content of the council newsletters is not limited solely to council matters, takes advertising and is laid out in such a way to compete directly with newspapers. I have some innate sympathy with that position, but I must admit that the evidence that there is truly an adverse effect is scant.

My real worry is that, while the enforceability of the code is clearly important, so too is the proportionality of the code itself. I suspect that Ministers are not, in fact, too worried about the frequency of publication. Their real worry is the partial nature of a very few publications—the “Pravdas,” to quote the Secretary of State—but legal officers on councils will not see it that way. Understandably, once the code becomes enforceable their advice will be that they cannot recommend anything other than that which the code allows, which includes not publishing more frequently than quarterly, as detailed in paragraph 28. I believe that as long as local authorities can adequately justify a more than quarterly publication we should not seek to prevent them from doing so.

A more than quarterly publication would have been costly and pointless for my own district council. We simply did not have enough to tell our local electorate every single week or even once a month. At the same time, a number of much larger authorities could easily fill a publication monthly with objective, useful and relevant information for residents. May I encourage the Minister to look at the code with a view to dealing with that point?

Will the Minister also look again at the publication requirements for statutory notices, which have already been mentioned? Although it is right that we consider the effect on local newspapers of the competition provided by local authority publications, it is also right that we consider how we spend public money to best effect.

One of my local editors made the argument to me that it is important for readers to be able to see what is going on in a public authority and that the publishing of statutory notices in newspapers is an important part of that process. I pointed out to him that if he truly thought that to be the case, there was nothing to prevent the paper from reporting on them and publishing the list itself if it felt that strongly about the matter. The simple fact is that the vast majority of the public access data about planning, licensing and so on from public notices and, thereafter, council websites, rather than from the local paper.

This issue was a bugbear to me as a portfolio holder. It was expensive, inflexible and of little advantage to the public, and it cost my council—a small district council—£32,000 a year. It may have been to the advantage of the profitability of newspapers, but I really do not think that that should be a relevant factor.

Finally, I turn to council tax referendums. It is clear that the Government are right to give local voters the right to vote on council tax increases that are above the limit set by the Government as reasonable and proportionate. I believe that is much better than a cap, allowing as it does for a council to take its case to the voters if it believes it has a strong enough case to persuade them.

The Bill corrects an anomaly in current regulations that omit levying authority charges from the calculations that determine the proposed percentage increase on council tax. We have already had the argument about why they should be added, but there is a difficulty that the Government need to address. If there needs to be a council tax referendum because the amount charged by the levying authority pushes council tax above the Government’s limit, there is no legal way in which the council can force that levying authority to change its charge. Neither is there any duty on the levying authority to hold a referendum—that falls to the local council taxpayers. I believe that that is wrong. We have to force some decision on levying authorities if this particular provision is to work correctly.

Three simple possibilities have occurred to me. It may be that none of them is the right thing to do, but they are all possible. The first is to impose a cap on levying authorities, which is not something that I would favour. The second is to impose the cost of the referendum required as a result of the charge from the levying authority on the levying authority. The final one is to make a no vote binding on the levying authority, such that it has to change the charge back in such a way that the overall council tax will rise only by the amount specified by the Government. I would welcome a commitment from the Minister to consider the matter and hope he will make some proposals in Committee.

In conclusion, I am confident in the general thrust of the Bill and in the vast majority of its measures. I will certainly vote for it tonight should there be a Division, although I suspect that is unlikely given what others have said. I ask, however, that Ministers address some of the concerns I have raised when the Bill goes to Committee.

19:08

[Andy Sawford (Corby) (Lab/Co-op)]

This has been a lively debate on an important Bill and it is a pleasure to follow the contributions of many hon. and right hon. Members. The hon. Member for Bromley and Chislehurst (Robert Neill) spoke with experience of local government, and it may not surprise him that I want to start on a note of consensus with him and the hon. Member for Meon Valley (George Hollingbery) by saying that I for one recognise that the Audit Commission went beyond its remit. Indeed, my right hon. Friend the Member for Leeds Central (Hilary Benn) made clear at the outset that we do not seek the restoration of the Audit Commission, and we understand that, to be frank, no one will lament its passing.

However, even though the Bill has been three years in the making, it is full of holes. My hon. Friend the Member for Derby North (Chris Williamson) said that the Bill is a dog’s breakfast. He made a strong speech in which he talked about the important functions of the Audit Commission, such as auditing and providing value for money in an independent way. Although we might not lament the Audit Commission’s passing, we should be concerned about those vital functions.

We must explore critical issues in Committee that are currently unclear, such as the arrangements for the future management of audit contracts and the transfer of Audit Commission functions. We do not know, for example, who will maintain the vital value-for-money tools. As a result of pressure in the Lords, not least from my hon. Friends, we have been promised improvements, such as amendments on opting into centralised arrangements for audit procurement. We can only hope that when the details are forthcoming in Committee, they meet the aspirations of their lordships and of the many organisations, including the LGA, that have pressed for those sensible amendments. It was good to hear the hon. Member for Mid Dorset and North Poole (Annette Brooke) pressing the Government on that point. I hope that she will take forward the good work of her colleague, the noble Lord Tope, in Committee.

There is doubt about the amount that the proposals will save. When the Minister responds, I expect that he will make claims about the level of savings, as did the Secretary of State in opening the debate. However, it would do Ministers much more credit if they stopped double-counting and deliberately inflating the estimated savings. We all know that most of the savings have already been banked with the axing of the Audit Commission’s inspection work and with most of the audit work outsourced.

It is disappointing that the Government ignored the advice of the draft Local Audit Bill ad hoc Committee, which, after receiving conflicting evidence on the savings, recommended that a new financial impact assessment be made. The Committee believed that only modest savings were likely and was concerned about whether a real market would develop. As my right hon. Friend the Member for Leeds Central said, in the last financial year, only seven firms were appointed for the nearly 800 councils, health bodies and fire and rescue authorities that were audited by private firms, and 90% of those bodies were audited by only five firms.

The Audit Commission has raised fears that some local authorities might find it hard to attract a suitable auditor:

“In a free market, we believe there is a risk that some local authorities may find it hard to attract an auditor with the necessary skills and experience, at a reasonable price.”

It continues:

“We are aware that the firms are already considering which audits they would look to drop under the new arrangements.”

As my hon. Friend the Member for Derby North, the LGA and the National Association of Local Councils have said, that will be a particular concern for smaller authorities.

On new entrants to the market, I share the scepticism of the draft Local Audit Bill ad hoc Committee, which said:

“We heard evidence to suggest that it is not realistic for smaller firms and organisations such as mutuals and co-operatives to bid successfully for one-off audits without an inevitable impact on quality, consistency or cost.”

The Local Government Information Unit, whose evidence and advice should always be considered—I should declare an interest as its former chief executive—points out that a 10% increase in audit fees would wipe out any predicted savings. Grant Thornton said that

“it is likely that fees will increase, not decrease, as a result of the draft Bill”.

[John McDonnell]

One simple measure to expand the market might be to prevent an audit firm from being the auditor for a local authority if it already has contracts with that authority.

[Andy Sawford]

My hon. Friend made a very interesting speech and I hope that he will follow the passage of the Bill closely. I will have to give further thought to the implications of his suggestion, but if the arrangements proposed by the Government are to work, there must be an open market and a wide range of audit firms must provide audit services. We would also want that to be reviewed regularly by the audit panel. The points that the hon. Member for Meon Valley made about the dismissal of auditors were important.

Steve Parkinson of the Society of Local Council Clerks said:

“When we get to the 2017 tender exercise, I cannot imagine those fees going down, and especially for the smallest, I can see them needing to go up.”

That speaks to the point made by my hon. Friend the Member for Derby North about what lies ahead. What assurance can the Minister give that the new audit arrangements will not lead to rising costs, rather than savings, for some councils?

On savings, it is welcome that, after Labour pressure in the Lords, the Government undertook to look sympathetically at a proposal for an optional joint procurement body. We welcome the assurances that the Secretary of State has given today and we look forward to seeing those proposals. Central procurement could save more than £205 million of public money over five years. That figure does not come just from the Audit Commission, but is supported by the LGA. Will the Minister assure us that he will bring forward detailed proposals on joint procurement as soon as possible? We hope to have them by this Thursday evening so that we can give them full and constructive consideration in Committee.

Joint procurement arrangements might address some of the concerns about the practicalities of requiring all councils to have auditor panels with independent members. As my right hon. Friend the Member for Leeds Central said, the Secretary of State considers himself to be a revolutionary, so he must be disappointed to be associated with arrangements that everyone but him sees as overly bureaucratic.

We will table amendments in Committee on the overlap between the new audit panels and the audit committees that most councils already have. My hon. Friend the Member for Hayes and Harlington (John McDonnell) suggested that all councils should be required to have an audit committee. Most councils have one already, but we should consider his suggestion further in Committee. We will also raise the practicalities of recruiting sufficient independent and appropriately qualified members for the audit committees, which were referred to by the hon. Member for Mid Dorset and North Poole. What evidence does the Minister have that there are people who are willing and able to take on that important role?

In Committee, we will also explore the removal of auditors and the purposes for which data matching can be used. As the Bill stands, those purposes do not include the prevention and detection of maladministration and error, as my hon. Friend the Member for Hayes and Harlington pointed out. We want to see that included in the Bill. We also want auditors to be covered by the Freedom of Information Act and will table amendments to that effect.

Does the Minister understand the concern that whistleblowers might feel uncomfortable approaching a private auditor that is employed by a local body or council? That is why we will propose that the audit committee should be named as a prescribed person in the Bill. I do not understand why the Government have resisted that. Perhaps the Minister will enlighten us.

My hon. Friend the Member for Hayes and Harlington highlighted concerns about corruption. I have read the important report that he mentioned. It is important that the new audit arrangements maintain independence, encourage probity, make appropriate provision for whistleblowers and ensure that it is possible to compare the relative performance of different authorities. He made wider points that we should explore further, including on the openness of council meetings, the use of commercial confidentiality and the role of scrutiny.

Perhaps the biggest disappointment with the Bill, as my right hon. Friend the Member for Leeds Central and my hon. Friend the Member for Derby North said, is that the proposed audit arrangements do not provide for the changing way in which public services are being managed and provided. The proposed arrangements require each local authority and other local bodies and public sector bodies to conduct separate audits. However, shared services, community budgets and combined authorities all demonstrate that there is a shift towards much stronger partnership working by local authorities, including with Government Departments. It is therefore a missed opportunity that the Bill focuses too narrowly on individual local authorities, rather than on arrangements that would enable auditors to follow the public pound through the system.

Many hon. Members have spoken about the provisions on local authority publicity. We support the code of recommended practice on local authority publicity and believe that it is broadly sensible. However, as my right hon. Friend the Member for Leeds Central said, there is no evidence to suggest that there are widespread breaches. No hon. Member has provided clear evidence of that today. The Government have taken no action to date under the code. Why not?

Clause 38 will allow the Secretary of State to issue a direction regardless of whether or not he thinks the authority is complying with the code. That is an extraordinary power grab that is worthy of the worst form of authoritarian government. The hon. Member for Bromley and Chislehurst revealed the true purpose of it. In seeking to support the Government, he listed a range of council publications, but gave no examples of where they had breached the code. The only common factor between the publications was that they were all from Labour-led councils. I know that in his heart he is a localist, as am I. Does he not agree that the way to deal with the problem is to fight the elections in those areas a little harder and to seek a Conservative majority, because it is clearly their political control that offends him, rather than the content of the magazines?

As for the wider controls on council publications, the Government suggest that local authority publications undermine the local press, but there is no evidence to prove that. Local papers are struggling for a variety of reasons. Indeed, as my hon. Friend the Member for Hayes and Harlington said, sometimes there is a welcome synergy between local newspapers and council papers. The Conservative-led LGA has complained, rightly, that the proposals are ill considered and not based on evidence or proper consultation—points echoed in the House of Lords by the Conservative peer Baroness Eaton, and the Liberal Democrat Lord Tope.

In my area, I have received many representations from residents in the smaller towns and villages of east Northamptonshire for whom the Nene Valley News—published, despite my best efforts, by the true blue local council—is a communications lifeline. Some residents of those villages feel so strongly about the issue that they tell me they will consider voting for me and my party for the first time because of the impact the measures will have on general well-being in those villages. That is surely not what the Secretary of State thought would follow from his nonsense claims about pocket Pravdas, which he cannot substantiate. We hope the Government will see sense when we consider the Bill in Committee, and I hope we will have the support of the hon. Member for Mid Dorset and North Poole because, as she rightly said, this is using a sledgehammer to crack a nut.

When the Minister responds, will he say whether he accepts the comments made by his colleague, Baroness Eaton, a former leader of Bradford council, that the Bill centralises powers to the Secretary of State? Will he say how many local authorities in England publish magazines more than six times a year, and will he inform the House how many times the code of practice on local authority publicity has been breached? We are concerned that the third major area of the Bill on council tax referendums adds further uncertainty to council finances at a time when—as my hon. Friend the Member for Derby North said—councils face incredible challenges, and that that could lead to further reductions in essential local services.

Clause 39 means that councils may have to hold a referendum on council tax increases because of increases in levies due to agreements made in previous years or over which they have no control. As my right hon. Friend the Member for Leeds Central said, we are deeply concerned about the retrospective nature of those changes—a point pressed on the Minister by the hon. Member for Mid Dorset and North Poole in another sensible intervention.

A year ago the Government signed city deals to improve transport infrastructure and boost local growth by allowing specific transport authorities to raise money for specific schemes. A year on, that agreement is being torn up. That undermines confidence in the whole city deal process across government, and harms the certainty on which sound financial planning and private investment relies. In short, it is damaging for our cities and our economy. As the LGA said:

“There is a risk of perverse outcomes that will put growth generating investment at risk”.

That is absolutely right, and I hope the Minister will address that issue and think again.

There are other complications. Authorities have no powers to reject levies, yet they are obliged to hold referendums because of large levy rises imposed on them by other bodies. The actions of levying bodies could lead to council tax referendums in some authorities, but not in neighbouring authorities because some levying bodies cross local authority boundaries. I hope the Government recognise the serious problems with those proposals.

The Chartered Institute of Public Finance and Accountancy stated:

“The entire burden of any referendum is actually placed on major preceptors and billing authorities despite the fact that they have no ability either to directly influence the amount of individual levies or require a body to reduce its levy as a result of a referendum.”

Does the Minister accept that including levies in the amount used to trigger a council tax referendum will jeopardise the city deals his own Government have approved? If a council tax referendum is lost and the levying body refuses to reduce its levy, what does he expect a local authority to do?

Despite serious problems with the Bill, I will end on a positive note. The Government propose to introduce two new elements to the Bill: on parish polls and transparency of council meetings. As the Minister would expect, the Government will have to answer the justifiable criticism—not least from our friends in the other place—that those proposals are being introduced rather late in the day and have not had the scrutiny given to the rest of the Bill. However, we support the intentions behind the proposals, and stand ready to play catch-up and assist with detailed scrutiny of those proposals in Committee. I sincerely welcome assurances that the Government will address the concerns raised by my right hon. Friend the Member for Leeds Central about combined authority boundaries. I hope we can do that through the Bill, but we welcome the assurance that another way will also be sought.

Finally, I thank the Minister for the helpful dialogue we have had since my appointment, particularly over the instruction to extend the scope of the Bill, and for the way he has facilitated contact with officials at his Department involved with the Bill. I hope that he is under no illusions about the many holes in the Bill, but also that he is in no doubt that the Opposition will approach Committee stage constructively.

19:24

[The Parliamentary Under-Secretary of State for Communities and Local Government (Brandon Lewis)]

Right hon. and hon. Members have raised a number of important points in the debate, and I look forward to discussing some of them in more detail during Committee as well as now. I will first respond to some of the main points raised, and then I will speak more generally and hopefully cover all the points Members have made.

A few comments have been made, not least by the right hon. Member for Leeds Central (Hilary Benn), about an audit for a modern world and authorities working together—an understandable point as we are looking to modernise the way we all work. Auditors of local government bodies and health bodies are required to comply with the relevant code of audit practice, and are used to working together across organisations in both the public and private sectors. It is right, however, that auditors must assess the body responsible for the spending, which is why the Bill is worded in this way.

The right hon. Gentleman also raised data matching, and we are sympathetic to that issue and will no doubt discuss it in Committee. The hon. Member for Corby (Andy Sawford) mentioned a sector-led procurement body. We are open to allowing the establishment of a central procurement capacity, provided—this is key—that it is led by the sector, is not mandatory, and gives local authorities the choice and opportunity to take part or appoint locally. We will deal with that in Committee.

Comments have been made about independent audit committees, or auditor panels, and the approach in the Bill gives flexibility to local authorities. A body can use its existing audit committee to act as the auditor panel if the majority is independent, or it can establish a small separate auditor panel if it is not, thereby allowing for anything that might happen later with a centrally organised sector-led body.

The hon. Member for Derby North (Chris Williamson) raised some issues, not least competition in the audit market. We are not creating new barriers; in fact, we are opening the local audit market and I hope it will develop even further. He also commented on whether council tax referendums are fair—other Members also made that point—and said that nobody wants this change. Councils such as Stockport, Liverpool and Newcastle—to name a few—might disagree with him, however, as they have all asked specifically for this change, which will put all local authorities on to a consistent footing. Currently, some local authorities undertake functions directly and in-house, and are therefore subject to referendum principles within that. Levying bodies are not, and therefore the proposals will bring things closer together.

My hon. Friend the Member for Bromley and Chislehurst (Robert Neill) did an excellent job early in this Parliament on ending the Audit Commission—the quango and the way in which it worked with the comprehensive area assessment. He has huge experience in and understanding of local government, and how the Audit Commission worked. I appreciate the time he has given me since I took office to work through some of those issues. His huge experience has been a great asset in reaching the point we have with the Audit Commission. We have managed to save councils so much in officers’ time, and therefore taxpayers’ money, over the past couple of years, as my right hon. Friend the Secretary of State was able to take through the ending of the comprehensive area assessment. My hon. Friend the Member for Bromley and Chislehurst mentioned the publicity code and referendum principles, and I will touch on those in the main part of my speech.

I welcome the support of my hon. Friend the Member for Mid Dorset and North Poole (Annette Brooke) for parish polls and the modernising of transparency, as I do that of the hon. Member for Corby. My hon. Friend noted how important the council tax freeze has been for families, which is one reason why we think it so important for that freeze to be applied across the board, fairly and evenly, as I have outlined. She also mentioned statutory notices, which I will touch on in a moment.

The hon. Member for Hayes and Harlington (John McDonnell) touched on a range of issues that are probably outside the scope of the Bill. I must explain to him, however, that the Audit Commission has been contracting out a percentage of its work for some considerable time. He also touched on counter-fraud activities and outcomes, and we are clear that local government must tackle fraud. That is worth about £2 billion a year, and it is important for taxpayers that it be dealt with. We are actively supporting local government to tackle that issue, not least through the Fighting Fraud Locally strategy with the Local Government Association.

At the point of closure, the Audit Commission’s national fraud initiative will transfer in its current successful form to the Cabinet Office. We recognise the value of the Audit Commission’s other counterfoil tools and are working with it and other interested parties to develop recommendations on their future.

[John McDonnell]

May I suggest that the Minister meet Transparency International UK and go through its report? Perhaps he could offer advice in Committee after meeting that group.

[Brandon Lewis]

As a general matter of principle, I am happy to meet anybody who wants to talk about any part of my brief. I obviously extend that invitation to Transparency International UK.

On the fairness of council tax referendums, my hon. Friend the Member for Mid Dorset and North Poole rightly outlined the anger of some areas and residents when they are faced with claims of a council tax freeze but receive spiralling bills from their authority. Clause 39 specifically addresses that—it ensures that claims of a freeze are based on the bill that hits doormats rather than any half-measures.

My hon. Friend the Member for Meon Valley (George Hollingbery), who has a background in local government, spoke of his wide experience of comprehensive area assessments and gave a great outline of exactly why we need a firm ending of the Audit Commission, so there is no chance of it coming back in the format we have experienced. He touched on auditor appointments, on enforcing the publicity code, which I will deal with later, and on council tax referendums and levying bodies. He suggested a range of interesting opportunities to ensure that referendums are dealt with in a proper and fair manner for the authorities. I look forward to taking his suggestions forward in Committee.

Let me be clear why the Government have decided to proceed with the final abolition of the Audit Commission. The House has heard how our reforms to local audit will result in a more efficient audit system, with an estimated £1.2 billion of savings—I would not want to disappoint the hon. Member for Corby by not mentioning the £1.2 billion of savings. That is exactly why it is important to push forward and embed that to stop any chance of future Audit Commission mission creep.

The reforms are not just about saving money. They are about the Government’s drive to decentralise power and responsibility to local bodies, and giving local people better tools to hold bodies to account. By cutting out the middleman, local bodies will no longer be forced to foot the bill for Audit Commission costs. They will know exactly what they are paying for in their audits. Local bodies will be required to publish information about their auditor appointments and any public interest reports they receive from the auditor. People will therefore be able to find that information locally, rather than having to go to a remote central body.

The reforms improve local accountability. As many hon. Members, including Opposition Members, have said, the Audit Commission had lost its way, forcing councils to focus on Audit Commission priorities rather than priorities that matter to local residents. My hon. Friend the Member for Meon Valley outlined some of those. As a councillor, I remember sitting in meetings when officers told us what we should do—it was often to do with waste collection. The suggestions were not made because they were right for our residents, but because they ticked a box to please the Audit Commission, and the Government would punish us further down the line if we did not take that action. The Government’s impact assessment estimates that the cost to local authorities of complying with the CAA was around £25 million per year—that money could be better spent on other things that residents want and need and deserve to have delivered.

Let me reassure hon. Members who are concerned that the quality of audit will suffer. The Government are committed to ensuring that that does not happen. Private audit firms have long had a role to play in auditing public bodies. As I have said, the Audit Commission has contracted out some 30% of its audit contracts to private audit firms. Last year’s outsourcing exercise demonstrated that public audit can be carried out to the same high level but at a much lower cost to the taxpayer.

The Bill contains robust mechanisms to safeguard auditor independence. The work of the auditors remains largely unchanged and auditors will still be required to use their professional judgment to decide whether to make a report in the public interest if they believe something is amiss. To enshrine that important principle, the Bill allows auditors to recover costs for their time in making a public interest report or advisory notice. By amending existing secondary legislation, we will ensure that whistleblowers can make disclosures to local auditors directly or to the National Audit Office.

Many hon. Members have mentioned the publicity code. I want to make one point clearly at the outset: there is no change to the code. The measures contribute to the Government’s commitment to localism rather than run counter it. Given that the code is not changing, I am somewhat surprised that any hon. Member has a problem with it being put into statutory form. Opposition Members have complained that the Government have not enforced the voluntary code. By putting it in statute, we can make sure that it is enforced to ensure that taxpayers’ money is spent appropriately and properly, and not for political ends.

There have been exaggerated claims that provisions on the code will lead to central Government clamping down on, for instance, HS2 campaigning, which has been mentioned. That is nonsense. Councillors are free to campaign on behalf of their constituents. Indeed, the Government legislated in the Localism Act 2011 to give councillors the freedom to campaign. If any challenge is balanced and factually accurate, it will not contravene the code, unlike some publications. For example, Nottingham city council’s website seems unusually to mirror the Nottingham Labour party’s website. Residents might want to question expenditure on that sort of thing. If anything, the publicity code defends council communications from political interference and propaganda-pushing, as was outlined by my hon. Friend the Member for Bromley and Chislehurst, who gave a range of examples.

The Government have no intention of monitoring or censoring communications, but it is right for us to act when concerns are expressed that local authorities are in breach of a code approved by Parliament. It is certainly right to act when authorities use taxpayers’ money to fund publicity for political purposes.

[Hilary Benn]

Where is the evidence?

[Brandon Lewis]

The right hon. Gentleman keeps asking for evidence, but my hon. Friend the Member for Bromley and Chislehurst has given it to him. In addition, I suggest the right hon. Gentleman compare Leeds city council’s website with the Labour party website.

The Government are aware of the burden that placing statutory notices in newspapers can place on local authorities, and that some authorities believe there are cheaper and more effective ways of informing local people on issues that affect their lives. The Secretary of State has been clear that, in the internet age, commercial newspapers should expect, over time, less state advertising as more information is syndicated online for free. Local papers need to develop new business models to fit the 21st century, particularly as it does not make sense to cross-subsidise one industry with fees from another. However, that will take time.

The Government’s council tax referendum measure will give protection against large increases in taxes raised by levying authorities such as waste disposal, integrated transport and pension authorities. Some say that the measure is unfair. I dealt with that earlier in my speech, but let us be clear that local authorities and levying bodies can work together and have done so, both under the old Government capping procedure, and more recently through the referendum principle. Councils have long worked together to agree council tax levels. That was always the case under previous systems.

[Chris Williamson]

Will the Minister at least acknowledge that levying bodies could, if the referendum goes against the council tax increase, result in even bigger cuts in the local authorities affected? Surely he must accept that.

[Brandon Lewis]

I do not accept that. The hon. Gentleman tried to make a good argument for his point of view—he wants more councils to increase tax—but the Government believe in freezing council tax and in keeping the cost of council tax down for families. We are unlike the previous Government, under whom council tax doubled. He made the argument for letting council tax spiral yet again, but I am afraid the Government do not agree with him.

The Government have made it clear that there has been no agreement to allow excessive increases in council tax without a referendum as part of a city deal. City deals are important, but they are also subject to the referendum principles. The largest estimate for a city levy in Leeds is still well below the 2% referendum principle—it is between 0.2% and 0.9%.

The House will decide shortly whether it consents to the Government including measures in the Bill to modernise the rules governing parish polls and to increase the transparency of council meetings. At the request of the other place, we are seeking to amend the Bill to include measures on parish polls, because they need to be modernised to bring the archaic process up to date, and to ensure they provide a legitimate method for local communities to have a voice on issues that directly relate to parish matters.

The widening of the Bill’s scope creates the opportunity to tackle not only parish polls, but problems with the transparency of council meetings. Those important measures will increase local accountability, strengthen local democracy and save taxpayers money. I appreciate the co-operation of the hon. Member for Corby on the matter and how he has worked with the Government to bring the measures forward. We will doubtless have further discussions on them in Committee, but town hall doors should be open to bloggers, tweeters and those who want to film and report on meetings. We will discuss that further in a few minutes.

It is a pleasure to serve under your chairmanship, Madam Deputy Speaker—this is the first time I have spoken at the Dispatch Box with you in the Chair. I hope the House sees fit to support the Bill.

Question put and agreed to.

Bill accordingly read a Second time.

LOCAL AUDIT AND ACCOUNTABILITY BILL [LORDS] (PROGRAMME)

Motion made, and Question put forthwith (Standing Order No. 83A(7)),

That the following provisions shall apply to the Local Audit and Accountability Bill [Lords]:

Committal

(1) The Bill shall be committed to a Public Bill Committee.

Proceedings in Public Bill Committee

(2) Proceedings in the Public Bill Committee shall (so far as not previously concluded) be brought to a conclusion on Thursday 21 November 2013.

(3) The Public Bill Committee shall have leave to sit twice on the first day on which it meets.

Consideration and Third Reading

(4) Proceedings on Consideration shall (so far as not previously concluded) be brought to a conclusion one hour before the moment of interruption on the day on which those proceedings are commenced.

(5) Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion at the moment of interruption on that day.

(6) Standing Order No. 83B (Programming committees) shall not apply to proceedings on Consideration and Third Reading.

Other proceedings

(7) Any other proceedings on the Bill (including any proceedings on consideration of any message from the Lords) may be programmed.—(Mark Lancaster.)

Question agreed to.

LOCAL AUDIT AND ACCOUNTABILITY BILL [LORDS] (MONEY)

Queen’s recommendation signified.

Motion made, and Question put forthwith (Standing Order No. 52(1)(a)),

That, for the purposes of any Act resulting from the Local Audit and Accountability Bill [Lords], it is expedient to authorise the payment out of money provided by Parliament of:

(1) any expenditure incurred by a Minister of the Crown or the Comptroller and Auditor General in consequence of the Act; and

(2) any increase attributable to the Act in the sums payable under any other Act out of money so provided.—(Mark Lancaster.)

Question agreed to.

LOCAL AUDIT AND ACCOUNTABILITY BILL [LORDS] (Ways and Means)

Motion made, and Question put forthwith (Standing Order No. 52(1)(a)),

That, for the purposes of any Act resulting from the Local Audit and Accountability Bill [Lords], it is expedient to authorise:

(1) the charging of fees in connection with the recognition of qualifications and supervisory bodies and of periodical fees to be paid by recognised qualifying and supervisory bodies, and

(2) the payment of sums into the Consolidated Fund.—(Mark Lancaster.)

Question agreed to.

Local Audit and Accountability Bill [Lords] (Instruction)

Monday 28th October 2013 Commons Chamber

19:40

[The Parliamentary Under-Secretary of State for Communities and Local Government (Brandon Lewis)]

I beg to move,

That it be an instruction to the Local Audit and Accountability Bill [Lords] Committee that it has power to make provision in the Bill about:

(1) polls consequent on parish meetings, and

(2) access to meetings and documents of local government bodies.

The motion seeks to widen the scope of the Bill to provide for the measures to be introduced. I take this opportunity to thank the Opposition, who have offered their support for the motion. I look forward to working with them in Committee.

Modernising parish polls is a long-standing issue that was raised during the passage of the Bill in the other place by the Earl of Lytton. It was agreed to consider amending the Bill in this House to include a power for the Secretary of State to make provision in regulations to modernise the rules on parish polls. We need to define more tightly what constitutes a legitimate topic for a poll, and modernise the archaic way polls are conducted, not least to ensure that all electors in the parish have an opportunity to vote. This will allow all local people to have a say on issues that genuinely affect their parish.

On openness, we want to increase levels of transparency to make it harder for councils to make decisions out of the sight of those they serve—something hon. Members touched on this afternoon. In particular, we want the public to be able to film, blog or tweet at all meetings where they are allowed to be present. Some councils are still refusing to allow people to do this, preventing local people from using modern technology to hold their elected representatives to account. Councillors should not be shy about the public seeing the great work they do for their local communities. We have already legislated on this matter for meetings of a local authority executive. The new provisions will allow us to extend that level of openness to other council meetings, closing the loopholes that councils are using to refuse the public access.

19:42

[Andy Sawford (Corby) (Lab/Co-op)]

I welcome you to your new role, Madam Deputy Speaker. This is the first time I have spoken under your chairmanship.

I refer the House to my remarks on Second Reading on the instruction issued to extend the scope of the Bill. I repeat my thanks to the Minister for the constructive dialogue we have had in recent days. We support the Government’s intentions on this matter. We will, of course, want to look at the detail and hope there will be strong consultation with many organisations and interest groups, not least the National Association of Local Councils, which made representations on parish polls. We should also spend some time referring back to the excellent debate in the other place, led by the Earl of Lytton.

On modernising practice in council chambers, in this world of blogging we support the principle. We are all concerned to ensure that it will enhance, not disrupt, democratic proceedings. I understand the point made by the hon. Member for Mid Dorset and North Poole (Annette Brooke) that it may enable the public to turn off council meetings when they choose, but I am sure we all hope that it will encourage the public to tune in and take more interest in local democracy.

Question put and agreed to.

Business without Debate

Monday 28th October 2013 Commons Chamber

delegated legislation

Monday 28th October 2013 Commons Chamber

Motion made, and Question put forthwith (Standing Order No. 118(6)),

Excise

That the draft Excepted Vehicles (Amendment of Schedule 1 to the Hydrocarbon Oil Duties Act 1979) Order 2013, which was laid before this House on 8 October, be approved.—(Mark Lancaster.)

Question agreed to.

European Union documents

Monday 28th October 2013 Commons Chamber

Motion made and Question put forthwith (Standing Order No. 119(11)),

Relations between the EU and the Overseas Countries and Territories

That this House takes note of European Union Documents No. 12732/12 and Addenda 1 and 2, a draft Council Decision on the association of the overseas countries and territories with the European Union; notes the progress that the UK has achieved against its key negotiating priorities in Council negotiations; and further notes the trade advantages and access to European Union funds that the Decision provides.—(Mark Lancaster.)

Question agreed to.

ADMINISTRATION

Monday 28th October 2013 Commons Chamber

Ordered,

That John Penrose and Mr Desmond Swayne be discharged from the Administration Committee and Mr David Evennett and Mr Robert Syms be added..—(Mr Evennett, on behalf of the Committee of Selection.)

Tobacco Products Directive

Monday 28th October 2013 Commons Chamber

Motion made, and Question proposed, That this House do now adjourn.—(Mark Lancaster.)

19:45

[Lorely Burt (Solihull) (LD)]

I add my welcome to your elevation to the Chair, Madam Deputy Speaker. This is the first time that I am benefiting from your wise direction; I am sure it will not be the last.

This is an opportunity to put the case for small retailers, who are caught between a rock and a hard place when it comes to the sale of tobacco. A few weeks ago, I was visited by a delegation of small retailers, a number of whom were my constituents who were supported by the publication Asian Trader. Also at the meeting, and uninvited by me, were representatives of Imperial Tobacco. I was surprised to see them and wondered what role they had to play in the proceedings. They were attending, I was told, in a spirit of helpfulness, and offered their “help” to me until I explained in no uncertain terms that I was not a friend of the tobacco lobby. However, their presence did lead me to consider the amount of influence tobacco companies have in the retail industry, and the kind of messages they are giving to tobacco retailers.

Tobacco companies have a lot of money—it is a huge industry—but as purveyors of substances that kill one in two long-term users, they do not tend to be the most popular lobbyists around. I received an e-mail from a Liberal Democrat councillor, John McClurey, who has been a newsagent for more than 30 years. He suggested that the tobacco companies were using the good names of the small retailers to lobby Parliament with their own promotional messages. He also suggested they were circulating misinformation to tobacco retailers, with the aim of scaring them into becoming a voice for tobacco manufacturers.

When I met the retailers, there was no doubt in my mind that they believed passionately in what they were telling me, but knowing the involvement of the tobacco lobby led me to re-examine objectively what they were saying in the light of wider evidence. For example, on the European tobacco products directive, my retail friends told me that banning smaller quantities of tobacco—packs of 10 cigarettes and 20 grams of loose tobacco—was wrong because it discriminated against smokers on a tight budget and smokers aiming to give up. It undoubtedly does. However, it also discriminates against minors, who are extremely sensitive to price changes. These packs of 10 cigarettes have been dubbed “kiddie packs” because they are so popular with teenage smokers.

My retail friends also believe that smuggling is a growing scourge that will be made worse by the advent of plain packaging and ever-increasing duty. According to Her Majesty’s Revenue and Customs, tobacco smuggling has more than halved in the past decade to 9% of total sales. I am not saying that 9% is not far too high, or that general statistics will help my friend Paul Cheema at his newly opened Kwik Save in Solihull if smuggled tobacco is being sold from a van near his shop. Nevertheless, despite tax hikes on cigarettes to the extent of 88% of the recommended retail price, the amount of tobacco smuggling has continued to decline. The tobacco multinationals’ concern about illicit trade needs to be evaluated in the light of their having paid billions in fines and payments to settle cigarette-smuggling litigation in the EU and Canada. They are being prosecuted for smuggling their own products, so their trying to unsettle small retailers, when some of their number are perpetrators of the problem, sounds a little hollow.

Is “plain packaging” not a misnomer, given that recent EU votes have confirmed that 65% of the packaging surface will have to carry writing and pictures warning prospective customers of the health dangers of the product? Other distinctive markings will also be required. The Government are therefore confident that plain packaging will be no easier to counterfeit when it comes under the scrutiny of government officials.

The European Parliament has voted for a ban on packs of 10 cigarettes; for a minimum weight of 20 grams for “roll your own” cigarettes; for banning characterising flavours, such as menthol, which are also particularly attractive to young people and women; and, as I just mentioned, for 65% of the surface carrying words and pictures informing people of the dangers of smoking. That is not in dispute. It has also voted against plain packaging; against the ban on slim cigarettes, which we know are particularly attractive to younger smokers and women; and against the ban on sales displays.

We await the final recommendations of the Government’s two consultations this Parliament, and we know that they are waiting for the results of the Australian plain packaging experiment, but will the Minister say how long she considers a reasonable time to wait before it can be evaluated? When will the Government report be published, and can the Minister give any insight into the Government’s thinking on plain packaging, slim cigarettes and sales displays? As I said, retailers are stuck between a rock and a hard place—between the health lobby and the need to trade—and so are the Government, but any indication she can give of what the future is likely to hold would be much appreciated.

The EU recently voted against prohibiting the purchase of e-cigarettes alongside tobacco and against registering it as a medicine. That is a sensible measure. Many former smokers attest that e-cigarettes have helped them to give up when nothing else had worked. Furthermore, making them a medical product would likely have increased their cost and reduced their availability. What is the thinking in the Department of Health on e-cigarettes? Will we follow the EU in not medicalising them, and if so, what product safety standards will be put in place?

Finally, I want to discuss proxy purchasing. Interestingly, there is no age in the UK at which the smoking of tobacco products is illegal, if children can get their hands on them. The legal age for purchasing a packet of cigarettes is 18, and retailers can be subject to serious penalties if caught selling tobacco to under-18s. Proxy purchasing—when an over-18 buys cigarettes for an under-age smoker—is illegal in Scotland, but not in England and Wales, so in the latter, the retailer can be prosecuted, but the proxy purchaser cannot.

Aman Bhura, from News and Booze in West Bromwich, says that now is the time for the Government to take the lead in the enforcement of illegal sales of tobacco. He says that

“we retailers are being forced to become the policing arm of the government... Responsible retailers will have staff trained to detect proxy selling, but it is an act which is extremely difficult to judge and prove”.

It is clear that tobacco retailers are more than prepared to measure up to their responsibilities in respect of proxy selling to under-age youngsters, but without a legal constraint to back them, what can they do? Will the Government not strengthen their arm by making proxy purchasing illegal, as it is in Scotland? Will the Minister consider changing the law to make proxy purchasing of tobacco products illegal in England and Wales?

I will leave the final word to Councillor McClurey:

“I make more profit from selling a 50p packet of chewing gum than a packet of 10 cigarettes. Sale of cigarettes represents 50% of my turnover but only 14% of my gross profit. If my customers stopped buying cigarettes and bought a packet of chewing gum instead I would be a wealthier shopkeeper.”

I look forward to the day when our retailers make a much healthier profit, when they sell fewer cigarettes and more of other products that have a better sales margin. That would be a good deal and a fair deal for everyone.

19:55

[The Parliamentary Under-Secretary of State for Health (Jane Ellison)]

It is a pleasure to see you in the Chair, Madam Deputy Speaker. I congratulate the hon. Member for Solihull (Lorely Burt) on securing a very timely debate. I enjoyed her thoughtful speech. I suspect that there will be things on which I cannot respond in quite the level of detail she would want, but she has posed all the important and current questions, and I will try to cover as many of them as I can.

We all agree that smoking has an enormously harmful impact on health. Nearly 80,000 people die in England every year from smoking-related illnesses, and the Government are obviously committed to reducing the number of those premature deaths—it is a priority for us—so this is a welcome opportunity to debate tobacco control. I will first take a moment, however, to highlight the UK’s international reputation on tobacco control. Successive Governments have demonstrated a commitment to improving public health through effective tobacco-control policies, and a wide range of measures have contributed to our long-term success. Over the past decade, complementary domestic and EU legislation has contributed to a decline in smoking prevalence among both adults and young people, and in England today the rate of adult smoking prevalence is under 20% for the first time. But clearly we want to keep making progress.

Since the 2001 tobacco products directive, there have been several scientific and international policy developments on tobacco control, an obvious one being the World Health Organisation’s framework convention on tobacco control, to which every EU member state and the European Commission are parties. It has become necessary to update the current directive, however, and that work is ongoing. The revised directive, to which the hon. Lady devoted much of her speech, proposes new requirements across a range of areas, including: the ingredients and emissions of tobacco products; labelling and packaging; product traceability and security features; cross-border distance sales; and novel and nicotine-containing products. The UK Government welcome the revised tobacco products directive and believe that the proposals will be good for public health across Europe, particularly in helping to prevent children from taking up smoking—it is of concern to us all that the vast majority of smokers started before they turned 18.

Our key objectives for the directive include: bigger pictorial health warnings; ending tobacco with characterising flavours, which the hon. Lady described, including menthol and fruit flavours; and requiring nicotine-containing products such as e-cigarettes to be regulated as medicines. During the negotiations, my predecessor and officials worked to secure adequate freedom for member states to introduce domestic policies within the scope of the directive that aim for a higher level of health protection where justified. That is important because we want to retain the freedom to do more if we want to. For example, we need the ability to introduce standardised packaging if we wish to do so.

[Ian Swales (Redcar) (LD)]

Does the Minister share my concern that some packaging is clearly aimed at children—for example, there is one with a Lego-style pattern called “14”—and women, through pastel colours and so on?

[Jane Ellison]

Yes, I share that concern. I saw a presentation only last week with some of those adverts and imagery. As I said, it is a key priority of ours to prevent children and young people from taking up smoking, so anything that might contribute to their taking it up is extremely worrying.

The UK’s support for the general approach agreed at the June Health Council was important in securing the qualified majority needed to avoid losing hard-won negotiated improvements to the text of the directive. Hon. Members will also be aware that the European Parliament has been scrutinising the proposal, and this is obviously where we have had some recent pushback in some areas. We were pleased to see that, on 8 October, the Parliament agreed with the Council and voted to ban packs of cigarettes with fewer than 20 sticks, to increase health warnings to 65% of the front and back of packs, to make pictorial warnings mandatory throughout the EU—as they are already in the UK—and to prohibit characterising flavours.

It should be noted that the Council and the European Parliament rejected the Commission’s proposal to ban slim cigarettes, so that will not form part of the final revised directive. As the new Minister, I made inquiries into why that was the case, and I understand that there was not enough support among EU member states or parliamentarians for such a ban. We in the UK felt that we had to go with the majority to ensure the progress of the directive, as it will be good for public health overall. That was a pragmatic decision. Like the hon. Lady, I believe that this package of measures will help to reduce the number of young people who take up smoking in the UK.

We are currently considering the detailed amendments that the European Parliament would like to make. We were disappointed that the Parliament did not support the regulation of nicotine-containing products as medicines. We believe that the medicines regulatory regime, applied with a light touch, is the best fit for these products. Although I cannot say too much more about that now, we recognise that there is a lively ongoing debate on that subject, and it is one that we are engaged in. It is also vital that we maintain momentum on the overall negotiations over the coming months, so as to finalise the directive as soon as possible.

The hon. Lady devoted some time to considering what the tobacco products directive will mean for small retailers. As a Back Bencher, I was co-chairman of the all-party parliamentary retail group, and I heard many of the same representations that she mentioned. I recognise those concerns. We recognise that some of the proposals will have impacts on tobacco retailers in regard to the range and pack size of tobacco products that they will be able to sell. During the negotiations, as with all of our tobacco control measures, we continue to consider the impacts on all areas of society, including businesses large and small.

I share the hon. Lady’s doubt that introducing the proposed revised directive, if and when agreed, will have any immediate or drastic effect on small retailers. As she said, retailers face an ongoing challenge to diversify the range of products that they sell so that they are not over-dependent on tobacco sales. British retailers are, and always have been, the most innovative in responding to consumer needs and diversifying. The earliest any new requirements would be likely to take effect in the UK would be 2016, meaning that shopkeepers have time to start making changes now.

The hon. Lady made some interesting points on illicit tobacco. Like her, I have heard that some tobacco manufacturers and retailers believe that certain measures in the proposed directive could drive more smokers to purchase illicitly traded tobacco products. We are not aware of any peer-reviewed and published studies that show that that would happen. However, we are not complacent when it comes to counterfeit or non-duty-paid tobacco products in the UK. The illicit tobacco market is complex and decisions by individuals to get involved in purchasing illicit tobacco depend on a range of factors. The proposed directive envisages a Europe-wide tracking and tracing system for tobacco products, the details of which we are still negotiating in Brussels. The European Commission says that that will reduce the amount of illicit products in the EU. Security features against counterfeiting will also allow consumers to verify the legal status of the products. The hon. Lady suggested that we were perhaps paying insufficient attention to the security features on the packaging, because they are often not very plain at all.

I am glad that the hon. Lady has pointed out that the illicit market in cigarettes and roll-your-own has diminished significantly since the launch of the first Government tobacco strategy in 2000, with the mid-point estimate of the tax gap for illicit cigarettes decreasing from 21% in 2000-2001 to 9% in 2012-13, for example, according to Her Majesty’s Revenue and Customs data. The UK’s success in reducing illicit tobacco is in no small part due to successive Governments’ commitment to, and investment in, enforcement, and that remains a key part of our policy. We should also see further progress on illicit tobacco on a global scale when the new framework convention on tobacco control protocol on illicit trade is implemented.

The hon. Lady made some interesting points about proxy purchasing. Obviously that is something that, as a new Minister, I have just begun to look at, and I was glad that she explored some of the arguments. I want to emphasise the valuable contribution that the majority of retailers make to ensuring that legitimate tobacco products are sold according to the law, including by not selling tobacco to people under 18 years old. Retailers get frustrated that we hear only about the occasional instances of poor practice that hit the headlines, and that decent, ordinary retailers do not get any credit for the way in which they uphold the law. I want to place on record my thanks to all those retailers who make strenuous efforts to uphold the law and who do not sell tobacco products to children.

I sympathise with the difficulties retailers face in ensuring that they do not make sales to under-age people. I also understand why some retailers feel that buying tobacco on behalf of a child should be an offence. However, we need to think carefully before introducing a proxy purchasing offence. I understand that the supply of cigarettes to children is a problem, but an offence of proxy purchasing would not necessarily tackle the wider problem of supply.

[Lorely Burt]

Will the Minister tell us whether any lessons have been learned from Scotland’s introduction of an offence of proxy purchasing that might be transferrable to the rest of the UK?

[Jane Ellison]

I was going to say that we are interested to see what will happen in Scotland. It is relatively early days yet, but I am certainly interested in looking at that.

Many children who smoke get their cigarettes from friends and family, and from other children who share cigarettes in parks and playgrounds. An offence of proxy purchasing would be unlikely to stop family members or friends giving cigarettes to young people. The offence was introduced in Scotland, where there is a slightly different regulatory regime, as part of a package of measures. Also, we cannot draw a comparison with alcohol because the regulatory regimes for the sale of alcohol and tobacco are different.

Enforcement of a good deal of tobacco control legislation, including age of sale, is the responsibility of local authority trading standards officers. I have asked questions about the capability of enforcing any such rules introduced. Currently, the Trading Standards Institute, while supportive in principle of any additional measures to tackle under-age access to tobacco, has told us that experience with the alcohol offence shows that there are likely to be difficulties enforcing a proxy purchase offence for tobacco. In practice, it is sometimes difficult to prove the offence and effective enforcement would entail surveillance of shopper and retailer behaviours, which can be time consuming and resource intensive. As I say, I am aware that, since 2011, there has been a proxy purchasing offence in Scotland, which was brought in as one of a number of changes—and we will keep a very close eye on how it has been implemented.

Having heard what the hon. Lady has said tonight, I would encourage Members who have evidence about the potential impact of introducing an offence for proxy purchasing to write to me, particularly if they have feedback from their local trading standards officers about the realistic potential for effective enforcement.

Let me finally touch on a couple of further points that the hon. Lady raised. As I have mentioned, the tobacco products directive does not seek to introduce standardised packaging, but it would allow the UK to proceed with that if we wanted to do so. The Government published a summary of the consultation responses, issued a written statement earlier this year and responded to an urgent question. As the hon. Lady knows and as I mentioned several times at Health questions last week, the Government have decided to wait before making a final decision on standardised packaging. The policy remains under very active consideration and the Government have not ruled out its introduction. We are assessing all the information available to us from Australia and elsewhere. I cannot give the hon. Lady a time frame, but I repeat the fact that the policy is under very active consideration. Some interesting information is coming in from around the world, not just from Australia.

We want member states to have the flexibility to make further progress on domestic tobacco control measures in certain key areas, potentially going beyond the new directive, and we have been helping to shape the final text of article 24 to try to achieve that as an objective. I hope the hon. Lady agrees that it is sensible to see what we can learn from other countries’ experience, but it is hard for me to speculate about what different impacts might be seen and when.

It has been a key strand of the Government’s commitment to reducing the take-up of smoking among young people that the display of tobacco has been prohibited in large shops such as supermarkets since April 2012. That display consultation happened under the previous Government. In April 2015, legislation extending the covering up of tobacco in all retail outlets will come into force.

I have endeavoured to try to cover all the points that the hon. Lady raised in her very thoughtful speech. As she recognises, the topicality of this debate is notable; many of the issues are being debated here and in the European Parliament. We are very much engaged in that debate. I look forward to hearing what other Members think and to hearing further from the hon. Lady on the important subject she has raised.

Question put and agreed to.

20:11

House adjourned.

Written Statements

Monday 28th October 2013 Written Statements

Monday 28 October 2013

EU Foreign Affairs Council

Monday 28th October 2013 Written Statements

[The Minister of State, Department for Business, Innovation and Skills (Michael Fallon)]

My noble Friend the Minister of State for Trade and Investment, Lord Green of Hurstpierpoint, has made the following statement:

The EU Foreign Affairs Council (Trade) took place in Luxembourg on 18 October 2013.

Sir John Cunliffe (UK Representative to the European Union) and I represented the UK on all the issues discussed at the meeting. A summary of those discussions follows.

Financial Responsibility for Investor State Dispute Settlement

The presidency reported that their compromise text had been adopted by member states during the previous week and would now form the Council position for negotiations with the European Parliament and the European Commission.

Eastern Partnership Summit

The presidency highlighted the importance of strengthening the EU’s economic links with Eastern Partners. They would therefore include deep and comprehensive free trade agreements with Ukraine, Moldova and Georgia as part of wider association agreements with those countries and present these at the Eastern Partnership summit in November. Member states agreed that, provided the relevant political obligations were met, the Ukraine agreement could be presented for signature and those with Moldova and Georgia for initialling.

Adoption of the EU/China and EU/ASEAN Negotiations on investment

Council adopted the presidency’s compromise mandates on both the China investment agreement and Association of South-East Asian Nations (ASEAN) investment agreement without debate.

Declassification of the EU/US Transatlantic Trade and Investment Partnership (TTIP) negotiating Directives

The presidency reported that there was no consensus in favour of declassification of the TTIP mandate. Therefore the mandate will remain a classified EU document.

State of play on preparations for the IX World Trade Organization Ministerial Conference (Bali, 3-6 December 2013)

The Commission reported accelerated progress in Geneva since September; new WTO Director-General Roberto Azevedo was bringing energy to the negotiations. EU Trade Commissioner Karel De Gucht underlined that considerable effort would still be required to secure agreement at December’s ministerial conference in Bali. In the debate the UK was joined by other like-minded member states (Sweden, the Netherlands, Denmark, Malta) in urging flexibility in order to secure a deal and in highlighting the economic benefits to the EU.

China anti-dumping measures on wine

The Commission felt the case was politically motivated, providing the Chinese with balance in the face of other high-profile disputes and the upcoming investment agreement negotiations. Progress had been limited since the summer, when China agreed not to introduce duties before the end of the formal investigation period in June 2014. At the EU/China high-level economic and trade dialogue the Commission would insist on starting formal negotiations, and would push hard to reach an early resolution.

Lunch: TTIP and Japan negotiations; Canada

Ministers received an update on both the TTIP and Japan negotiations over a private lunch which otherwise concentrated on the Canada deal which was being simultaneously concluded by President Barosso and Canadian Prime Minister Stephen Harper in Brussels. This long awaited conclusion was unanimously and warmly welcomed.

“The Future of Apprenticeships in England: Implementation Plan”

Monday 28th October 2013 Written Statements

[The Minister for Skills and Enterprise (Matthew Hancock)]

Today the Government have published “The Future of Apprenticeships in England: Implementation Plan” and the associated “Guidance for Trailblazers”.

Apprenticeships are at the heart of the Government’s drive to give people of all ages the skills employers need to grow and compete. They already deliver strong returns for the economy, for employers and for apprentices. A record 1.5 million apprenticeships have been started since 2010.

Following the Government’s endorsement of the employer-focused vision in Doug Richard’s independent review of apprenticeships, and our subsequent consultation on his recommendations, the implementation plan sets out policy, process and time scale for reforming apprenticeships in England.

Our reforms will ensure that apprenticeships become more rigorous and more responsive to the needs of employers. We will improve the quality of apprenticeships by introducing higher expectations on English and maths grading to incentivise apprentices to strive to be the best and an increased focus on assessment at the end of an apprenticeship to ensure full competence.

We are putting employers in the driving seat, by giving them responsibility for developing short clear standards and the high-level approach to assessment that will replace long and complex frameworks, to ensure they better meet the skills needs of employers. We also intend to announce our future approach to apprenticeship funding later this year.

Trailblazers will lead the way in implementing these new apprenticeships, ensuring that employers are involved in their design and that we deliver them in a way that works. We will learn from trailblazers lessons for the future delivery of all apprenticeships. The first trailblazers will focus on vital occupations in the following sectors:

Aerospace

Automotive

Digital Industries

Energy and Utilities

Electrotechnical

Financial Services

Food and Drink Manufacturing

Life Sciences and Industrial Sciences

In total, more than 60 organisations are already involved, including large and small businesses and professional bodies. Together they already had more than 13,000 apprentices start in 2011-12

Copies of the implementation plan and guidance for trailblazers, including a full list of the organisations involved, are being placed in the Libraries.

Local Accountability

Monday 28th October 2013 Written Statements

[The Secretary of State for Communities and Local Government (Mr Eric Pickles)]

Later today, the House is considering opening the way for the Government to introduce amendments to the Local Audit and Accountability Bill that will take forward proposals to give the press and public new, stronger rights to film and report council meetings.

Subject to parliamentary approval, the legislation will enshrine in the law the right of residents, bloggers and journalists to report, blog, tweet and film council meetings in England.

Last year, the coalition Government introduced secondary legislation to open councils’ Executive meetings to greater scrutiny, and I actively encouraged councils to do the same with their meetings of committees and full council. In August, I asked the planning inspectorate to open up their hearings fully to the public. However, many councils have slammed their doors shut rather than opening them up, clinging to old-fashioned Standing Orders or spurious excuses like “health and safety”.

A recent survey from the TaxPayers’ Alliance revealed an alarming number of councils in Yorkshire and Lincolnshire who were still keeping democracy behind closed doors. Some councils had even banned local residents from recording, blogging and tweeting at council meetings. Consequently, the Government are to move amendments to primary legislation to help open up all council meetings.

An independent local press and robust public scrutiny is essential for a healthy local democracy. We are taking action against “town hall pravdas” which are undermining the independent free press, but I want to do more to help the new cadre of hyper-local journalists and bloggers.

It was a Private Member’s Bill by Margaret Thatcher which introduced the substantive right to attend council meetings back in 1960, building on earlier legislation from the Liberal Government of 1908. It is right that we now bring these provisions up to date with the digital age. Councillors should not be shy about the good work that they do.

This measure will help bloggers and tweeters, as well as journalists, unlock the mysteries of local government and make it more transparent for all. My Department is standing up for press freedom.

Government amendments will also seek to improve the archaic rules over parish polls—allowing for example, longer polling hours, postal votes and polling cards—responding to the debate of the Bill in the House of Lords.

The Bill will also abolish the residual parts of the Audit Commission; protect local press from taxpayer-funded town hall propaganda sheets; and ensure that local taxpayers have greater say over council tax levies imposed by bodies with a minimal or no public presence.

Subject to parliamentary approval, these measures will apply to all councils in England.

The coalition Government have abolished top-down inspection like comprehensive area assessment and is scrapping the Audit Commission, and we have given councils more power. But it is essential that local people and local media are able to hold their councils to account. Local accountability and local transparency is essential for localism to thrive.

City Deal

Monday 28th October 2013 Written Statements

[The Minister of State, Cabinet Office (Greg Clark)]

Following the successful completion of the first wave of city deals in July 2012, with the “Core Cities” the Government committed to work with a further 20 cities and their wider areas to negotiate a second wave of city deals in October 2012.

These cities (the next 14 largest cities and the six cities with the highest population growth) are in the process of negotiating the devolution of specific powers, resources and responsibilities required to deliver locally-determined economic priorities.

Over recent months I have been in negotiation with the Reading, Bracknell Forest, Slough, West Berkshire, Windsor and Maidenhead and Wokingham local authorities and the Thames Valley Berkshire local enterprise partnership (LEP) and I am pleased to inform the House that a number of proposals will take effect as the Thames Valley Berkshire Local Enterprise Partnership City Deal.

The Thames Valley Berkshire Local Enterprise Partnership City Deal aims to improve the ability of young people in the area to take up the jobs that are being created by local businesses.

The city deal will:

Bring together local and national investment in order to ensure every young person has the opportunity to undertake the right training, improve their skills, find an apprenticeship or get a job.

In addition the LEP will work with local businesses to develop a joint approach to supporting new and growing businesses.

The LEP expects these arrangements to support new opportunities for 4,500 people in the area.

Grand Committee

Monday 28th October 2013 Grand Committee

Monday, 28 October 2013.

15:30

Children and Families Bill

Monday 28th October 2013 Grand Committee

Committee (6th Day)

Relevant documents: 7th 9th and 11th Reports from the Delegated Powers Committee.

[The Deputy Chairman of Committees (Lord Geddes) (Con)]

My Lords, as I am sure all your Lordships are aware but I am nevertheless obliged to state, if there is a Division in the Chamber while we are sitting, which I suggest is highly likely, the Committee will adjourn as soon as the Division Bells are rung, or as soon as I have seen same on the Monitor, and resume after 10 minutes.

Clause 21: Special educational provision, health care provision and social care provision

Amendment 71

Moved by

[Lord Ramsbotham]

71: Clause 21, page 19, line 24, leave out subsection (5) and insert—
“(5) Health care provision or social care provision which is provided for the purposes of education or training of a child or young person in addition to provisions included in subsections (3) and (4), if any, is to be treated as special educational provision.”

[Lord Ramsbotham (CB)]

My Lords, I shall speak to Amendment 72, the wording of which, as the Committee will note, is similar to that used by my noble friend Lady Greengross in her Amendment 71. I apologise to the Committee if it, quite rightly, thinks that I am being a bit military in my approach to Part 3 of the Bill. I am doing so because, in my experience, things work much better if they are corralled into an overall strategy.

As I mentioned earlier in our proceedings, the Bill is, or ought to be, all about child development, the heart of that being Clause 19(d), which refers to, “the need to support” every child or young person,

“and his or her parent … in order to facilitate the development … and to help him or her achieve the best possible educational and other outcomes”.

The key word in this is “development”. The current absence of a Minister for child development was the reason for my earlier question to the Minister about who was responsible, and therefore accountable, for overseeing the development of every child in the country. This concern arises from my view that the only raw material that every nation has in common is its people, so woe betide it if it does not do everything that it can to identify, nurture and develop the talents of all its people. If it does not, it has only itself to blame if it fails.

The absence of any apparent child development strategy is doubly disappointing. A number of recent initiatives seemed to suggest that the development of every child was becoming the Government’s default aim. For example, the introduction of an early years foundation stage in every child’s life, concluding with an assessment, appears to be a sensible way to enable entry to a 0 to 25 pathway. During our work on the link between social disadvantage and speech, language and communication needs, the All-Party Group on Speech and Language Difficulties, which I chair, was shown four other sub-pathways that were being worked on by the Department for Education, the Department of Health and others. One covered pre-birth and the first few months of life, the second up to and including primary school, the third roughly secondary school and transition into adulthood, and the fourth was for those at risk of becoming involved with the criminal justice system. Those seemed entirely sensible and appropriate because they pulled in all the players in those processes. I should therefore be very grateful if the Minister would let me know what the current status of these four pathways is and their relationship to the 0 to 25 pathway proposed for those with special educational needs.

Logic suggests that the early years foundation stage assessments should be turned into individual health, education and care plans and 0 to 25 pathways for everyone. Default education, health and care plans for the 81.2% of children who do not need help along the way, unlike the 2.8% on statements and the 16% on school action or school action plus plans, could merely be progression through the educational system, but it would be a plan. However, the Bill as presented, instead of seizing a priceless opportunity to bring order and logic into a system that requires the co-operation and joint working of so many different ministries and agencies, by laying down a default position and then highlighting how individual necessary alternatives are to be identified and delivered, does not contain the necessary strategy and leaves a number of key requirements unresolved. These include further assessments at various stages along a pathway to identify changes of need and oversight of the whole process.

Amendment 72, about which I am extremely grateful for the detailed legal advice of David Wolfe QC, focuses on one important part of special educational provision, as well as trying to seal a potential crack in the presumed strategy. The importance of speech and language therapy was highlighted for me when, as Chief Inspector of Prisons, I was wondering what could be done with and for the more than 60% of young offenders who were found to have speech, language and communication needs. If only those needs had been identified and challenged earlier in their lives, they might never have truanted or been evicted from school, or ended up in young offender institutions. Luckily, Lady Helen Hamlyn funded a two-year trial of putting a speech and language therapist into each of two young offender institutions. The two governors of these institutions were saying, within a week of the therapists’ arrival, that they did not how they had managed before they came along.

To cut a long story short, everyone agreed how invaluable their contribution was, because at last all young offenders could communicate with education, healthcare and disciplinary staffs, which enabled individual plans to be made. Despite this, I could not persuade either the Home Secretary or the Secretary of State for Education to pay for them, because speech and language therapists belonged to the Department of Health, whose Secretary of State in turn refused to pay, on the grounds that all such funding was delegated to what were then called primary care trusts. The development of thousands of children has gone by default, and the same could happen to millions more if speech and language therapy is not enshrined in government child development plans.

Therefore, I welcome the Government’s apparent intention to maintain the existing position, confirmed in both case law and the current Special Educational Needs Code of Practice from 2001, which, in Chapter 8.49, says that,

“since communication is so fundamental in learning and progression, addressing speech and language impairment should normally be recorded as educational provision, unless there are exceptional reasons for not doing so”.

The new, separate definition of healthcare provision in the Bill creates a risk that speech and language therapists, because they are provided by the NHS to address this impairment, could be reclassified as healthcare provision, rather than, as currently, educational provision.

This raises two problems. First, parents could lose their right of appeal to the Special Educational Needs and Disability Tribunal. Secondly, healthcare provision does not have to be included in an educational health and care plan unless it is, to quote the Bill, “reasonably” required, which implies that it could be left out on cost grounds. Although Clause 21(5) mitigates the risk of reclassification, it does not remove it, and the rewording that I am proposing in Amendment 72 is designed to ensure unambiguously that the existing classification of speech and language therapy as educational provision is maintained. I beg to move.

[Baroness Jones of Whitchurch (Lab)]

My Lords, our Amendment 73 is in this group, and it has the same intent as that of the noble Lord, Lord Ramsbotham, and the amendment from the noble Baroness, Lady Greengross. We have just gone about it in a slightly different way. The issue is one of what should be classified as special educational provision. As the noble Lord, Lord Ramsbotham, quite rightly pointed out, this is important because, by its nature, this determines what issues parents can take to appeal, and we should make that classification as broad as we possibly can.

We have debated before in Grand Committee how broad a definition we are going to apply to special educational needs, and that we believe that a whole tranche of disabled children are not classified and included in that. This issue touches on that somewhat as well. As we said at the time, it is important to get a standard classification of special educational needs and disability included throughout the Bill. We have not tabled amendments to this clause to take that on board; however, earlier clauses ought to clarify it more clearly.

Clause 21(5) sets out that healthcare provision and social care provision can be classified as special educational needs if they are,

“made wholly or mainly for the purposes of … education or training”.

However, according to many in the sector, backed up by the legal advice that we have received, there is a concern that the new definition of the phrase “wholly or mainly” sets a higher threshold than that which exists. We have heard from, among others, David Wolfe QC, the adviser mentioned by the noble Lord, Lord Ramsbotham. That is why our amendment would remove “wholly or mainly” from the clause.

The initial draft of the Bill did not include a requirement for educational provision to be wholly or mainly for educational purposes. It stated that anything provided by the health authority was health provision and that anything provided by social care was, similarly, social care provision and therefore not enforceable or appealable to the tribunal. The new wording was introduced as a result of opposition to the initial draft but we still do not feel that it deals with this problem. I think the Minister will be aware that there is considerable concern about this issue, particularly around therapies such as those for speech and language, which may be classed simply as health service provision under this clause and therefore, apart from anything else, not appealable.

In addition, we have also received the following legal advice:

“Following case law dating back to 1989 the general position has been that any provision which is directly related to an educational need can be classified as educational or medical and it is for the tribunal to decide. Guidance has been given that speech and language therapy will normally be considered educational because of its importance in communication, whereas other therapies such as occupational therapy vary according to the type of difficulty the child has and how far the therapy relates to an educational objective. Tribunals have consistently held that where a provision has a beneficial educational aspect, and is directly related to the child’s educational needs, it can be described as educational provision and specified in the statement. This aspect needs to be set out in the current bill if parents’ rights are not to be eroded. The current wording set a higher bar and reduces the rights of the child and parent”.

This issue was raised briefly in the Commons by the Conservative MP Robert Buckland. At the time, the Minister there replied that,

“the clause maintains the existing right of appeal to the tribunal for special educational provision so that parents will not lose their current protections”.—[Official Report, Commons, Children and Families Bill Committee, 19/3/13; col. 372.]

However, this is not what the experts are telling us, so it would be extremely helpful if the Minister could clarify this and work with us to find alternative wording which would ensure that we are not raising the bar and eroding parents’ rights. In his letter to us following Second Reading the noble Lord, Lord Nash, wrote that,

“the Government recognises the concerns and is looking for ways to address them”.

I would be really grateful if he could tell us how far he has got in looking at ways to address these concerns, and whether he would now be prepared to find an alternative form of wording to address this issue.

[Baroness Whitaker (Lab)]

My Lords, I support my noble friend’s amendment very warmly. I think that the wording of the Bill must be changed because, although I understand that the Government consider that they can rely on case law to establish the primacy of the education purpose, their own draft SEN code suggests that more firmness is needed. I quote:

“Health or social care provision made wholly or mainly for the purposes of education or training must be treated as special education provision”.

Noble Lords might say that that is all we are asking, but the fact that they have to put “must” in the code suggests to me that there is an element of doubt. I suggest that certainty is what is required in the law, and the code simply amplifies the law.

15:45

[Lord Touhig (Lab)]

My Lords, I entirely endorse the arguments advanced by my noble friend Lady Jones of Whitchurch on Amendment 73. I spoke about this at Second Reading and argued then that the Bill must protect existing rights for parents and young people and not diminish them. I think we all agree on that. At present, parents rely on their right to appeal statements at a tribunal. However, if my understanding is correct, under the new system that the Bill will introduce, only provision which is deemed to be,

“wholly or mainly for the purposes of education”,

can be appealed in this way. This raises the threshold, as my noble friend Lady Jones said, and it restricts the ability of parents to uphold their rights and support the needs of their children. The removal of the three words “wholly or mainly” is, I think, absolutely necessary.

My noble friend referred to the letter that the Minister sent to all noble Lords following the Second Reading debate. She mentioned that he said that the Government would be looking at ways to address this matter. He also explained—and this gave me some hope—why Clause 21(5) was included in the Bill, but he added:

“As there is now a duty on health commissioning bodies to secure the health care provision in a Plan, this clause is no longer necessary to ensure that the child or young person receives the health care provision specified in the Plan.

However, retaining the clause does enable young people and parents to appeal to the tribunal in respect of health care provision where it is defined as special educational provision in accordance with the clause—as now”,

a point just made. We now need some clarity from the Government about precisely what they want to do about this part of the Bill.

[Baroness Howarth of Breckland (CB)]

My Lords, I declare an interest as the president of Livability, which is an organisation that cares for people with complex needs. I am very concerned about this issue because we have two colleges for young people aged 16-plus where their social and educational needs are met together. Sometimes it is quite difficult to differentiate between the two, as we found during Ofsted inspections. If young people have extremely serious difficulties that need perpetual health provision and you are trying to help those young people to learn skills—the sort of skills whereby they can sit and pick up a cup instead of screaming all day, which is how they are when they arrive—it can sometimes be difficult to differentiate between education, social care and health provision. I am simply asking that nothing in the Bill should make that even more difficult. Usually we have difficulty getting payment for the social element of these colleges, but recently we have found ourselves being given the social element without the educational element of the colleges. Some really difficult issues are emerging and I should like to stop them before they develop. I should be delighted if the noble Lord, Lord Nash, would one day visit Nash College.

[Lord Addington (LD)]

My Lords, can my noble friend give us some idea about how the Government will remove those things that are not for educational purposes in the case of a young person with complex needs or a problem that prevents them accessing the process of education? That seems to be what the noble Lord, Lord Ramsbotham, started with. Getting some clarification now about how that process will take place will be of help. If we have a system in place that gives some degree of confidence, I think that we can probably move on from this. If not, it will be a real problem.

[The Parliamentary Under-Secretary of State for Schools (Lord Nash) (Con)]

My Lords, I shall be brief, as we are keen to clarify this point. I shall speak to Amendments 71, 72 and 73 about the circumstances in which provision that would otherwise be health or social care provision should be treated as special educational provision. In doing so, I would like to comment on a couple of the points that the noble Lord, Lord Ramsbotham, made. If I understood him correctly, he said that we needed a child development strategy for every child. I would say that we have such a strategy in the massive reform programme that this Government have put in place for schools.

I will try to get my facts right because I know that the noble Baroness, Lady Jones, will write to me if I do not. We have just been told by the OECD that we came bottom—joint 21st with Italy and Spain, out of 24 countries—for our school leavers, and we have just been told by Alan Milburn that we are the most socially immobile country in Europe. That is why we have a schools strategy and a massive reform programme in place. However, this Bill is about SEN. I will write to the noble Lord, Lord Ramsbotham, about the four pathways that he mentioned. On training, which he also mentioned, I just signed a letter to him today on this point about initial teacher training and other professional development for teachers, which is founded on the teacher standards that were introduced in September 2012. Child development is an important part of those standards.

I turn to the amendments. During the pre-legislative scrutiny of the SEN provisions of the Bill, the Minister for Children and Families gave an undertaking to maintain the existing protections for parents in the new system. Clause 21(5) was added to the Bill before introduction in the other place as part of that undertaking. It seeks to replicate as far as possible the case law established under the present SEN legislation, which, in our view, makes clear that health provision such as therapies can be educational, non-educational or both, depending on the individual child and the nature of the provision. Case law has established in particular that since communication is so fundamental in education and in addressing speech and language impairment, it should normally be treated as educational provision unless there are exceptional reasons for doing otherwise. We have reflected this in section 7.9 on page 109 of the draft SEN code of practice.

I think we all share the aim of carrying the current established position through into the new system. I understand the concerns that have been expressed in this debate that the current drafting does not get this quite right. This is complicated legal territory and it has not been straightforward to find the right formulation, as evidenced by the different approaches taken by each of these three amendments. I know that various parts of the sector have sought legal advice on this issue; I understand that the amendment of the noble Lord, Lord Ramsbotham, follows the advice that the Royal College of Speech and Language Therapists received, and we are currently looking at that advice. The noble Baroness, Lady Jones, said that she also had received advice, and we would be delighted to look at that as well. I would welcome the opportunity to discuss this further and see what progress can be made with noble Lords outside the Committee. With that reassurance, therefore, I hope that the noble Lord will feel able to withdraw his amendment.

[The Earl of Listowel (CB)]

My Lords, before my noble friend does that, as I imagine that he may well do, I very much hesitate to speak in this debate. I have just been chairing a discussion on child development in schools. Attending it were head teachers, the former head of the TDA and a number of other experienced practitioners in the area that we have just been discussing. Unfortunately, I was four or five minutes late to this discussion so I hesitate to make any contribution to it. However, since the Minister referred to what is being done about the standards to ensure a better understanding of child development, which is very welcome, I should like to make two points.

First, in welcoming the effort by both the previous Government and this one in raising the status of teaching, and particularly in welcoming the advent of Teach First, we heard from the man responsible for Teach First in London. He said how successful the scheme is and that 30% of graduates were getting into the schools that needed their help most, so that really tough inner-city schools were getting these excellent graduates, particularly in science and maths. However, although he could speak only anecdotally, he said that he had met many of these teachers and they said they felt hopeless. They did not know how to manage the challenges presented by the young people they were working with. We need to get this right because otherwise we might lose the wonderful new crop of young teachers we are recruiting into the profession, who will make a huge difference to outcomes for young people.

The other point to arise from this meeting is that a generation of teachers has not learnt anything significant about child development. That means that head teachers and lead teachers today will not have learnt much about child development in their training. So, while I welcome what the Minister has said about the changes in the standards, the challenge presented by this issue should not be underestimated. I hope there will be ongoing discussions about what we can do in this area, which is vital for the educational outcomes that we want to see for our young people. We need to retain our new, young, enthusiastic teachers on the front line, help them to understand why children sometimes behave so challengingly and enable them to engage with them effectively. I apologise to the Grand Committee for intervening but I hope that it has been helpful.

[Lord Ramsbotham]

My Lords, I thank the Minister for that positive response and all those who have contributed to the debate. The fact that there is a strategy for schools proves my point because it is the strategy for the early years being hooked on to the strategy for schools which seems to be missing. The strategy for after-school transition up to the age of 25 is also missing. You have local government, healthcare, business initiatives and skills and others all joining in on this; it is not only schools. There is more to it and education is not only about what happens in school.

Accepting what the Minister has said, I am grateful for the opportunity to discuss this issue. I suspect that not only will the Royal College of Speech and Language Therapists, the Communication Trust and the people I am involved with wish to take part in this but so will other Members of the Committee because this is an extremely important issue. With that, I am happy to withdraw the amendment.

Amendment 71 withdrawn.

Amendments 72 and 73 not moved.

Clause 21 agreed.

Amendment 74

Moved by

[Baroness Brinton]

74: After Clause 21, insert the following new Clause—
“Special educational needs of severely bullied children
(1) Schedule (Special educational needs of severely bullied children) has effect.
(2) In this section and Schedule (Special educational needs of severely bullied children)—
“bullying” is unwanted behaviour that causes distress or harm, involves an imbalance of power or strength between aggressor and victim, is unwarranted and commonly occurs repeatedly over time;
“severe bullying” is behaviour that affects children so severely that they suffer trauma and psychological damage, which can also result in them missing school for long periods of time;
a “bullying incident” should be addressed as a child protection concern when there is reasonable cause to suspect that a child is suffering, or is likely to suffer, significant harm.”

[Baroness Brinton (LD)]

My Lords, I shall speak also to Amendment 217. I am grateful to the authors of Amendment 127, which also refers to bullying. The amendments I have tabled may seem rather long but they are the result of a substantial amount of work by the APPG on Bullying and evidence from a number of anti-bullying charities, the police, head teachers, psychologists and academics, who have all given our APPG a substantial amount of evidence over the past 18 months.

It may be helpful if I remind the Committee of the definition of bullying. It is aggressive behaviour intended to cause distress or harm, involves an imbalance of power or strength between aggressors and victim, and commonly occurs repeatedly over time—not always, but sometimes. Children severely affected by it miss school for long periods, often self-excluding due to the trauma caused by the bullying. Research shows that around 16,000 a year are now out of school because they have been so severely bullied. However, provision for them out of school is woeful.

To understand, we need to go back a step and look at bullying generally and provision to stop it in schools. Any child can be bullied for their race or their special abilities and, shockingly, Scope reports that disabled children have a high level of being bullied, as do children with special educational needs and even children with medical conditions. I met a young person with asthma a couple of weeks ago who reported being bullied during an asthma attack and a young lady who, on her return to school having had a year out for chemotherapy on a brain tumour, was bullied because she was bald. This was despite the school having a whole-school assembly to explain both her cancer and her treatment.

15:59

Unfortunately, many schools believe that they have covered themselves adequately; they have taken a model policy. Hertfordshire, my local authority, has an exceptionally good 38-page document on preventing and responding to bullying, which uses the department’s code of practice and guidelines as a starting point. The one page on which I can find any reference to supporting pupils in need of most support is all about the children remaining in school. There is nothing here that accepts that a child may be traumatised, clinically depressed, or seeking help through the child and adolescent mental health services, or that refers to what a school would do in those circumstances. That is very depressing. We do not seem to have moved on much from the excellent 2003 report by Christine Oliver and Mano Candappa at the Thomas Coram Research Unit, Tackling Bullying: Listening to the Views of Children and Young People. In their conclusions, they say:

“Adults (teachers and parents) claimed that bullying was a serious or ‘bad’ thing, but pupils’ experience was that bullying was often dismissed as ‘child’s play’ … Pupils were encouraged to report incidents of bullying, but when they did, pupils frequently felt that they were not listened to or believed”.

That is what begins the spiral downwards for the child who is severely bullied. If it is not nipped in the bud, there are serious issues and some children find it very difficult to survive.

Too many schools also believe that because their provision matches the draft code of practice and the guidelines issued by the local authority, they are covered. They certainly believe themselves to be covered because they are told what they have to do to cope with an Ofsted inspection, but these children and their absence from school are often not visible. The Government are to be applauded for reissuing guidance and for funding the Anti-Bullying Alliance projects—I think that the value is about £4 million. In particular, the anti-bullying scheme under the Diana Awards, which is creating champions in schools, is an excellent example of how cultures in schools can be changed by the children themselves. However, it is slow work; there are champions in only a few hundred schools, but there are thousands in the country.

Once these children are out of school, they need a temporary statement. That is why Amendment 217 refers specifically to that. When I first tabled the amendment I was under the impression, having talked to schools and to Ed Sykes, that no such thing existed. However, DfE officials have informed me that there can be a temporary statement. Unfortunately, the majority of schools do not seem to understand that or even believe it, as I found when I went back to them to ask, “What are you doing, if you are enabled to do so?”. That is the other problem. We have lots of different bits of guidance in different places, and we now need one document that covers everything from the very positive aspects of how schools tackle what I may call, for today’s amendments, minor bullying, as opposed to those children who are so severely bullied that their learning is severely affected. When that happens, they fall under the definition of special educational needs because their condition means that they require support.

As I have already mentioned, their health is also affected. They need a safe learning environment, which is in paragraph 14 of the new schedule proposed by Amendment 217. It is extraordinary that it is clearer under employment law how to keep employees of a school safe than it is to keep children safe. It is common sense when we look down the list of policies that schools should have one relating to harassment and bullying, but the main one relates to employees. Anti-bullying does not go as far as harassment; it is all about how to get children to talk to each other, and how everything should be resolved by that.

I am most concerned by the woeful lack of alternative provision. Unfortunately, some children who are excluded from school get sent to pupil referral units. As I mentioned in a debate in the Chamber earlier this year, less than 1% of those gain five A*s to Cs. That is understandable: they are the children who are the most disruptive. They are also often the children who bully. It is ridiculous to put bullied children into exactly that environment and, frankly, we should expect a catastrophic disaster. I understand some schemes for alternative provision are being considered by the DfE at the moment. The problem is that most of them do not fit the neat funding model that you get in a pupil referral unit or elsewhere, where you expect to keep a child for at least a year in that alternative provision. The real strength of good alternative provision is that sometimes you need it for as little as two or three months before the children have recovered and can move on—usually to another school; it is rare for them able to go back. Red Balloon centres have an outstanding academic rate. Compare the less than 1% of pupils who gain five A*s to Cs in PRUs with Red Balloon, where the rate is 75% of children, most of whom have been there for less than a term.

I recognise that it may not be possible to cover the country with alternative provision for severely bullied children, but the DfE absolutely will not countenance virtual school environments, which can provide a lifeline to isolated children—whether because they live in very rural areas or because there is no alternative provision in their more urban area. Schools of the air work exceptionally well in Australia, and electronic blended learning works well in FE and HE, so why not in schools? DfE, please reconsider. That is actually quite a cost-effective way of getting isolated children to work together.

It is time that schools were required to make their environment safer for those severely bullied children and to acknowledge when a child is so badly bullied that they need to go elsewhere. It is time that Ofsted asked specific questions about children on the roll who are out of school: no more secret deals, please, between schools and parents about keeping them on the books but not present. It is time that the Government issued a new code of tactics and guidance, all in one place, that not only helps to tackle the bullies—which is equally important—but helps the children who are so badly bullied that they cannot go to school but desperately want to continue their learning. I beg to move.

[Baroness Howe of Idlicote (CB)]

My Lords, I have put my name to the two excellently researched amendments of the noble Baroness, Lady Brinton.

Bullying is absolutely rampant throughout all stages of people’s lives. If we can find a way to eradicate bullying from the earlier stages of children’s lives, that would be a hugely important first step. I very much like the thought that the noble Baroness expressed of having champions in schools to carry that through.

Bullying can have such severe consequences on children that they cannot attend school. As we have heard, there are 16,000 self-excluding children in England between the ages of 11 and 15. They are very ordinary children. Many develop temporary mental health issues, resulting in self-harm, depression, anxiety, panic attacks and even suicidal tendencies. Those children want to be able to go to school and to have friends, and may well have aspirations to go to sixth-form colleges and then on to university.

In some schools, children who are being badly bullied and do not want to go to school are offered places in the schools’ own exclusion units, but those units are largely for disruptive and difficult children or children with learning difficulties, and the children we are talking about just do not fall into that category. Of course, once there, if they go, they are further bullied or find the work too easy. If children self-exclude from schools for reasons of bullying, there is no alternative provision other than the pupil referral unit, which is for challenging, aggressive children—the bullies themselves, as we have heard. Those children are eminently recoverable with a short stay—I think that, for the majority, it is approximately one year—in an intensive care unit for such bullied children.

These children are often absent from school for months—in some cases, at least a year—before something happens about their situation. Some parents are threatened with prosecution for their child’s absence. The school then advises the parents to remove their children from the school roll to avoid prosecution. Once the child has been taken off the roll by the parent, of course, the local authority and the school have no responsibility for that child’s education.

We have heard that it is the experience of Red Balloon Learner Centres over 17 years that more than 85% of the children who have been to one have a learning difficulty when they first arrive. This manifests itself in behaviour such as an inability to think, concentrate, think logically, conduct lucid conversation, play, work with others or be a team player—all these sorts of things are reflected in their behaviour. Many children who are severely bullied do not have special educational needs prior to this; there is no doubt about that. Most of the children who fall into this category are intelligent, well behaved, co-operative and looking for self-improvement, and most are eminently recoverable, given that appropriate environment. Thus the SEN provisions should be regarded as being temporary and short-lived but intensive. If it were accepted that severely bullied self-excluded children who were out of school were children with SEN, then they could be statemented swiftly and efficiently within less than a school term and referred to a specialist intensive care unit for a short-term placement on a combined academic and therapeutic programme. The vast majority of these children would recover and be able to return to mainstream education.

It is particularly interesting to look at some of the case studies that have been supplied by Red Balloon. In case one, according to the child and adolescent mental health service, a girl now in year 11 had, at the end of year 9, requested a referral into Red Balloon because of the severe bullying and subsequent trauma that she had experienced. The local authority argued that the student was on roll at an academy and so the decision whether or not to refer remained with that academy. The academy was perfectly clear that it would not consider any referral into alternative provision, for cost reasons. The academy has its own provision for vulnerable students, and argued that the student’s needs could be met by its on-site unit. The student is now approaching the end of year 11. She has not attended at all since February. There were multiple issues prior to that date, and she has no chance of attaining any qualification this year. In a recent review, the representatives of CAMHS argued that without a therapeutic element to the programme, it was doomed to failure from the outset.

Case two concerns a year 9 student who was form captain, captain of hockey and netball, predicted straight As at GCSE and extremely popular with her year. She shared indiscreet photos of herself with her boyfriend, and when they broke up he posted those photos over the internet. Subsequently she was so severely bullied by other students in the school that she tried to take her own life three times in one night. In desperation, her mother drove her to the A&E department of the local hospital, and a paediatric specialist on duty recommended that this girl be educated for a temporary period in a small centre such as Red Balloon. The parent contacted the centre, which in turn contacted the school and the local authority, but the school refused to contemplate this referral and suggested that the girl could go to its inclusion unit. This required her walking through the school where the bullies jeered at and humiliated her and made crude comments. Inside the unit were children who knew of the cyberbullying and continually bullied her. Other children had special learning needs. There was no one like her in this unit. She refused to go and, unsurprisingly, was out of school for seven months. Eventually, despite all efforts to get her referred to Red Balloon and to find funding, her health deteriorated to such an extent that her mother sent her to live in Israel with her grandparents. Four years on, this girl, now 19, has completed no external exam, has not gone to sixth form and has no prospect of a university career, even though that was clearly predicted at 14. We are likely to face that kind of situation more and more frequently given the position we are in and all the possibilities that the internet provides us with, many of them, sadly, not desirable.

I hope that the Minister will take notice of the importance of severe bullying because I am not certain at this stage that the Government are taking it as seriously as they ought. That is one of the reasons we have all spent a great deal of time on working through this programme.

16:15

[Baroness Jones of Whitchurch]

My Lords, before I speak to Amendment 127, I should say that I support the amendments tabled by the noble Baroness, Lady Brinton. I pay tribute to the considerable amount of work that she has done in campaigning on the needs of severely bullied children.

As the noble Baroness said, this is a growing and worrying issue. This is backed up by a recent DfE report which identified that 47% of children reported being bullied at age 14, 41% at 15 and 29% at 16. This is a significant proportion of young people. Many report that the bullying is ongoing and for some of them it is an everyday event. There is also growing evidence that this problem particularly affects children with disabilities and special educational needs, who are, apparently, three times as likely to be bullied, with verbal, emotional and physical bullying prevalent. Again this is relevant to the debates that we have had in Committee. As the noble Baroness said, many of these children do not come to the attention of the authorities but some are so traumatised that their behaviour, school attendance and mental health begin to be affected. Figures have been cited of more than 16,000 young people at any one time refusing to attend school.

We support Amendments 74 and 217, which address these issues in a structured and helpful way. They would ensure that the Secretary of State produced a strategy and statutory guidance to prevent bullying, and provide effective recovery programmes for those affected and a temporary SEN statement to access help and support. These amendments, combined with ours, would go a considerable way towards addressing the poor educational provision and lack of consistency in meeting the needs of children temporarily unable or unwilling to attend school.

Our amendment seeks to introduce a new clause to widen out the concerns to cover children who, because they are bullied, suffer from a mental health problem or a medical condition and are unable to attend mainstream school for a period of time. We are attempting to address these widespread concerns. These issues were flagged by our colleagues in the Commons and were mentioned by a number of noble Lords at Second Reading.

In addition to the incidence of bullying, the Teenage Cancer Trust and CLIC Sargent have highlighted the fact that there are 3,600 new cancer diagnoses in children and young people every year, which can also have a significant effect on a child or young person’s education. There are other reasons why children and young people may be absent from school for a long period, including trauma, the loss of a family member or being the victim of violence or abuse at home. These children and young people should not have to suffer because of their experiences. We should do everything we can to ensure that they are able to achieve their full potential. This includes putting in place support systems and ensuring that alternative temporary education provision is as good as it would have been in mainstream education.

In his letter to Peers after Second Reading, the Minister argued that temporary access to SEN status was not the right way forward. He said:

“The definition of Special Educational Needs is deliberately broad, and it must allow local professionals the freedom to make judgements on who it applies to … However, for children who require statements of SEN it rightly takes time to make the appropriate assessments and establish the right provision. We hope and intend that the consequence of bullying can be resolved quickly … As with statements, education, health and care plans are intended for longer-term, more complicated needs, rather than for providing rapid support”.

While we understand that assessments and EHC plans take time, it is important that we also have mechanisms for addressing the needs of those children who have more immediate needs and fewer long-term needs, to make sure they do not fall through the gaps. I was interested that the noble Baroness, Lady Brinton, said this afternoon that temporary statements are indeed available, because that certainly had not been drawn to my attention. Having that spelled out in more detail goes some way towards addressing this issue.

We believe that the amendments spoken to this afternoon provide a suitable package of support for severely bullied children and others temporarily unable to attend school. We hope the Minister will agree to reconsider the Government’s position, and to come up with a scheme that is as good as those amendments put before him today.

[Baroness Walmsley (LD)]

My Lords, I strongly support the amendments of my noble friend Lady Brinton, and would have added my name if I could have been sure of being here today to speak to them. However, here I am, very strongly supporting them.

Many thousands of children fall into the category of “severely bullied” but are invisible, for two reasons. One is that often the bullying takes place outside school, on the internet. The school does not see it happening. Unless school staff look carefully at the attendance record, or the parent is sufficiently distraught to bring it to the school’s attention, the school may not notice what is going on. The other unfortunate aspect is that often these children are quite shy; they take themselves off, rather than put up with it. They become visible to the rest of us only when they attempt suicide, or actually succeed. Then they land on the front page of the local or national newspaper. That is a tragedy.

When the school becomes aware of this problem, it often suggests to the parent that they educate the child at home. This is not the answer. Many parents are not capable, either professionally or economically, and cannot take the time off work to educate the child at home. They need specialist, professional help. Nor is it an answer to send the children to PRUs, for the reason my noble friend Lady Brinton has mentioned. Indeed, I would say it is cruel to expect these children to attend a PRU with a group of children of whom they are often frightened. They are square pegs in round holes in PRUs, because they are often children of great ability, and the provision offered in PRUs will not address their problem and allow them to achieve their academic potential.

Virtual schools can be an answer, but not the whole answer. These children need therapeutic and restorative help from well trained people. That is why my noble friend has suggested that what is needed is temporary special educational needs provision. As to the cost, yes, the sort of provision these children need is expensive, but it lasts for only a short period. If it is done well, many of these children go back into a mainstream school—perhaps a different one—after a relatively short time, during which their confidence has been built up and their mental health problems have been addressed.

If this does not happen, it is not the school that pays but the state that pays later. These children’s potential has not been realised; they do not have the qualifications that they could have; they do not have the well paid jobs that they could have, so do not pay so much tax; and there may be ongoing mental health problems that have to be addressed later in life by the health service. Although the school saves money by not paying for this provision in the short term, the public purse does pay—and, of course, the person who pays most is the child themselves. We have a duty to give these children back their education and indeed their lives. Provision is available, and it could be expanded if only a more sensible approach were taken to ensuring that the funding became available for these children. It is not a lot to ask and, compared to many children who need special needs provision for the whole of their school life—which of course very often they deserve—these children require it for only a very short period. What they need is very special provision from people who really understand what they have gone through and what needs to be put into place to enable them to face an ordinary education again.

[Baroness Whitaker]

My Lords, the amendments in this group are particularly important, with respect to one group of children in particular. I declare an interest as chair of the Department for Education’s stakeholder group on the education of Gypsy, Traveller and Roma children. These are the children, particularly Irish Traveller and Gypsy children, who between primary and secondary school experience a 20% drop in attendance; one-fifth of children drop out. From the material that I have seen, a very large part of this is due to bullying, although there are also cases when the parents are so mistrustful of education and unwilling to expose their children to the violence that they experience that they are complicit. Whatever the reason, there is a gap in these children’s education. They are a small number of children so they do not always appear in the aggregates, but if you compare them to the population of Gypsy and Traveller children, the numbers are huger than for any other ethnic group in our country. That is why these amendments are of vital importance.

The noble Baroness, Lady Brinton, mentioned alternative education. I place on record that I cannot speak to the fourth group of amendments in the name of the noble Countess, Lady Mar, the noble Lord, Lord Patel, and others, about suitable alternative education, which in a way is parallel to the group that I ought to be discussing now. That, too, has a particular relevance not only to drop-out children but to children of Traveller parents. I hope that in some way my support for those can be recorded, even though I shall have to be chairing another meeting then.

[The Earl of Listowel]

My Lords, very briefly, having visited a Red Balloon school, having had the privilege of being invited to visit one and speak to some of the pupils, I should like to reinforce what has been said by other Members of the Committee today, particularly the concerns about whether pupil referral units—I have been to those as well—would be an appropriate environment for many of these young people.

I would also like to bring to the Committee’s attention the latest research from Professor Jackson, the academic who had a very important role in highlighting the deficits in educational outcomes for looked-after children. The latest research has been into children with complex needs across Europe and in this country. She has found that in other countries these children find that their school is a refuge for them; it is a place where they feel safe so that, no matter how disturbed their family is, at least their school is a refuge. She looks particularly at Denmark but also at several other continental countries, and she draws a stark contrast with the experience of children in England, who do not find a refuge in their school. That is very concerning. It is also relevant to this particular group of vulnerable young people whom we are discussing now. Finally, I thank the Minister who was so kind as to meet me when I had concerns about this issue. I am grateful for his close consideration of this matter.

16:30

[Baroness Morris of Yardley (Lab)]

My Lords, I add my support to the amendments tabled by the noble Baroness, Lady Brinton, and my noble friend Lady Jones. I do not want to go over the points again as we are trying to move quickly, but it may be a case of weight of Members as everybody is agreeing with everybody at the moment, and it seems that most of the Committee has spoken against the Minister. To add to the number of voices, I want to raise two or three points that have not come out.

My noble friend Lady Jones said that these are amendments about children who are temporarily unable to attend school. Those children’s needs have not been addressed by either Government through legislation. There is widespread support for the Bill generally, as it deals with some of the most vulnerable children in our society. We are all on side on this, but for this group of children who are temporarily unable to attend school, there is no underpinning in legislation to help them. That is a problem. Even if the essence of the content of the amendments is unsuitable, the Minister needs to put something forward. If we do not do that in this legislation it will not happen, and the problems we have been talking about will continue.

We spend an awful lot of time trying to get children who do not want to go to school back into school. We take their parents to court. We have welfare officers who chase them. We bring them in and have mentoring, and so on. But here we have a bunch of children who want to go to school but cannot go for reasons of their mental health, bullying or whatever. We should think about that. If we were to put as much effort into children who want to go to school, but cannot do so temporarily, as we do with those who do not want to go to school, we would probably have a stronger education system. It is that sort of area that is missing. Anyone who has ever done any teaching will know that if a child has been away, it is almost impossible to help them catch up when they come back. The impact is not just on their learning but on the learning of the rest of the class. If we address this issue, we will be meeting the needs of vulnerable people.

I add my support to the Red Balloon argument. I, too, had the privilege of visiting a Red Balloon school in Cambridge. I went not as an enthusiast of online learning as I, too, thought that education was about mixing with children socially. An obvious point that I missed was raised. For some children who are temporarily out of school, it is the way to get back. If we can get children learning online, where they do not have to face other young people and adults, it is a stepping stone to getting back. Finally, whether we like it or not, there is an incentive in the system for schools not to purchase provision outside their own school. A statement for children who have special educational needs mitigates that incentive in the system for the school not to look to resources outside itself. For this group of children, the incentive is still there for the schools to handle it themselves. We need a bit of help on behalf of these children so that we incentivise, make possible or demand that resources outside the school can assist for what may be no more than a week or a month. If it is only for a week or a month, and the children continue to learn, it could do their future education a power of good.

[The Countess of Mar (CB)]

My Lords, briefly, I want to clear up a misconception that both noble Baronesses, Lady Walmsley and Lady Brinton, seem to have. Online and joined-up learning is available to schools because we have it for children with ME. I shall speak about it more on my amendment, but I want the Committee to know that local authorities can provide it.

[Lord Nash]

My Lords, I shall speak to Amendments 74, 127 and 217 regarding severely bullied children and the education of children unable to attend a mainstream school. I thank my noble friend Lady Brinton for raising the important issue of bullying and the needs of young people who are bullied. As the noble Baroness, Lady Jones, said, my noble friend has been a great advocate for children and young people whose lives have been blighted by bullying. Bullying in any form and for any reason is totally unacceptable and should never be tolerated in schools. Bullying can instil fear, damage self-esteem and reduce academic attainment. We have a considerable campaign in place to combat cyberbullying, which, as my noble friend Lady Walmsley mentioned, can be particularly unpleasant. As our reforms work their way through the school system, and behaviour management strategies improve—as I believe that they are substantially in schools across the country—that should help in this regard.

The amendments broadly cover three areas: a call for bullying to be defined in law; measures to prevent bullying happening in the first place and to tackle it when it does; and provision for those who are the victims of bullying, particularly those who are severely bullied.

The definition of bullying outlined in Amendment 74 suggests that bullying will involve an “imbalance of power” and is repeated behaviour that causes physical or mental harm. These elements are likely to be involved in many instances of bullying, but not all of them. The definition of severe bullying outlined in the amendment refers to behaviour that affects children so severely that they suffer trauma and psychological damage. There is a risk that that could cause confusion for schools, because the same bullying activity could be treated differently according to the effect that it has on the victims, rather than the act itself. Although we acknowledge that the support should take account of the effect, it is important that there is consistency in how schools manage the behaviour of pupils.

There will always be exceptions to whatever definition is put in place, which is why we consider that these matters are best placed at the discretion of head teachers and teachers. We outline what constitutes bullying in our advice to schools and we consider that that is the best place to do so, rather than through a strict definition in law. A legal definition could, among other things, rule out behaviour that common sense might suggest is bullying but may not be captured by a law.

Turning to my noble friend Lady Brinton’s point about guidance being in one place, it is of course important that guidance is practical and manageable for those using it. We are very happy to look at how the different pieces of guidance fit together and cross-refer, in particular, in the current consultation on the code.

Turning to preventing bullying in the first place and tackling it when it does, as different schools face different issues, we do not want to prescribe specific anti-bullying strategies. Instead, we want to allow schools and local authorities to address bullying in the light of the needs and circumstances of their schools and their pupils. I believe that our current position provides the right balance between requirements in law, flexibility for schools and strict accountability.

All schools must have a behaviour policy with measures to prevent bullying. It is up to them to develop their own strategies, but they are now clearly held to account for their effectiveness in doing so by Ofsted. Since 2012, it has been a requirement for school inspectors to take into account issues relating to bullying, harassment and discrimination. In addition, we provide schools with advice, with links to several anti-bullying organisations for specific advice.

Turning to provision for children who are bullied, the starting point should be the needs and welfare of children and young people and the state of their mental and emotional health. Schools and local authorities should provide support in a proportionate and tailored way to meet their needs. The new draft SEN code of practice considers that developing a graduated response to the varying levels of SEN among children and young people is the best way to offer support, and this can include the needs of bullied children. There is no separate legal status of a temporary statement. However, local authorities and schools are free to use key elements of the statementing process to make local arrangements.

The causes that affect the well-being of children and young people will be relevant to how those needs are best addressed, but are not the best guide to the level of need. A child’s well-being could be severely affected by a variety of things, including bereavement, family upheaval or severe bullying. It could result from a range of factors that taken in isolation a child could cope with, but taken together have a severe impact. It is important, therefore, to avoid creating a hierarchy of causes and prescribe what the response should be.

Schools know their pupils. They are alive to changes in behaviour, character and attendance. They should offer support quickly, based on the need they identify, and there is a wide range of options that they should consider, from asking the pastoral team to keep an eye out to providing formal counselling, engaging with parents, referring to local authority children’s services, completing a common assessment framework and referring to child and adolescent mental health services, including whether to assess for SEN. The circumstances that my noble friend describes will often need swift support. An EHC plan is intended for those with the most challenging, complex and long-term needs. This is reflected in the amount of time that it will take to deliver an EHC plan—a maximum of 20 weeks under the reforms. In many cases, offering a child or young person SEN support in the first instance will be much more appropriate, and faster. Giving a child or young person an EHC plan is a significant step and may not be necessary.

No child should ever be forced out of school because of bullying. In extreme cases, it may be necessary to make other arrangements so that a bullied child can access the good education they deserve.

In response to the concerns raised by Amendment 127, I should reinforce that local authorities already have a duty to arrange suitable education for any child who would not otherwise receive it. Suitable education is defined as,

“efficient … education suitable … to the child’s age, ability and aptitude, and … to any special educational needs the child may have”.

The duty covers all compulsorily school-age children who are not receiving suitable education. This could include pupils who are unable to attend a mainstream school because of bullying, but it is not limited by the reasons for a child being unable to attend school.

The duty is also not limited by the length of time a child will be missing education. For example, statutory guidance on the education of children unable to attend school because of health needs states that alternative arrangements should be put in place for children missing 15 days of school or more, whether consecutive or cumulative.

Separate statutory guidance on alternative provision, issued in January this year, sets out that parents, pupils and other professionals should be involved in decisions about the use of alternative provision. It also states that there should be clear objectives and arrangements for monitoring progress.

My noble friend Lady Brinton made a point about the shortage of alternative provision. I am delighted to tell her that already, under the free schools programme, we have approved 33 new alternative provision providers. So far as Red Balloon is concerned, I have met Carrie Herbert. I have initiated conversations between her, the department and the New Schools Network, and I hope that she has taken on board what they have said about any future applications she may make under the free school proposals. However, I cannot help but wonder whether such a bid, if successful, would be allowed under a Labour Government, as it would be not a parent-led academy but a free school run by professionals, as indeed are most AP schools and special schools.

I should like to consider and investigate further the point about disincentives made by the noble Baroness, Lady Morris, who I know is very experienced in these matters.

I hope that I have been able to reassure the noble Baroness that we are deeply concerned about bullying and bullied children. We have measures in place to prevent and tackle bullying, and the safety net she is seeking for pupils who are unable to attend school is already in place. I therefore urge her to withdraw her amendment.

[The Earl of Listowel]

My Lords, I am most grateful to the Minister for his reply and for making clear the standards regarding alternative educational provision for those outside mainstream schooling, for whatever reason.

On the guidance, perhaps he can look at the issue of children who are bullied being placed in pupil referral units. It may be helpful to have some clarity in that regard. Maybe as a general principle, something along the lines of guidance that states that if a child is severely bullied a pupil referral unit should not be the first choice of placement would help in these considerations.

[Lord Nash]

I am very happy to do that. I am fully aware that it is obviously not appropriate for a bullied child to be placed in a pupil referral unit with other children who themselves are there because they have been guilty of bullying. It is something that we will look at further.

[Baroness Howe of Idlicote]

My Lords, perhaps the Minister could speak a little further about what I mentioned at the beginning—bullying being relevant not only to children; it goes on into adult life in all forms of employment. Perhaps that should encourage everyone to spend rather more time thinking about how important it is to eradicate bullying earlier on.

16:45

[Lord Nash]

I could not agree more with the noble Baroness’s point: habits formed early or seen in the home life are difficult to break. We must constantly do all we can, particularly in our education system, to break such bad cycles. I take the point and I would be happy to discuss it with her further.

[Baroness Brinton]

My Lords, I am very grateful to the Minister for his response. Perhaps I could briefly take each of the three areas that he outlined. I would be grateful to talk to him and his civil servants about the definition of bullying because it seems to me, and I am sure to others, that the key is the imbalance of power. Most schools would accept that, although there may be some other issues around the edges, the imbalance of power is absolutely at the core between the aggressors and the victims. I am also grateful to the Minister for saying that he would be happy to look at guidance again. I hope that he would be happy to have a meeting with some of us and to report back to us on progress there.

However, there is a concern. I am pleased that there are 33 alternative provision centres but, for 16,000 children, that is not a very large amount. The Minister also seemed to echo the response that the DfE has given elsewhere about there being a lack of understanding of the importance of virtual or cyberlearning access. That can often be the transition into education, for exactly the reasons that the noble Baroness, Lady Morris, outlined. I hope therefore that it might be possible to continue the discussion outside Committee. For the moment, I am certainly happy to withdraw the amendment but I warn the Committee that I will be bringing something back on Report.

[Lord Nash]

If I may clarify one point, I was talking about 33 new AP providers being approved under the free schools programme. Obviously, many more AP providers exist in the country.

Amendment 74 withdrawn.

Amendment 75

Moved by

[Baroness Jones of Whitchurch]

75: After Clause 21, insert the following new Clause—
“Early-years area SEN co-ordinators
(1) Local authorities must appoint sufficient full-time equivalent members of staff (to be known as “early-years area SEN co-ordinators”) to have responsibility for coordinating provision for children in Ofsted-registered early years settings other than maintained nursery schools.
(2) In assessing sufficiency of staffing levels under subsection (1), the local authority must have regard to—
(a) the number of children with special educational needs in its area registered with early years settings to which subsection (1) applies; (b) the number and geographical location of early years settings to which subsection (1) applies.(3) Regulations may provide for—
(a) further considerations to be made by local authorities in exercising their duties under subsection (1);(b) the specific responsibilities of early-years area SEN co-ordinators.(4) The Secretary of State shall publish guidance to local authorities to assist in exercising their functions under subsection (1).
(5) Local authorities must publish information on the provision of early-years area SEN co-ordinators as part of exercising their duties under section 30 of this Act.”

[Baroness Jones of Whitchurch]

I am covering for my colleague here, so I am doing a double act.

Amendment 75 proposes a new clause, which very much picks up on the point that the noble Lord, Lord Ramsbotham, made in the debate about the importance of early identification. We believe that identifying and supporting children with SEN as early as possible is the most important factor in improving their outcomes, so our new clause would put early years area SENCOs on a statutory basis, like school SENCOs. It would require local authorities to employ enough of them to support all the identified needs locally. Clause 22 requires local authorities to seek to identify children and young people in their area who may have SEN. Our amendment would insert “as early as possible”, which again echoes the points we made in the earlier debate.

The professionals who work with children have a crucial role to play as the first educators with whom those children come into contact. A number of issues such as speech and communication problems, developmental delay, behavioural issues and literacy problems can be better addressed by having a good quality early years provider, meaning that children start school in a much better position than they otherwise would have. Fewer resources would then be required in later years, so the case is well made and cost effective.

However, the early years workforce is typically the least qualified in the education sector, while cuts to local authority budgets have meant that councils have cut their training budgets for early years staff by 40% since the election, resulting in many cutting back on the early years area SENCOs that they previously employed to provide advice and training in early years settings. Yet the support that they provide is now needed more than ever. A recent Communication Trust project, Talk of the Town, evidenced that, across a federation of schools, children and young people’s speech and language needs were underidentified by an average of 40%. The Communication Trust says that it,

“remains concerned over how the Bill will ensure that the mechanisms for identification will work in practice across all educational phases and also on local authorities’ ability to identify needs as early as possible, and to respond to these needs”.

The NDCS, the RNIB and Sense are also concerned that overall proposals do not place sufficient emphasis on the importance of early years support for children with sensory impairments and their families.

Labour tabled these amendments in the Commons. At the time, the Minister said that he would reflect on whether and, if so, how some of the good practice of area SENCOs could be reflected in the code of practice. As I have just hinted, I have only just acquired this brief this afternoon. I have looked at the code of practice and I am struggling to see where that might be. There is certainly reference to maintained nurseries having a role, but nothing that spells out the role that area SENCOs can have with the more diverse group of early years providers. I look forward very much to hearing what the Minister has to say about that, but I hope that we can agree that more can be done within the Bill and the code to emphasise the importance of these early years area SENCOs. I beg to move.

[Lord Ramsbotham]

I rise to support this amendment, and to speak to Amendments 79, 108, 116, 128 and 238. I am glad that the noble Baroness mentioned the importance of assessment and intervention as early as possible, particularly for this area. I was very struck last Wednesday, at a meeting with the Minister, when he confirmed that only just over 10 years ago, 80% of communication between young people was verbal and 20% electronic. That is now reversed, with 80% being electronic and only 20% verbal. We need verbal communication above all to enable us to engage not just with teachers but healthcare workers, family, friends and ultimately with employers and customers. If we are to enable our children to live in today’s world, it is crucial for them to communicate with each other and for those who have to engage with them to help.

Amendment 79 requires schools and registered early years settings to identify special educational needs while offering guidance on how to do so. This is very important because, as we discovered when doing the report, which I have mentioned several times, the health visitors who were doing the early assessment in Northern Ireland were extremely glad that they had been trained to do so by speech and language therapists—not that they could offer therapy, but at least they knew what signs to look for to alert them that somebody had a problem. This is very important, and it is a lesson that should be applied right across the country.

Amendment 108 extends local offers to include access to services for children who are educated in non-maintained early years settings. It should not be restricted only to those with EHC plans, which, for the vast majority of people who have children with speech, language and communication needs, do not make them eligible for any additional support. That is wrong. The people with speech, language and communication needs do need support to enable them to engage. It is not just for those on EHC plans, which, as we know, is a small proportion of the whole.

Amendment 116 requires local authorities to inform parents of what special educational needs and local office support is available to children educated in non-maintained early years settings. This is again something that should not be left to chance because, as we know, there is a vast variety of provision and a vast amount that parents do not know or understand and with which they need help. Somebody has to co-ordinate the giving out of that advice, which suggests that local authorities have a role to play.

Amendment 128 makes local authorities responsible for special educational needs provision to those who have them identified in private, voluntary and independent early years settings, and for establishing the necessary mechanisms to enable and ensure that both identification and provision are available. All those may seem very much the same, but what they are saying collectively is that there is a duty here for the local authorities to make certain that identification and provision are available for all children in the local authority area, whether they are in mainstream or PVI settings. We must not let that go by default.

Amendment 238 highlights something that else that is lacking and is not clear from the Bill. Schedule 4 to the Bill amends the Childcare Act 2006 to require the registration of childminder agencies and certain childcare providers on childcare registers. However, the Bill is currently unclear about the position regarding private, voluntary and independent providers. As nearly 80% of the early years providers come from the private, voluntary or independent sector, this seems to be a gap that needs to be filled. We must ensure that everyone is covered. I am not simply saying that there is a gap; I am trying to suggest that there may be a way out of this. I suggest that all childminder agencies should be required to employ a SENCO, and that all non-maintained providers—that is, all the PVI providers—should be required to register with one of these childminder agencies. In that way, the SENCO can relieve the PVI of what the Government have said that they do not want to do, which is to belabour it with too much bureaucratic work that it has to do. A SENCO with the same status as the others would be able to act as a bridge between these 80% of providers and the local authorities to ensure that every child is covered.

Again, this may sound complicated, but I say to the Minister that the Communication Trust and others, who have thought this through and drafted this amendment, which I am very pleased to put forward for them, are very happy to engage with officials to discuss how this might be provided for, and to make certain that the gap is covered. The Communication Trust includes those working in the area now, and we have contacts with the Local Government Association, which I know would be very happy to contribute.

[Baroness Perry of Southwark (Con)]

My Lords, my concern in this whole topic is that I make a fair estimate that a lot of childminders are not trained or equipped to identify children with special needs. Surely the agency that ought to pick up special educational needs very early is the district nurse, who visits in the very early stages of a child’s life. One of the things that they are trained to do is to test for special needs. Is this not an opportunity, in this Bill that is trying so hard and so admirably to bring together all the different services, such as health services and educational services, to tie up the measurement, the testing and the observations that a good district nurse will make of a baby—and that I guess a midwife would make—to ensure that this is passed on to the childminders? Here we are very much occupied, rightly, in pointing out the things that need to be done when a child has been identified, but there is very little about how the identification takes place. I would be grateful if the Minister could make some reference to how this could be brought about. It is not asking for anything new; it is asking for exactly what the Bill tries to do, which is to bring the bits together.

17:00

[Lord Storey (LD)]

My Lords, I very much agree. On the one hand, it is hugely important that there is early identification and early intervention. I guess that the move towards childminder agencies will ensure a more codified standard. However, there are some cracking, fantastic individual childminders. There is a danger that we will lose that whole body of people who do not want to be part of an agency but who have real talent and expertise, as we go headlong to have agencies which have to do all the following things. I am quite nervous about that move. As we have heard, district nurses and midwives have a huge part to play in early identification. We need to be very careful about how we move in that direction.

[The Countess of Mar]

My Lords, I support the noble Lord, Lord Ramsbotham, and the noble Baroness in their amendments. When my elder granddaughter came to visit us, we found it very difficult to understand what she was saying. When she got to the age of three and a half my husband, who was a schoolteacher, was saying, “Huh, huh, huh” or “Ber, ber, ber” to her to try to get her to pronounce things. My daughter got into a furious rage and took her home, but then realised that the child could not communicate and was getting very frustrated because we could not understand what she was saying. She took her to a speech therapist. On the health service, it would have been 14 or 15 months before she could get help, so she took her privately. My granddaughter was diagnosed as being quite severely dyspraxic. She struggled through school but got her A-levels and is now deliriously happy at university doing a course in fine arts, restoration and conservation, which is right up her street. She was caught early, which is so important. She will have a career; everyone wants someone who can conserve things. She has been to the House and visited the conservators.

It is important that we catch them early. My granddaughter started off being able to speak at the age of nine months, but then had an accident involving a head injury that was not picked up, so midwives or district nurses would not have seen that. The noble Lord, Lord Ramsbotham, and the noble Baroness have an important point.

[Lord Ramsbotham]

I just say to the noble Baroness and the noble Lord, Lord Storey, that I was referring to the assessment required now in the early years foundation stage, which must be carried out by health visitors. I was saying that that is a compulsory healthcare test. I was mentioning that the healthcare visitor to whom we spoke in Northern Ireland mentioned the value that she had had from being trained by the speech and language therapist to identify the particular triggers for speech and language difficulties, which I believe ought to be common practice everywhere.

[Baroness Northover (LD)]

My Lords, this debate has covered the important issue of SEN in early years settings, and noble Lords have been probing a perceived gap in the legislation in that regard. Clearly, as noble Lords have said, many of the duties in Part 3 apply only to maintained nursery schools, not to other early years providers, which has led to concerns that children in playgroups and independent nurseries or with childminders might not have their special educational needs met. We reassure noble Lords that that is not the case. Duties are in place throughout the Bill and through the Childcare Act 2006 which should ensure that special educational needs are identified and addressed in early years, wherever a child is.

I point the noble Baroness, Lady Jones, who I realise leapt in having not realised that she was about to deal with this amendment, to page 70 of the draft guidance, which is on the role of the SENCO in early years provision, so that she can have a look through that.

Amendments 116 and 108 seek to include early years provision within the local offer. We absolutely agree that this should be the case. Perhaps when I have explained some of these areas the noble Lord, Lord Ramsbotham, will be reassured and will want to see whether that meets most of the concerns of those who were advising him.

Schedule 1 to the draft Special Educational Needs (Local Offer) Regulations 2014 already makes clear that the local offer must include special educational provision from,

“providers of relevant early years education”.

These providers are explicitly referred to in paragraph 1(a) of that schedule. The regulations also require the local offer to include the arrangements that such providers have for “identifying … special educational needs”, in paragraph 4(a), and for,

“securing the services, provision and equipment required by children”,

with SEN, in paragraph 4(c).

Relevant early years education is defined as that childcare which is provided to meet the duties under Section 7 of the Childcare Act 2006. Noble Lords may be reassured that this would include all local authority-funded early education for two, three or four year-olds, whatever the status of the provider. It is not limited to maintained nurseries and 96% of three and four year-olds access such early education through local authority funding, so I hope the noble Lord, Lord Ramsbotham, is reassured that non-maintained early years providers are already included. We share his concern that children are identified as early as possible. This is particularly important in areas of disadvantage, where the current two year-old offer of 15 hours’ free childcare per week is targeted.

Amendment 128 would require the local authority to use its best endeavours to identify children with SEN in early years provision, and then to secure the relevant services for them. In relation to the concerns of my noble friend Lady Perry, I know from the Department of Health that this issue has been picked up there. I assure her that there is cross-government working in this regard. We recognise the importance of health service involvement in identifying very young children who may have SEN as soon as possible. That is why Clause 24, which my noble friend may want to look at, provides for health bodies to tell local authorities about young children under compulsory school age who may have SEN. It is also why we are training an additional 4,200 health visitors by 2015 to help improve early identification. I hope that my noble friend finds that reassuring.

The Government want to reassure noble Lords that local authorities must ensure that all providers that they fund in the maintained, private, voluntary and independent sectors effectively meet the needs of children with SEN and disabilities. Local authorities should remove barriers in access to early education and work with parents to give each child support to fulfil its potential. All early years providers, regardless of how they are funded, must follow the welfare requirements set out in the EYFS framework to have and to implement a policy and procedures for children with SEN and disabilities. This should include how the needs of these children will be met and how reasonable adjustments will be made. Providers are also required to assess children regularly and to keep parents informed. They must consider whether a child has a special educational need or disability which requires specialist support. They should link with families and help them to access relevant services from other agencies as appropriate. These requirements are reflected in the draft SEN code of practice, which also gives practical guidance to early years providers on responding to special educational needs. I hope that the noble Lord, Lord Ramsbotham, will look carefully at that.

Amendment 238, again tabled by the noble Lord, seeks to place requirements on childminder agencies, including a requirement to appoint a SENCO with the prescribed qualifications, and a regulation-making power to set out requirements on how childminders registered with an agency should support children with SEN. I heard the reason he gave for taking that route, and I hope that to some extent what I have already said has reassured him that there is not quite the gap he is seeking to plug here. I also note what my noble friend Lord Storey said about this. The provision to create childminder agencies in Part 4 is an enabling one. We do not think it would be helpful to try to tie these providers into agencies. I am sure we will hear arguments to the contrary when we get to Part 4.

Returning to the key issue of early years childminders, we agree that childminders need also to look out for children in their care. Clearly, they need to be subject to the same duties and expectations whether they are registered with an agency or independently registered with Ofsted. The Government’s intention is that the agency-registered childminders should follow the same guidance on SEN as other types of early years providers, as part of that jigsaw of involvement with young children.

Page 70 of the draft code of practice, which I have just referred to, sets out guidance on the role of the SENCO in early years. It makes clear that the SENCO role may be shared between childminders in the network and suggests a similar approach be applied to agencies. For most early years settings, the SENCO is not required to have a particular qualification. Currently, and in the draft code, only SENCOs in schools and maintained nurseries must hold specific qualifications, including qualified teacher status. We feel that it would not be appropriate to impose additional burdens on childminder agencies over and above those in place for other early years settings. The framework provided by the early years foundation stage and the SEN code of practice makes this unnecessary.

Amendment 75, tabled by the noble Baroness, Lady Jones, seeks to require local authorities to appoint sufficient area SENCOs to support early years providers, drawing attention to an important role. As my noble friend the Minister mentioned in a debate last week, page 70 of the draft SEN code of practice states that,

“local authorities should ensure that there is sufficient expertise and experience amongst local early years providers to support children with SEN”.

It goes on to outline the role of area SENCOs in the early years. By including the role in statutory guidance for the first time, we are recognising its importance and creating a clear expectation about the support that local authorities should provide for children in early education.

Turning to Amendment 79, we fully endorse the importance of early identification of SEN, which this amendment seeks to secure. One of the main aims of the reforms we are debating is to seek to ensure that children and young people have their needs identified earlier—whether through district nurses, as my noble friend Lady Perry indicated, or through others involved with young children—so that the right support is put in place quickly.

The education providers listed in Clause 29(2) have a duty under Clause 62 to use their,

“best endeavours to secure that the special educational provision called for by the pupil’s or student’s special educational needs is made”.

Actively identifying special educational needs is an integral part of this duty. The draft SEN code of practice makes this absolutely clear. Chapter 6 of the code requires schools to assess pupils on entry, make regular assessments of pupils progress and ensure that teachers are equipped to spot potential special educational needs quickly.

I have perhaps been too comprehensive. However, I hope that I have been sufficiently comprehensive to address the questions and needs of all those who are rightly concerned about this area. I hope that my response reassures noble Lords that effective duties are in place because we agree with what noble Lords say they are seeking to achieve. We will continue to work with the Communication Trust and other expert organisations to ensure that the SEN code of practice provides effective guidance on all these issues. I therefore hope that the noble Baroness will be happy to withdraw her amendment.

17:15

[Baroness Jones of Whitchurch]

My Lords, I thank all noble Lords who have spoken in this debate. I think that we all share the common ambition to improve the scope and quality of early years provision and to make sure that special educational needs are identified at the earliest possible time, as we said at the outset. I think that there is common cause there.

In several of the contributions it was asked who should be responsible for some of that identification. We feel that early years area SENCOs in the model that we have proposed could be the people to take on that responsibility, although I understand that everybody else whom noble Lords have mentioned could also play a role in that. That model has already been developed by local authorities as a way of taking on some of that responsibility, and it is important that the people in those posts are properly trained and supported. I was slightly disappointed by what the Minister said about not requiring them to be trained and qualified, because it seems to me that we have already identified a skills lack among some of these people. This is an opportunity to address that lack, and it will be a shame if we do not embrace it when we have the opportunity to do so.

[Baroness Northover]

I am sorry to interrupt the noble Baroness. Of course, these proposals build on what the previous Government decided to do. As I said in my response, that was the arrangement that existed before. However, we have taken it a step further, in that it is in the draft statutory guidance, and I hope that that will be welcomed by noble Lords.

[Baroness Jones of Whitchurch]

I was picking up the particular point about qualifications. As the Minister has already identified, I have not yet read page 70 and I was trying to do a bit of speed-reading. I obviously need to reflect on that in a little more detail before we come back to debate this further in the House and, when I have done some more reading, I shall write to the noble Baroness if I have any more questions. In the mean time, I beg leave to withdraw the amendment.

Amendment 75 withdrawn.

Clause 22: Identifying children and young people with special educational needs

Amendments 76 to 79 not moved.

Clause 22 agreed.

Amendment 80 not moved.

Amendment 81

Moved by

[Lord Patel]

81: After Clause 23, insert the following new Clause—
“Suitable education for children and young people
(1) Section 19 of the Education Act 1996 (exceptional provision of education in pupil referral units or elsewhere) is amended as follows.
(2) After subsection (5) insert—
“(5A) Suitable education for children and young people means—
(a) good quality education regardless of personal circumstance or education setting,(b) appropriate and tailored support to overcome barriers and meet a child or young person’s individual needs,(c) education suitable to the child or young person’s age, ability and to any social and emotional or special educational needs he or she may have, and(d) enabling children and young people to maintain academic progression and attainment, and allow them to thrive and prosper in the education system.”(3) Omit subsection (6).”

[Lord Patel (CB)]

My Lords, this amendment would add a new clause after Clause 23. It refers to Section 19 of the Education Act 1996 and seeks to improve it. Therefore, I hope that the Minister will find this a helpful amendment, as it seeks to do what he has been trying to do with his own amendments.

To summarise, Clause 19(6) of the Education Act 1996 would be repealed and after subsection (5) would be inserted a new subsection (5A), which refers to:

“Suitable education for children and young people”,

the definition of which would be inserted according to the wording of my amendment. The amendment would ensure that legislation and subsequent statutory guidance and regulations reflected the Government’s policy intention that all children, regardless of circumstance or setting, should receive a quality education as per the statutory guidance published in January 2013. I commend the Government for the publication of their guidance, and I shall come back to that again.

The reasoning behind my amendment is that Section 19(6) of the Education Act 1996 currently reads:

“In this section ‘suitable education’, in relation to a child or young person, means efficient education suitable to his age”—

it is always “his”, although it means “his or her”—

“ability … and to any special educational needs he may have”.

I consider that a more thorough definition of “suitable education” will help to achieve the Government’s aspiration for young children and persons learning in alternative provision, and it is that inclusion of alternative provision that I am seeking in the definition in the Education Act.

Alternative provision is defined as education arranged by local authorities for pupils who, because of exclusion, illness or other reasons, would not otherwise receive suitable education. This includes the education that a child or young person may receive in a hospital school, in a medical pupil referral unit or through home tuition.

The Committee may well be aware, since other noble Lords have referred to it, that CLIC Sargent, the UK’s leading cancer charity for children and young people, has found in a study that young people—particularly those with cancer, although it also applies to children with other diseases—who are receiving education in a hospital school or medical PRU setting while undergoing treatment do not receive a quality of education equal to those in mainstream education. Its research, published in the document No Child with Cancer Left Out, found that 70% of parents said that their child had very little education outside their normal school. In fact, to quote one parent of a child with cancer:

“We waited nearly a year for a home teacher who was brilliant, but it really should not have taken so long. Five hours a week home teaching is too little for a child in Year 6”.

Teenagers have also commented that the education they get is not appropriate for them at their age, or to help them get through exams. There is also a lack of funding from local authorities for home education.

I return to the Government’s intention, which I thoroughly support, and the statutory guidance for local authorities that they published earlier in the year. It clearly states that alternative provision and the framework surrounding it should offer good quality education on a par with that of mainstream schooling, along with the support that pupils need to overcome barriers to attainment. I agree that this support should meet a pupil’s individual needs, including social and emotional needs, and enable them to thrive and prosper in the education system. However, it is a statement of intention and good will, not a statement of a directive which the authorities may be obliged to follow. I hope that the Minister will see that strengthening the Education Act and defining suitable education more clearly may help.

I welcome the Government’s belief that,

“pupils with cancer deserve as good an education as any other pupil and poor health should never mean poor education”.—[Official Report, Commons, 10/1/13; col. 576.]

A key part of this will be to ensure that children and young people who receive alternative education receive a quality education, and that all education provision is responsive to the diverse range of needs of children with cancer and other serious conditions. I hope that the Minister will see that this amendment of mine helps his intention, so that he might either accept it or bring his own amendment at a later stage to strengthen the Education Act. I beg to move.

[The Countess of Mar]

My Lords, I shall speak to my amendments; there is rather a long list of them. They are Amendments 154, 160, 178, 185, 187, 189, 193, 197, 205C and 218. It seems an awfully long list but they are very simple amendments, which all say more or less the same thing. I declare my interest as chairman of Forward-ME, as patron of a number of ME charities and as vice-chair of the All-Party Group on ME.

I first became interested in virtual education in 2004, when the Young ME Sufferers Trust, or Tymes Trust, developed an alliance with Nisai Virtual Academy Ltd, also known as Nisai Learning. Together, they developed an educational programme for young people who were too ill to attend school or who could attend only intermittently and who, as a result, were missing out on large chunks of their education. At a function in the House last year the noble Lord, Lord Clement-Jones, founder-patron of the Tymes Trust, said:

“No wonder students with ME find concentration so difficult. When a student makes an effort, oxygen levels in the brain can fall instead of rising to cope with … demand. Obviously, it can be next to impossible to study effectively after struggling into school”.

He finished by saying that,

“students can be thought lazy, or just awkward when they are doing their best. Often staff do not realise why the student either can’t get to school at all or can’t concentrate on their work when they get there”.

Tymes Trust research has shown that,

“for young people with ME, the most effective form of education is home based, with interactive virtual education producing grades equivalent to, or higher than, other healthy students at school. The protocol that has been developed enables very sick students to achieve, when otherwise they are typically condemned to a recurring pattern of school attendance and subsequent relapse with little to show for it. They often feel that they are failures, when in reality it is the education system that has failed them”.

It is not just students with ME who benefit from virtual education, although ME is the biggest cause of long-term sick absence from school. There are young people with other medical illnesses who are not able to attend school, as my noble friend just said. Those with learning difficulties and emotional and behavioural disorders, those with disaffection with school or school-refusers, those who are excluded and sufferers from bullying, whom the noble Baroness, Lady Brinton, has so clearly defined, can all benefit from virtual education. Despite their myriad problems, those students, who would normally struggle to achieve any qualifications, find that a virtual environment is one in which they can flourish. This year, 91% of the students of Nisai Learning achieved GCSE and A-level qualifications, and 30.6% achieved A* to C grades. While this is below the national average, many of these students would have had no GCSE or A-levels under their belts.

The Bill focuses on provision for children with special educational needs who are in the main stream. That excludes some 100,000 children who do not have access to mainstream education, for some of the reasons that I have given. According to a BIS research paper published in January this year on the motivations and barriers to learning for NEETs—those not in employment, education or training—more than nine in 10 young people with experience of being a NEET are motivated to learn, while seven in 10 of the same young people looking for learning opportunities felt that there were barriers associated with access to education. It is intolerable that young people such as these should be left behind when we know that, with the right support at the right time, they can succeed.

Education outside the mainstream is often supplied by individual organisations that have created imaginative ways to help those who are excluded. However, the money assigned to a student while inside the mainstream system does not follow them once they are no longer on the school roll. That means that it is impossible for students to have access to alternative provision that would help them. The Bill gives us the opportunity to rectify that state.

Online and blended education mixes visual with auditory and verbal kinaesthetic modes of teaching, and ensures that children can focus on learning without the complications of external influences with which they may struggle. They are given a structure that supports them educationally and emotionally and which enables them to become economically independent. Online learning integrates a variety of learning styles, using teachers who have a comprehensive understanding of work processes and the special needs of students who have physical or emotional problems.

Students do not wake up one morning and decide that they do not want to learn any more; there are numerous factors that contribute to their lack of engagement. For children with ME with special educational needs, virtual education protects health and promotes recovery; results in better exam grades than a child with ME can otherwise achieve; costs less than home tuition; and can be accessed at any time of the day or night. The child remains on the school roll, and the school league table can include the child’s success. Very importantly, through virtual contact with other children in a similar position, children can make many new friends whom they are able to meet when they are well enough. As a sideline, I quote a note from a former head teacher:

“the purpose of education is to educate to the best standard possible; an attendance register is not a measure of achievement or success”.

17:30

Many children with special educational needs who cannot participate fully in mainstream education need more help from alternative education providers. It makes sense to make provision for alternative education providers in order to ensure that they are part of the process that ensures that those young people can achieve a life of economic independence and satisfaction that can be gained through a proper education.

Amendment 154 to Clause 38 would bring online and blended learning into the list of schools or institutions that are included in education and healthcare plans. Amendment 160 to Clause 41 would bring online and blended learning under the umbrella of institutions that the Secretary of State may approve for the purpose of enabling the institution to be the subject of a request for it to be named in an EHC plan. Amendment 178 to Clause 49 would correct the anomaly whereby online and blended learning do not always qualify for inclusion in provisions for personal budgets and direct payments. Amendment 185 to Clause 57 would make a special point of including online and blended learning for special education provision otherwise than in a school or post-16 institution, simply because local authorities are used to thinking about home or hospital tuition and may not consider virtual educational provision to fall within this section.

Amendment 189 to Clause 62 would include online and blended learning in the list of schools and institutions relating to the appropriate authorities’ duties to use best endeavours to secure special education provision. Amendment 193, also to Clause 62, would give “appropriate authority” to all types of alternative education providers to a member of the senior management team. Amendment 197 to Clause 64 would provide for online and blended learning to be included in the institutions in Clause 67. Amendment 205C would include the providers of online and blended learning in the list of organisations to which the code of practice needs to be issued. Amendment 218 to Clause 73 gives a list of definitions of online learning, blended learning and associated terminology.

We are living in an age of high technology, and most, if not all, young people whom we are discussing are computer literate. By including a provision of online learning and blended learning, we would enable those who could not attend school, for one reason or many, to benefit from an excellent education at their own pace.

[Baroness Brinton]

My Lords, I support Amendment 81 tabled by the noble Lord, Lord Patel. I believe that it chimes well with my Amendment 74 that we discussed earlier, as well as some interventions in the group dealing with health conditions last week.

I want to pick up the case study that I quoted last week of a young lady who had cancer who talked to me quite specifically about the problems that she had, during her year off school, with the three types of education that she was offered and the lack of communication between them. As she became ill, she had one teacher in her school who was prepared to support her, her maths teacher. That was extremely helpful, but unfortunately other teachers did not seem to have time to give her work to do before she went into hospital. She was provided with some home tuition by the local authority, but it was not co-ordinated with the school and the local authority had virtually no level of understanding of her assessment in school. Then, when she was in hospital for an extended stay, the hospital school—again—had no links back to her school to get any idea about where she was. Given that this young lady was in year 8 at the time, it was very important, as she was coming up to choosing her options for GCSE, that the work was appropriate for how much she could manage but also at an appropriate level for when she could manage it.

The amendments from the noble Lord, Lord Patel, and the noble Countess, Lady Mar, on blended learning and virtual education go some way to addressing the holes that these children often fall through. Alternative provision, simply by its nature, has to be bespoke for these children, and often they work in very small groups. There has to be better communication between the alternative providers, these children’s schools and local authorities. Small teaching groups require proper funding for children that recognises their special problems and incentivises their schools to release the funding as appropriate, linked with the school communicating with the alternative provider and, hopefully, levels being reported back to the school when the child re-enters. That is why I particularly support the idea of online distance learning combined with face-to-face support, which can provide outstanding methods of blended learning engagement for young people, but particularly those who are out of school.

I saw this a few years ago with some apprentice chefs in very rural areas of the fens in Cambridgeshire and Norfolk. They were having their lessons with the college online in the hotels that they were working with, and it was the combination of their apprentice tutors within the firms, the chef tutors in their college, online learning and some face-to-face support that really made all the difference, because those young people could not travel to the necessary location.

If further education and higher education are moving much more to this type of blended education using this range of techniques, surely it is time that our school system found a mechanism to ring-fence this type of learning for children who have needs that are best met through blended learning. It might then become a pathfinder for the future for mainstream schools.

[Baroness Morris of Yardley]

I, too, support the two amendments in the names of the noble Lord, Lord Patel, and the noble Countess, Lady Mar, and I do so for one reason in particular. There is a real danger in the whole Bill that, by necessity—and I have no problem with this; it is what the Bill is about—we will be talking about structures, obligations and demands on people, and about trying to get the system right. We have always failed to do that in the past through successive pieces of legislation. The system does not quite work. There is a danger of forgetting that what will ultimately make a difference is the teaching once the system does work.

In terms of mainstream schools, I have always been a big advocate of talking more about pedagogy than about structures, because that is what will make the difference. We never quite get to that with special needs children because we always revisit the structures, the obligations and the legal framework. What I like about both the amendments is that they are about what happens when the structure works in terms of the quality of teaching and the learning experiences of the children who would access their education through these provisions.

I do not like the phrase “blended learning”. I am not familiar with it and it took me a long time to work out what it was. I had a few ideas, none of which was anywhere near the truth. Therefore, perhaps the wording is not quite right but the kernel and the elements of it are right—it is about what happens in the classroom once the system is working. It would be a shame to let this bit of the legislation go by without having a good debate on that to ensure that we give really clear signals that what we care about for children with special needs is not just that the structure works for them but that the quality of the teaching is appropriate and meets their needs.

On blended learning and online learning, we have not yet gained what we could regarding advances in technology and education. We have done so in higher education and further education but in schools we are lagging behind. For a long time, I have thought that the group that can most benefit from this are children with special educational needs, because of the technology and because of the need that there sometimes is to learn in more than one place.

These are two really good amendments. They put us into a different place when we come to talk about the education of special educational needs children. I hope that the Minister will reflect on them and perhaps discuss how the Government might take them forward.

[The Countess of Mar]

Perhaps I can point the noble Baroness to my Amendment 218, which has a definition of blended learning.

[Baroness Howe of Idlicote]

My Lords, I support the amendments. When I first received the briefing about blended learning, I was slightly puzzled by it all. However, the deeper you get into it, the more appropriate it seems for many of the circumstances that we are facing, particularly with SEN children. I very much hope that the Minister will be able to find a way of supporting it, or of allowing it to be used in a number of different ways with the children for whom it is appropriate. I fear that, all too often, I am less than enthusiastic about the advantages of the internet and all the things that enable us to access all sorts of things online. However, if this can be a real plus for children with needs, I hope very much that it will be given a useful role and will be supported by the Government.

[Lord Lucas (Con)]

My Lords, I agree with every word that the noble Countess, Lady Mar, has said. There are beginning to be some quality suppliers in online provision. It is probably too early to say, “Let us make this generally available and experiment with children who do not actually need it”, but, goodness, we should start to use these provisions for children who are not getting an education because they cannot access what we currently provide. It is good enough to be sure that we will be doing better by these children. We can perhaps move on to children who are out of school for other reasons, who are very poorly provided for at the moment, and see where we go from there, but let us do what good we know we can now, rather than hanging on until we feel able to do good for everyone.

[Lord Nash]

My Lords, noble Lords who have spoken on this issue have eloquently highlighted the significant barriers that stand between some children and young people and the good education they deserve. The aim of the Bill is to help to overcome these barriers. I hope that I can reassure noble Lords that these provisions, in conjunction with existing legislation and guidance, are sufficient to achieve this aim.

The Government’s view is that the majority of pupils are best served by attending a mainstream educational institution. For those with particularly acute needs, a special educational institution may be appropriate. These institutions provide face-to-face teaching and are subject to rigorous accountability arrangements. They also support social, emotional and physical development in a way that more isolated approaches to learning struggle to replicate. Wherever possible, the support provided to children and young people, including through education, health and care plans, should enable them to access the benefits of mainstream or special education. There will be individuals for whom, despite additional support, a mainstream or special institution would be inappropriate.

As has been discussed, local authorities have a duty to make arrangements for pupils of compulsory school age who may not, for any period, receive suitable education. In the context of this duty, suitable education is defined as,

“efficient education suitable to [a child’s] age, ability and aptitude and to any special educational needs he may have”.

New statutory guidance was issued in January on the use of alternative provision and on the education of children unable to attend school because of health needs. Local authorities must have regard to this statutory guidance and the clear expectations it sets out. If a local authority does not follow the guidance, the issue can be taken through the local authority complaints process and, if not resolved, referred to the department. I believe this addresses the concerns raised by the noble Lord, Lord Patel, in Amendment 81 about ensuring the quality of alternative provision.

The guidance sets a clear expectation that alternative provision should deliver a high-quality education that leads to good academic attainment on a par with mainstream schooling. It also reinforces the importance of flexible provision that meets pupils’ wider needs.

In drafting this guidance we have listened carefully to organisations that represent children and young people, such as the cancer charity CLIC Sargent. In response to these views, we recently amended the guidance on children with health needs to give greater emphasis to supporting children’s social and emotional needs. The current arrangements provide an appropriate balance between legal duties and statutory guidance. This ensures that all children unable to attend school are covered by the duty while retaining the flexibility to clarify how the duty should be discharged.

The noble Countess, Lady Mar, in a number of amendments has raised a number of specific points about the use of alternative provision, including in relation to EHC plans and personal budgets. I am pleased to reassure her that the Bill does not prevent a local authority naming an alternative provider in an EHC plan. Where alternative provision is named in a plan as additional specialist provision, it can also be covered by a personal budget, including a direct payment. The Bill, therefore, gives local authorities the flexibility to use alternative provision where it is in the best interests of the child or young person.

However, alternative provision is intended as an exceptional arrangement, and decisions about its use need to be considered carefully. For the majority of children and young people, the aim of alternative provision should be to support their reintegration back into mainstream education. Local authorities would need to consider any requests from a parent or young person to include alternative provision within a plan. The current arrangements allow for local authorities to ensure that the arrangements constitute a “suitable education”, in line with their legal duty. In doing so, they mitigate the risk that alternative provision is used inappropriately or for longer than necessary.

17:45

Given the diversity of institutions that provide alternative provision, we do not believe that it would be feasible to impose blanket duties on them in relation to SEN provision. This does not mean a lack of accountability for these pupils. Where a local authority arranges alternative provision, it then has a duty to ensure that the arrangements are suitable to a child’s special educational needs.

I listened with interest to the examples given by the noble Countess, Lady Mar, and my noble friend Lady Brinton of the value for some children of online or blended education. This is certainly something that could be provided for in an EHC plan, and I have no doubt that blended learning will be used much more in future, as the noble Baroness, Lady Morris, and my noble friend Lord Lucas said. Personally, I do not think that our first attempt at embracing IT in education has been a great success but, as my noble friend Lord Lucas said, more and more products are becoming available online, and I am sure that they will be more widely used in future.

The current provisions within the Bill maintain the position that, wherever possible, the focus of education, health and care plans should be on supporting children and young people to access suitable mainstream or special education. They do, however, allow sufficient flexibility for local authorities to specify alternative provision within a plan where this is in the pupil’s best interests. I believe that the current duties on local authorities and accountability mechanisms strike the right balance. We will, however, continue to work with organisations such as CLIC Sargent to ensure that statutory guidance on alternative provision supports the needs of all pupils. I therefore urge the noble Lord to withdraw his amendment.

[The Countess of Mar]

My Lords, I meant to do this in my initial speech: I thank the Minister and his department for the statutory guidance. Both the ME charities with which I work, which deal with young people, have been extremely grateful for it and are making good use of it. If we could get this embedded in the Bill or indeed into the system, that would be extremely helpful. I am grateful for his reassurances. I will read what he has said and think about it.

[Lord Patel]

My Lords, I thank the Minister for his comments, particularly the last ones that he made about working with the charitable organisations that work with children with cancers and other health conditions. My concern was not that he was not personally sincere about making sure that all these children got a good education, nor that the guidance already issued and the amendments that the Government have brought in do not go a long way towards making sure of that. My concern was that, while the intention is to ensure that all children get their education in mainstream education, which I agree is the best for them, there are times when these children cannot be in mainstream education because of their conditions. It is the gap that occurs—the provision that is not there to continue their education—that makes them fall behind when they re-enter mainstream education. It was in filling that gap that I was hoping to see whether I could be of some help through the amendments. However, I am reassured by what the Minister has said, and I hope that he and his team can work with those who are concerned to ensure that the guidance produces the required emphasis to make sure that this education for children continues in alternative provision. I beg leave to withdraw the amendment.

Amendment 81 withdrawn.

Clause 24: Duty of health bodies to bring certain children to local authority's attention

Amendments 82 to 85 not moved.

Clause 24 agreed.

Clause 25: Promoting integration

Amendment 86

Moved by

[Baroness Sharp of Guildford]

86: Clause 25, page 20, line 36, at end insert—
“( ) In exercising its functions under this Part, a local authority must—
(a) facilitate co-operation between local authorities, schools, other educational providers and providers of health care and social care;(b) ensure that schools, other educational providers and providers of health care and social care have sufficient resources including financial resources, to meet and carry out their responsibilities under this Part;(c) develop strategies to ensure the identification and support of persons, who may be described as lead professionals or key workers who may come from local authorities, schools, other educational providers and providers of health care and social care, and who shall take a lead role in the integration of services.”

[Baroness Sharp of Guildford (LD)]

My Lords, Clause 25 is about promoting integration. My amendment is about effecting that integration and,

“co-operation between local authorities, schools, other educational providers and providers of health care and social care”,

but also ensuring that there are sufficient resources for that integration to take place. It is a probing amendment intended to explore issues relating to multiagency working and the local offer. Integration of services, the alignment of assessment processes and co-operation among groups of professionals works only if those same professionals, especially at the early stages of such integration, have time to get together to talk things through.

The pathfinders, which were evaluated in the June document that we have all seen, suggested that attendance by the professionals involved—the teachers, healthcare and social work professionals—was highly variable, many of them pleading that their loads were so great that they had no time to attend the meetings required. However, the reforms will not work unless a realistic approach is taken to recognise those time constraints on the professionals involved, deliberately programming in time for them to build the relationships required. Of course, that means more resources, especially in the early phases of the development of the programme—not an easy prescription at a time when budget cuts are impinging so strongly on local authorities.

The pathfinder evidence also highlights the need to develop a targeted learning and development programme for school lead professionals and/or other key workers. If the unspoken assumption is that all the new expectations will be possible because they can be discharged by school special educational needs co-ordinators, Members of Parliament need to visit SENCOs in their constituencies to ask them about their already unrealistic workloads. It is likely that far fewer teachers will opt to take on the additional responsibilities of being SENCOs if the new reforms are implemented without sufficient resources being allocated.

The question of which agency should take on the role of key workers and lead professionals needs much further explanation. The existing DfE advice about when schools should or should not be the lead professionals is very inadequate. It does not guide schools in how to decide whether they are the most appropriate agency to take on the lead. Teachers report that schools are often inappropriately named as being lead professionals because other agencies cite budget cuts as precluding them from taking the lead. Those nuances currently seem to be ignored in the Bill but could cause a considerable amount of trouble. I beg to move.

[Baroness Jones of Whitchurch]

My Lords, we have two amendments in this group, Amendments 88 and 90B, so I shall speak to them. They would widen the scope of joint commissioning to include all aspects of support that children and young people might need by extending the definition of EHC provision and ensuring that children without EHC plans would also be included in the arrangements. I should add at this point that we support the amendments tabled by the noble Baroness, Lady Sharp, and the noble Lord, Lord Ramsbotham, which would in their own way go further to strengthen the joint commissioning arrangements. I very much agree with the points made by the noble Baroness, Lady Sharp, about resources.

However, before I go on to the substance of our amendments, I should like to ask the Minister about the wording of the entire clause. I should be grateful if she could put on record exactly what the clause means and what it would require local authorities and health bodies to do. I say this because the clause does not seem to be about requiring local authorities to secure services through commissioning; rather, it appears to require them to set up the apparatus through which decisions about commissioning will be taken. Obviously, that is a very great difference. It says that a local authority and partner bodies must make arrangements; it does not say that they must jointly secure provision. It does not even say that they must secure the provision that they have agreed is needed. This is especially important with regard to health, where other legislation can be used to absolve them from improving legislation on the grounds of, for example, cost. So far as I can see, there is no mechanism for anyone to challenge such decisions.

Therefore, the danger is that Clause 26 as it stands simply builds a procedural structure that really does not have any teeth. Furthermore, I cannot see any leverage by which the partner bodies will be accountable for what they decide to commission. We have not tabled any amendments on these points as it would have meant a substantial rewriting of the whole clause, but I would be very grateful if the Minister could address the point about what is intended by the wording and how partner bodies will be held accountable.

I turn to our Amendments 88 and 90B. Our concern is that the needs of families, including those where the child does not have an EHC plan, are met as completely as possible. It is important that the kind of provision subject to joint commissioning is not just the kind that goes directly to the child or young person relating to either special educational provision, healthcare provision or social care provision, but includes support for families to enable them better to support the child and their siblings. Supporting a child with SEN or disabilities can be incredibly stressful for families, and it is important that we assist and support parents and families with the tools to understand and support their child’s special educational needs or disability.

In the Commons, the Minister said that there was nothing precluding joint commissioning arrangements from covering other services for children and young people with or without SEN, and that support for families needing social care services was provided for under Section 17 of the Children Act 2004. He added that the duty in Clause 26 relates to joint commissioning arrangements for children and young people with SEN, and where the services are needed to support the child’s family as part of that package, that might be included in the arrangements.

17:57

Sitting suspended for a Division in the House.

18:10

[Baroness Jones of Whitchurch]

To recap, I was talking about the support that was given to the families of children with special educational needs. I have referred to the fact that the Minister in the Commons referred people to the Children Act 2004. In summary, our point is that if we are going to have a Bill like this that aims to be transformative, it really should put all the responsibilities in one place. Just saying, “Well, this is already covered in bits of other Bills and guidance here and there”, is not the point at issue. If we think that support for families is important, and I know from other meetings with the Minister that he believes that, they should all be covered in the Bill. That is why we tabled these amendments, because we would like to see all these provisions brought together so that it is clear in the Bill exactly what people’s rights are, including the extension of support to the families of children with special educational needs. I beg to move.

[Baroness Howe of Idlicote]

My Lords, I shall speak to my Amendment 100. Its purpose is to provide encouragement to local authorities to work together to commission services for children and young people with low-incidence needs. For very low-incidence conditions, such as sensory impairment, it may not be appropriate to expect that specialist provision is made available in every local authority area. For that reason, there should be regional support services co-funded by a number of local authorities across the geographical area. The department’s Green Paper on special educational needs and disability stated:

“We know that greater collaboration between local areas can also help local professionals to plan, commission and deliver the best services for children and young people with SEN or who are disabled and their families, as well as helping to secure best value for money … we will explore how we can encourage greater collaboration between local areas”.

The Bill creates new duties on health and education services to work together and collaborate. However, it says little about the importance of joint working across local authority boundaries, despite the obvious potential benefits to services to children with special educational needs. Children with sensory impairments have a low-incidence special educational need and disability, or LISEND. The National Sensory Impairment Partnership, NatSIP, has defined a LISEND as,

“A need which has the potential to have an adverse impact on learning and development unless additional measures are taken to support the child/young person … The prevalence rate is so low that a mainstream setting is unlikely to have sufficient knowledge and experience to meet these requirements. Settings will need to obtain specialist support and advice on how to ensure equitable access and progression (against national standards) … The prevalence rate is so low that any formula for allocating specialist resources for additional needs, which is based on proxy indicators of need, will not reflect the true distribution of children and young people identified as having low incidence SEND”.

Children with a LISEND are a diverse group in terms of their needs and the nature of the support they require. There is often a lack of expertise in those needs in local authorities and/or insufficient capacity. Indeed, although local authorities are required by Section 7 of the 2006 Department of Health deafblind guidance to identify and provide specialist assessments for deafblind children, the identification rate is only three MSI children per 100,000, but Sense figures suggest that the rate should be 31 per 100,000. These figures indicate that local authorities do not have sufficiently qualified assessors, and that deafblind children and young people are receiving generic assessments that fail to address their specific needs. Deafblind children are also not receiving adequate specialist support in many areas. The Consortium for Research into Deaf Education—CRIDE—found that 18% of services employed two or fewer teachers of the deaf, and 8% employed one or fewer teachers of the deaf. Fifteen per cent of services reported that each visiting teacher of the deaf was supporting, on average, 80 or more deaf children, and 7% had a ratio in excess of one to a hundred.

18:15

Sense, NDCS and RNID understand that it may not always be realistic for a local authority to provide services to children with sensory impairments and low-incidence needs on its own account when the numbers of children with such needs in the area is very small. However, they state that they believe it is possible for such a local authority, by collaborating with other local authorities, to meet its responsibilities for these children. Although we welcome the endorsement of this approach within the revised SEN code of practice—which is currently out for consultation—we would like the Government to go further to encourage such collaboration in the Bill.

[Lord Ramsbotham]

My Lords, I shall speak to my Amendments, 89 and 92 to 97, and add my support to Amendment 100, mainly because it becomes very relevant when we come to Clause 70, dealing with people in detention.

My other amendments are to do with something I find odd about Clause 26. Although on the face of it local authorities and partner health bodies are required to make, have regard to and keep under review joint commissioning arrangements, there is no obligation on them to operate any of those arrangements, let alone to reach agreement. That seems very peculiar. Even when they operate the arrangements and reach agreement, the resulting provision is limited to what they agree to be reasonably required.

I go back to my amendment to Clause 21(5), because, as I mentioned then, health bodies may well argue that their position is constrained by what they consider necessary. Given how many such bodies apparently give very low priority to speech, language and communication needs and the provision of speech and language therapists, that might mean that little or no speech language therapy would be provided for children or young people other than those who are on EHC plans. This brings us back to the problem of the vast majority of children with these needs who are not on those plans.

Clause 26 does not allow the assumption that children without plans will get what they require; nor does it mention any requirement to publicise what arrangements and agreements are available for parents or the people affected; and it does nothing to ensure that there is consultation on the joint commissioning arrangements. My amendments are designed to strengthen Clause 26 by making its tone “must” rather than “discuss”.

[Baroness Northover]

My Lords, this group of amendments relates to Clauses 25 and 26, which deal with promoting integration and joint commissioning. These provisions are at the centre of our reforms and I am grateful to noble Lords for their careful consideration of these issues. Children and young people with special educational needs need integrated services. Too often they have to tell their story over and again, and too often they or their parents struggle to navigate a system that makes no sense either to them or to the professionals who are supposed to be helping them. In this mini-debate we have had an echo of the discussions we had on both the Health Bill and the Care Bill, where noble Lords were very keen, as were the Government, to take forward better integration and working together across these areas. Noble Lords who have just come from the Care Bill will be extremely well aware of how the Government have sought to take this forward, addressing how people have so often fallen between the cracks. This, too, is part of the attempt to ensure that those with special educational needs are better supported and that the authorities responsible for them work more closely together.

These clauses seek to tackle those issues head on. The integration duty sits alongside duties for a local authority and its local partners to co-operate with each other. I remember extremely clearly, as other noble Lords no doubt will, how integration, as debated in the Health Bill, had to be part of the new arrangements for the health service. This echoes much of that. It links closely to the joint commissioning clause that provides the statutory framework to enable partners to work together effectively to deliver a better experience for the child or young person and their families, and support improved outcomes. Joint commissioning sets out the framework for key elements, such as the local offer, education, health and care plan assessments, and personal budgets. It seeks to improve both the working relationships between local authorities and health bodies, and the provision to children and young people with special educational needs. It requires the local authority and health bodies to establish clear procedures for making decisions and, in particular, to agree what support is needed locally and which agency will deliver it. Crucially, they must agree how they will resolve disputes between partners, as well as how they will deal collectively with complaints concerning education, health and care provision.

The new draft SEN code of practice’s chapter on joint commissioning has developed a great deal, and I hope it may help to reassure noble Lords to know that it puts great store on the importance of making decisions in joint commissioning arrangements—an issue to which the noble Lord, Lord Ramsbotham, has just referred. It specifies that the arrangements should be robust enough to ensure that all partners are clear about who is responsible for what, who the decision-makers are across education, health and care and how partners will hold each other to account where there is a dispute. It recognises the importance of getting elected members and chief executives across education, health and social care on board, and recommends that the arrangements for children and young people with SEN should be specifically accountable to councillors and senior commissioners. It recognises that local accountability can take the form of a programme board, acting as a bridge between the local authority’s education and social care leadership and health partners.

It also reflects that health bodies must work with the local authority in commissioning integrated, personalised services and designing the local offer, including ensuring that relevant contracts with providers reflect the needs of the local population. Local authorities, clinical commissioning groups and NHS England should develop effective ways of harnessing the views of their local communities so that commissioning decisions on services for those with SEN are shaped by people’s experiences and aspirations. The dovetailing of the SEN reform clauses with the NHS reforms is central. The NHS mandate requires clinical commissioning groups to consider the needs of children and young people with SEN and disabilities, so we see immediately the crossover. The Health and Social Care Act reforms require local authorities and clinical commissioning groups to participate in the health and well-being board and to produce a joint strategic needs assessment and a joint health and well-being strategy that sets out how local needs will be met. So the needs are to be identified, and plans have to be put in place as to how they are met.

The health and well-being board has a duty—and I well remember it—to encourage integrated working. For the purpose of advancing the health and well-being of the people in its area, it must encourage people who arrange for the provision of health or social care services in the area to work in an integrated manner. As I said, the Care Bill has been taking that further forward and making it a reality. I hope that that context helps when looking at how we are trying to tackle the needs of these particularly vulnerable children.

I heard what my noble friend Lady Sharp said about the probing nature of her amendment. As ever, she probes extremely effectively. She is seeking to explore how these new arrangements will work in practice, and obviously she is absolutely right to do that.

My noble friend wondered whether SENCOs would have too much on their plate. Since 2009, the Government have funded more than 10,000 new SENCOs to study for the National Award for SEN Coordination. We will support a further 800 places in 2013-14 and this will help them in their important role in linking with other agencies, such as health and social care. I hope that that helps to take this matter forward.

Many of the amendments in this group reflect an apparent desire to puts lots of detail in the Bill. This is an argument with which everyone here will be very familiar—whether it is necessary to specify certain things in the Bill in order to make sure that certain things happen. I am sure that we are all seeking to go in the same direction, which is to achieve what the Bill sets out to do. From noble Lords’ probing as to whether it is going to be delivered by the Bill as it is, I certainly sense that there is agreement on that.

However, noble Lords will also be familiar with the fact that if you specify in great detail in a Bill, you can inadvertently exclude things that you have not included. That is why there is always discussion about what happens in guidance and secondary legislation and so on, and that is why I am so pleased that we have the SEN guidance. It is comprehensive and, I hope, addresses a number of issues that noble Lords are concerned about. From that guidance, your Lordships can see how the Bill translates into what we intend in practice.

As noble Lords will appreciate, we feel that there is a danger that if too much is specified in the Bill, that will then hinder the kind of flexibility that may also be required at a local level. Noble Lords who heard the pathfinder organisations, which came to address us the other day, probably share my feeling that the often very imaginative and creative ways in which they were going about their work and the way they were working with other organisations in their local areas to address the needs of the children were very impressive. One would not wish to do anything that stifled that. One would wish to support them in taking that forward. The aims of what one is seeking to achieve and the details being spelt out in the guidance—

[Baroness Howarth of Breckland]

I have not spoken in this debate but I should like to ask the noble Baroness a question. The thing that concerns me greatly as a practitioner is the variableness of how co-operation takes place across the country. In some places, certainly where there are special projects such as pathfinders, it works well, but in my experience some authorities do not make timely decisions, which can mean that placements are not agreed, and again I refer to my experience in adult colleges for severely disabled young people. If a local authority cannot agree between its own social services provision and its education provision, how does it then hope to get co-ordination across the piece?

I probe only because of my anxiety that we get this right. I agree that it is not always good to have too much detail in a Bill, but how through the guidance will we ensure consistency across the country so that decisions are made appropriately and young people get properly placed, not left in back rooms in homes with distraught parents when a college place could make the difference?

18:30

[Baroness Northover]

I hear what the noble Baroness says, and she speaks from a great deal of experience. That is the kind of challenge that has led to us trying to move forward across the board on SEN to ensure that what is provided for children is more uniform and more joined up. If need be, I will write with more detail in response to her but, as I said, what the pathfinders were saying was encouraging. They said that they would link up with those who came after to try to spread best practice. As noble Lords have said, it is often what happens in practice on the ground that may be wanting.

That links up with an issue raised by the noble Baroness, Lady Jones, about how families might hold their local authority and CCGs to account for having arrangements for joint commissioning in place. Ultimately, families could take out a judicial review, but we believe that there are other, more effective ways to hold local bodies to account through local complaints procedures and through NHS England, which will review how CCGs are fulfilling their duties under the NHS mandate. I remind noble Lords that the NHS mandate refers specifically to children and young people with SEN. Therefore, there are those novel routes. That is a new lever.

As the services that result from joint commissioning arrangements will be reflected in the local offer through direct involvement in developing and reviewing it, we hope that that will bring about the opportunity to improve things in the way that both noble Baronesses seek.

Returning to my script, as opposed to my thoughts, Clause 26 requires local authorities and CCGs to keep the arrangements under review, so that service provision will evolve over time and continue to meet the needs of the community that it serves. I have spoken about the pluses and minuses of putting duties in the Bill.

I also note that service providers must take responsibility themselves for how they best use their resources to provide services for children and young people with SEN. I was struck by what the pathfinders said about how often that meant finding a cost-effective way to do that. It was not necessarily the case that working together was more costly. That was interesting to hear.

The final paragraph in Amendment 86 highlights the importance of key workers, which is something that we support and have specifically included in the code of practice. Chapter 3 makes clear that the kind of support that local authorities should offer children, their parents and young people should include key work and support, such as individual casework and informal advocacy, support in attending meetings or contributing to assessment and reviews, and participating in decisions about outcomes.

There was reference to how the NHS provides services and how that might mesh. The fundamental principle of the NHS is that provision should meet reasonably required needs. We have to be careful. There is a wide understanding, certainly among noble Lords, as to why that is the case and why, for example, the previous Government set up NICE to assess treatments and to work out what was effective. An NHS that was free at point of need, universal and comprehensive had to make sure that what it was providing to the population made sense and that clinicians would agree as to what was an effective treatment and so on. All of that is built into the way the NHS has always operated. We therefore have to be careful that we do not inadvertently seek to change that fundamental principle of provision to meet the reasonably required need.

The CCG has a statutory duty to provide services to meet the reasonable needs of those for whom it is responsible. We have a good understanding of that. We may challenge it around the edges, but we do have an understanding of it. It must act consistently with the NHS mandate—

[Lord Ramsbotham]

My Lords, I am sorry to intervene but the point of raising my concern is that, in many areas, speech and language therapy has not traditionally been accorded the impetus that has been required by the NHS. I welcome the talk about health and well-being boards. Indeed, as I mentioned earlier in the debate, because they are the bodies that are in touch with all people from nought to 25, I hope that they will have a role and that it will evolve. Accepting the way in which the NHS operates, I hope that in future it will take account of speech and language therapy needs because of its increasing importance for our children today.

[Baroness Northover]

The noble Lord made a very cogent case before and my noble friend was sympathetic to what he said. It will always be the case that, at any one time, there will be debate as to what is essential, what ought to be provided and what will best help children or any member of the population, and, therefore, debate about what the NHS or any other provision ought to cover. As I said, the noble Lord made a cogent case and my noble friend responded sympathetically, so it is a matter of let us watch this space. As I have mentioned, the NHS mandate includes a specific objective that children and young people with SEN have access to the services set out in their care plans. I hope that is reassuring.

I have referred to pathfinders and the wording in the clause reflects the fact that the parties involved are expected to follow the arrangements made unless there is good reason to depart from them. Allowing that flexibility will enable partnerships to adapt to accommodate unique circumstances or changing priorities locally which the arrangements may not have anticipated.

Noble Lords may be anxious that this flexibility could mean that partners have to have only some of the arrangements in place before achieving any agreement. I hope I can reassure noble Lords that this is not the case and is certainly not the legal effect of these provisions. Clause 26(4) makes it clear that these partnerships have the clear function of securing the care that children with SEN need. Therefore they must be able to agree a clear course of action in every case. This point is backed up by the new draft SEN code of practice.

There may be other elements that I need to address. I turn to the point that the noble Baroness, Lady Jones, made about transparency. We certainly agree with her point about needing transparency for parents but we do not think that we should replicate other legislation in the Bill. I am sure she will be disappointed about that. The place to bring this together, we feel, is in the code of practice, and that is what we have sought to do. Again, that is something that comes up in legislation all the time: should we make reference to previous Acts or should we include it in the new Bill? We feel that the draft code of practice helps to bring everything together very clearly, and I hope that she will accept that.

[Baroness Jones of Whitchurch]

Earlier the Minister made the point that we do not want lots of detail in the Bill and I think that we all understand that you cannot spell out everything in a Bill. However, we thought our amendments on this issue were rather neat and not full of detail. Our proposals, about providing any other provision deemed necessary to meet the special educational needs of the child or young person, were intended to include the family context and so on. That was not about too much detail—obviously the detail can be spelt out in the code—but it was to provide a route in for families to feel that they were included in the Bill. I take the Minister’s point about not having too much detail but I do not think that our amendment could be found guilty of that.

[Baroness Northover]

I was actually thinking more of my noble friend’s amendment. My noble friend Lady Sharp is always clear and to the point, so far be it from me ever to suggest that she might add detail that was best put elsewhere.

The noble Baroness, Lady Howe, spoke about local authorities working across boundaries. I assure her that we agree that, working together, local authorities can secure more cost-effective, high quality provision for children and young people with the most complex needs. Many authorities already have such arrangements in place and we encourage it through the new draft SEN code of practice, which includes, in section 4.4, a specific section on regional collaboration. As the noble Baroness spells out, it is in local authorities’ interest to do so. The provision stipulated in education, health and care plans will reflect individual need and local authorities will have to ensure that it is provided.

The noble Baroness highlighted effectively how there may be just one or two children with particular needs in one area, and it makes a lot of sense to collaborate with those in other areas. That is why Clause 30 sets out that local offers must cover provision outside the local authority area for children and young people for whom the authority is responsible. Making this an explicit part of the local offer will mean that authorities have to take steps to make these arrangements up front, and allow parents to challenge whether the best arrangements are being made. For specific cases, Clause 31 goes further and requires other local authorities to comply with requests for co-operation, as long as doing so does not compromise their own duties. That provides a further spur for local authorities to consider in advance suitable joint arrangements for providing for children and young people with specific needs.

I hope that I have covered most of the points raised by noble Lords. If I have not, then obviously I will write to them. In the mean time, I hope that the noble Baroness will be prepared to withdraw her amendments.

[Baroness Sharp of Guildford]

I thank my noble friend for her answer. I do not think that any of us who have spoken take issue with the fact that the Bill as a whole aims to improve the integration of arrangements. There is scepticism because we have seen several Bills where that hope has been there. Perhaps this Bill, in its way, is a stronger one. Clause 26(4) states:

“Joint commissioning arrangements about securing education, health and care provision must in particular include arrangements for … securing”,

EHCs. The Bill is quite explicit in making clear that integration should take place.

18:45

Our scepticism lies in the fact that practice does not often meet the idealistic requirements, as the noble Lord, Lord Ramsbotham, made clear. In particular, he instanced speech and language therapy, which has been the responsibility of the NHS. Having been a school governor responsible for SEN issues, I know from experience that we have been let down time and time again by the NHS. You might need to wait six months, or sometimes longer, even for an appointment, and often the amount of provision given in such circumstances is grossly inadequate. As was referred to earlier, we know very well that early intervention is so important. If you can get in there quickly and make that intervention, it makes all the difference in the world.

The proof of the pudding is in the eating. I know well that my friend in the other place, Sarah Teather, was responsible for putting this new Bill together and that she wanted to get these services working together—and working well—for the benefit of those with special educational needs. She wanted to make sure that the sorts of things I was criticising just now did not happen, so let us hope that these stronger requirements on the authorities to work together take effect.

The point I was making about resources is very important. We can put all kinds of duties on local authorities, social services departments and CCGs about what they should and what they cannot do. However, there are a limited number of hours in the day and many of these people are extremely pushed in their work already. Let us hope that we can effect the integration because, as noble Lords were also saying, co-operation and partnership can often mean that it is ultimately less work for everybody. With that, I beg leave to withdraw the amendment.

Amendment 86 withdrawn.

Clause 25 agreed.

Clause 26: Joint commissioning arrangements

Amendments 87 to 97 not moved.

Amendment 98 had been withdrawn from the Marshalled List.

Clause 26 agreed.

Clause 27: Duty to keep education and care provision under review

Amendment 98A

Moved by

[Lord Low of Dalston]

98A: Clause 27, page 22, line 12, at end insert—
“( ) If the education and care provision referred to in subsection (1)(a) and (b) is deemed insufficient to meet the needs of children and young people under subsection (2), a local authority must—
(a) publish these findings;(b) involve those consulted in subsection (3) in producing an action plan to revise the education and care provision referred to in subsection (1)(a) and (b);(c) review and report on progress against its action plan;(d) revise the local offer accordingly.“( ) Regulations must make provision about—
(a) criteria to be used by local authorities in assessing whether the education and care provision referred to in subsection (1)(a) and (b) is sufficient under subsection (2);(b) the information to be included in an authority’s action plan;(c) how an authority is to involve children, young people and families in the production of, and assessment of progress against, its action plan;(d) imposing time limits on implementing the revision of the education and care provision referred to in subsection (1)(a) and (b) deemed insufficient.”

[Lord Low of Dalston]

My Lords, the Support and Aspiration Green Paper, published in 2011, contained the aspiration that it would be as good as its name and would make the system of provision less adversarial and give children, young people and their parents greater clarity about their rights. It clearly stated that local authorities would have to set out a local offer which parents could rely on. However, parents and special education professionals are concerned that the Bill will not put an end to the battles faced by families which the Green Paper so clear-sightedly analysed as a major blot on the system and pledged to end. They also worry that it fails to put in place appropriate accountability mechanisms in order to ensure that local authorities deliver the support that families need.

The Government’s intention to put children, young people and their parents at the heart of the system, and Ministers’ oft-repeated desire to ensure that the services outlined in the local offer are responsive to families’ needs, are commendable. The key to this is accountability: if families with disabled children and children with special educational needs are not able to hold local agencies to account for the delivery of the services in the local offer, they will have no way of ensuring that the services they need are available.

The Bill makes some useful moves in this direction. Clause 27 states that local authorities must consult children and young people with special educational needs and their parents when reviewing education and care provision in the local offer. Clause 30 requires local authorities to publish comments about their local offer from children with SEN and their parents, as well as the authorities’ responses to those comments. However, I am concerned that, while publishing the comments is a start, it will not of itself ensure that local offers are responsive to local needs. Local agencies will be under no obligation to act on the comments and to make the improvements parents want to see. Parents will still have to battle with local authorities for the services they need.

The amendment places the onus on local authorities to improve the service, rather than leaving children, young people and their parents to fight for their rights themselves. It would require local authorities, after publishing comments on the local offer, to involve young people and parents in producing an action plan to revise the education and care provision outlined in the local offer; to review and report on progress against the action plan; and then to revise the local offer accordingly. This would help to ensure that local support is responsive to local need.

Without this amendment, which is aimed at driving up the quality of local services, I fear that little will change for families, and the opportunity to transform the lives of hundreds of thousands of disabled children and children with special educational needs will be missed. Parents will still feel that they have to battle through the labyrinths of bureaucracy the Green Paper spoke about for the support they and their child need. I therefore hope that the Government will adopt this amendment, which will ensure that the local offer will be something parents can indeed rely on. I beg to move.

[Lord Touhig (Lab)]

My Lords, I add my support to the noble Lord, Lord Low, on Amendment 98A, to which I have added my name. I shall also speak to Amendment 99, in my name and the names of my noble friend Lady Hughes and my noble friend Lady Jones.

The noble Lord, Lord Low, has outlined the objectives of Amendment 98A, which requires local authorities, where services that they provide have been found insufficient, to involve parents and young people in producing an action plan, to revise the education and care provision in the local offer and to review and report on progress against the action plan.

I look across the Room. I believe that the Minister has spent most of his life working in business. I am sure, therefore, that he would see the merits of this amendment; if he ran a business that was in danger of losing a major customer, he would want to find out why and then to put in place an action plan to deliver what the customer wanted, thereby keeping the business. Amendment 98A does just that. The provider of the service is required to engage with the user to ensure that what is provided is what is needed. That seems sensible to me.

I turn to Amendment 99. Clause 27 requires local authorities to keep education and care provision under review. While that is welcome, in the view of the Opposition it is insufficient. Amendment 99 would require local authorities to assess whether there was sufficient funding in place to be able to secure these services for all the children and young people who needed them. If they found that they lacked the wherewithal, they should consider jointly commissioning services with neighbouring local authorities where appropriate.

These are difficult economic times and there has been huge pressure on local authority spending and budgets. Whether or not services are secured and available should not depend on whether a particular local council can afford the level of provision needed to meet the needs of children and young people in its area. Therefore, collaboration strongly commends itself.

I am sure that I am not alone in believing that accountability is the key to these reforms. Parents, children and young people should be able to rely on the services provided by the local authority and render it accountable when that provision is not met. That seems fair and proper, and our amendment requires local authorities to consider working together and sharing services with neighbouring authorities. I believe that that already takes place in a number of London boroughs. I know that in my part of the country, Wales, a lot of collaboration is now taking place between local authorities that are sharing the ability to provide services across a number of boroughs.

Importantly, Amendment 99 would not constrain local authorities to work with others but would merely require them to consider doing so in the interests of improving services for children and young people. The amendment was dismissed in the other place, where the Minister said that the decision for spending on children and young people with special educational needs must remain one for the local authority. We would certainly agree with that, but nevertheless Amendment 99 highlights a problem and seeks to find a solution. If the Government recognise that there is a problem but do not want to accept this amendment as a solution, will the Minister explain how they will ensure that local authorities deliver the services that young people and children need and that they are accountable for providing those services? In other words, if the Government do not like our solution, what is their solution to a problem that we all recognise exists?

[Baroness Wilkins (Lab)]

My Lords, I support Amendment 98A, moved by the noble Lord, Lord Low, and I echo his comments that accountability must be at the heart of SEN reforms in the Bill. I will also speak to Amendment 99, which is a better version of my Amendment 98, which I withdrew.

Times are tough for all families, but for families with disabled children the challenges are even more acute. The current SEN system has led to parents with disabled children all too often feeling powerless, overwhelmed by the seemingly endless bureaucratic hurdles that they need to jump over to access the support their children need. Parents are exhausted, demoralised and unable to understand why it is such a battle for their children’s needs even to be recognised, let alone given adequate support.

Recent evidence shows that one in eight families in England who have a child with SEN are being pushed to breaking point by a lack of support. Scope’s Keep Us Close report found that 62% of these families said that the services they need are not available in their local area and that that has a serious impact on their family life. It is vital that robust accountability measures are in place around the local offer. This would give parents the confidence that their needs would be listened to and that local support would be in place to enable their children to be a part of their community and part of society, and to have the same opportunities as their non-disabled peers.

Amendment 98A would ensure that the local offer was not merely a “Yellow Pages” of SEN support, as many fear it will be, but was rather a living document, responsive to the needs of families and with a clear intention to improve local services. The current requirement in the Bill for local authorities to publish comments from parents on the local offer, although an important first step, does not go far enough and will not fulfil the Government’s ambition to, in the words of the Children’s Minister, put the child and their family in the driving seat. The amendment would require that local authorities actively involved parents and young people,

“in producing an action plan to revise the education and care provision”,

outlined in the local offer,

“review and report on progress against its action plan”,

and then,

“revise the local offer accordingly”.

That would give Clause 27 some much needed teeth. It should confine the battles, fights and struggles faced by parents to the SEN history books.

19:00

I turn to Amendment 99. It would require a local authority to perform a funding check before proceeding with implementing the reforms. At Second Reading, I highlighted the fact that many local authorities are already cutting support services for children with SEN. The National Deaf Children’s Society has found that 29% of local authorities will be cutting specialist support services for deaf children this year, and RNIB and Sense are concerned that similar cuts are being made to other services for children with SEN impairments.

This SEN reform has the potential to do more harm than good unless it is adequately funded and implemented properly. Earlier this month, the Department for Education published its impact evaluation of the SEN pathfinder programme. It found that in the first 18 months of the programme the median cost to pathfinders of implementing the reforms was £330,000. If that was applied across all local authorities, we would be looking at a total cost of more than £50 million. Earlier this summer, the Department for Education announced that non-pathfinder areas would receive start-up funding to support the implementation of the SEN reform. That came to a total of £9 million, or about £75,000 per authority. There is a huge funding gap between those two figures.

The impact evaluation report warns that actual costs may in fact be higher. That is already identified, given that pathfinders have been working with relatively small numbers of children to date. That leaves me very nervous that we are asking local authorities to deliver these reforms without adequate resources. I urge the Minister to respond positively to those concerns.

[Baroness Howarth of Breckland]

My Lords, I find the speeches of the noble Baroness, Lady Wilkins, a breath of fresh air. Often, sitting in these debates, I feel that I am in a time warp bubble where we have high hopes and expectations for the future. The word “hope” was used earlier by the noble Baroness, Lady Sharp, and I think I muttered to the noble Baroness, Lady Howe, “Is hope enough to achieve what we want?”. I ask the Minister to be realistic in her response. We are raising the expectations and hopes of hundreds of families. Day in and day out, I see families struggling to get services that they simply cannot access or which do not exist, and being persuaded to accept something else because what they feel they need is not available.

I welcome the Bill enormously. As I have said before, I think that at its heart is a real care for that group of families, but I am immensely concerned about what happens when it goes through. I speak also as a vice-president of the Local Government Association and work often with local authorities and their leaders. I know the struggle that they are having with government finances to make those services work. I ask the noble Baroness how we move towards achieving those services, and that level of services, while keeping a realistic picture, so that families do not expect more than they can hope for, but somehow ease the system so that, as the noble Lord, Lord Low, said, they are not engaged in a huge antagonistic battle day in and day out to move just a step forward. If only we could make some of it easier and clearer so that they knew what they could expect, that would be of huge benefit.

I am sorry if I sound slightly sour in saying all of that, but the noble Baroness, Lady Wilkins, presented us with the reality as it is, and as many of us see it on the ground, day by day. I think that I have said enough to make my point. I care about the families; I care that they do not have unrealistic hopes. I just want them to be able to get what is intended by the Bill.

[Baroness Howe of Idlicote]

My Lords, I am happy to support the amendment of my noble friend Lord Low to strengthen the accountability measures around the local offer. I hope that all the comments that have been made will strengthen the arm of the Government in making certain that they are delivered.

For far too many families the process of accessing support for their disabled child or child with special educational needs involves them navigating their way around a complex, inflexible system which is still steeped in bureaucracy. All too often parents feel that they have to be persistent and tireless if they are to get the services they need, with only articulate families or those who shout the loudest—in essence, probably, more middle-class families—being listened to. Therefore, accountability around the local offer for services, on which almost 1.4 million children will be reliant, must be as robust as possible so that families can ensure that the services they need are available in their local area.

This is something that the Education Select Committee emphasised in its pre-legislative scrutiny of the SEN reforms, stating:

“The importance of getting the Local Offer right cannot be overstated”,

and recommending that the Bill must contain improved accountability measures by which offers can be evaluated. The amendment of my noble friend Lord Low would create a situation where local authorities would have to work closely together with families, as well as with school governors, children’s centres and nurseries, with the common aim of making local support for disabled children and children with SEN the best that it can be.

In these difficult financial times, when every penny counts, ensuring that children with SEN are given timely and effective support in their local communities will certainly prevent families reaching crisis point, where they need more expensive support further down the line as a result. We should not underestimate the importance of this partnership working. Too often parents feel powerless and that their needs are not being listened to. As a consequence they are forced to fight for a statement of special educational needs or to go to a tribunal to get the right support for their child. This is, and remains an unacceptable situation. It wastes time, money, resources and can be emotionally draining for parents who already face immense challenges on a day-to-day basis. Indeed, I echo the chair of the Education Select Committee, the Member for Beverley and Holderness, who stated at the Report stage of the Bill in the other place that he hoped there would be fewer people having education, health and care plans than under statements,

“because local offers meet so many of the needs of parents and young people”.—[Official Report, Commons, 11/6/13; col. 205.]

The local offer has the potential to be truly transformative in improving the lives of families with disabled children, ensuring that services are designed by families for families. However, I am not confident that the current provisions in the Bill will guarantee this. I will listen with enthusiasm to any reassurance I can get. I further urge the Government to accept the amendment of my noble friend Lord Low, which would prioritise the needs of families and ultimately lead to better life outcomes for 1.4 million children.

[Lord Northbourne]

My Lords, I support the amendment of the noble Lord, Lord Low, and the comments that the noble Baroness, Lady Howarth, made about it, which were very wise and very important. Both those speakers have said what needs saying more ably than I can, and I am not going to repeat it. The only thing that I am going to raise with the Minister is whether this does not raise a question about the rather extraordinary wording of Clause 25(1):

“A local authority in England must exercise its functions under this Part … where it thinks that this would”...

Leaving aside the rather esoteric question of whether or not local authorities think, that enormously weakens the residual provisions in these clauses. It gives the local authority the excuse to say that it does not think that these things are absolutely necessary. I wonder whether the Minister might think about that.

[The Countess of Mar]

My Lords, I was horrified to be pointed to the report by the Children’s Commissioner, Always Someone Else’s Problem. The executive summary, which I am afraid is all I have had time to read, says:

“We have found evidence of … pupils being excluded without proper procedures being followed; these exclusions are usually for short periods, but may be frequently repeated, meaning that the child misses substantial amounts of education … pupils being placed on extended study leave, on part time timetables, or at inappropriate alternative provision, as a way of removing them from school”.

It goes on to list other examples, which I am sure the Minister is familiar with, but the final one is,

“local authorities failing to deliver their legal responsibility to provide full time alternative education for children from the sixth day of exclusion”.

In the report the Children’s Commissioner says that it is mainly SEN children who are what she calls illegally excluded from school. I am very concerned that local authorities are perhaps not taking due care to ensure that this does not happen in their areas. This is an excellent amendment that would perhaps preclude this sort of thing from happening. From that report, it seems to be happening on a very large scale.

[Baroness Northover]

My Lords, we appreciate the concerns that have prompted the amendments in this group and noble Lords’ determination to ensure that we move things forward for children with special educational needs, and I welcome the opportunity to respond to the discussion. I thank the noble Baroness, Lady Howe, for saying that the local offer has the potential to be transformative for these children.

We understand the reasons why the noble Lords, Lord Low and Lord Touhig, seek the publication of an action plan if the education and social care is deemed insufficient. I assure them that there is already scope in our provisions for children and young people with SEN and their parents, and local providers, to be involved in improving provision where it is insufficient. Clause 19 clearly sets out the guiding principle of the SEN provisions, which is all about putting children, their parents and young people at the heart of what the local authority does. It sets out the importance of involving children, their parents, and young people as fully as possible, and includes the need to support them to achieve the best possible outcomes.

Children and their parents, and young people, are also central to the local offer. Local authorities will be under a duty to review their local offer in Clause 30(5) —noble Lords have made reference to that—and regulation 4 of the draft local offer regulations sets out who they must consult in such a review. Local authorities will also be under a duty to publish comments on the local offer under Clause 30(6). Noble Lords, again, made reference to that.

The noble Lord, Lord Low, was probing on accountability and how the review would then, as it were, have teeth. We understand the noble Lord’s points about accountability, and we will be discussing this in a later group. Perhaps we can return then to how that will be done. However, I would say that the local offer in Clause 30(6) will require local authorities to publish their response to comments that they get from children, their parents and young people, so there is a major incentive there to act.

That is also made clear in Chapter 5 of the code of practice, which says that local authorities should publish an explanation of the action they are taking to respond to the comments. It is not simply a case of publishing what that response is. This brings transparency—a point that the noble Baroness, Lady Jones, made previously—and potential publicity. We must bear in mind that local authorities are themselves accountable to their electorate. In the debate on the previous group, I mentioned other ways in which people could hold local authorities to account. However, I do not think that it is going to be very comfortable for local authorities to have to publish critical comments and to have to justify why they are doing what they are doing. That is certainly worth bearing in mind. As I mentioned, local authorities must consult widely and involve children and young people with SEN and the parents of children with SEN in shaping local provision.

19:15

The noble Lord, Lord Touhig, the noble Baroness, Lady Wilkins, and others raised the issue of funding, and we have talked about that to some extent. Clause 27 specifically states that local authorities need to consider resources. Subsection (2) requires them to look at whether special educational and social care provision is sufficient to meet the needs of those children and young people. It follows that, in considering whether provision is sufficient, local authorities must consider whether the funding is sufficient. I appreciate the comment of the noble Lord, Lord Touhig, about difficult economic times, as well as his important point about working together. I also appreciate what the noble Baroness, Lady Howarth, said in this regard.

We agree with what the noble Baroness, Lady Jones, said about local authorities working together and commissioning services jointly to secure cost-effective, high-quality provision for children and young people with low-incidence needs. Many authorities already have such arrangements in place and it is clearly in their interests to do so. I covered this matter when we debated the previous group.

The noble Baroness, Lady Wilkins, talked about support services for deaf children being cut. We firmly believe that all young people should be helped to achieve their best, regardless of their background or circumstances. I assure the noble Baroness that we are not cutting services for deaf children. In terms of funding, we have protected the dedicated schools grant so that overall it is at the same cash level per pupil over the period of review of government spending. We have also ensured that we will not be reclaiming SEN funding from the local authorities as part of academy funding arrangements for SEN services. That said, we obviously recognise that the current financial climate means that everybody is under pressure to work together as effectively as possible, to share approaches to supporting deaf children and to get ready to implement the reforms in the Bill.

Perhaps I may draw out a little more the question of financing in response to the noble Baroness, Lady Wilkins, and others. The funding that we have provided this year, which is £75,000 per authority, is to help them to develop their systems in preparation for these reforms. Overall, we are investing around £47 million to support implementation this year, including £9 million to non-pathfinder local authorities, £6 million to pathfinders, £19 million via the voluntary and community sector, and £9 million for workforce development. I hope that noble Lords will welcome that investment. Going forward, any new burdens on local authorities created by the implementation of this part of the Bill will be properly assessed and funded by the Government. I hope that that is reassuring.

The noble Lord, Lord Northbourne, raised a point regarding Clause 28(1), and I liked his reference to how it was written. We will be very happy to write to him with clarification regarding the weakening of the strength of local authorities’ obligations elsewhere in the Bill.

I assure the noble Countess, Lady Mar, that any evidence of illegal exclusion is taken extremely seriously by the department and Ofsted. The department’s statutory guidance on exclusion lays out the responsibilities of schools, and states explicitly that excluding pupils simply because they have additional needs, or sending them home to “cool off”, is unlawful. We are grateful to the Children’s Commissioner for her report on this issue.

I am sure that I will not have totally reassured noble Lords. However, I hope that what I have said about what is in place here and the transparency and accountability that we have put on local authorities, and what I have said about funding, will help to reassure noble Lords, and that they will be content to withdraw, or not to move, their amendments.

[Baroness Howarth of Breckland]

May I just ask a question about the funding? Much as local authorities do not like ring-fencing, how will the Government ensure that that funding is properly directed to these services?

[Baroness Northover]

The issue of exactly how to make this as effective as possible is under discussion at the moment, and I am very happy to write to the noble Baroness to spell that out in more detail.

[Baroness Wilkins]

To return to the question of funding, the Government have said a number of times that they are protecting funding for vulnerable families, but that protection is not being carried through at local level. The Government seem to be remarkably complacent about this. Surely action must be taken so that the funding reaches the people who need it.

[Baroness Northover]

I hear what the noble Baroness says. She is a doughty champion in this area. The best thing is if we write explaining what I have just said in further detail. Maybe she would then like to respond so that we can look at that further and get back to her.

[Baroness Wilkins]

I wonder if the Minister would meet with the organisations concerned, which would be far more helpful.

[Baroness Northover]

Being a very low-level Minister, I am not sure how useful that would be for her group. However, I will refer it to my far more significant noble friend. I know that the department is very open to discussions with all interested parties. In the light of that, I hope that she will be reassured.

[Baroness Wilkins]

I welcome that. I thank the Minister.

[Lord Low of Dalston]

My Lords, it seems clear that this amendment has touched a nerve. People have spoken with real passion and feeling about the need to put more beef into the local offer in ways such as I have set out in the amendment: through a process of review, revision of provision, development of an action plan through consultation, reporting against the action plan, leading on to the revision of the local offer.

All those who have spoken, and I am grateful to them for their comments, have been very much in support of the Bill’s aspirations but have been concerned that the provisions in it at the moment may not be adequate to deliver those ambitious aspirations for the children and young people whom we are concerned about and whom the Bill deals with.

I am grateful to the Minister for her reply. There was plenty of detail in it. I would like to read it, if I may, and measure it against the aspirations that we have in the amendment. It may be that what the Minister has set out will meet the concerns of those who developed it. However, this has touched on something, and I have a sense that we may be brewing something more focused that will reflect the anxieties and concerns that have been raised around the Committee when we come back on Report. For now, though, I beg leave to withdraw the amendment.

Amendment 98A withdrawn.

Amendment 99 not moved.

Committee adjourned at 7.25 pm.

House of Lords

Monday 28th October 2013 Lords Chamber

Monday, 28 October 2013.

14:30

Prayers—read by the Lord Bishop of Lichfield.

Introduction: Lord Sherbourne of Didsbury

Monday 28th October 2013 Lords Chamber

14:38

Sir Stephen Ashley Sherbourne, Knight, CBE, having been created Baron Sherbourne of Didsbury, of Didsbury in the City of Manchester, was introduced and took the oath, supported by Lord Hill of Oareford and Lord Howard of Lympne, and signed an undertaking to abide by the Code of Conduct.

Introduction: Lord Paddick

Monday 28th October 2013 Lords Chamber

14:45

Brian Leonard Paddick, Esquire, having been created Baron Paddick, of Brixton in the London Borough of Lambeth, was introduced and took the oath, supported by Baroness Barker and Lord Macdonald of River Glaven, and signed an undertaking to abide by the Code of Conduct.

Public Services: Private Sector Companies

Monday 28th October 2013 Lords Chamber

Question

14:50

Asked by

[Lord Haskel]

To ask Her Majesty’s Government what assessment they have made of the reliability and value for money of public services provided by private companies.

[Lord Wallace of Saltaire (LD)]

My Lords, the Government’s overarching principle in procuring public services in the private sector is to secure the best quality and value for money for the taxpayer over the life of the contract. On coming to power in 2010, the Government found that public sector procurement was fragmented, bureaucratic, protracted and expensive, both for bidders and for procurers. The procurement reforms we have introduced since 2010 have made the way we do business more competitive, more transparent, better value and far simpler than before.

[Lord Haskel (Lab)]

Does the Minister agree with me that blaming the past for our problems in the present does not actually get us very far? Does he also agree with virtually everybody else that we are being ripped off by these companies, not only on energy prices but also in the Work Programme and in health assessments and rail fares? We learnt from the Financial Times only this morning that the Government are concerned that we are being ripped off by the water companies. What steps are the Government taking to rebuild public trust, and hold down the cost of living, by giving social obligations a higher priority and encouraging an attitude of public service?

[Lord Wallace of Saltaire]

My Lords, I hope you will accept that there is, to some extent, a difference between the relationship that the Government have with water companies and energy suppliers, which have regulators, and the direct contracts that the Government have with particular suppliers such as Serco and G4S. The concerns that we have at present over Serco and G4S are widely known. The Government are conducting a review of contracts with Serco and G4S across the board.

[Lord Naseby (Con)]

Does my noble friend recall that, prior to 1979, hundreds of local authorities had direct labour departments building council homes and carrying out maintenance at a massive loss of billions of pounds to the local ratepayers and the taxpayer in general? In 1979, very early on, those councils were prevented from doing that and the private sector construction industry was brought in to build those flats. Is that not a better way forward, and has that not been proven over the years?

[Lord Wallace of Saltaire]

My Lords, I think we have discovered yet again that there is no perfect way of providing goods and services and that each model has its own advantages and disadvantages. The Government are currently doing their best to encourage the development of mutuals. Some weeks ago I went round the mutual housing association operating in Bradford, and it was doing a superb job, in particular in training apprentices. But of course there are good examples and bad examples in almost every sector.

[Lord Wills (Lab)]

My Lords, does the Minister agree that transparency can only improve the delivery of public services by private sector companies? If he does, can he explain exactly why the Government continue to resist the extension of the Freedom of Information Act to the provision of public services by private sector companies?

[Lord Wallace of Saltaire]

My Lords, that is a familiar question. There are, of course, problems of commercial confidentiality, as the noble Lord well knows. I will take it back and write to him yet again on the subject.

[Baroness Greengross (CB)]

In the light of the recent criticisms of past exercises in public procurement, can the Minister give the House an absolute assurance that the Government will in future ensure that in every such procurement the reasons and objectives are clearly laid out so that delivery can be monitored and success assessed; that a realistic and workable alternative is available so that the Government do not in the last hours find themselves negotiating over a barrel; and, lastly, that the Government are clear about which risks they will keep and, when they want to allocate those risks to the operator, how that will be achieved?

[Lord Wallace of Saltaire]

My Lords, I wish that every potential risk was clear before one ever signed a contract, as that is part of the problem. The Government are aware that part of the problem with public procurement is that it has proved easier to contract with very large-scale providers which then very often subcontract to other suppliers. We are moving towards the target of 25% of contracts going to small and medium-sized suppliers so that there are direct relations with those who are actually on the ground providing the service in the regions and the localities. That is one of the things that we hope will improve the quality.

[Lord Sugar (Lab)]

My Lords, does the Minister agree that the original concept of hiring commercial enterprise to conduct the business of the Government was meant to gain better efficiency and value for money? Does he agree that this has failed in the sense that most of these private contractors actually spend most of their time enhancing their profit margins instead of looking after the service that they are supposed to be providing? Serco, as he has already mentioned, is the classic example where, I believe, there are allegations of fraudulent activities.

[Lord Wallace of Saltaire]

My Lords, in the case of Serco, the noble Lord will have seen that a number of senior executives have resigned in recent weeks. We welcome that and see it as a positive first step in the process of corporate renewal. Across the board, however, I am not sure that I would wish to blacken every company providing services for the state in the way that the noble Lord has perhaps suggested.

[Lord Blackwell (Con)]

My Lords, I declare my interests as set out in the register. Does my noble friend the Minister accept that there are millions of privately employed workers delivering public services who go to work every day completely dedicated to the quality of services that they deliver to the public? Does he recognise that, in tribute to their efforts, we should be clear that you do not have to be a public sector employee in order to be a public sector servant?

[Lord Wallace of Saltaire]

My Lords, one of the reasons why the Government are attempting to encourage more mutuals in this area is that there is considerable evidence that people who work for mutuals have a much stronger sense of service, job satisfaction and co-operative working.

[Baroness Farrington of Ribbleton (Lab)]

My Lords, the Minister referred to one of the earlier questions as familiar. Does he accept that questions would become less familiar on the Order Paper if they were answered?

[Lord Wallace of Saltaire]

Yes.

[Lord Berkeley (Lab)]

My Lords, can the Government explain why, on the recently announced east coast main line franchise, they have allowed the state railways of the Netherlands, Germany and France to bid but not the directly operated railways that are owned by this Government? What is the difference?

[Lord Wallace of Saltaire]

My Lords, that is a little bit on the edge of this Question. However, as a frequent user of the east coast railway line, I know exactly where the noble Lord is coming from.

National Curriculum: Violence against Women

Monday 28th October 2013 Lords Chamber

Question

14:58

Asked by

[Baroness Prosser]

To ask Her Majesty’s Government what plans they have to review the National Curriculum with the aim of preventing violence against women; and whether any such plans include making sex and relationship education a statutory part of the school curriculum.

[The Parliamentary Under-Secretary of State for Schools (Lord Nash) (Con)]

My Lords, violence against women is unacceptable. We expect schools to teach children not to tolerate violence. Schools may include this topic in personal, social, health and economic education as a non-statutory subject. Maintained secondary schools are already legally required to provide sex and relationship education, and we would expect all academies also to do so. The SRE guidance, which schools must have regard to, states that teachers should support children to avoid all forms of abuse, bullying and violence.

[Baroness Prosser (Lab)]

I thank the Minister for that reply, but does he agree that with women and girls experiencing higher levels of physical and sexual abuse, the Department for Education should actively support the Home Office’s strategy entitled A Call to End Violence Against Women and Girls? This includes sending schools information about prevention campaigns and overseeing the implementation of such campaigns.

[Lord Nash]

I pay tribute to the noble Baroness’s work on women’s and girls’ rights and opportunities. We support the principle behind her Question, and the DfE fully supports the Home Office’s excellent strategy in this regard. However, we do not believe that the most effective way of doing this is for the department to try to send messages to all girls. We are looking into how best to get information and messages to them. The This is Abuse campaign run by the Home Office is already doing good work in this regard. Later this year, Ministers from the Department for Education, the Home Office and the Department for International Development are to meet representatives from head teachers’ and teachers’ unions to discuss how best to raise awareness among staff and pupils of risks linked to gender-based violence. I am sure that the noble Baroness will also agree that any messages need to go to boys as well as girls.

[Baroness Butler-Sloss (CB)]

My Lords, the noble Lord, Lord Northbourne, has been passionate about the importance of parenting being part of citizenship. If the Government took that on board, the very important issue of domestic violence would fit very neatly into it.

[Lord Nash]

I take the noble and learned Baroness’s point. We should do everything we can to improve parenting in this country. But, I am afraid, it is also the case that there are many children whose parents are not going to do the job and we must do that in schools.

[Baroness Hamwee (LD)]

My Lords, does the Minister agree that behaviour and attitudes tend to get repeated down the generations? This includes the repetition of violence and, among men and women, the acceptance of violence. Therefore, does he think it is important to say that violence is wrong and to give victims the confidence to speak up and say that it is wrong and that they will not put up with it?

[Lord Nash]

My Lords, I entirely agree with my noble friend’s point. I think she is particularly referring to domestic violence, where we have a lot of work under way, but there are a number of cycles that we need to break through work in schools: worklessness is one; violence is another good example.

[Baroness Nye (Lab)]

My Lords, the last time the sex and relationship guidelines were updated was at the turn of the century, when the founders of Facebook were still in high school and Twitter was confined to the bird world. Will the Minister explain why the Government are so opposed to updating those guidelines to help teachers help children understand the internet world that they are growing up in now?

[Lord Nash]

My Lords, as part of the recent PSHE review, we looked at whether or not the SRE guidelines needed to be updated. We concluded that they represent a very sound framework for guidance in this area. We are doing a great deal on internet safety, as the noble Baroness knows, including bringing it into the curriculum for the first time, and a great deal of work with CEOP. We think that the framework is there and that to keep constantly changing it due to changes in technology is counterproductive, as technology is moving so fast.

[Baroness Jenkin of Kennington (Con)]

My Lords, is my noble friend aware that recent polling shows that one in three girls is groped at school and sexual harassment is routine? May I suggest that where schools do best practice, other schools are encouraged to learn from them?

[Lord Nash]

I agree entirely with my noble friend’s comments. We have asked Ofsted to publish best practice on PSHE, and we encourage all schools to do what the best schools can.

[Baroness McIntosh of Hudnall (Lab)]

My Lords, may I take the noble Lord back to the Answer that he gave to my noble friend Lady Prosser? If I heard him right, he said that he thought that the message did not need to go to all girls. Can he tell the House which girls he thinks do not need to hear this message?

[Lord Nash]

I did not intend to give that impression. If I did, I apologise. I just think that the method of getting the message to all girls needs to be carefully thought out.

[Lord McColl of Dulwich (Con)]

My Lords, as millions of men are brutalising millions of women and that means that millions of other people know about it and do nothing, can we encourage the public to take some responsibility? For instance, a few weeks ago, two 14 year-old boys heard a woman being beaten up, went and bashed on the door and then informed the police. Can we not encourage the public to become more involved?

[Lord Nash]

The noble Lord makes a good point. We can try to do this but I feel that it is really a job for the police authorities.

[Lord Sutherland of Houndwood (CB)]

My Lords, the two topics mentioned in the Question clearly refer to abhorrent sides of our society; we all agree on that. However, does the Minister agree that dealing with all those problems by inserting them on a statutory basis into the national curriculum is almost a confession of failure and that there have been many other interesting suggestions made from around the House today?

[Lord Nash]

I am grateful for the noble Lord’s question and I agree entirely. Pupils will often respond better to dialogues with mentors from outside agencies that are skilled in their work. It is right to help pupils in this way: issues around drug-running in gangs, for instance, are completely different from those relating to forced marriages. Schools should be free to engage with outside agencies as appropriate.

Sudan

Monday 28th October 2013 Lords Chamber

Question

15:05

Asked by

[Baroness Cox]

To ask Her Majesty’s Government what is their response to recent developments in the Republic of Sudan.

[The Senior Minister of State, Department for Communities and Local Government & Foreign and Commonwealth Office (Baroness Warsi) (Con)]

My Lords, the Sudanese Government’s violent crackdown on recent popular protests was disproportionate and unacceptable. We have called for an independent investigation into the use of force by the security forces. These events have demonstrated once again the need for an opening-up of democratic space in Sudan for real political debate. The Government must engage in a process of reform that addresses the needs of all groups and parts of the country, including those regions currently in conflict.

[Baroness Cox (CB)]

I thank the Minister for her reply. Is she aware that the suffering inflicted on their people by the Government in Khartoum is escalating, with continuing aerial bombardment of civilians in the Nuba mountains and Blue Nile? Half a million people have been displaced and are dying; I myself have witnessed that. In Khartoum, over 200 legitimate protestors have been killed. Not only that—some of their relatives were forced to sign forged death certificates saying that their deaths were from “natural causes” rather than from live ammunition. The scale of suffering in Sudan is second only to that in Syria. Would the Minister agree that the time is long overdue for really robust measures to be taken to stop the impunity with which Khartoum is continuing to slaughter, terrorise and cause suffering to its own people?

[Baroness Warsi]

I thank the noble Baroness for keeping this House up-to-date with what is normally the most up-to-date information on Sudan and South Sudan—usually because she has just visited once again. Of course there is immeasurable suffering taking place in Sudan; 3 million people have been displaced or affected by various internal conflicts. It is felt that the way to deal with these matters is through the United Nations Security Council, which regularly addresses this issue: it discussed this matter only last Thursday. We feel that the best responses are, first, through UN peacekeeping; secondly, through humanitarian assistance; and thirdly, through concerted international efforts led by the African Union, all aspects of which are supported by the British Government.

[Baroness Kinnock of Holyhead (Lab)]

My Lords, what response is likely to be given to the increased violence taking place in Darfur and the planned reduction simultaneously in the number of UNAMID personnel? Will urgent attention be given to the need for a more viable and inclusive process to replace the much discredited Doha process? Can we expect Darfur civil society and local stakeholders to be directly involved?

[Baroness Warsi]

The noble Baroness makes an important point. Of course, 10 years after the start of the conflict, the situation in Darfur remains serious. We have been pressing the Government of Sudan to honour their commitments. I understand the concerns that the noble Baroness has about the Doha peace agreement, but that is the framework within which we are working at the moment, supporting the efforts of the African Union and the UN joint chief mediator to engage the armed movements and encourage them to end violence and not to obstruct the peace process. We continue to give support, predominantly through humanitarian aid, of which a large chunk goes into Darfur.

[Lord Avebury (LD)]

My Lords, as I am sure my noble friend knows, the Security Council last Thursday expressed grave concern about the highly volatile situation in Abyei. What information does she have about the proposed referendum to determine the constitutional status of that territory being held among its permanent inhabitants towards the end of this month? What does she know about the increased military activity by the Sudan armed forces, particularly around the capital, Kadugli? Does she think these two events are connected?

[Baroness Warsi]

We are of course concerned about unilateral actions by either side in Abyei, but we believe that the Ngok community is organising a popular consultation of the community. However, this has not been endorsed by the Government of South Sudan. We understand the frustration that has led to this, but we encourage all parties at this stage to refrain from unilateral action. We are aware of the reports to which my noble friend refers of the build-up of Sudanese forces in South Kordofan. Whether or not that is linked to Abyei or the ongoing conflict in South Kordofan, we are not sure at this stage, and we urge restraint from the Sudanese armed forces. The noble Lord will of course be aware that, during the dry season, there is generally a build-up of armed personnel in the area, but we are keeping a close eye on the situation.

[Lord Triesman (Lab)]

My Lords, I understand the call on the Sudanese Government to open up greater democratic space, but that is rather like inviting any violent dictator to think about his behaviour and mend his ways—it is unlikely to create the outcome sought. Is not the truth of this, whether we are talking about Abyei or anything else happening in Sudan, that Omar al-Bashir is wanted for war crimes? This Government—indeed, it was the noble Baroness on 17 July speaking about strengthening the International Criminal Court—made the point that impunity was not acceptable. What steps will be taken to bring this man to justice? He travels freely throughout Africa and much of the world. He is not immune.

[Baroness Warsi]

We regularly remind states party to the Rome statute of their responsibilities under that statute. Only three months ago, we brought this fact to the attention of Nigeria, where President Bashir was travelling.

Universal Credit: National Rollout

Monday 28th October 2013 Lords Chamber

Question

15:11

Asked by

[Lord McKenzie of Luton]

To ask Her Majesty’s Government when they will publish an agreed plan for the national rollout of Universal Credit.

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud) (Con)]

Our priority is to deliver universal credit safely and securely over a four-year period to 2017. We remain committed to that objective, these timescales and the budget. We have already announced plans to expand universal credit into additional jobcentres from today and to roll out the claimant commitment nationwide by next spring. We have also said that we will provide more details around our implementation plans later in the autumn.

[Lord McKenzie of Luton (Lab)]

I thank the Minister for that Answer. Any confidence that we may have had in the Government’s ability to deliver universal credit was dramatically shaken by the NAO report last month. It concluded that the DWP was not achieving value for money and that there was,

“weak programme management, over-optimistic timescales, and a lack of openness about progress”.

Alarmingly, it stated that the department does not know to what extent its new IT systems will support national rollout. When will those systems be fit for purpose to support national rollout as well as enable detection of fraudulent claims? I also note that the department has written off £34 million-worth of abortive IT expenditure. How much more will be written off as abortive before the Government get their act together?

[Lord Freud]

My Lords, first, I take the opportunity to congratulate the noble Lord on taking up a slightly more relaxed lifestyle on the Back Benches with this portfolio. I pay tribute to him for his formidable contribution over many years from the Front Bench. To deal with his latest and just as formidable contribution, I remind noble Lords that the NAO said in its report:

“Spending so far is a small proportion of the total budget … and it is still entirely feasible that [universal credit] goes on to achieve considerable benefits for society”.

[Lord German (LD)]

Would my noble friend agree that the introduction of universal credit represents one of the largest system changes we have ever seen in the public sector in this country, sitting as it does on a hugely complex IT platform? Given the significance of universal credit in that it will always make work pay more than being on benefits, does my noble friend agree that getting it right is more important than making mistakes as we go along? But, if he will forgive my impatience, when will we see the first families with children being able to receive universal credit?

[Lord Freud]

My Lords, I entirely agree with the sentiment. When you are introducing a large cultural change like this, it is important to do it in a careful and controlled way, and to make sure that it is safe and secure. That is how we have been introducing our series of changes, such as child maintenance, PIP and benefit cap. I am not in a position, until we announce Howard Shiplee’s plans later this year, to give a timetable of when couples and children are brought into the migration strategy.

[Lord Foulkes of Cumnock (Lab)]

My Lords, this is really depressing. Why do the Government not pay attention to Sir John Major? Last week in the Press Gallery he advised the Government not to pay attention to the bean counters and cheerleaders, but to the people working with the disabled, the elderly and others who are suffering. John Major also said that this was going to fail, that all these reforms were going to fail, unless Iain Duncan Smith was a genius, and he saw no proof of that. Does the Minister have any proof? Unless he does, is it not about time that for the sake of our disabled people the Government started to think again?

[Lord Freud]

My Lords, the party opposite is not saying that universal credit is not the right transformation. Although it voted against various aspects, it is actually saying that it is the right way to go. The issue is how to introduce it. We are introducing it safely and securely, and we are doing that exactly for the kind of people to whom the noble Lord was referring. We are making sure that we do not produce shocks by introducing a new system on one day in the way, for instance, that tax credits were introduced and which was a failure. We are doing this slowly and securely.

[Lord Cormack (Con)]

My Lords, as this is such a profound change, would it not be sensible to have a Joint Committee of both Houses to monitor and supervise its introduction and development?

[Lord Freud]

My Lords, I can assure noble Lords that there is no shortage of people overseeing this particular programme. I do not really think that there is a need for another layer.

[Baroness Royall of Blaisdon (Lab)]

My Lords, undoubtedly the Minister is right that there are an awful lot of people overseeing the process, but the suggestion made by the noble Lord, Lord Cormack, is a good one. There may be better people to oversee the process. The noble Lord was generous in his tributes to my noble friend, but he did not answer the Question. My noble friend is still a valued member of the Front Bench and speaks on the Department for Communities and Local Government.

The DWP has estimated that a three-month delay in transferring cases to universal credit would reduce savings by £240 million in the current spending review. Will the Minister please tell the House how this reduction is to be funded?

[Lord Freud]

My Lords, I am not aware of any such mathematics. We have always said that we will introduce universal credit in a safe way and that we will adjust the timetable in the light of experience. We now have Howard Shiplee on board, and he is immensely experienced. He produced the Olympic Park on time, and he is working to make sure that we have a plan that will introduce this programme effectively.

[Baroness Wheatcroft (Con)]

My Lords, our welfare system is broken. If it takes a little while longer than we had originally hoped to put it right, surely it is right that we should take the time. Universal credit is a massive step in the right direction. Does the Minister agree that the real tragedy would be if benefits claimants were reduced to such desperate circumstances that they had to superglue themselves to benefit desks?

[Lord Freud]

My Lords, when you introduce a big programme of change, the important thing is that you test and trial it thoroughly. We have a major programme of testing and trialling, whether it is the intensive-activity programme, the in-work conditioning pilots, the housing demonstration projects or the 12 local authority pilots. I am hoping soon to publish the next issue of the local support service framework that is designed exactly to make sure that there is a support network for people who might otherwise look for the superglue.

[Baroness Hollis of Heigham (Lab)]

Like others in this House, I support universal credit and I welcome it, but I am deeply worried that it is going to be a paperless system accessible only online. A very large number of people in their 40s and 50s in limited financial circumstances on benefit do not possess computers, smart phones or computer skills. They will not be able to interrogate or correct errors on the system, and even if the Minister successfully delivers the structure, which I hope he is able to do, although I have my doubts, I am profoundly worried that an awful lot of people who should receive their full benefit will not be able to do so because they will not have access to a paper system.

[Lord Freud]

My Lords, we are designing the system to be digital, which must make sense in the 21st century. It also makes enormous sense to get people into the digital environment, not least because 94% of all jobs now require that kind of capability. However, our plans do not rely on everyone having to interrogate the digital system themselves. We will have back-up systems in a telephone service and a face-to-face service for those who absolutely need it. We will have a system to encourage people into the digital environment.

Inheritance and Trustees’ Powers Bill [HL]

Monday 28th October 2013 Lords Chamber

Membership Motion

15:21

Moved by

[The Chairman of Committees]

That, as proposed by the Committee of Selection, the following Lords be appointed to the Special Public Bill Committee on the Inheritance and Trustees’ Powers Bill [HL]:

L Ahmad of Wimbledon, L Beecham, E Courtown, B Hamwee, V Hanworth, L Henley, L Jones, L Lloyd of Berwick (Chairman), L McNally, L Plant of Highfield, L Shaw of Northstead;

That the Committee have power to send for persons, papers and records;

That the evidence taken by the Committee shall, if the Committee so wishes, be published.

Motion agreed.

Transparency of Lobbying, Non-Party Campaigning and Trade Union Administration Bill

Monday 28th October 2013 Lords Chamber

Order of Consideration Motion

Moved by

[Lord Wallace of Saltaire]

That it be an instruction to the Committee of the Whole House to which the Transparency of Lobbying, Non-Party Campaigning and Trade Union Administration Bill has been committed that they consider the bill in the following order:

Clauses 1 and 2, Schedule 1, Clause 3, Schedule 2, Clauses 4 to 26, Schedule 3, Clauses 27 to 32, Schedule 4, Clauses 33 to 44.

Motion agreed.

Energy Bill

Monday 28th October 2013 Lords Chamber

Report (1st Day)

15:22

Relevant documents: 5th, 6th, 9th and 11th Reports from the Delegated Powers Committee.

Clause 1: Decarbonisation target range

Amendment 1

Moved by

[Lord Oxburgh]

1: Clause 1, page 2, line 4, leave out subsection (5) and insert—
“(5) The first decarbonisation order must be made before 1st April 2014 and the year in relation to which the decarbonisation target range is set must be 2030.”

[Lord Oxburgh (CB)]

My Lords, I begin by declaring an interest as a director of two small companies with interests in energy efficiency and energy from waste, GEO and 2OC, and as honorary president of the Carbon Capture and Storage Association. As indicated in the register of interests, I occasionally advise other bodies on matters relating to energy, water and environment.

Other noble Lords have longer memories than I, but I can recall no other Bill for which the external atmosphere has changed so dramatically during its passage through the House. For that reason, a few introductory remarks that range more widely than normal may be appropriate and may answer questions that could be raised by noble Lords later.

The price rises that are causing so much concern today are, in part, attributable to the increase in the world price of gas. Whether we like it or not, we can expect the 20-year ragged upward trend of fossil fuel prices to continue, driven by steadily increasing world demand and partly because reserves and oil are becoming more expensive to extract. Temporary market gluts apart, we have to expect carbon-based energy systems to become progressively more expensive relative to the other items on which we spend our money.

However, looking at today’s low price of natural gas in the United States, we might ask whether we should not completely rethink our energy strategy in the light of possible US shale gas resource. Shale gas appears to be abundant and carries only half the environmental penalty of coal. I answer in the following way. It is widely recognised within the industry that the current low price of shale gas in the US results from overproduction and cannot be sustained. For the large US shale gas resource to become an economically exploitable reserve, the price will need to be around three times what it is today. The fact is that extracting gas from shale requires more energy and is more expensive than producing gas by conventional means. Either most of the gas in US shale will not be produced or its price will be much higher than today.

These considerations apply to the UK as well, except that the operational conditions here are likely to be tougher than in the US. If the UK shale gas resource is exploited, its main consequence would be a greater degree of resource independence rather than lower prices. That said, in almost any realistic scenario, gas has an important role to play in the UK energy supply for some decades to come, particularly if cost-effective carbon capture and storage technology is developed. The bottom line is that shale gas does not provide a “get out of jail free” energy card for the UK and does not provide a reason for a major rethink of energy policy or for changing the thrust of the Bill.

The original thinking behind the Bill is correct; namely, that it is prudent to spend more in the short term to build a strategic infrastructure that will substantially decarbonise our economy and reduce our exposure to rises in the cost of fossil fuels, which are likely to remain a continuing political concern. For reasons so well known that I will not rehearse them here, we need this Bill urgently so that the first steps in building the new infrastructure can be taken soon and in the right direction. The two defining characteristics of energy infrastructure are the long timescales and the high costs. With sufficient forethought and consistency of policy, both can be reduced. That is what the amendment seeks to achieve. As the Bill stands, important decisions on timing are deferred until at least after the next election, and who knows what other distracting pressures on government time there will be then. This is our opportunity and we should seize it.

The amendment would require the Government to settle next year the outlines of a measured approach to a longer-term UK energy strategy, taking into account the advice of the Committee on Climate Change. Once the bare bones of the strategy and above all its timescale are clear, industry can begin to plan. It is not just major companies that are involved. It is sometimes forgotten that the nominal times taken to extend the grid or build a new power station depend on essential components being available when they are needed. This means having a robust and specialised supply chain, which itself can take a number of years to establish. Without such a supply chain, major components that are urgently needed will probably have to be imported at high cost and with no benefit to the UK economy. More clarity now will help UK jobs and the manufacturing industries.

Major infrastructure investment also needs funds. Investors have the choice of where to put their funds and they will not put their money into a decarbonised energy infrastructure unless they see the Government committed not just by good intentions, but by the wording of the Bill. Investment is about risk; and the lower the perceived risk, the better terms we may expect to obtain. Here I must take the Government to task. At a time when investment in energy utilities in Europe has rarely looked less attractive, the Government appear to have gone out of their way to weaken confidence further. Ministers in departments closely involved with this Bill have on at least five occasions made statements that appear to undermine its main decarbonisation rationale. To make matters worse, the Government now seem to have adopted the language of their critics by describing as “green taxes” those elements of consumer charges that are specifically designated to reduce costs by improving energy efficiency and developing better long-term infrastructure.

15:30

The best way for the Government to recover the situation is to accept the amendment today as a reaffirmation of their commitment. The amendment will not guarantee that investment is forthcoming, but it will certainly help. Today, I have said a little about the environmental objectives of the Bill. These are undoubtedly important but, for reasons that I have given, the arguments for decarbonising—energy security and minimising energy costs—all point in the same direction. Others have asked about possible damage to our economy if we are the only country embarking on a decarbonisation strategy now. We are not alone. Around 50 other countries have either enacted or are working on improved energy efficiency and decarbonisation legislation. The Government are making special provisions for those industries which might be particularly disadvantaged by new legislation.

The amendments are about getting on with the job and setting milestones for ordered progress to a new energy structure. They are specifically about setting a power-decarbonisation milestone for 2030. The milestone should be set, if for no other reason than because, the sooner it is set, the less expensive it will be to achieve the energy security and decarbonisation that we seek. Accepting the amendments is the “no regrets” course. Should some miraculous, game-changing new technology appear, or some other unforeseen circumstance arise, the Bill provides Ministers with ways of dealing with the unexpected. There is simply no reason not to get on with the job that has to be done and every reason for doing it now. The amended Bill would be good for jobs, for UK industry, for investors and for the environment. I beg to move.

[Lord Teverson (LD)]

My Lords, I commend the noble Lord, Lord Oxburgh, on his amendment. Decarbonisation is fundamental, and is absolutely what the Bill is all about. The 11th word of the Bill is “decarbonisation”. The Long Title refers to,

“reforming the electricity market for purposes of encouraging low carbon electricity generation”.

The entirety of Part 1 of the Bill is about decarbonisation. The methodology there allows the Secretary of State to set a decarbonisation target. The Bill is about nothing if it is not about decarbonisation.

Of course, the majority of the Bill beyond Part 1 is about ensuring, not just through targets but in practice, that we have decarbonisation. There are many chapters about the nuclear industry. Whether one is for or against nuclear, it is a low-carbon technology and it is enabled by the Bill.

The Bill has a whole chapter devoted to the “emissions performance standard”, which is all about decarbonisation. I have a number of issues with it, but the standard is there and it is the practice for ensuring that decarbonisation actually happens. There is a whole chapter on the capacity mechanism, introducing the possibility of electricity and energy demand reduction and management.

Of course, at the core of the Bill, are the contracts for difference, which have taken up a lot of our time in Committee and elsewhere in the House. Contracts for difference would not exist, would not be in the Bill, if there were not a practical and urgent need to get low or zero-carbon technology investment into the generating sector.

There is no point in having this Bill if not for decarbonisation. As we know, this Bill started back in 2010 with a White Paper and has been through many other processes. It is all around one of the four pillars of government at that time—which are still there and which include carbon capture and storage—trying to decarbonise, in this case, fossil fuels, as the noble Lord, Lord Oxburgh, will know better than anybody. The second pillar of this energy strategy was emission performance standards, which are in the Bill. The third pillar was the carbon price floor, which has already been delivered. In terms of green taxes, we are already taxing output of carbon emission from fossil fuels. That is practical decarbonisation. In addition, the Government have introduced energy reduction through the Green Deal and the energy company obligation. As well as all these practical actions, do we need another target? That is what I really want to look at.

As this is a coalition Government, there are differences not just between parties but between departments. We have differences between the Treasury and DECC on occasions, and perhaps BIS as well. There are also different directions in which the two coalition parties look. Nevertheless, what the coalition came together for was to provide a specific programme in terms of government for the five years of this Parliament. A key part of that concerned the economy and debt reduction. Another, which both parties shared, was being a green Government with respect to the environment, part of which is decarbonising. The agreement, willingly entered into by both parties, called for a levy control framework that allows contracts for difference and decarbonisation investment to work, with some £7.6 billion by 2021. We have an agreement that the energy company obligation, which is really important in terms of households’ energy efficiency, stays at its present level until the end of this Parliament. We have electricity demand reduction in the Bill. We have an agreement at EU level that a 50% reduction of carbon emissions by 2030 should be negotiated with our European partners. We already have the carbon tax floor and we have emission performance standards legislated for, we hope, when this Bill finally gets through.

We, as Liberal Democrats, ask whether it is more important to deliver targets at this time, when issues of energy—energy bills and energy security—are so fractious, perhaps between all parties. Is it important to make sure that through this Bill we deliver real, practical, £100 billion-worth of investment decarbonisation, or do we go for just another target? I look back at targets, whether they were for fuel poverty being eradicated by 2010, which failed quite considerably, or whether carbon emissions for 2010 were met—they were not in terms of the original obligations. Do they make a difference for business? Yes, I think that they do—the noble Lord, Lord Oxburgh, is right.

What makes the real difference in terms of investment? It is stability and understanding that there is the right environment for investment in terms of cash flow, in terms of where the market is going and in terms of a determination to deliver a much broader agenda for investing in decarbonisation. That is the area that I feel is of the greatest importance. We should have a decarbonisation target. I am happy to wait until 2016 to deliver real decarbonisation.

[Lord O'Neill of Clackmannan (Lab)]

My Lords, in proposing Amendment 2A in this group, I will go roughly along the same lines as the noble Lord, Lord Oxburgh. We had to wait six minutes to get any indication of the previous speaker’s attitude towards these amendments.

We have all had approaches from a plethora of organisations; in my years in this House and the other place I can rarely remember such a broad coalition. You normally get the greens and one or two others, but it is quite surprising to get support from across the spectrum of industry, banking and environmental concern for an amendment along the lines that the noble Lord, Lord Oxburgh, and I are proposing. The amendment I have tabled is in some ways slightly different from the amendment in the name of the noble Lord, Lord Oxburgh, in so far as it seeks to define the decarbonisation obligation, which it sees as the level of carbon intensity of electricity generation which may not be exceeded in total kilowatt hours. However, it does not set a target by plucking a figure out of the air. The idea is that it should give the Minister probably longer than the amendment in the name of the noble Lord, Lord Oxburgh, which gives the target of 1 April. Amendment 2A mentions 12 months, which would mean another six months in the process. That is important in itself.

The other fundamental requirement is that having set up a Committee on Climate Change, the Secretary of State should take account of what the committee has to say and what its findings are. It is a very important body, formed of a distinguished group of people from academia and business who take an interest in these matters—and it has a distinguished chairman from this House. However, it is not the only body. We are seeking to establish a consensus that would broadly agree to the figures that would then emerge.

We have international obligations, some of which have been imposed upon us, in so far as we have been forced to troop in and put our hand up in the Council of Ministers. In this instance we seek to fill a gap in the British obligations beyond 2020, a gap that would effectively extend from 2020 and 2030. It is important that any Government can go into Europe with a clear programme so that we are not seen to be chasing an agreement—and equally, so that the target figure we would set ourselves would be arrived at by British agreement and British discussion. A country of 60-plus million people with our diverse industry, economy and geography is that kind of country, the limitations or parameters of operations of which are very similar in many respects to a lot of the member countries of the EU that will be sitting on the Council of Ministers in this area.

Some say, “We mustn’t be allowed to be dragged along by the EU”, but in this instance we would be, in many respects, ahead of the game—not, however, to get our green badge to put on our jacket. Rather, we will have made a rational decision on the basis of sound information and wide discussion, and we would be doing so because it is necessary for us to have a degree of foresight. I will not use the word “planning”, but “foresight”. We have to recognise that the investment requirements of our energy economy are not just only long term. I remember talking here about setting down roads. We know that we have a 2050 target, but frankly, at the moment, after 2020 there is no road map and no signposts or proper targets. We must recognise that we will not have 30 years of doing a bit of this and that, then a mad helter-skelter run between 2040 and 2050 to try to get to where we are supposed to be. This has got to be done on the basis of proper consideration. These amendments give business, the investment community and the people who are engaged in research signals regarding the kind of timescales in which to operate.

15:45

I was selected as a parliamentary candidate in 1978 for a seat which had five collieries. The boundary of the seat was the Grangemouth petrochemicals complex. East Stirlingshire in Clackmannan was the kind of place where energy was the life-blood of the local economy. I am not going to dwell on that. Suffice it to say that the number of times I have had to change my mind in the past 35 years has been such that I realise that you cannot chisel things in stone. You cannot pour quick-setting concrete on your ideas and hold on to them. They have changed. We took a very important decision last week, and I commend the Government for getting the strike price although it may not be exactly what we want. We know that the nuclear component will be able to make a contribution. It will be over a period of 60 years, not just 30 or 35 years.

We are talking about a number of other technologies and a number of other things which require support and investment. This investment has a lot of people interested and almost prepared to put their money where their mouth is. People have been writing us letters saying that they would be interested in coming in in the future. The sooner we get this started, the better. We cannot wait till 2016. If something is decided in 2016, it will begin to happen in 2019. We talk about putting off decisions till the next general election. It will be the general election after that. There are too many people in this country who are unemployed. There are too many people who have uncertain industrial futures, whose talents and energies could be deployed if we had a stable path ahead, if we had the opportunity for rational decisions to be made and the flexibility, if things do not go the way we want, to change them. That is why this amendment is suggesting it be done by regulation. In some ways, regulation is not the most democratic of means, but if you get it wrong you can always change it fairly quickly. You can change it on the basis of consultation before you put it into legislation.

There are those who do not wish to have anything to do with carbon reduction because they deny that there is a crisis in this area. The Flat Earth Society used to be their natural home—that has now been changed. Instead, they sit alongside the anti-Europeans who tell us that we are being dictated to. For most people, the need for carbon reduction is understood and appreciated.

We do not need to fear Europe if we have for the next 50 years proposals and policies which can take us into the Council of Ministers and other places with a clear agenda that is in line with the rest of the Bill. This is the thing I find surprising. The last speaker epitomised it. They are in favour of everything but specific action in one particular area.

I can understand that the Whips think that this Bill is the finest work of God and man and therefore need not be amended. I think that is wrong. We need to fill in gaps. We need more specifics. This proposal is the means of providing the specifics which will give the opportunity for rational investment decisions to be taken in the very near future with the prospect of employment and other savings being made with the reduction in carbon in the very near future.

[Lord Lawson of Blaby (Con)]

My Lords, this is such an unbelievably bad Bill that it is difficult to see how it could be made any worse. However, no one should ever underrate the noble Lord, Lord Oxburgh, because he has found a way to make it even worse. I agree with one or two of the things he said. For example, he said that a lot has changed since the Bill was first thought about.

The noble Baroness who is the spokesman for the Labour Opposition probably knows a lot about how the Bill first came into being because I believe that she had a hand in it, but a long time has passed and a lot has changed, including the arrival of what is known as the shale gas revolution, although that includes shale oil. This is of the first importance. I disagree with the comments made by the noble Lord, Lord Oxburgh, but I will reserve judgment on those because your Lordships’ Economic Affairs Select Committee has just embarked on an inquiry into UK shale gas and shale oil and we have only just begun to take evidence. I will reserve my judgment until we come to a conclusion in the light of the evidence, but it is clearly a change of the first importance.

My noble friend Lord Teverson put his finger on the real reason why the Bill is such a bad Bill—that is, it is not an energy Bill at all but a decarbonisation Bill, as he made very clear. As a former Secretary of State for Energy, I take the old-fashioned view that an energy Bill ought to be an energy Bill concerned with how to provide the people of this country—particularly the poorest—and the businesses and industry of this country, with the cheapest possible supply of reliable energy. Energy needs to be supplied cheaply, efficiently and reliably. This Bill, not being an energy Bill, is about how to supply energy expensively, inefficiently and unreliably. This has become a very sensitive issue. Energy prices in general, and electricity prices in particular, have understandably achieved a very high profile as families up and down the land are suffering from the introduction of a policy which the Bill will make even worse.

I do not know whether noble Lords have had the opportunity to read today’s Financial Times which has a very good leading article on this issue. Like the noble Lord, Lord Oxburgh, I think that this group of amendments goes to the heart of what the Bill is about. One needs to put the thing into perspective. The article states that, on the Government’s own figures, by 2030 environmental levies will account for 41% of the cost of electricity. I suspect that is a great underestimate but it is the Government’s own estimate. The article points out:

“If Britain never adequately reckoned with the cost of its carbon commitments, it may also have been too optimistic about the benefits. The country accounts for less than 2 per cent of world emissions. The heroic reductions that are planned will have a negligible effect on global temperatures.

This would be true even if the UK’s moderation were not offset by intemperance elsewhere. In fact, investment in energy-intensive industries is already being drawn to countries such as the US where costs are lower. Britain may end up exporting emissions–and jobs–to countries that have shunned such onerous environmental commitments. The halting progress towards a global carbon pact provides scant vindication for those who thought that where Britain led, others would follow”.

It goes on to say, quite nicely, that:

“Such wilful naivety gives an unintended meaning to Prime Minister David Cameron’s pledge to lead the greenest government ever.”

This policy is so damaging that even the Financial Times says that the commitments we have entered into—because there is absolutely no point in doing it on a unilateral basis—should be either repealed or amended.

However, that is not the only objection to the Bill. As I have pointed out, I have some interest in this as I was Secretary for Energy at the time in question. The Financial Times also says:

“Since privatisation the electricity industry has been run on market principles. Price controls were abolished and politicians placed their faith in competition to keep prices low and the grid adequately supplied. Now, the government is becoming the industry’s Gosplan. It decides what plants are built, sets their prices and guarantees financing for their construction.”

This is a Gosplan Bill: those are not my words, but those of the Financial Times, which concludes that the Bill,

“combines the inefficiency of state planning with the expense of private capital, exacerbated by the fear that politicians will retrospectively change their minds ... Britain cannot afford to hobble itself with overly high energy costs as it embarks on the road to recovery.”

That is the considered view of the Financial Times which knows what it is talking about. That is why the Bill is fundamentally flawed and the amendment proposed by the noble Lord, Lord Oxburgh, seeks to make it even worse and make the flaws go even further. By 2016, nobody in their right mind is going to have the time of day for this policy.

Nobody who knows anything serious about energy policy has a good word to say about the Bill. The Oxford Institute for Energy Studies is probably the most reputable forum for the study of energy in the country. The greatest expert there, Mr Malcolm Keay, described the Bill as entailing,

“a massive and unprecedented degree of centralisation and detailed decision-making by the Government.”

This is quite extraordinary. Prior to the changes we made in 1979, the previous Labour Government’s policy of nationalisation was of the highest parliamentary standards compared with the discriminatory system in this Bill where the Secretary of State has the power to sign contracts—with no effective parliamentary scrutiny whatever—with particular energy suppliers, on a completely arbitrary basis, to decide how much should be supplied, at what price and for how long. This makes old-style nationalisation something one would look back to with nostalgia. It is worse than a return to the past: it is a return to something even worse than the past, which was bad enough. The policies we introduced in the 1980s worked and served the country very well. A final witness for the prosecution, as it were, is Professor Dieter Helm, Professor of Energy Policy at Oxford University, who is widely regarded as the country’s greatest authority on energy policy and who has condemned the Bill with bell, book and candle.

This is quite appalling. Over all the time that I have been in this House, which is a long time now, I have never come across a Bill as bad as this. I therefore support the Government wholeheartedly in opposing the amendment proposed by the noble Lord, Lord Oxburgh. The amendment is certainly within the logic of the Bill but it would just take it further and make it even worse.

15:59

[Lord Krebs (CB)]

My Lords, the noble Lord, Lord Lawson, cites as his authority the Financial Times. I want to address the question of energy prices by turning to the authority of the statutory committee set up by this Parliament, the Committee on Climate Change. I declare an interest as a member of that committee. Through rigorous detailed economic analysis it has uncovered the facts. Between 2004 and 2012 the average household energy bill for a dual-fuel household that uses electricity and gas increased by £520, from £610 to £1,130. How much of that was caused by green, low-carbon measures? The answer is that £30, or 6%, of the energy price increases over that period was due to investment in low-carbon energy generation. Another £45 was due to investment in energy efficiency to help with the affordability of energy for vulnerable consumers, and the rest was largely due to increases in the price of gas.

Turning to the present, 2013-14, the climate change committee has calculated that the increases due to the renewables obligation, the feed-in tariff, the energy company obligation and the carbon-price underpin between them amount to 1% of household energy bills. Let us look forward to 2020. The climate change committee estimates that household energy bills will be 10% higher due to low-carbon investment but—and this is an important but—that 10%, which is small in relation to the overall increase, could easily be offset by investment in energy efficiency such as the installation of new boilers and energy-efficient lighting, appliances, heating and insulation in homes. It is therefore a complete canard to claim that investment in low-carbon energy is the cause, and will be the cause, of increases in energy prices. It is simply not true. What about the commercial sector? The climate change committee estimates that by 2020 1p in every £10 will be added to consumer prices as a result of investment in low-carbon energy.

We should not get confused in this debate by the arguments about energy prices. We should also remind ourselves, as the noble Lord, Lord Oxburgh, has said, that this country is by no means the only one to be taking serious steps to transition to a low-carbon economy. China, Germany, South Korea, Mexico and many others are taking steps, just as we are. We are not leading alone but should be among the leading nations that are setting an example to the rest of the world.

The latest report of the Intergovernmental Panel on Climate Change says that if we take no action we are likely to see global warming of between 3.2 and 5.4 degrees by the end of this century, which could be disastrous for our descendants, and that we should take action now. In that context, I commend the amendment of the noble Lord, Lord Oxburgh, and hope that this House will support it.

[Viscount Hanworth (Lab)]

My Lords, the description of the Bill by the noble Lord, Lord Lawson, bears no relationship to what I and many others understand to be its nature. It is a curious document that is suffused with the free-market ideology that accompanied the privatisation of Britain’s energy industry in the latter years of the Thatcher Administration. The Bill contains evidence of the dangers of global warming and the effects of carbon emissions associated with fossil fuels, which have been well understood. However, notwithstanding its pieties in that respect, the Bill does very little to promote the cause of climate protection. It poses some ineffective and non-binding constraints on the rates of emission and, in truth, will not help in reaching the targets set out in the Climate Change Act 2008.

The truth is that the Bill is attempting to appease a powerful faction within the Conservative Party that is strongly opposed to any measures that might be taken to staunch the emissions of greenhouse gases. There is solid and highly disturbing scientific evidence that should alert every one of us to the perils that we face through global warming. However, many in the Conservative Party believe that they are as entitled to their own contrary opinions on such matters as any of the scientists are to theirs. The climate change deniers have a powerful ally in the Chancellor of the Exchequer, George Osborne. He envisages a dash for gas based on fuel that might be conjured up by fracturing the ground on which we stand. This vision has strongly influenced the Bill. Such a dash for gas would utterly negate the purposes of the Climate Change Act 2008, which proposed that the emissions of greenhouse gases in 2050 should be 80% lower than those in 1990.

The Labour Party brought the matter to a head in the Commons by tabling a reasoned amendment declining to give the Bill a Second Reading in the absence of a decarbonisation target. In the absence of full support from the Liberal Democrats, the amendment was defeated by 279 votes to 206. Perhaps now we can trust that the Liberal Democrats are not bound by whatever agreement it was that made them adhere to the Government’s position on the amendment, and that they will support the amendment of the noble Lord, Lord Oxburgh, which surely accords with their natural instincts. There is clamorous support from industry for a binding emissions target. A target somewhere between 100 grams and 50 grams of CO₂ per kilowatt hour, to be set in 2014, would indicate that the UK Government are genuinely committed to their climate change obligations, and give much needed confidence to investors.

The privatisation of the power industry, according to the nostrums of free-market economics, has given rise not to a competitive market but to a dysfunctional oligopoly consisting of six big companies. On the sidelines are a few small independent companies specialising in renewable power generation. Given adequate protection, the independent companies could be expected to provide a large proportion of the new investment in renewable power generation. At present, there is a danger of their being squeezed out of the market by the big six, who are intent on fulfilling their renewables obligations with their own power plants. The Government and the Department of Energy and Climate Change have paid scant attention to the plight of the independent generators. They need to act with urgency to protect these players.

The Government’s free-market ideology and aversion to government sponsorship and national ownership have severely prejudiced the prospects for nuclear energy in the UK. It is an outstanding irony that in their pursuit of a free-market ideology they have bequeathed our nuclear future to two foreign state-owned monopolists, Électricité de France and the China General Nuclear Power Company. These suppliers are expecting a rate of return in double figures as a consequence of a high price for their electricity that is guaranteed for a period of 35 years. This return is supposedly justified by the risks inherent in the project and the difficulties of raising the necessary finance on the open market.

However, in their attempt to attract firms to undertake nuclear projects, the Government have provided a so-called infrastructure guarantee that guarantees 65% of the necessary funds. Surely under such circumstances, it would have been appropriate for the Government to raise the necessary funds by selling bonds and to commission the building of the nuclear power stations directly, thereby taking them into national ownership. Such a course of action would have given the Government powers to ensure that native suppliers would be fully exploited and that our nuclear industry would stand a good chance of revival. Instead, foreign suppliers will predominate and Britain’s taxpayers will have the burden of supporting a much troubled French nationalised industry.

[Lord Jenkin of Roding (Con)]

My Lords, the noble Lord, Lord Oxburgh, has posed a fairly simple question to the House. There is widespread agreement that we are aiming for a very substantial reduction—80%—in carbon emissions by 2050. There is also wide agreement, embodied in the Bill, that we should have a considerable measure of decarbonisation by 2030. For the most part, there is no dispute about that. When I have discussed this with some of the companies outside, they all accept that that is what we are heading towards. The question is whether we set the figure for 2030 now or wait until 2016, as the noble Lord, Lord Teverson, suggested at the end of his speech, a bit to my surprise. The argument for 2016 is really quite strong. Under the Climate Change Act, this is all administered by the climate change committee, of which my noble friend Lord Deben is the chairman, and which is engaged in setting a series of five-year ceilings as the measure of decarbonisation, leading to an 80% cut by 2050.

The fifth carbon budget comes up in 2016. It seems to be of the highest importance that the figure agreed for 2030 should be consistent with what the climate change committee comes to in 2016. I think that the effect of the amendment of the noble Lord, Lord Oxburgh, would be to set now what the figure would be—which would seem to make that extremely difficult if not very doubtful. The noble Lord, Lord O’Neill of Clackmannan, said, “Let it be done by regulations and then you can change it”. I am not sure that is not exactly where we are anyway. The climate change committee will be setting a fifth carbon budget in 2016, which will of course be part of the then Government’s policy. The question is whether we do it now or wait until then.

I have attended a number of meetings in the past two or three weeks on this subject but will just mention, in passing, one thing that disturbs me. I read the short report from the Intergovernmental Panel on Climate Change. The report of the Nongovernmental International Panel on Climate Change also came into my possession, which takes the view that the intergovernmental panel is completely wrong. What disturbs me about these two bodies, and I will leave it there, is that they do not argue with each other—they abuse each other. One side calls the other climate change deniers and that side calls the others back a bunch of government stooges. I find that a very tiresome argument. If one is going to have an argument about something, one should have a proper one, not one that just descends into abuse.

One of the most interesting meetings that I attended was the one chaired by my noble friend Lord Deben and also, I think, by the noble Baroness, Lady Worthington. One of the points that my noble friend made was that the climate change committee has always been determinedly technology-neutral. It does not seek to identify how a particular target should be reached. It accepts the international figures and then sets a British target for that. I have found that the people I talk to are worried that this is all very well for this country but that Europe has gone and set a technology target, with a figure for 2020—I cannot remember the exact figure—that has to be covered by renewables. The companies who are having to invest and develop their investment programmes say, “Which are we to believe? Are we free to work towards the 2030 target or do we have to pay attention to this?”. The one thing I agreed with my noble friend Lord Lawson about was when he quoted from that extremely interesting Financial Times article and said that if one thinks there is something wrong—as I think there is with this technology target—the right answer is to renegotiate. One of the questions that I therefore ask my noble friend is: what are the chances of our going to the European Union and saying, “Look, this 2020 target for renewables is really quite inconsistent with the much broader target, which will lead on to our 2050 target”? It seems to me that it is an aberration, and that is unfortunate. We should renegotiate that directive.

16:15

The other meeting that I attended was chaired by the right reverend Prelate the Bishop of London, and that was extremely interesting too. There we were harangued—well, not harangued, that would be quite wrong as he was very polite—by Mr Andrew Raingold of the Aldersgate Group. He said that industry is clamouring to know now what the 2030 target should be, and we had a bit of that with some of the earlier speakers this afternoon. Indeed, he feels that there is a massive loss of confidence because they do not know what the 2030 target should be, and that is why we having what is described as a hiatus on investment.

I do not think that is right. If one talks to the companies—and I talk to quite a number of them and their advisers—about why they are having a bit of a hiatus in investment at the moment, they say it is because they cannot yet see the full shape of the electricity market reform system which is the heart of this Bill. The Government have gone a very long way now to publish the details but, as I said to my noble friend’s officials the other day, if they were as good at producing investment as they were at producing paper we would not have a problem. However, all the details are there now and they are becoming clearer. With each new publication there is a new element of certainty, and the industry tells me that it wants the Bill through without hesitation. Industry wants it, as planned, before Christmas. Then the regulations can be made next year and the scheme can start effectively in 2014-15.

That is what industry wants. I have not heard any company, until I heard Mr Raingold quoting them, tell me that the real thing they need to know now is what the 2030 target is going to be. I am sorry, but that is not right. It may suit his argument, but it does not actually represent the facts. I find the argument given to me by the CBI much clearer, and others may have seen it. It states:

“The debate over the carbon intensity target should not hold up important policy details … The CBI supports the Climate Change Act and the carbon targets and budgets enshrined by it, and the Bill must deliver the pace of decarbonisation required to achieve them”.

I agree with that. Investment cases will stand or fall on the details of the contracts for difference,

“the capacity mechanism, and the levy control framework—not on a carbon intensity target”.

We ought to be sensible and have the date that we decide on the 2030 target consistent with the fifth carbon budget of the climate change committee, have the two of them together in 2016 and then take it from there. For that reason, I do not think that I will vote for the amendment tabled by the noble Lord, Lord Oxburgh. If he puts it to the vote and tests the opinion of the House, I shall be in the opposite Lobby.

[Lord May of Oxford (CB)]

My Lords, I am a member of the Committee on Climate Change and was a member of the committee of both Houses that helped draft the legislation. I want to inject a fact or two into the discussion. The first thing the Committee on Climate Change did was to ask, “How much carbon, looking to 2050, do we think the world can have put into the atmosphere without exceeding a dangerous level of climate change?”. On that basis, we then divided that total by an estimate of the population of Britain in 2050. I would be the first to admit that that second figure is a little uncertain but that was the basis of the ambition that we set and of the overall target that was given for our goal for the end of 2050. We then put the committee together and asked, “Feasibly, how do we think we can get there?”. It was decided—I think sensibly—that the first thing to do was to decarbonise power. Once you do that, you can begin to do other, more difficult things. When looking at decadal timescales, you can look at the possibility of having surface transport primarily done by electricity and that will be okay if we decarbonise the power supply.

We then set intermediate goals. One of them was to come as close as we can by 2030 to decarbonising the energy source through renewables and other things. It was seen that the trajectory to that from 2010, which was when we were talking, was still going to involve coal and gas—gas more efficiently than coal. One thing that the noble Lord, Lord Lawson, and I agree on is that, given that we have to make that trajectory to 2030 and we will still have to use carbon-producing products to generate the energy, shale gas might be the best intermediate way to get there.

To get there, we also need industry to see that we are committed to getting there, to get it in turn preparing and talking of massive investment, but on the premise that there will be support and continuing commitment to those goals. This is primary legislation and the goals that have been accepted by the Government are legally binding, and I am in the habit of asking, on the Committee on Climate Change and elsewhere, “What does legally binding mean?”. I have not yet had a satisfactory answer. In so far as that phrase means something to some people, we have a legally binding interim target of decarbonising electricity by 2030.

That is why at the draft stage of the Bill the Committee on Climate Change recommended that it include not a vague statement of aspiration but the explicit wording essentially equivalent to that of the amendment moved by the noble Lord, Lord Oxburgh. In some sense, you could say we are legally committed to it but it would make common sense to vote for that amendment, as it is consistent with the history and where the facts lie. There are no two ways about it.

[Viscount Ridley (Con)]

My Lords, I declare my interests in various forms of energy as listed in the register. I cannot declare the probably seven-figure annual sum that I do not receive because I do not allow wind turbines on my land in a very windy part of Northumberland. I say that not to elicit the House’s sympathy, obviously, but to emphasise the point that the Government would be right to resist this amendment because it would hit the poorer even harder and reward the rich even more, by encouraging enormously expensive renewable energy, particularly the wind industry, particularly offshore wind. Effectively, this amendment would lock in now the wrong technologies, the ones that we know are inefficient in producing decarbonisation and which are immensely expensive.

We have heard a lot already today about the interests and needs of producers of energy. As I said in Committee, it is much more important that we think about the needs and interests of consumers of energy. We do not build power stations for the people who build them or the people who plan them; we build them for the people who use the electricity that comes from them, and thereby provide jobs with that electricity.

We know three things now that we did not know at the start of the summer when the Bill first arrived in this House. The first is that the public are right royally fed up with rising energy bills and are not going to take kindly to further increases, which is what we are talking about. Secondly, wind in particular—as with a lot of renewables—needs even bigger subsidies than we have been led to expect. We were told that the strike price for offshore wind would come down from around £150 per megawatt-hour to about £100. That target has now been abandoned; it is coming down to £135. That is an extremely expensive product—about three times the price of wholesale electricity at the moment. The third thing we have learnt—and I am going to come on to this at the end of my speech—is that climate change is happening more slowly than expected.

If all three of those points are taken together, it would be completely mad to lock in a target now for 2030. It would also be potentially callous because it would encourage an increase in the price of electricity.

[Lord May of Oxford]

My Lords, what the noble Viscount, Lord Ridley, has just said was factually incorrect. Climate change temperature has fluctuations. The noble Viscount does not understand the statistics properly; it is basically the same problem he had with his thesis. It fluctuates; it goes up; it flattens a bit. But the statement made by the noble Viscount, as if it were a flat generality, was inaccurate.

[Viscount Ridley]

My Lords, I shall repeat the statement. Later in my remarks I shall come back and justify it. Climate change is happening more slowly than expected. Far from locking in highly expensive energy, as we are doing, we should be reconsidering the huge cost that we are afflicting the most vulnerable with to comfort the most comfortable. Offshore wind costs about four times as much as gas: £270 per megawatt-hour is the total cost, including connections and system costs, for offshore wind compared with about £66 for gas. We are asking hard-working families to pay over the odds for their electricity in order to provide subsidies to generate power and in order to provide subsidies not to generate power. Last year, £30 million was paid to wind companies not to produce power at a time when it was not needed. Furthermore, we are asking them to pay over the odds to pay for the short-term operating reserve, which is the balancing mechanism by which we make up for the fact that wind is unpredictable. That consists largely of fleets of diesel generators, which are being increased in number by the national grid towards 8 gigawatts, combined with open-cycle gas turbines—both of which are higher carbon than combined-cycle and extremely expensive.

Moreover, we are asking hard-working families to pay over the odds to upgrade the grid and the network costs involved in that, specifically for wind. We are asking them to pay for a carbon floor price, the specific purpose of which is to make fossil fuels look less cheap compared with renewables. Finally, we are asking them to pay over the odds to compensate energy-intensive industries for these costs that we are putting on to them. All of these things end up on people’s bills at the end of the day and they are not paid through general taxation, where the richest could pay more of them: they are paid through people’s electricity bills. Green levies have risen by about tenfold in 10 years, but we ain’t seen nothing yet. By 2020, about £13 billion, if you include system costs and VAT, will be spent every year, compared with about £2.9 billion today, on the support for renewable energy, particularly wind. The biggest part of that will be going to offshore wind. People’s bills will go up as a result of green subsidies by 33% by 2020 and 41% by 2030, according to figures from the Department of Energy and Climate Change.

[Lord Krebs]

My Lords, I invite the noble Viscount, Lord Ridley, to explain to the House why he disagrees with the climate change committee’s calculations to which I alluded earlier.

[Viscount Ridley]

My Lords, we are taking about the same sorts of numbers. The percentage addition I am talking about is how much of the increase we shall see in future will come from energy subsidies. As I said, I took the figures from the Department of Energy and Climate Change.

16:30

[Lord Krebs]

So does the noble Viscount accept the climate change committee’s calculation that less than 10% of the addition to energy bills for households by 2020 will be attributable to investment in low carbon energy, and that that could easily be offset by greater energy efficiency in the home?

[Viscount Ridley]

My Lords, why are we to assume that greater energy efficiency in the home will only happen if we invest in renewable energy? We will be able to invest in greater efficiency in the home later anyway. The idea that we will get more efficiency in the home because we invest in renewable energy has never seemed very sensible. As for the cost of renewables towards energy prices, we can agree or disagree about the figures but it depends on your assumptions about what will happen to wholesale gas prices.

What have we achieved with the £2.9 billion we are spending this year on subsidies to renewable energy? We produced about 1% of our total energy from wind and solar this year. If you take total energy—including transport, fuel and everything else—wind provides only about 1% of the energy we use in this country. After accounting for the back-up—wind needs about 80% back-up to make sure that energy is available when it is not blowing—we have cut our carbon emissions through the use of wind and solar by probably less than 0.5%. That is surely a very small return on our investment.

All we are really doing is driving carbon emissions abroad, as has already been mentioned. Professor Dieter Helm, who has also been mentioned, said that carbon production in Britain fell by 15% while consumption rose by 20% between 1990 and 2005. We are consuming the carbon, it is just that somebody else is producing it. As Professor Helm also said, if we follow the leader of the Opposition’s proposal and decarbonise altogether by 2030, “we may actually make global emissions higher than they would otherwise have been” because of this effect. Unilateral decarbonisation is like building a flood bank at the end of your garden when your neighbour does not.

The noble Lord, Lord May, challenged me on the point about climate change. We have heard that the position on climate change has become more certain. Those who have come to that conclusion are obviously reading a different Intergovernmental Panel on Climate Change Summary for Policymakers than I am. The one I saw said that it is now 95% sure that more than half the warming since 1951 is man-made. That is a slightly weaker statement expressed slightly more strongly than six years ago, and a statement about the past not the future.

In what the Intergovernmental Panel on Climate Change says in its latest report about the future, you find more uncertainty than six years ago. Let me give nine separate examples of ways in which the Intergovernmental Panel on Climate Change has retreated to a slightly less alarming and less certain position than six years ago. First, it acknowledges the pause or standstill in temperature for the first time, which has taken place for either 15 or 17 years depending on whether you look at surface or satellite temperatures.

Secondly, it acknowledges for the first time since its report in 1990 that the medieval warm period was at least as warm as today on a global level and therefore that today’s temperatures are not unprecedented in the last thousand years. Thirdly, it acknowledges for the first time that Antarctic sea ice is slowly expanding not retreating, which was not predicted by its models. Fourthly, it acknowledges that 111 of its 114 models overstated warming in the last 15 years.

Fifthly, it acknowledges that the range of equilibrium climate sensitivity is lower than it was six years ago. It says that it cannot now give a central estimate, whereas six years ago it gave a best estimate. Why can it not do that? The average of 16 separate estimates of that quantity made by empirical studies since 2011 is 60% cooler than the ECS that was assumed in the IPCC models. The noble Lord, Lord May, says that it is important to make a calculation of how much carbon we must produce by the middle of the century, but that depends upon your estimate of equilibrium climate sensitivity. If it turns out that it is as low as the range is now suggesting, and as the latest studies suggest, that changes the calculation entirely.

The sixth thing that the IPCC acknowledges is that transient climate response is lower. That is the more immediate policy-relevant number because it tells you how much warming actually happens by a particular point in the future rather than what takes a lot longer later. Seventhly, it acknowledges that sea-level rise, which is definitely happening, is lower than some authorities, such as Professor Rahmstorf, have tried to persuade us that it is. Eighthly, it says, using the words “very unlikely”, which it specifically defines in statistical terms, that a collapse of the Gulf Stream is very unlikely, that a collapse of the west Antarctic or Greenland ice sheet is very unlikely and that an explosion of methane from clathrates on the ocean floor is very unlikely.

Ninthly, it says that it has low confidence in a number of tipping points that were previously thought to be possible concerns: the collapse of tropical forests, of boreal forests and of the monsoon, an explosion of greenhouse gases from the Arctic permafrost and an increase in megadroughts. It says that it has low confidence in these things. These are major retreats. We know that the harm being done by climate change will arrive considerably later in this century. There is the harm being done now by decarbonisation policies: biofuels driving people into poverty, and wind costs driving up people’s energy bills and causing them trouble in heating their homes.

These problems are arising now and we are being dangerously close to callous if with higher energy costs we tighten even more the noose around the necks of needy people in this country. This week the Minister President of North Rhine-Westphalia, Hannelore Kraft of the Social Democratic Party in Germany, has said that she thinks we should slow down this transition to renewables until we are more certain.

[Lord May of Oxford]

At the risk of being tedious, can I ask for a response to this account of what the IPCC said? This is not printed by some bunch of touchy-feely greenies, but comes from the Economist of a week or so ago. It stated that,

“the upper 75 metres of the oceans have warmed by 0.1°C a decade in the past 40 years and there is no sign of this slowing down. Water expands, and ice melts, as temperatures rise, so sea levels have risen 19cm in the past century and the Arctic sea ice has shrunk by about 500,000 square kilometres a decade since 1979.

These facts matter because the oceans cover seven-tenths of the Earth’s surface and are its primary heat sink (90% of the extra warming over the past 40 years has gone into the oceans). By most measures—though not all—global warming is continuing.

But what about the pause in air temperatures? Isn’t that a fact? Indeed it is. But right now it matters more to climate science than climate policy”—

[Lord Gardiner of Kimble (Con)]

My Lords, I hope that the noble Lord will understand that we are at Report stage. I am conscious of the rules at this stage and if there are frequent interruptions it gets very difficult. We should try to keep the rules on these matters.

[Viscount Ridley]

My Lords, I will try to be brief. There has been no increase in sea surface temperatures over the past 10 years or so. The noble Lord, Lord Oxburgh, says that shale gas does not provide an excuse to rethink this target, but the shale gas break-even price has come down dramatically in the United States as a result of increased experience of how to develop shale gas. Fields that were once thought to be break even at $6, $8 or $9 are now breaking even at $3, $4 or $5. Then if you add gas liquids—some fields have gas liquids and they are much higher value—and so on, it is very possible that we will see shale gas have the same effect on prices in this country as we saw in the United States.

I feel we must retain flexibility to research low-carbon technologies, to explore the possibilities of solar, carbon capture and storage and other forms of nuclear and, above all, to see what shale gas can do, but we should not lock in an expensive target now.

[Lord Smith of Finsbury (Non-Afl)]

My Lords, I support the noble Lord, Lord Oxburgh, and Amendments 1 and 2. At the heart of this debate is the question of why decarbonisation is important. As the noble Lord, Lord Teverson, said, it sits at the heart of the Government’s Bill, and the amendment moved by the noble Lord, Lord Oxburgh, seeks to strengthen the position of decarbonisation at the heart of energy policy. The noble Viscount, Lord Ridley, told us that climate change is happening more slowly than expected. He justified that with some somewhat selective pickings from the fifth report by the Intergovernmental Panel on Climate Change. The reality of that report is that its overwhelming conclusion is that the atmosphere and the oceans have warmed, the amounts of snow and ice have diminished and are continuing to diminish, sea level has risen and each of the past three decades has been successively warmer at the earth’s surface than any preceding decade since 1850.

Climate change is real and is happening. I wish the noble Viscount were right. I wish that it was not happening. I take no pleasure whatever in the fact that it is.

[Viscount Ridley]

My Lords, did I say that it was not happening? Everything that the noble Lord, Lord Smith, has said about what has happened, I completely accept, but it does not say that it is happening faster than expected.

[Lord Smith of Finsbury]

It is rather good to have on the record the noble Viscount’s opinion that climate change has been happening, and I have to say to him that it is a process that it is continuing.

I am the chairman of the Environment Agency in England. We are already seeing increasingly erratic and extreme patterns of weather here in the UK. Last year, in 2012, the first three months saw us in near drought. That was followed by 11 serious flooding events during the summer and autumn. In March, the River South Tyne was flowing at 28% of its average flow for that time of year; by June, two months later, it was running at 408% of its average flow for that time of year. I cannot say that the erratic weather patterns that we are now increasingly seeing in the UK are directly attributable to climate change, but I can say that this is precisely the sort of effect that climate science tells us we are going to see an awful lot more of over coming decades unless we do something serious about decarbonisation.

It looks as if we are heading for at least a 2 degree rise in global temperatures, and probably more, and the consequences of that for flooding, water supplies, agriculture, movement of population and human health are incalculable. Therefore, it is important for all of us to do what we can to take carbon out of our activities. Decarbonising energy production over the next 20 years is not just a “nice to have”, a luxury, or something to be thrown aside the first moment that some flak appears; it is essential if we are going to have anything remotely resembling a coherent and sustainable energy policy in the future.

A decarbonisation target is not just important because of climate change; it is essential in order to give confidence and certainty to the burgeoning renewables and energy efficiency industries. Putting clear targets in place will stimulate innovation and enable long-term investment and planning to take place. Energy, perhaps more than any other field of government policy, needs long-term thinking and, if at all possible, cross-party thinking, too. We have to put the parameters in place and make the target clear but achievable, then the ideas, investment, work and economic benefits will flow. The amendment of my noble friend Lord Oxburgh seeks to do precisely these things and I fully support it.

16:45

[Lord Deben (Con)]

My Lords, we should start by recognising that the latest report of the IPCC is very clear. It is the product of the world’s most distinguished scientists and is looked at by the Governments of the world. The report is clearer than it has ever been that climate change is happening and that it is largely being caused by humankind. That is the summation. We could go through it and pick out the bits we want in order to make our particular point, saying that the position is worse or better than it seems. The truth is that the likely increase in temperature will be within a range of between 1.5 and 4 degrees centigrade, which is almost precisely the figure that the very first IPCC report put forward. There is a continuity, and that continuity now seems to be more certain.

These are, of course, carbon equivalents. In addition to that, there are the concerns related to other climate-changing effects—not least the fact that we now know that clouds amplify rather than diminish the effects of climate change, unhappily for those who used to put forward the argument that they were the future. We also know there is a severe likelihood of melting permafrost having a serious effect, in addition to methane. All these are in addition. We do not know by how much, but we do know that they are adding to rather than subtracting from, climate change.

The one thing we have to accept is that most of those skilled in this matter are warning us that climate change is a real danger. That puts those who disagree into difficulty because what they are asking us to do is to bet on them against those skilled in climatology and the like. They are asking that we should accept their interpretation against that of the IPCC. They may be right—I am not for one moment suggesting that they might not be—but it would be the foolish father of a family, a foolish government or a foolish company that bet the future not on the majority view of scientists, but on the relatively small minority of those who disagree. Therefore I am not surprised that more and more governments around the world are taking this view, as the GLOBE report—I declare an interest as its president—by the London School of Economics shows. They recognise that it is not possible to ignore climate change and still maintain their duty of care.

For that reason, I welcome the Government’s Energy Bill. As the Committee on Climate Change will serve any Government to do their job properly, and in speaking as its chairman I speak independently, I remind the House that the Government have already committed £7.6 billion in order to achieve what we need to achieve by 2020. In many ways, what the Government have done has been remarkable. The question is therefore whether the Committee on Climate Change is right in suggesting that a carbon intensity target for 2030 is a sensible way forward. I put it to the House that it is, for several clear reasons.

The first reason is that, having spent that £7.6 billion, if there is a cliff at the end of 2020 so that people do not realise how we intend to deal with things later, we will not get the investment we need and, in particular, we will not get the supply chain investment that is crucial for securing the jobs which should come from a green economy. This is not a climate-change reason at all; it is a business reason. As somebody who comes from the business world, it seems clear to me. The letter in today’s Financial Times, if that is a popular read at the moment, shows a large number of business people who are making that point. It is certainly true that most of those who are concerned with the industries we are talking about see it clearly.

The second reason it is so important is that statements made by prominent people unfortunately appear to have caused some to fear that we will not keep to our direct trajectory. I am not one of those; I am absolutely sure that we will. My noble friend Lady Verma, her team and the entire Government have made it clear that we have a statutory requirement to deliver by 2050 an 80% reduction in emissions, and that we will do that. I am therefore in no way concerned about this, but a lot of businesses are. I had a phone call over the weekend from a distinguished individual to ask whether I was sure that we are still going to do these things. If he as a man of considerable ability and an investor thought that, I can understand perfectly well why so many others do. So the second reason is to ensure that clarity.

The third reason is that we need a non-prescriptive mechanism. I served my noble friend Lord Jenkin for a long time as his parliamentary private secretary; I acknowledge and admire him enormously. He is right to put his finger on whether we need this in these circumstances, first, because of the concern about the European Union renewables target. I admit that when this Government came to power I tried to get them to go back on the decision of the previous Government to sign up to a renewables target, because I thought that it covered far too great an area. That was a mistake. It was a misunderstanding of the difference between energy and electricity and should not have been agreed to. However, we have it, and all the pressures will be to have a bigger renewables target. If I may for one moment lapse into party politics, I do not think that that is a very Conservative way forward. I do not think that you should choose winners in that way. It is one thing that worries me a bit about nuclear energy, because you have to if you are going to have it at all. That is why I am in favour of this non-prescriptive target. It merely gives the level of decarbonisation that we will need in 2030 in order to reach the 2050 target. Of course, those who do not believe in any of this will be opposed to it, and therefore it would be wrong of me to detail each of the differences that I have with those who have spoken. In case anyone should need to know them, I will make sure that the reasons why the interpretations of the documents are not right are available to the whole House, and why the noble Lord, Lord May, is correct.

The fourth reason why it is important to have this target is that it is the only thing that is consonant and consistent with what the Government are seeking to get in Europe. In other words, if we have this target, it is possible for the Government to say, “We prefer this target over a target for renewables”. Surely that is better for Britain, better for science, better for the future, and better for price. Furthermore, at the moment we are negotiating for a level of ambition in Europe that can be met only if we have such a target, so this fits in with the Government’s demands.

I have two further things to say. First, the Government have, as you would expect, put forward arguments against this amendment. I hope my noble friend will not mind me saying that one of them does not actually stand up. It is that, somehow or other, we cannot make this decision until we know what is happening in the European Union. The Committee on Climate Change took this argument very seriously. It spent a great deal of time looking at it and concluded that, whatever possible likely scenario happens in the European Union— unless it goes backwards—this particular proposal fits. Therefore, I do not think that we need to be concerned about that.

I come to my second point. If climate change is dangerous, and all the evidence shows that it is, what is the insurance worth? Everybody in this House has fire insurance costing around £140 or £150 a year. We all know that it is 99% likely that our house will not burn down, but for the 1%, we pay the premium because it is too frightening not to. We have something here that is 95% likely, and the cost we are charging this year is £60. By 2020, it will be £100. If we have the carbon intensity target, to that £100 will be added £20 a year. This is based on the most detailed and precise research. Frankly, the figures that have been quoted elsewhere are not true. They come from bodies like the TaxPayers’ Alliance, who want to have a big figure in order to frighten people. I do not think that that is helpful. You have sensible people on both sides—sensible people who think this is not the right way forward and sensible people who think it is the right way forward. However, let us not try to frighten anyone with figures that are not true.

If we want the jobs here, we need this amendment. If we want to reassure the country and the world that we are serious and that they can place their confidence and their business here, we need this target. If we want to keep ourselves in line in order that we do not end up with an impossible task later on, we need this target. Above all, what is the downside? Actually, the Government know that they have to reach this target. All they are doing is putting into legislation now—and getting so much for it—what they know they have to do. Surely the House should support the amendment on an all-party basis and make sure that this good Bill becomes a better one.

16:59

[The Earl of Caithness (Con)]

My Lords, I take a very different view from my noble friend Lord Deben. I thought that his last comments were quite inaccurate. He said that we will get jobs here because of the amendment but the wind farms that proliferate in Scotland do not bring any jobs here, as they are all made overseas. I have talked to the companies that say that they need this amendment in order to invest here. They are all worried about investment, but not because they are worried about whether this amendment will go through; they are worried about whether Britain will remain part of the EU or not. That is where they will invest. They are not worried about whether they will invest in a tiny little island on the north-west coast of Europe; they will invest in Europe, and if we are not part of Europe we can have as many amendments as your Lordships like, but the investment will not come here. I think that my noble friend Lord Deben was quite wrong and misleading to the House to stress that last point in the way that he did.

It was also confusing—as the noble Lord, Lord Smith of Finsbury, was confusing—to talk about climate change as though it was something new. My ancestors sailed to Newfoundland and the new world long before Columbus got there. They had settlements in Greenland. Between that time and now the Tiber has frozen over, and if the historians are correct, the Nile has frozen over. Climate change has happened. If one wants to talk generally about climate change, yes, we all agree that it is happening, has happened and will happen in the future. The specific argument is about what percentage of that climate change is related to the carbon emissions of the past 200 years or so, which is a different and much more specific argument.

Before I address Amendment 1, I will chide the noble Lord, Lord O’Neill, who, sadly, is no longer in his place. It is very unfair to the House to put down a starred amendment on the first day of Report. It is a bad way to treat the House, and a bad way for the amendment to be treated. None of us is discussing it; none of us has been able to look at it and give it the attention it is due. Considering that the House reassembled at least three weeks ago, it is quite unnecessary to have a starred amendment for the first day of Report.

I turn specifically to the amendment in the name of the noble Lord, Lord Oxburgh. I agree with him that shale gas is not a panacea, for two reasons. As I said in Committee and in earlier debates on energy in this House, the cost of extraction of shale gas will be considerably more than most people realise. In this country it will be very hard to be allowed to extract gas. There are all those who say, “We mustn’t burn coal and gas—but you can’t do anything that will make it better. If shale gas makes it better we’re going to block the roads and stop the development and research”. That will make it increasingly hard to try to develop shale gas to its potential—to what it could do, regardless of the costs of its investment.

The noble Viscount, Lord Hanworth, criticised the Government for putting nuclear energy into the hands of two foreign companies. Who is to blame for that? In the 1950s we were the world leaders in nuclear energy and had a huge advantage. We could have a number of small nuclear reactors all around the country, very low carbon—or, rather, with no carbon emissions at all—and this amendment would not be necessary. We have thrown away the lead we had in nuclear energy, which was a huge mistake. Even in 2003 the Labour White Paper, quite rightly condemned as a disaster by the noble Lord, Lord Rooker, last Thursday, ruled out any option of nuclear. We have shot ourselves in the foot on one of the greatest resources we have, to decarbonise this world.

I disagree, therefore, with my noble friend Lord Deben on this amendment. What we are now talking about is whether the decarbonisation target comes in in 2014 or in 2016 because it will be part of the fifth carbon budget. That is now written into the legislation. What are the consequences if we go ahead by ourselves? Again, I disagree with my noble friend Lord Deben on this. It will affect Europe because there will be continued carbon leakage. There is no doubt, regarding investment, that if people and companies look at this country and see that the rules are tighter here than in the rest of Europe, they will move their resources and production elsewhere.

I think it was my noble friend Lord Ridley who mentioned the amount of leakage there has already been. It is important in Europe that we act as one and that we have the same targets. When Sub-Committee D looked at energy and produced its report No Country is an Energy Island: Securing Investment for the EU’s Future, it was clear that one of the problems in Europe is that each country is doing its own thing. Here is a chance, on the question of energy, to get a more European approach to stop the carbon leakage.

That carbon leakage, on an international scale, is costing the EU dear. It is one of the great drawbacks to getting any growth back into Europe. Businesses in America are thriving. They are taking business that emigrated to the Far East back into the US because of the cheapness of shale gas. There are downsides in going ahead by ourselves. If there is carbon leakage, it is going to affect our international competitiveness. We need every bit of help we can get for our businesses.

When we looked, in Sub-Committee D, at the question of energy, it was quite clear that there is what is termed a trilemma. The trilemma is the green issues—how to decarbonise as quickly and as safely as possible— security of supply, and affordability. Getting that balance right is an almost impossible target, not just for this Government but for any Government.

The evidence to date proves to me that that scenario is out of kilter. There has been too much emphasis on the green issues, not enough on security of supply and affordability. That is another reason why I think we should wait for 2016. I do not see the justification for moving forward now as this can be done in a much more rational and less costly way in two years’ time.

[Lord Donoughue (Lab)]

I have never spoken against a Labour amendment in my 28 years in this House, but I propose to do so today because I am troubled by this misguided amendment. I should make it clear I am not a climate-change denier—an offensive word, from which I have suffered. I am a questioner. I accept that the globe is warming mildly, 0.8% of 1 degree in 131 years, although the surface stopped warming 17 years ago. I accept that the warming is almost certainly linked to carbon emissions and human activity, and I support curbing those emissions in a measured way. The questions that concern me are how much warming will happen, how damaging it will be, how we react in our policies, and how sensitive the climate is to carbon emissions. I note that this century carbon emissions have rocketed, but there has been no further warming of the surface of the globe.

As regards extreme weather, I say to my noble friend Lord Smith, for whom I have the greatest respect and affection, that I believe the IPCC said it could find no evidence that extreme weather was occurring globally. I am troubled from a Labour position—not a denier position—that reactive policy-making, as is the case with this amendment, is not justified by the evidence, and I am troubled by the consequences of that for ordinary people. These policies hurt the poor, given rocketing energy prices, although there seems to be argument about how much the relevant figure will be. The noble Lord, Lord Turner, tried to set it very low. Last week I received an answer from the Department of Energy and Climate Change that put a figure of 9% on green taxes. However, they will increase significantly by 2020. The increases may not look much to noble Lords but will be painful for ordinary people. Such increases will hurt jobs as high energy costs make industry uncompetitive. Indeed, Grangemouth stated that one of its reasons for being unviable was the high cost of energy. Not much notice has been taken of the fact that its rescue plan contained a proposal to build a terminal to import shale gas from the United States. It is sad that it has to import it from the United States. The greens, of course, oppose shale gas.

I oppose the amendment because it entrenches the rapid switch to inefficient and grossly expensive renewable energy sources. I understand that those of a strong green faith—and we are frequently dealing with faith—support this amendment. As has been made clear, their main priority is the rapid decarbonisation of our planet regardless of the costs. However, as a Labour person, I believe that other priorities should be balanced with that—not against it—such as protecting jobs and protecting the public from fuel poverty. Under recent green energy policies, but not wholly because of them, fuel poverty threatens to rise, affecting more than 6 million people. The figure will rise further if these renewables policies are imposed to the extent intended.

I listened to the noble Lord, Lord Oxburgh, and read the briefing from my Front Bench. I question at least three of its main arguments. The first is that gas prices will remain very high and so renewables will not seem expensive by comparison. However, we simply do not know what energy prices will be. I do not share the certainty of the noble Lord, Lord Oxburgh, in that regard. In 1974, I was in No. 10 when we were hit by a 400% increase in energy prices which no one had forecast. In the 1980s, in the City I managed top energy analysts and they did not know what would happen with energy prices, and, of course, firms such as Shell and Centrica spend billions of pounds hedging because they do not know either.

It is a mistake to do as is proposed in this amendment and further lock in the commitment to the massive use of renewables at high prices with no escape if, for instance, gas prices halve. I do not know what will happen. I do not think that those who have put their name to this amendment know either although they claim to. It is possible that shale development could reduce gas prices, as it has in the United States. I am not convinced by the opening dismissal of that on the basis that shale prices in America might increase in time, because shale supply will increase greatly throughout the world. However, most greens oppose shale, perhaps because if we had shale we would not need the inefficient and expensive windmills which blight our countryside.

17:15

The second assertion I question is that renewable prices will fall in the medium term because greater efficiency will cut energy use. That may be but, again, we do not know. I hope so, but it is speculation. The Green Deal to increase efficiency of use, which I support broadly—though not in all of its implementation—is a testing point. However, according to the department, only 54 households have signed up so far: not much increased efficiency of use there. We need more flexibility in our approach and, although I have rarely supported the proposals of a Conservative Government, the Government are actually right on this.

A third disputable assertion is that we must commit to huge renewable investments now, with tight targets and huge subsidies. It has been quoted that business is very keen to have this. Of course they are keen: I have floods of leaflets through my door asking me to invest in these green projects. As they say, this is a bonanza; we are guaranteed an annuity of a huge real return. However, who pays for these huge subsidies? I can tell you, and you know. If we stick to the current regressive consumer subsidies through energy bills, it is customers—especially the poor—who pay. Or, if we switch to taxation and debt to pay them, it is the taxpayer and a higher deficit pay. Neither of those courses is particularly attractive to me, as a Labour person.

As it often is with extreme green climate policies, the price paid, either way, comes soon, higher and painfully while the alleged benefits, some of which may happen, are vague, unquantifiable and distant. An additional worry is that the Labour Party is now focusing successfully on cutting the cost of living and even imposing an energy price freeze. The amendment will, most probably, raise the cost of living and is in conflict with a future energy price freeze.

I may be dim, and I may not have been in the Labour Party for long enough to understand how it appreciates these things—it is 60 years this month since I joined—but the amendment is, surely, incompatible with our main policies. I suspect the electorate will see through it. I cannot see why I, as a Labour person, should support the amendment: it hits jobs and is likely to increase fuel poverty. Politically, I am aware that yesterday’s big poll showed that 60% of the public oppose green taxes so I am not sure that is a great flag to wave before the next election. The poor should not pay the price of green dreams.

[Lord Stoddart of Swindon (Ind Lab)]

My Lords, like the noble Lord, Lord Donoughue, I shall not be supporting the amendment of the noble Lord, Lord Oxburgh. I am also a Labour person but an independent Labour person, so I shall not be supporting the Labour Party this afternoon. However, I want to say one or two things about the amendment and the debate.

The noble Viscount, Lord Ridley, in a detailed critique, settled many of the arguments that have been made. The noble Lord, Lord Lawson, was absolutely right to say that the Bill is not about energy but decarbonisation. The two things are quite different. I have been asking a lot of questions about energy and decarbonisation, and the latest reply I received from the noble Baroness, Lady Verma, was that the Government are responsible for 14% of the average bill paid by consumers for energy. The companies, for which I hold no brief, are getting between 5% and 6%. They are being demonised for increasing the bills and yet the Government are responsible for three times as much of the bills as the companies are.

When I was in the Labour Party before I was expelled for supporting Labour people instead of Tories—defecting Tories, incidentally—I opposed from the Front Bench the privatisation of the gas and electricity industries and I believe that was the right thing to do. It may very well be that the Labour Party, because it now apparently believes in socialism, will consider whether it wants to renationalise those industries if it gets into power at the next general election. However, that is by the by.

My other point is that like most other sensible people I believe that climate changes but like other noble Lords I believe that it is not necessarily carbon emissions that are causing the climate to change at present—if there is any significant climate change at all. However, the Government, Opposition and virtually everyone else say that climate change is due to carbon dioxide emitted by humans and their activities. That may or may not be true but unfortunately the Government do not deal with the problem. If climate change is due to human activity, why on earth are we not doing something about the predicted increase in the population from the present 7 billion to 9 billion? That really is going to exacerbate the problem. An extra 2 billion people will be emitting more carbon dioxide and their activities will add to the problem. Why do the Government not have a population policy? That would meet the problem without the Bill and without the amendment.

Then, of course, there is the possibility that carbon is not the real problem, that perhaps it is not global warming we ought to fear but global freezing. I am old enough to remember a lot of climate changes in my life and there seems to be some sort of circle. They come around now and again. However, suppose the people in the 1970s who said we are going to have a new ice age are right. Then we would be wrong in trying to reduce. If the warmists and the people who believe in carbon dioxide causing global warming are right, we would need extra carbon dioxide to deal with the ice age rather than less. This is becoming quite an issue. I read in the Daily Express today an article—

[Noble Lords]

Oh!

[Lord Stoddart of Swindon]

I am sorry I have gone downmarket a bit. I am quite sure noble Lords will want to take more notice of the Financial Times, which was quoted by the noble Lord, Lord Lawson, rather than me, but I saw this in the Daily Express. It is not the view of the Daily Express; it is the view of Professor Mike Lockwood of Reading University, who said that,

“erratic and extreme weather patterns could be the norm in 20 years. He said the risk of harsh winters and wet miserable summers has gone up to 25 to 30 per cent compared with 10 per cent a few years ago. Weakening sunspot activity is to blame for a ‘major change’ in the UK’s weather he told BBC TV. He said: ‘The sun is ‘quietening’ really rapidly. We think it is actually quietening more rapidly than at any time in the last 10,000 years’”.

We are entitled to take Professor Lockwood’s view into account as well as the views of other people. If he is right then we should be taking a completely different course on climate change. I hope that the Government will take note of what he said. Finally, I hope that they will indeed take some action to ensure that the people of this country—the energy consumers—are not put to further expense by additional green measures. Perhaps there could be a reduction in the cost of those as well.

[Lord Dixon-Smith (Con)]

My Lords, I hesitate to intervene at a late stage in this debate. I am grateful to the noble Lord, Lord Oxburgh, for tabling the amendment that we are discussing because it has enabled this extremely wide-ranging debate over a whole lot of matters that are not specifically aimed at the wording of the amendment. I am bound to express the view, which the House might agree with, that having had this debate at the start of Report I hope we will not have to repeat it.

The debate reminds me so much of the distinction between climate and weather. This morning, I tried to set out to come here. Every road I attempted to pass down was blocked by a fallen tree for about the first three hours of the day, and it was impossible. Of course I am here—that is noble Lords’ misfortune but that cannot be helped. The fact of the matter is that that is weather, and weather is only a part of the climate. This debate makes me think more and more of weather. However, the conclusions we come to and set in our debate will create the Bill and will set the climate. That is the significance of what we are discussing.

17:30

The second thing I wanted to say is that it is entirely appropriate to have this debate here. I ask noble Lords to set their minds back 200 years, although that may not be possible. It was a whole series of British innovations, by people who thought originally and did not accept the limitations under which they worked at the time, which set off the Industrial Revolution, which of course is largely responsible for creating the world as we know it today. It is appropriate that we have this sort of wide-ranging discussion because you could, in one sense, say that our predecessors brought about the conditions which we now have to take steps to correct. It is a pleasure to be doing this.

I want to come back to the opening remarks of the noble Lord, Lord Oxburgh, where he implied that shale gas was not perhaps that significant an issue. For me, disregarding the fact that the amendment is only making two years’ difference in the way we take our decisions, this is the reason why it should not in fact be passed, The thing about shale gas is that it is very much an unknown quantity: it could be a game-changer but it might not be. I do not think we should hasten towards long-term decisions, which will set the investment climate, unless we are fairly sure of the ground on which we stand. Shale gas is not a British or a United States issue but a global one. We know that there are large deposits in the Mediterranean and I understand that there are large deposits in many parts of China. There are presumably large deposits elsewhere in the world, so this is an issue that we have to take care of.

So far as I am concerned, shale has the potential—I would put it no higher than that—to be a real interim technology that can change the nature of the game. Some of the environmental lobbies do not like it, as it is a fossil fuel. When I was first here, a Member of this House at the time said to me that we should remember that all our energy sources are nuclear. We can have our nuclear power station here or we can have it 98 million miles away, but we should remember, when we discuss fossil fuels, that they are nothing more than geologically stored solar energy. Those who deride these technologies need to put their thinking caps on.

The second thing about shale gas is that it would enable a revolution in electricity generation, because of not one but two factors. In conjunction with carbon capture and storage, it should be possible to reduce carbon emissions from electricity generation to almost, if not completely, zero. However, much more important than that, the technology is very clean. One of the things that appals me about our electricity generating industry is that, historically, because it has been a pretty dirty technology, it has had to be sited very far from large communities and conurbations. With clean technology, we could site power generation on the urban fringe, which could bring about a revolution in power generation, because we could use the waste heat productively in the community to heat homes. That is a major consideration as far as I am concerned. It is all very well having a nuclear power station out in the Severn estuary but it means that the energy efficiency of that power station is somewhere between only 40% and 50%, rather like an internal combustion engine. If we want to get efficient generation, we have to find a way of using that waste heat. That is, in a sense, a red herring in terms of the debate, but it is the reason why I do not think that these amendments should pass. I think we need more time to find out what we are really dealing with.

[Baroness Worthington (Lab)]

My Lords, it is a great pleasure to speak at the end of this debate—a wide-ranging debate, something on which other noble Lords have commented. I am delighted to add my name to the amendment of the noble Lord, Lord Oxburgh, this afternoon. I will not get drawn into the debate that we have had about the climate science, because other noble Lords have done that far better than I could: the noble Lords, Lord Smith of Finsbury, Lord May, Lord Krebs and Lord Deben, have all, very clearly and lucidly, explained the dire situation and the threats that we face with climate change. I am also not going to comment on individual technologies, as it is very clear to me that the debate we should be having today is about the principle of decarbonisation, not about individual technologies. Nothing in any of these amendments dictates that we use renewables, do not use shale gas or use nuclear. They are entirely technologically neutral, which is one of their great assets and benefits. It is fair to say that on this issue we, as a party, and the noble Lord, Lord Oxburgh, are very close to DECC Ministers. We are not here to debate whether or not we should set a decarbonisation target but simply to debate when that target should be set. The Bill has been amended during its passage to state that a target will be set in 2016. The lead amendment is really about timing, and I have a few words to say about why it is right to set that target now.

The main reason is that, without this amendment and without bringing forward the setting of this target, the Bill largely lacks purpose. It is an enabling Bill which includes many measures that enable the Secretary of State to do things at his or her own discretion, but does not require anybody to actually do anything very specific. Therefore, despite the fact that we have been deliberating the Bill for many months—indeed, years now—investors are not celebrating the fact that it is nearly complete and are not yet clear about what the Bill actually delivers. There is still insufficient clarity of purpose, too much doubt about the Government’s commitment to cleaning up and modernising our electricity sector, and too much control now being given to the Government, who, unfortunately, are equivocating about the need for low-carbon investment. The Bill does not enable enough competition to ensure a broader range of projects and investors are delivered by it. The Bill is an enabling Bill and lacks a clear purpose. The amendment of the noble Lord, Lord Oxburgh, is intended to address that failing.

I have no doubt that the Minister will say that it is not targets, in and of themselves, that will drive investment. The noble Lord, Lord Teverson, has already indicated that that is what he believes. That would be true if we could point to detailed elements of the Bill that gave certainty. The mechanisms that the noble Lord, Lord Teverson, alluded to, which I have no doubt the Minister will also allude to, including the contracts for difference, the strike prices and the capacity mechanism, are not being celebrated by industry; in fact, quite the opposite. We are hearing very strongly that, for example, the strike prices being offered for offshore wind do precisely the opposite of enabling investment and actually deter it. The same is true of the capacity mechanism, which we were told would bring forward investment in gas power generation. Again, this part of the Bill is not being celebrated. It is being lamented because it does not appear to give the certainty investors need. We need to see action, not just targets, but unfortunately, without a target, it seems clear that action will not be delivered.

This is a modest and very moderate amendment. The noble Lord, Lord Oxburgh, could, had he wished, have put in place an amendment that dictated a target in the Bill. He has not done that; he has merely asked that the target be set by April next year. One might say, “Well, of course that’s sensible”, but in other parts of the Bill there are numerate and precise numbers which, when the Government see fit to try to encourage gas investment, they seem perfectly happy to put on the face of the Bill. I am alluding to the energy performance standard, which is incredibly prescriptive and detailed. The noble Lord, Lord Oxburgh, has not followed that; he has made a moderate and necessary amendment and I hope that the Members of this House will find support for it.

If we want to get to the real reason why this amendment is potentially going to be blocked by the Minister, it is not because we do not have a fifth carbon budget. It is absolutely clear to me that if the noble Lord, Lord Deben, as the chair of the CCC, can advocate the setting of this target, then there is clearly no link between the need for a carbon budget and the need for a carbon intensity target. The two things do very different jobs, and it is merely a ruse to state that we must wait for it.

It is also wrong to say that we cannot move without Europe. The situation in Europe is that we are being asked to consider a renewables target, as many noble Lords, including the noble Lords, Lord Jenkin and Lord Deben have alluded to. We may not want a renewables target in 2030, but we may be dictated to by Germany to have one, which seems absolutely certain that that is what it wants. If we had a decarbonisation target set early, we could then influence that debate and prevent the setting of a technology-specific target in favour of a decarbonisation target.

It seems clear that these reasons for opposing these moderate amendments are not the real ones. The real reason is that there is a complete lack of cohesion within the Government on whether we want to seriously pursue our climate change targets. One need look no further than Prime Minister’s Question Time just a week ago when a panicked Prime Minister was making up policy on the hoof. Without a real response to Labour’s challenge on how to bring prices down, he has now started blaming green electricity, or indeed social, environmental and energy-efficiency policies for those price rises.

I reassure the noble Lord, Lord Donoughue, that it is absolutely consistent for us to call for a decarbonisation target while wanting to see changes to the way that our electricity market is run. We have a regulator that is not fit for purpose, and an oligopolistic energy market that needs to be broken open so that we can have true competition and transparency and see that we are not overpaying for the electricity that is generated.

The real nub of this debate is: why can we not set the target now? Why are the Government insisting that it be set after the next election? It is purely political expediency because they have been unable to arrive at a sensible position in government. I really hope that Liberal Democrats—who have this as part of their party policy—will stand up and vote for this amendment because it is absolutely clear that, although many things are being attempted with this Bill, the bargain that has been struck is not yet balanced. The levy control framework that has been wrested from the Treasury is only a promissory note. That £7.6 billion that may be spent on clean energy will be spent only if strike prices are agreed at the right level. If all of the control that is being given to government means that the strike prices are continually set at the wrong level, we will see no investment and we will have sacrificed clarity of purpose for a bargain which will not ultimately deliver what I think the Liberal Democrats believe it will.

As I said, I am not going to get involved in the debate on climate science. However, I will say that if we are thinking that this amendment will somehow damage our competitiveness, that somehow Europe and the UK are out on their own tackling climate change, then that is absolutely incorrect. The most dynamic economies—China, Germany, California, South America—all now accept that the only future for energy is clean energy, and that we must act together to globally decarbonise. I am sure that we will see in Paris in 2015 the passing of an international framework that will demonstrate that we are not alone and that the big economic powerhouses of the US and China are behind this too. We will therefore move forward in tandem and it will not be a race to the bottom as some would prefer.

In the other place, this amendment was lost very narrowly; had 12 votes gone the other way, it would have been put into the Bill. That, of course, is in a situation where there is a large government majority. Here, in this House, the balance of power is such that on issues of great importance we can send a strong signal to the Government that they have got something wrong and must institute a rethink. This issue of when we set this target is not a huge issue but it is one of those important issues where we must cause the Government to rethink.

The noble Lord, Lord Oxburgh should be commended for tabling these moderate amendments. I hope that if the opinion of the House should be tested, we will be able to cause the Government to rethink this important issue.

17:45

[The Parliamentary Under-Secretary of State, Department of Energy and Climate Change (Baroness Verma) (Con)]

My Lords, these amendments have attracted significant debate across the House today and I am extremely grateful for the insights of all noble Lords who have spoken. However, the Government do not agree that the Bill should be amended as proposed and I shall set out the reasons for this.

The provisions in Part 1 set out a logical, measured approach that enables the Government to set the UK’s first sector-specific carbon intensity target in law. Once set, the provisions place a legal duty on the Secretary of State to ensure that the target is achieved. This brings with it important responsibilities. It is not something that should be rushed into. A target would have significant implications for the power sector, consumers and the wider economy. It is therefore vital to understand fully, based on evidence, whether a target represents the best approach to meeting our economy-wide carbon budgets cost-effectively and, if so, what level it should be set at.

The right time to consider this is in 2016, not 2014 as proposed by Amendment 1, as 2016 is when, in line with the requirements of the Climate Change Act, we will be undertaking extensive analysis to set the level of the fifth carbon budget in law, incorporating advice from the Committee on Climate Change. At that point we can consider a decarbonisation target within the broader context of the trajectory of our whole economy towards our 2050 target.

Moreover, in 2016 we will have a better understanding of how low-carbon forms of electricity have developed, the commercial deliverability of carbon capture and storage, the uptake of electric vehicles, and how the market is responding to the reforms included in this Bill. We will also have a clearer idea of a future climate change package both at the global and the EU level. These are important considerations when looking at the UK’s targets for 2030. By contrast, the noble Lord’s proposed approach would mean rushing to set a target in less than six months. As it stands, there are significant uncertainties now as to the energy mix that will best meet our objectives of secure, sustainable and affordable energy. This would make setting a robust target challenging.

In terms of investor certainty, according to the British Chambers of Commerce, the Energy Bill as it stands will,

“provide sufficient incentives to attract investment in low carbon forms of energy”.

This is supported by the point made at Second Reading by my noble friend Lord Browne of Madingley. In his experience as a businessman and an investor:

“The incentive structures contained in the Bill are far more important than targets or aspirations, because they are the mechanism for action”.—[Official Report, 18/6/13; col. 192.]

This is not forgetting that since January 2010 there have been announcements that could see more than £29 billion of investment in renewable energy. This speaks for itself. Clearly, a decarbonisation target is not the only way to encourage investment.

On Amendment 2, I fully agree with noble Lords that there should be a role for the Committee on Climate Change. In line with its responsibilities under the Climate Change Act, it is due to provide advice on the level of the fifth carbon budget. This covers the 2030 period. This analysis is perfectly sufficient to advise on a decarbonisation target range and it is therefore unnecessary to include further provisions in the Bill.

Amendment 2A, tabled by the noble Lord, Lord O’Neill, proposes setting annual carbon intensity limits on electricity suppliers. I do not support this amendment for three key reasons. First, the government reforms in the Bill support market-based mechanisms to incentivise a cost-effective transition to low-carbon power. Introducing an annual carbon limit on suppliers would be contrary to this approach. Secondly, the proposal would introduce confusion around accountability. The Government’s provisions clearly place legal responsibility for meeting the target range on the Secretary of State. This position should be maintained since it is he or she who is responsible for setting UK energy policy and is ultimately accountable to Parliament. Lastly, this is a blunt instrument which could have unintended consequences. We are not convinced that the proposal would not undermine our security of supply objectives. We are also concerned that the amendment may lead to an increase in consumer bills if the costs of compliance are passed on from energy suppliers to consumers.

The Government are not willing to accept these amendments today. However, we considered the amendment tabled by the noble Baroness, Lady Worthington, in Grand Committee. This proposed that the Secretary of State explain the actions to be taken to stay on track to meet the target over time. The Government support the aim of transparent reporting and I therefore commit to the House that, where carbon intensity is reported to have increased year on year for three consecutive years, the Government will explain the reasons why, and, where appropriate, report additional actions to address it within the annual statement of grid carbon intensity.

In conclusion, I hope that noble Lords can see the drawbacks of rushing to set a target next year. We want a much more measured approach. We all want to see decarbonisation continue—and this Bill enables that—but we must all be mindful that any targets set now will impact on consumer bills. Without having the more detailed information that is needed across all sectors, and without looking at our position against our European partners and more widely globally, setting a target would put us in isolation and make us uncompetitive against our partners.

We have to be sensible and see this as an opportunity to debate the subject but to set it in the appropriate context. We do not know which technologies will realistically be able to be deployed in the 2020s. As the EEF has warned,

“should current assumptions about the development of carbon capture technology, the level of investment in nuclear power, the cost of offshore wind or the future price of gas prove wrong the UK could end up committed to an unrealistic and extremely costly target”.

We need to keep these issues very much in mind. Ultimately, what we decide will be borne by the consumer. I hope that the noble Lord will withdraw his amendment.

[Lord Oxburgh]

My Lords, I thank all those who have participated in this very interesting discussion. I apologise for the fact that what I had intended to be a rather narrow, technical discussion has turned into a debate that has been much more like a Second Reading. Nevertheless, I think it has done a great deal to clear the air. I am extremely sensitive to the question of consumer prices and there is a real debate to be had about to what extent some of the measures that we have been talking about should go on to energy bills and to what extent they should be borne by general taxation. I am not taking a position on that but it is well worth discussing.

I think I found something with which I could agree in almost all the speeches that have been made, from whichever side of the House—even in the case of the noble Lord, Lord Lawson. There are things about this Bill that I do not like but we have to have a Bill and we have to have it urgently. However, I think his cover is blown: on the basis of his comments today, we can be pretty sure that he is moonlighting as a leader writer for the FT. I also agree with those noble Lords who have questioned the overly prescriptive nature of the EU targets. We could well do without them and I would like to see the Government do what they can to renegotiate or indeed disregard them. On the other hand, to believe that what I and my co-proposers have suggested today will have any additional impact on consumer bills beyond that to which we are already committed through existing agreements is a misunderstanding.

On the 2030 target, I have to say that, given the length of time this proposal has been around, the “rushing” argument is a little bit rich. We know precisely the views of the Committee on Climate Change. We have had them from several members of the committee today. We know what the committee expects and what its forward look demands for 2030. Waiting for the next carbon budget is a little bit of a procrastination and I do not think that it is a serious, substantial objection.

If one takes the position taken by the noble Lord, Lord Lawson, that one is unconvinced that human intervention is having a significant effect on long-term climate—

[Lord Lawson of Blaby]

I never said that. But even if one thinks it does have an effect, the policy prescription does not stand up. That was the point I was making.

[Lord Oxburgh]

I thank the noble Lord. I was about to go on and say that I think his position is rational in that situation but that he is entirely wrong in his assessment of the science. There is also a political argument to be had over what one subsequently does.

This is something on which I feel it is necessary to test the opinion of the House, so I would like to do that.

17:57

Division 1

Ayes: 202

---

Labour: 144
Crossbench: 43
Independent: 4
Bishops: 2
Conservative: 1
Liberal Democrat: 1
Plaid Cymru: 1

Noes: 216

---

Conservative: 129
Liberal Democrat: 62
Crossbench: 16
Independent: 3
Labour: 2
Ulster Unionist Party: 2
Democratic Unionist Party: 1

18:10

Amendment 2 not moved.

Amendment 2A not moved.

Clause 5: General considerations relating to this Part

Amendment 3

Moved by

[Lord Whitty]

3: Clause 5, page 5, line 22, after “electricity” insert “in general;
( ) the strategy and objectives to be set out under section 136 of this Act for addressing fuel poverty;”

[Lord Whitty (Lab)]

My Lords, I do not think that this issue will take us quite as long as the previous debate. Indeed, it could be disposed of relatively straightforwardly as the Government could quite easily adopt this amendment. Frankly, they would be very wise to do so. If the Minister cannot do that, she can at least indicate that she will bring forward an equivalent but better drafted amendment at Third Reading.

This amendment concerns the issue of fuel poverty and its relativity to electricity market reform. Noble Lords will recall that when the Bill went through the House of Commons and first reached this House there was hardly any direct reference to fuel poverty in it—a glaring omission. The organisations concerned with fuel poverty and the people who suffer from it thought that was a serious omission and quite shocking in many ways. But we have moved on from that: in Clause 136, much later in the Bill, the Government have come up with a provision requiring them to provide a strategy on fuel poverty that will apply to the whole range of energy policies.

There are those who have doubts about the coalition Government’s commitment on this front. There has not been a great track record on fuel poverty so far. The hesitation and delay in bringing fuel poverty into this Bill has been worrying, as has the recent furore within the Government. As far as one can make out from the various statements by the Prime Minister and Secretary of State, there is still an argument going on in the Government. Many in the Conservative Party appear to have in their sights not only green levies in the strict sense of the word but also those levies that provide for resources to improve the energy efficiency of the homes of the fuel poor. I will be generous today and accept that the Government have agreed that a new strategy is to be provided, one which this Bill will give legislative requirement for. We can have a substantive discussion on fuel poverty at that point in the procedure of the Bill, some time next week.

The point today is that the Government have inserted in the clause that we have just dealt with that fuel poverty is one of the matters that Ministers must have in mind when setting decarbonisation targets. In relation to the electricity market reform, there is no such reference. I suggest that reference could be made most appropriately here in Clause 5. Clause 5 stipulates the issues that have to be taken into account in electricity market reform: decarbonisation, referencing the Climate Change Act, prices for consumers both domestic and industrial, and energy security. The environmental and economic dimensions of electricity market reform are there but the social dimension—that of fuel poverty—is omitted.

18:15

Now that Clause 136 is part of the Bill—whether or not we improve it when we get to that point—surely we should now make sure that the Bill’s major intervention in the market, the complete reform of the electricity part of the market, is stipulated. We can obviously have the substantive arguments on Clause 136 later but that clause’s very existence and the Government’s acceptance of the need for it must mean that the social dimension of electricity market reform should be recognised and reflected at this point.

It would be sensible for the Government just to accept this amendment, although they could argue that it should be in both parts of Clause 5 rather than just one. It would be equally sensible if the Minister told me that she would come forward with a much better amendment at Third Reading. But, given the logic of what is now the Government’s point of view and for the House to recognise the importance of tackling fuel poverty as an equal part with the other strategic objective of the energy policy, we should adopt something like this amendment. I beg to move.

[Baroness Maddock (LD)]

My Lords, I have great sympathy for the words spoken by the noble Lord. He and I and one or two others in this House have campaigned on fuel poverty for a number of years, although he will remember that, when as a Minister he wrote his draft fuel poverty strategy, he hoped to eradicate it by 2010. That indicates what a difficult issue this is. I am grateful to the Government for, after cross-party lobbying, putting into the Bill a strategy for fuel poverty. I am very pleased about that.

This is very pertinent at the moment. I do not know if noble Lords noticed that as the storm went through the temperature dropped. I only just made it in on my train today. As I walked across, I could feel the temperature dropping. Elderly people particularly are getting very worried about how they will pay their fuel bills this winter. We know but many do not understand that if you are older and have heart problems, problems with blood circulation and so on, you do not need to get very cold for it to have a serious effect.

I have campaigned on this issue for as many years as I care to think about. In my 20s, I lived in Stockholm in Sweden where pensioners did not die in wintertime because they were too cold. They did not have arthritis. They lived in properly heated houses. Here we are in 2013 and we have still not managed to achieve that. I recognise that it is a very difficult problem but I hope that my noble friend can at least give us some warm words in response to the noble Lord, Lord Whitty. Many noble Lords care passionately about this issue. It is time, as one of the richest nations in the world, that we dealt with it.

[Lord O'Neill of Clackmannan]

My Lords, I start by declaring an interest: I am a vice-president of National Energy Action and the president of Energy Action Scotland. The Government have made some moves on this issue in the course of the Bill’s passage, but it would help if they would add to the list of objectives they have set themselves the one concerning fuel poverty mentioned in this amendment tonight. That would be a signal that this is not an issue of party conflict, and indeed that the Government have recognised that one of the deficiencies in the Bill is that insufficient attention was initially given to fuel poverty.

Now that we have had recognition, we can probably argue about the niceties when the appropriate time comes. We are all in favour of the earliest possible elimination of fuel poverty. It is not just about prices. It is about handling our grossly inadequate housing stock. Before too long we may well have to look afresh at the Green Deal that at the moment has, as far as I know, attracted something like 57 successful completions—one for every one of Heinz’s varieties; that is perhaps all that one could say about the proposal. People may find the money and find it attractive to accept the Green Deal at the 7.5% interest that is being charged, but I very much doubt it.

More has to be done on this. It would be helpful to have a clear indication that an opportunity is available with this amendment to put in the Bill, as one of the overarching targets of the Government’s energy policy, that we should as a high priority be able to eliminate fuel poverty. If we all agree on it, why is it not there? It is not a particularly controversial amendment. It is one that would enhance the credibility of the Bill and make easier the passage of future elements in it, which I am sure the Minister is looking forward to bringing before this House.

[Baroness Verma]

My Lords, I thank the noble Lord, Lord Whitty, for his amendment and all noble Lords who have taken part in this short but important debate. It gives me an opportunity to lay out the Government’s objectives for reform throughout the development of the EMR proposals. These objectives have been set out in the published documents, from our White Paper in July 2011 and within Clause 5, to reflect our aims of reform. This does not mean that other aims, such as minimising fuel poverty, are not important. I agree with noble Lords that this area is incredibly important to us all. As outlined in Clause 5(2)(d), the Secretary of State will have regard to the likely cost of electricity to consumers. This means all consumers, including the fuel poor.

Our analysis suggests that, as a result of EMR, household electricity bills will be on average around 9%, or £63, lower per year over the period 2016 to 2030, relative to what they would have been if decarbonisation were achieved through existing policy instruments. The impact of EMR will be to reduce fuel poverty compared to what it would have been without those policies in place.

However, we should not be complacent. With or without EMR, electricity prices are likely to increase over time due to rising fossil fuel prices and the rising cost of carbon. This is why we have in place a strong package of measures to support low-income and vulnerable households with their energy costs. The energy company obligation ensures that help goes to low-income and vulnerable households to enable them to heat their homes more affordably on a long-term basis. Through the affordable warmth and carbon-saving communities obligations, we anticipate that support should reach around 230,000 low-income households each year. In addition, this winter around 2 million households will get help under the warm home discount scheme, including over 1 million of the poorest pensioners, who will receive £135 off their electricity bill.

In the last financial year, winter fuel payments helped over 12.5 million older people in over 9 million households with their fuel bills, providing between £100 and £300 tax-free to help pay for heating bills. During the same period, 5.8 million cold weather payments were made, targeted at those households that are most vulnerable to the cold. This Government are committed to helping the fuel poor, now and in the future. That is why earlier this year I proposed amendments to the Warm Homes and Energy Conservation Act, to put in place a new, rigorous and flexible framework for measuring the Government’s progress in tackling fuel poverty in England. As we move forward with ensuring a safe low-carbon future we must be absolutely sure that we do not leave the fuel poor behind.

The noble Lord, Lord Whitty, mentioned the Prime Minister’s announcements last week on green taxes and the review of their impact on the fuel poor. The Government are looking at how to get people’s energy bills as low as possible to help the very families to which the noble Lord refers. We are already increasing competition by bringing new players into the market to offer consumers real choice. The most vulnerable are getting direct help with their bills this winter. We will continue this work to make sure that consumers get a better deal. No one is talking about changing support for large-scale renewables or feed-in tariffs. We want to make sure that those who need help get help. I hope that the noble Lord, Lord Whitty, finds my explanation reassuring and on that basis will withdraw his amendment.

[Baroness Maddock]

Before the Minister sits down, can I apologise to the House for not declaring my interest? Like the noble Lord, Lord O’Neill of Clackmannan, I am a vice-president of National Energy Action, which is a charity that works towards eradicating fuel poverty.

[Lord Whitty]

My Lords, I also omitted to declare an interest. I am chair of a charity that deals with research into fuel poverty.

I am a bit disappointed by the Minister. It is correct that the Government have a number of policies coming on-stream that are directed at dealing with fuel poverty. Unfortunately the start of their period of office saw a substantial reduction in support given to tackling fuel poverty through the abolition of the Warm Front scheme, which was taxpayer-funded. For the first time in 30 years we are without a taxpayer-funded scheme to deal with fuel poverty. In so far as the objection to the ECO and other green tariffs is valid, it is partly because they are made on a poll-tax and not a progressive-taxation basis.

While the Government’s strategy has some commendable features that I hope move it in the right direction, it is not a sufficient answer to the failure of successive Governments to meet the targets that were set—as the noble Baroness, Lady Maddock, said—back in 2000 to eliminate fuel poverty in general. It was actually by 2016 rather than 2010, so we still have two years to do it, but we definitely need a new strategy, which Clause 136 recognises. In view of how the Minister has portrayed the current schemes dealing with fuel poverty as being adequate, I suspect that we will have a few arguments when we come to Clause 136. I am glad that it is there.

I hope that the Minister will go away and think about the point that I am making: electricity is the main form of energy that the fuel poor use. They rely on it disproportionately for their heating. Any electricity market reform part of this Bill should reflect that interest. The way that we deliver electricity, the choices that we make in terms of the source of that electricity and the kind of tariffs and levies that we impose on that electricity make an enormous difference to the way that they impact differentially on the fuel poor. It is correct that we are concerned about the cost to consumers in general—that is already in the Bill—but there is a differential effect depending on the nature and the mix of the policies that fall on the fuel poor. Before we leave electricity market reform, that should be reflected there.

I shall not push this tonight because I am not sure that my amendment fully reflects what I am saying, but I hope that the Minister will think about, at the beginning of the major section of this Bill dealing with electricity market reform, saying that one of the things with which we are concerned is the minimisation of fuel poverty. I beg leave to withdraw the amendment.

Amendment 3 withdrawn.

18:30

Amendment 4

Moved by

[Lord Jenkin of Roding]

4: Clause 5, page 5, line 24, at end insert—
“(f) the desirability of promoting effective competition between persons engaged in, or in commercial activities connected with, the generation, transmission, distribution or supply of electricity or the provision or use of electricity interconnectors, wherever appropriate”

[Lord Jenkin of Roding]

My Lords, this amendment stands in my name and those of my noble friends whom I shall mention in a moment.

The House will realise that this is an exceedingly complicated Bill. Anyone coming to it for the first time would recognise that. At the heart of it are the Government’s proposals for electricity market reform. The objectives were mentioned in the previous major debate. They are security of supply—the lights must not go out—support for low-carbon generation and affordable prices for consumers. From the outset, Ministers have been determined to say that to achieve these objectives, tougher competition is going to have to come. It is true that the regulator, Ofgem, has had some responsibility for this, but the general perception has been that it has not been as effective as it might have been.

My right honourable friend the Secretary of State, Ed Davey, mentioned a problem on “Newsnight” the other day. He said, “We need more competition … We think the big six have been a real problem”. I have the figures. The big six have no less than 92% of the supply to consumers. The remaining small companies have a mere 8%. Generation is nearly as bad. It is an oligopoly. That is what we are faced with. I do not believe that existing arrangements for dealing with competition are strong enough, so there was a very positive welcome when my right honourable friend the Prime Minister said in the Commons the other day:

“So I can tell the House today that we will be having a proper competition test carried out over the next year to get to the bottom of whether this market can be more competitive. I want more companies, I want better regulation”.—[Official Report, Commons, 23/10/13; col. 293.]

And so say all of us. That is obviously necessary. We await with interest what my right honourable friend the Secretary of State is going to say in his statement later this week, or perhaps even tomorrow. What is this review going to involve? It is already clear that it is likely to take some time and involve not only Ofgem, the regulator, but the Office of Fair Trading and the Competition and Markets Authority. I will return to this towards the end of my remarks.

Three amendments in this group are tabled in the names of my noble friend Lord Roper, the noble Lords, Lord Berkeley and Lord Cameron of Dillington—a very cross-party group—and me. Our purpose is to make the determination to have tougher competition explicit in the legislation and that it should apply, where appropriate—it certainly is to the bit of the Bill I shall be coming to—to the Minister as well as to the regulator.

The part of the Bill with which I am chiefly concerned is Chapter 3 of Part 2, which introduces the capacity market. I briefly describe that as a managed-auction system to give clear incentives to generators to invest in new capacity. This can mean keeping open plant that might otherwise have been closed, bringing into production plants that have been mothballed—there is a good deal of that at the moment—or building new plant. It can also include measures to reduce demand.

The capacity market offers a real opportunity for Parliament to give the industry the opportunity to get more competition. That is what the Prime Minister was talking about when he said he wanted new companies—he was absolutely right—new entrants and smaller independent generators. They struggle to compete with the big six. Unlike the big six, which have strong balance sheets, smaller companies have to raise funds from the market for their investment. Unless they can see a reasonable prospect of a decent profit, they will not be able to do so. Investors will not come forward. That is the purpose of the capacity market; it is to give them the incentive to do that.

One would have thought that if everyone really wants more competition, it would be in the Bill. Yes, it is; there is quite a lot in the Bill. When you look at other clauses in the Bill—in particular Clause 47, dealing with power purchase schemes, Clause 127, dealing with the strategy and policy statement and Clause 132 on the modification of supply licences—they are specifically for the Secretary of State, and in all that, he has to promote competition. But when the Bill comes to the capacity mechanism, for some reason—and I have to confess that I had some difficulty understanding what it is—the competition duty does not apply to his role as the official with responsibility for the capacity market. That is the only instance in the Bill where there is no obligation on a Minister to be responsible for promoting competition. Yet the Secretary of State is in overall charge of the capacity market. Why? What is the difference?

The Government have done very well trying to spell out to the industry the complex details of the structure of electricity market reform: the contracts for difference, the capacity market and all the other features. They are not all quite there yet, but they are nearly there. The object of the exercise is quite clearly to create conditions where investors, particularly smaller and independent investors, can raise money in order to invest in the additional capacity which we certainly need and which will help consumers because it will bring more competition. It is not quite true that they have yet succeeded in doing that. The terms set out for the operation of the community charge—I perhaps do not need to go into detail—have been described to the Minister, who has been very good and met the people concerned, but they are not yet sufficient to enable them to do that. They will have the objective of doing it, but nothing will be achieved. Therefore, there have to be changes.

I have heard it said that the changes will have to be for the regulations, but as the House well knows, if regulations come before the House, they cannot be amended. They can be either rejected or accepted. That is not very satisfactory. Therefore, we must have clear authority imposed upon the Secretary of State to run the regulations in such a way that they generate the competition they want. That will require some changes in what has already been distributed and made clear to the industry. Ministers must be under a clear statutory duty when exercising their responsibilities for the capacity market to do so positively to promote competition. That is the simple purpose of Amendment 4, which adds to Clause 5 a sixth duty to promote effective competition in the several activities set out in the amendment. The other two amendments we have tabled, Amendments 42 and 43, specifically make this duty effective for the purposes of the capacity market set out in Chapter 3 to make it explicit that the duty for promoting competition covers Ministers as well as the regulator, Ofgem. Taken together, these amendments would enable potential investors to insist that the regulations and rules are drafted so they really will enable independent generators and new entrants to raise the funds they will need to invest in the new capacity in competition with the big six. Last week, the Prime Minister said he wanted new companies. This is the way to get them.

I referred a moment ago to the proposed high-level review. The first auction for the capacity market happens next year. For that to go ahead, the regulations have to have been finalised and approved by Parliament, and must be in force. The review we have heard about will be over the next year and it will be too late. I hope that when my noble friend replies to this debate, she will not take refuge in the review as a substitute for what we are asking here; it is not. I suspect that my noble friend, who is very bright on these things, has fully taken that on board.

We need these amendments now. I ask my noble friend to accept the amendments as they are tabled, or undertake to bring forward her own amendments, which have the same impact, when we reach Third Reading. I beg to move.

[Lord Broers (CB)]

My Lords, I wish to speak in support of this amendment. I recognise that the noble Lord, Lord Jenkin, is applying it mainly to the capacity issue. I wish to address a very specific, simple point with respect to the operation of contracts for difference. In order to attract investment, this Bill allows—almost encourages—electricity suppliers to pass on to consumers the difference between the strike price and the reference price should the strike price exceed the reference price. However, there is nothing in the Bill to ensure that the suppliers return money to consumers should the reference price exceed the strike price. This might well be the case should the price of gas continue to rise, as several noble Lords, including my noble friend Lord Oxburgh, have suggested it may.

The Minister kindly discussed this with me and said it was the Government’s position that intervention was unnecessary as the market should ensure that suppliers reduce their charges in order to remain competitive. I am not fully convinced of this and favour a specific requirement that suppliers should return what might be described as a windfall profit to consumers if the reference price exceeds the strike price. The noble Lord’s amendment at least requires the Secretary of State to have regard to the desirability of promoting effective competition wherever appropriate. In this case, it would surely be appropriate. How else can we protect the consumer?

[Lord Deben]

My Lords, I very much like the thrust of this amendment and I hope the Government will take it seriously. I would like it to have included the issue of how one generates more competition. Interestingly, at least half of Germany’s renewable energy is generated by municipalities, co-operatives and individuals. That means that there is very widespread support for renewables, leading to some real competition. That is why the big boys are increasingly angry about renewables—they are bringing the price down and they are serious competition.

My concern is that it is difficult to see, as the Government have admitted, the sort of competition among the six that we would expect. I notice that the Opposition are now seeking to make significant changes on this, but one must admit some of the things that have gone wrong are the very changes they made last time. I think there is a certain cross-party understanding that things are not as they ought to be. The Prime Minister, I understand, has said he wants the six to become 60, and I notice that the Minister for Energy wants 600. That is certainly much closer to what I would like because this is a way in which the public as a whole could have a greater say in the way electricity is produced and would be more supportive of a much more competitive market.

18:45

Whether they accept this amendment or not, I hope that the Government will recognise that if we could only achieve a more competitive system, it would help explain to people the real costs of electricity. One of the difficulties is that we are forgetting that the biggest cost is actually for gas, so we are all talking here about what are in that sense marginalities. Therefore, achieving competition so that people feel there is a good reason to reduce their bills would be very helpful.

The biggest difficulty is that not one of the six has suggested that this is the moment to get new customers by not putting their prices up. They have all merely said, “everyone else is putting their prices up, so we’ll put them up as well”. That suggests we do not have quite the competitiveness that we want. The Prime Minister has made that point and the Opposition feel it too, so we should consider this as a very real issue in a way that does not just encourage another few big or even medium-sized companies. I want to see a world in which it is much more likely that people come into the industry because it is at that level of innovation that you really get the competition that in the end leads to lower prices.

[Lord Roper (LD)]

The noble Lord, Lord Broers, and my noble friend Lord Deben have widened the amendment tabled by my noble friend Lord Jenkin to other, rather important issues on competition in the course of this Bill. Although it may take us a little time to get from six to 60, or even 600, this amendment is important because of the immediate impact upon independent generators when the capacity mechanism comes into operation next year.

As my noble friend Lord Jenkin points out, the Bill and the proposed rules for the capacity market would make it virtually impossible for independent generators to raise project finance and compete with the big six. My noble friends Lords Jenkin and the noble Lords, Lord Cameron of Dillington and Lord Berkeley, have talked to a number of them and they really do not see how they would do it. We have also talked to their bankers and they do not see how this would be possible for independent generators. That is why it is very important that the regulations and other provisions for the capacity market are drawn up in a way that is fair to smaller generators.

As my noble friend Lord Jenkin has said, we would obviously prefer it if the Minister were able to accept these amendments today. However, there may well be technical problems with them, so we hope that if she were not able to accept them today, she would be able to give us some indication that she will bring back something covering this ground at Third Reading.

[Lord Cameron of Dillington (CB)]

My Lords, as this is my first intervention on Report, I must declare an interest as a farmer with a renewable scheme on my land.

Most of what needs to be said in favour of these amendments concerning competition has already been said and as a co-signatory I very much support them. However, I want to underline the fundamental point involved. It has become obvious to anyone reading newspapers in recent months that the electricity industry needs a huge amount of investment. In Europe it amounts to trillions of euros, and in the UK it is hundreds of billions of pounds. This investment is needed for generation, transmission, distribution and supply. If we do not have that investment, to believe some of our journalistic forecasters, we are likely to get power cuts with all the economic and social tragedies which that might involve. This investment cannot be provided by the government. It has to be provided by the private sector; that is, you and me or, rather, our pension funds in most cases.

The other issue on which anyone reading our newspapers in recent days and weeks will have come to a conclusion is that the oligopoly of the big six is not the political flavour of the month. While being aware that the root of the problem is the rise in the price of gas—I was going to say feedstock—there is something to be said for the fact, which I read in a newspaper, that this oligopoly has some sort of stranglehold. We have a vertically integrated oligopolistic situation within our electricity industry, as the noble Lord, Lord Jenkin, has pointed out. If you wish to deal with this stranglehold, it is crucial that you stick to the golden rule of in no way deterring investment in the panoply of the electricity industry. Investment is crucial. Either freezing electricity prices or putting a windfall tax on the big six does not conform to that rule.

What would conform to that rule, which you have to do, is to increase competition, which ensures that everyone can compete. As the noble Lord, Lord Deben, has said, that could involve very small competitors at every stage and in every sector of the electricity supply chain. Competition is vital to the success of the Bill and to the entirety of electricity market reform. The Bill will be judged on its long-term effects on the security of supply and on the decarbonisation of the electricity and, above all, on how effective it is attracting competitive investment.

[Lord Berkeley (Lab)]

My Lords, I support Amendment 4 and will speak to my Amendment 5. Both concern competition. We had a good debate in Committee on Amendment 5, and there is a lot of support around the House for requiring the big six to divest themselves of their retail section and keep it completely separate. I found that to be a very good solution in many discussions on the European railway market, which is some way away, but separation seems to bring growth, competition and efficiencies. That is what we have in the UK, whereas looking across the Channel to France, the traffic in the rail freight and passenger sector is falling badly and the quality of the network is pretty bad, too.

I believe in fair competition and transparency in all the dealings. I liked the idea of the noble Lord, Lord Deben, of local generation. I remember visiting Denmark with a Select Committee about 10 years ago, to see how each village has its own little grouping of windmills. Of course, the villagers got a reduction in their electricity price and felt a sense of ownership; that is terribly important. They exported the surplus to the grid and imported it when there was no wind.

I am very pleased that the Prime Minister has announced the review of the regulation. According to the Daily Telegraph, this will cover,

“prices, profits, barriers to new entrants and how easy it is for customers to get the best deal”.

I hope that they will add “fairness and transparency”. It is an excellent review, but my worry is that the big six welcomed it with such open arms. Is something going on which we do not know about? Ofgem probably needs a strong review. It has recently come up with some interesting figures addressing the price rises which we have all seen in the press, showing that the wholesale costs contribute only about an additional £10 to household charges. This means that that element of the average annual bill has gone up from £600 to £610. The regulator therefore estimates that the companies’ average net profit margin has more than doubled. The regulator is therefore doing something right; that is of course why the big six do not like it.

I do not think that competition is working for the smaller generators, as many noble Lords have said. A DECC analysis shows that 98% of the domestic supply market is dominated by the utilities; that is not quite the same figure as that given by the noble Lord, Lord Jenkin, but it is in the 90s which is, at any rate, much too high for any kind of competitive situation. The fact that there are eight small suppliers active in the market is a bit paltry if they each have only 0.25% of the market share.

I have had several meetings with people from the big six. Their response to these arguments is quite interesting. They say that there are many synergies upstream and downstream, with vertical integration. I wonder whether this gives them an unfair advantage in the market, and whether the consumer sees the benefits. They then say that it enables them to engage in wider dialogue. Well, of course, it does; but they have three representatives on each of the Ofgem working groups while the small independents are lucky to be able to field one. Yes, it is engaging a wider dialogue—in aid of their commercial advantage. As several noble Lords have said, the managing of uncertainty and hedging is one of the big problems.

Do the Government want the independents there, or are they happy to see what you would almost call a “cartel” of six as a fully functioning market? How would that market work? I am pleased that the Labour Party and Caroline Flint, MP—our shadow Secretary of State—are now supporting this. I know that the party has changed its view on this over the years but, if we have seen the light, that is very good. Caroline Flint is saying that separating the energy companies into the different parts of the business is a good thing, requiring energy companies to trade their energy in an open market by selling into a pool, with transparency. That is also fundamental. Then there is the introduction of a simple tariff structure so that people can compare prices; back to transparency again.

I expect the Government to welcome these two amendments since they both put the issues of competition into the Bill. They are necessary to ensure that competition is transparent and fair, and the lack of that, I am sure, contributes to rising prices.

Several noble Lords have mentioned the independence of the regulator. There is always a debate about to what degree Ministers should instruct regulators, to what degree regulators should be seen to be independent and to what degree they should act totally independently; we could have a big debate about regulatory capture, which I do not intend to have tonight. It is important for Ministers to be able to give this kind of guidance to the regulators in the next few years. We have the big six involved in these working parties while controlling 98% of the market. Having a duty to promote competition in the Bill seems to be a necessary protection for the smaller independent operators.

I would like to see the split of retail from generation. If the Government want real, transparent and open competition, they will either accept these amendments or possibly come up with their own similar ones at Third Reading.

19:00

[The Earl of Caithness]

My Lords, my noble friend Lord Jenkin has yet again put his finger on a hugely important issue, but it is a little bit of motherhood and apple pie. We all want competition and there is no disagreement about that. Indeed, the Bill is all about competition, and the Government’s policy that has already led to more competition. It is worth remembering that in 2000 there were 14 major energy suppliers, but by 2010, within 10 years, they had shrunk to six. In the past two years, seven more energy suppliers have joined the market. The mere fact of what the Government are doing has already started to improve the position with regard to competition. Therefore, the question is: how do we expand that without in any way damaging the Bill?

This part of the Bill covers the trilemma which I mentioned on the first amendment that we debated. It covers the core matters of decarbonisation, security of supply and least cost. It is a very difficult balance to get right. As such, I think that this part of the Bill was quite well framed. It seems to be the wrong place to bring in something about competition when the whole Bill is about competition. It could also open up opportunities for other amendments such as securing the efficiency of the rural economy by having cheap energy. There are many other things you could add to this list once you start to move away from the core principles.

That leads me back to the question of how we get more competition without damaging the Bill. I would ask my noble friend Lord Jenkin: what is the situation where there is little competition? I am particularly keen on tidal energy. Living beside the Pentland Firth for the part of my life when I am allowed out of this place, I think there is huge potential for energy generation there. However, if I set up an energy company to try to exploit that, and the noble Lord down in Sussex set up a company, would he be able to say that he did not get a fair crack of the whip because there was not enough competition? If that is the case, what happens if he goes to judicial review on the wording of this amendment? That will only delay matters. My real concern is that we might be introducing something here that could delay the much-needed investment about which the noble Lord, Lord Cameron, and I were given a lot of evidence when we sat on the sub-committee together and which he has expanded on tonight. I agree with him totally.

My concern is that this opens up the potential for a legal challenge. What about nuclear? As I said on Amendment 1, we were the world leaders, but now we have to go overseas. Can that be a possibility for a legal challenge? I would say to my noble friends Lord Jenkin and the Minister on the Front Bench that, since we all agree on this, can we somehow get it into the Bill? This is the wrong amendment in the wrong place, but the principle is absolutely right. Can we have a form of wording that gives effect to competition but which does not open loopholes that those who dislike a particular form of energy or want to delay a scheme could exploit to the disadvantage of all?

[Lord Teverson]

My Lords, I do not want to speak specifically in favour of the spirit of the amendment proposed by the noble Lord, Lord Berkeley, about the vertical integration of this industry. It has seemed to me over the past 12 months in particular that there has been, if I may say, a growing corporate arrogance in the energy industry. Power seems to have gone to the heads of many of those six organisations. They feel that they can do what they like to their own customer base and that they do not have to pay much regard to democratically elected Governments or Parliaments, let alone your Lordships’ Chamber.

I was particularly struck by this one evening when I visited my 94 year-old mother. She had just had a letter from British Gas which said that she would have to pay an increase of 10% on her bills for the year. Then it kindly went through—in very small type, which was not easy for a 94 year-old—all the reasons for the rise. It gave as the top reason, the first on the list of bullet points explaining why energy prices had gone up, not one of the reasons that we know are actually the reasons for the price increase; instead, it blamed the Government. It is a dual fuel tariff, so the charges are affected by the various bits of government legislation. I think that reflects a real arrogance. It is very difficult indeed to fix this competitive area, as noble Lords are trying to do. It is time to think what has previously been the unthinkable and say, although perhaps not tonight, “Yes, it is credible that we split supply from production”. That should be seen as a real way forward.

However, we have another problem, which leads to the arrogance that we are seeing within the industry. The companies know that we know that some £100 billion needs to be invested to keep the power lines going to make sure that we keep the lights on in terms of capacity. That is a dilemma for any Government. Nevertheless, we should start thinking what has previously been the unthinkable: that this arrogance is not acceptable. We expect them to be more responsive, not necessarily to us but certainly to their customer base and to the nation in terms of their pricing strategies. They should know that if we cannot solve the competitive issues, that split could indeed happen.

[Baroness Worthington]

My Lords, I am grateful to noble Lords for tabling this amendment. It enables us to have a debate about what I believe is an obvious missing element in the entire Bill, which is the need and the desire to promote competition. It is clear that there has been a quickening of pace in the thinking about energy policy since the conference season. That is largely because the Labour Party has called time on the existing system which is operating in our electricity market. We stated clearly that if we win the next election we would make dramatic reforms to introduce greater competition. It is evident that we have an oligopolistic system and that there is an insufficient downward pressure on prices. Otherwise, why would British Gas and other members of the big six opt to spend half a billion pounds on share buy-backs when they could have used that money to keep prices down for their consumers or to stop the price rises they have recently announced? It is absolutely clear that something needs to be done.

The amendments tabled go some way to trying to crowbar this issue into the Bill but, unfortunately, I do not think they go far enough. We certainly support the desire to put the requirement for further competition into the general considerations. We cannot see an argument against that and it seems very sensible.

The noble Earl, Lord Caithness, said that the Bill was all about competition. That could not be further from the truth. What the Bill actually does is deliver a system that will largely be determined by administrative negotiations between the Government and single parties quite often representing the big six. We have seen the first such announcement to emanate from this Bill, the contract awarded to EDF to build Hinkley Point C. Indeed, the noble Lord, Lord Deighton, was responsible for negotiating it. I have no doubt that he would have found it much easier to negotiate a price and length of contract that was better value for consumers if we had had more competition. What we needed was more competition in our choice of vendors of nuclear reactors. We were choosing one from one, which is never a good situation to be in.

I shall put that aside because I have used it as an illustration that the Bill does not introduce or increase competition, but narrows it. Later this evening we will debate—very briefly, I promise—my Amendment 7, which seeks to state that this contract for difference process must very quickly pass to a competitive process. It cannot continue as this bilateral, negotiated discussion behind closed doors with one or two very large companies that already play a dominant role in the market. In the interests of consumers and of competition, we must open up the whole process to competition so that we can keep prices down.

This group also contains the amendment in the name of the noble Lord, Lord Berkeley, which would split the big six. Again, we are very sympathetic. Rather than crowbar it into the Bill, we have already stated that we would use legislative powers on election to do exactly that. The argument in favour of the big six and vertical integration has always been that they need the balance sheet of the supply industry to be able to raise the finance required to invest upstream in generation, but that is not what they have been doing. They have not ploughed their profits back into investment; there has been a hiatus in investment.

The renewables industry, which has grown the most, has not relied on the big six. More than half of the investment that has gone into renewables has come from independent investors: new, independent companies. We should seek to support those companies and see them prosper. However, they report that it is becoming increasingly difficult to get power purchase agreements from the big six because they control the vast share of access to customers. Why is this? It is another clear signal that there is not enough competition in the market. We now have yet more contortions added to the Bill, such as purchasers of last resort and buyers of last resort, provisions that have been put in precisely because the big six are not offering decent contract terms to the independent investors. If that is not a signal that something is wrong, I do not know what is.

I will briefly touch on the reference made by the noble Lord, Lord Deben, to Germany. I fully support the idea that the big six should become the big 60, and ultimately the big 600. We need to democratise our generation of electricity. The signs are that it is already starting, from the man on the street fitting solar panels to communities coming together to find PV for their schools or building wind farms. Real change is happening and we must endeavour to make it happen more quickly and substantially. Only then will the big six or their equivalents be challenged. This is happening already in Germany, where after a relatively short period RWE, the giant of the German electricity industry, is claiming that its business model is broken. The support for decarbonised, community-owned power has broken that industry, which is a good thing, as it has been responsible for a huge amount of carbon emissions over the decades and has shown itself to be incapable of adapting quickly enough to the new, modern needs of electricity.

I will not go on any more. We have covered the main points: the big six system is broken and we absolutely need more competition in this market. The Bill, by introducing contracts for difference, makes it possible and credible for us to make the decisive move to split vertical integration and halt the market power that is gained from having generation and supply in the same companies. We are in principle supportive of this, and we look forward to the Minister’s response. It is a sticking plaster, but nevertheless a very important one.

[Baroness Verma]

My Lords, I thank my noble friends Lord Jenkin and Lord Roper, and the noble Lords, Lord Cameron and Lord Berkeley, for their amendments. They all relate to competition within EMR and the electricity market. I should like to reassure noble Lords across the Chamber that I fully recognise the importance of effective competition in the market. I also recognise my noble friend’s desire to help independent gas-fired generators in particular. My noble friend tabled Amendment 4 in Committee, and I have considered carefully the points he made. In particular, he said that this amendment would,

“help the Government to achieve their stated desire of having greater market competition”.—[Official Report, 18/7/13; col. GC 339.]

However, I still do not think that it will deliver the competition that he rightly seeks. We will make a difference to competition only if we take action and deliver actual reforms that are designed for that purpose.

The list of matters to which the Secretary of State must have regard in Clause 5(2) is about balancing different objectives: balancing the need to decarbonise against ensuring security of supply, and at the least cost to the customer. However, competition does not fit into such a list. We are not balancing competition against delivering decarbonisation or cost to the consumer. Competition is one of the means of minimising cost to the consumer, and the purpose of EMR is to move us to an electricity market where low-carbon generation can compete fairly on price. Amendment 4 could cause confusion as to the practical effect on the design and implementation of EMR. Noble Lords will recognise that we do not have the luxury of time at the moment, and that to understand the effect of such a change would undermine our efforts to quickly implement EMR and bring forward investment.

19:15

Amendment 5 seeks to abolish the vertically integrated business model. While I certainly recognise that vertical integration plays a part in perpetuating barriers to market entry, it also delivers some benefits for consumers through lower costs of capital, efficient risk management and economies of scale. These benefits cannot be discounted without a clear sense of what the effects of a prohibition on vertical integration might be. There is no clear evidence that the divestment of retail businesses will increase competition or lower consumer prices. Instead, we should focus on delivering reforms that we know will increase competition. For instance, it is crucial to ensuring a reliable electricity supply that independent gas-fired generation and other forms of reliable capacity can compete in the electricity market. That is precisely what the capacity market is intended to achieve. It will do this, for example, by offering longer-term contracts to each plant, which will enable them to spread their cost of capital over a longer period. This is particularly important to independent players as they rely on securing project finance rather than financing from their balance sheet, as many of the big players do.

We have sought to factor competition into EMR, designed by running competitive auctions in the capacity market and signalling a clear intention to move to competitive allocation of contracts for difference as soon as possible. Of course, CFDs themselves will enable new low-carbon generation to compete in the market. More widely, Ofgem is taking forward an ambitious package of reforms to improve market liquidity and meet the needs of independent suppliers and generators.

Under these reforms major energy companies will be required to quote and trade at prices across a range of products up to two years ahead of delivery. This will allow independent generators and suppliers to lock in prices well ahead of delivery and will therefore enable new entrants to the market. Furthermore, I amended the Energy Bill in Committee to allow for the establishment of a power purchase agreement scheme. This will make it easier for independent renewable generators with CFDs to access the electricity market by guaranteeing access to an off-taker of last resort at a specified discount to the market price. This will provide investors and lenders with more certainty over maximum long-term route to market costs, which in turn reduces risks and therefore costs.

Noble Lords will be aware of the work we have done to simplify retail tariffs and make it easier for consumers to switch. However, I can reassure noble Lords that the Government are listening to the concerns raised, and I agree that more can be done. That is why the Prime Minister has announced an annual review into the state of competition in the energy market. As my noble friend Lord Jenkin said, this review will be led by Ofgem in conjunction with the Office of Fair Trading and will draw on the expertise of the new Competition and Markets Authority. The details will be developed by the regulators and we do not want to prejudice that. The assessment may look at prices, profits, barriers to new entrants, and how easy it is for customers to get the best deal. My department will publish more details shortly.

I have met with a group of independent generators and lenders and have very much taken their concerns on board. We have indicated our willingness to look at the length of capacity agreements for new plant to ensure that we allow a long enough period to provide certainty to investors and encourage new capacity in the market at the best possible price for consumers. We are proposing a higher cap in the first capacity auction. We will continue to engage with independent gas generators and other stakeholders and have committed to further discussions during the consultation period with a view to securing the right design parameters that will support new investment in reliable capacity.

[Baroness Worthington]

I am sorry to interrupt, but I forgot to ask a question in my contribution, particularly on the capacity mechanism, in which I know the noble Lord, Lord Jenkin, is very interested. What representations have the Government had from independent gas generators on the penalty prices? We are being told that because of the way that the capacity market is stretched, they will not be able to raise finance with those punitive penalties within the capacity mechanism.

[Baroness Verma]

My Lords, while I wait for some inspiration to wing its way down to me, I will continue and respond later to the noble Baroness. I recognise what my noble friend Lord Jenkin and others have said about how liquidity reforms benefit consumers. These reforms make it easier for independent suppliers and new entrants to access the wholesale market. They will increase competitive pressure in the retail market, which will benefit consumers in terms of downward pressure on bills, greater choice, and better service, which is what I know all noble Lords want.

My noble friends Lord Deben and Lord Jenkin, and others, mentioned Ofgem’s liquidity proposal. We want to make the energy market as competitive as possible. An increasingly level playing field for independent suppliers and generators is precisely what will help drive competition, which delivers better value for consumers and business. Ofgem’s proposal to increase transparency in the way electricity is traded will give independent generators a foothold in the UK market and encourage new players to invest.

While I am waiting for inspiration, which has not quite arrived yet, I will touch on the proposals the noble Baroness, Lady Worthington, has mentioned on the price freeze. We cannot see the Labour Party’s proposals solving the problems of competition. What we see is that we will get price hikes before and after the freeze. What we need is to get a better understanding of where the Labour Party is coming from when it says that it wants to reset the energy market, because we do not know whether that is just jingoistic terminology or if there are some proposals in place.

The inspiration I was waiting for has arrived. We are engaging with industry. It said that it was pleased with our proposal for a higher cap in the first auction. I suspect that does not quite answer the noble Baroness’s question, so perhaps I will come back to her on that.

[Lord Jenkin of Roding]

I am listening with very great care to what my noble friend has said because this is all very important. She says that she has met the representatives of the industry and of their bankers and funders. Is she now saying that she will take account of what they said and of the three points they raised? My noble friend has mentioned the length of the contract; they say it must be not less than 15 years. There is the question of the penalties, which the noble Baroness, Lady Worthington, has mentioned. There is then the question of a cap. All three have to be right or, however much the noble Baroness, Lady Verma, says she wants competition she will not get in the new entrants and the independent generators.

[Baroness Verma]

My Lords, as I have said, I have taken very seriously what the independent generators and others have said to me, as well as what noble Lords have said. I think, however, that what our proposals are laying out answers many of these fears and the concerns of those generators. We of course agree that there needs to be greater competition. That is what I think this Bill will help to achieve.

I return to the penalties that the noble Baroness and my noble friend have mentioned. We have proposed cutting penalties between 101% to 149% of capacity payments in any year. We are aware of concerns from independent generators at the level of penalties, but it is crucial to balance investability against protection for consumers. The right thing is to focus our efforts on concrete actions that will make a difference by enabling low-carbon generation to compete, by helping gas-fired generators and other reliable capacity providers to remain economic and compete, and to bring reforms to the wholesale and retail markets.

I therefore urge my noble friend to withdraw his amendment. I hope I have demonstrated that the Government are taking clear action to increase competition at the same time as actively reviewing what more can be done.

[Lord Jenkin of Roding]

My noble friend went very fast, and at my age it is not always easy to hear everything that is being said. The Leader of the House is waiting to make his Statement about the European Council. I have the impression that she has been impressed by the people whom she has met and the discussions that she has had with me and others on this matter. She has given me every impression that she understands that, if these people are going to compete effectively, they have to be able to raise the finance in the market to do it.

The initial terms which the Government pointed out, as originally indicated, would apply to them would have made them say, “Well, we cannot raise it. We only have 10 years? It is impossible”. There are various other things, and we have mentioned the penalties and the cap. I understand that my noble friend has given an undertaking—perhaps she will deny me if that is not right—that she will consider very carefully what those independent generators have said and the terms and conditions that they will have to have if they are going to enter the market. If they do not, whatever my noble friend has said about competition, it will not happen.

[Baroness Verma]

My Lords, I do not want to leave my noble friend in any grey area. I have listened very carefully to him, as I always do, but I think that the proposals I have laid out will respond to him and to those independent generators. I think the proposals and the Bill and what I am taking forward do answer those concerns.

[Lord Jenkin of Roding]

My Lords, I am going to take my noble friend’s word as what I think she is intending to mean. She is not giving any guarantees, but she does apparently understand the case that has been made if the competition is going to work through the capacity market in the way in which the Government have said it would. She has been told very firmly that unless she changes the conditions it will not work. She has given me the impression—and, I hope, other noble Lords as well—that she understands that and will continue talking with a view to getting acceptable conditions. If that is the case, it would seem to me to be quite wrong that I should take the opinion of the House. In those circumstances, I beg leave to withdraw the amendment.

Amendment 4 withdrawn.

Amendment 5 not moved.

Consideration on Report adjourned until not before 8.27 pm.

EU Council

Monday 28th October 2013 Lords Chamber

Statement

19:28

[The Chancellor of the Duchy of Lancaster (Lord Hill of Oareford) (Con)]

My Lords, with the leave of the House, I will now repeat a Statement made in another place by my right honourable friend the Prime Minister. The Statement is as follows.

“In the past 24 hours the country has been hit by one of the worst storms for many years. I know that the thoughts of the whole House will be with the families and friends of the four people we know have lost their lives. I am sure the House will join me in paying tribute to our emergency services and to all those who have been working to clear up the debris and get our transport system moving again. All the agencies involved are working as fast as possible to get things back to normal.

Let me turn to last week’s European Council. The key subjects under discussion were business regulation, competitiveness and monetary union. We also discussed migration policy, following the Lampedusa tragedy, and the importance of the EU’s Eastern Partnership, specifically with respect to Ukraine. So the background to this Council was the state of the European economy.

There is no doubt that the outlook is better than it has been, and particularly here in Britain where Friday’s figures showed the fastest growth for three years. My aim at this Council was to do everything possible to enhance the prospects of a sustained, balanced recovery here in the UK. We made good progress on three areas in particular: cutting red tape; promoting trade and the completion of the single market in digital and services; and protecting British interests as the eurozone integrates further.

Let me briefly say a word about each. First, on cutting red tape, Britain’s Business Task Force produced an excellent report which was endorsed by a hundred European businesses. I chaired a meeting bringing members of the Business Task Force together with President Barroso and the leaders of Germany, Sweden, Italy, Poland, Finland, Estonia and the Netherlands. These countries representing all parts of Europe and all political traditions agreed on the need to make more progress in cutting regulation and helping businesses across Europe to create jobs, and the strong language adopted in the communiqué by all EU member states reflects this. It calls for rapid implementation of REFIT, the Commission’s own bureaucracy-cutting initiative, and a proper scorecard to measure exactly how much regulation is being cut. Deregulation is now part of the EU agenda in a way that it simply has not been before.

Secondly, on trade, we welcomed the conclusion of the EU-Canada trade deal. This new deal could be worth £1.3 billion to the British economy, with estimates suggesting British exports to Canada could go up by as much as a fifth. Last week’s agreement also means we can now move the focus on to the EU-US talks which we began at the G8 in Lough Erne. There were some attempts to link this potential US trade deal with concerns over US intelligence, but the Council rejected this idea.

Turning to the digital single market, once again the commitment was made to complete this by 2015, potentially boosting growth by as much as 4% of the EU’s total GDP. As Britain is a world leader in e-commerce, this is very much in our interests. We made good progress at the Council on issues like portability of data, e-identification, e-invoicing and payment services and an EU-wide copyright regime for the digital age, but we also agreed not to rush ahead with the data protection directive on an artificial timetable because the current draft has disproportionate burdens on small business and they need to be removed. In terms of the services directive, we agreed that it was time to look at a new sector-by-sector approach rather than just trying to remove all the outstanding barriers to free trade in services in one go—a process that has stalled in recent years.

Thirdly, on defending Britain’s interests, as I have argued repeatedly, the European Union is changing and the eurozone needs more integration and co-ordination. But Britain is not in the single currency, and we are not going to be, so we should not have to take part in these additional bits of co-ordination, whether they cover economic or social policy. So while members of the eurozone agreed to even more intrusive policy co-ordination, including on social policy, I was clear that Britain will not take part. This is reflected in the communiqué which says that all changes are voluntary for those countries not in the single currency.

On the tragedy at Lampedusa, we agreed the next stages of the work of Frontex, which is responsible for trying to stop people coming to the EU in the first place, but we rejected the idea that there should be additional burden-sharing for so-called ‘front-line states’, not least because, if you look at the figures, Britain, France, Germany, Belgium and Sweden between us received almost 70% of asylum applications recorded in the EU in the past 12 months. What is most important of all is helping to stop the problems at their source. The UK will continue to play a leading role in this: for example, through support for border security in Libya and the focus of our development assistance on helping countries that are at risk of instability. On the Eastern Partnership we agreed that countries which look towards Europe for support, such as Ukraine, should be free to enter into agreement with us while, of course, continuing to insist on proper standards of governance and justice that such a relationship should entail.

Finally, because of the recent controversies there was much discussion about the role of intelligence agencies. We agreed a statement signed as Heads of Government—because there is no EU competence in this area and nor should there be—that said European countries and America should have a relationship based on trust and that damage had been done by recent revelations. The UK has a very strong, long-standing trust-based relationship with the US, not least as part of the Five Eyes partnership together with Canada, Australia and New Zealand. In terms of our own intelligence services, we have a long-standing tradition that we do not comment on intelligence matters. We have parliamentary scrutiny of our intelligence agencies through the Intelligence and Security Committee and we have strengthened that oversight. Our agencies operate under the law and their work is overseen by Intelligence Commissioners. Of course, as technology develops and the threats we face evolve, so we need to make sure that the scrutiny and frameworks in place remain strong and effective. But we have every reason to be proud of our intelligences services and the way in which they are properly constituted in our country.

Since 2000, we have seen serious attempts at major acts of terrorism in Britain typically once or twice a year and, since 9/11, 330 people have been convicted in our courts—here in the UK—of terrorism-related offences. This year alone, there were major trials related to plots, including plans for a 7/7-style attack with rucksack bombs, two plots to kill soldiers and a failed attempt to attack an English Defence League march using an array of lethal weapons. There were guilty pleas in each case and 24 terrorists were convicted and sentenced to more than 260 years in jail. I quote these figures to demonstrate the scale of terrorist threats still facing this country.

Our intelligence has also allowed us to warn our EU allies about terrorist plots aimed at their people, cyberattacks on their businesses and infrastructure and attempts in their own states illegally to traffick drugs, people, arms and money. Our intelligence officers serve our country without any public recognition. Some have given their lives in this service and yet their names are not known and their loved ones must mourn in secret. We owe them, and every intelligence officer in our country, an enormous debt of gratitude. These silent heroes and heroines are keeping our country safe. They deserve our wholehearted support. I commend this Statement to the House”.

My Lords, that concludes the Statement.

19:37

[Baroness Royall of Blaisdon (Lab)]

My Lords, I am grateful to the noble Lord the Leader of the House for repeating the Statement made by the Prime Minister in the other place. I start by sending deepest condolences from these Benches to the families of the people who have died during the storm conditions in the past 24 hours. I also join him in thanking the emergency services for the work that they have done overnight to protect people and the work they are now doing to clear the debris. I would be grateful if the noble Lord could update the House on the 270,000 homes without power in south-west England, East Anglia and the Midlands, and if he could inform the House how long it is expected to take for the power to be restored.

On the European Statement, I join the Leader of the House in his support for the work of our intelligence services. It is vital, it keeps us safe, and by its very nature it goes unrecognised. I also join him in applauding the men and women who work for our services. On these Benches we support the summit’s statement on this issue. We can all understand the deep concerns that recent reports have caused in some European countries, especially Germany, so as well as providing that support for intelligence services it is right to ensure proper oversight of those activities.

I turn to the formal agenda of the summit. First, on trade, we welcome and support the conclusion of the Canada-EU trade deal and agree with the focus on the US-EU trade agreement. At the start of this year, a timetable for December 2014 was set to complete negotiations. Can the Leader set out any further developments on this challenging timetable and its feasibility? Does he agree that the possibility of this agreement is an important reminder, including to his Cabinet colleagues and much of his party, that a prosperous future for Britain lies inside, not outside, the European Union?

Secondly, we all agree that completion of the digital single market could have a significant impact on our prosperity. On numerous occasions the Government have stated their commitment to expand the single market in digital services. Will the Leader please tell us what has been achieved at this summit that was not achieved on previous occasions? Will he explain why the Prime Minister pushed for delay to the data protection directive, which would have enhanced citizens’ privacy across Europe?

On regulation, we will, naturally, look at the proposals of the task force. We agree with the need to restrain unnecessary regulation and welcome any progress on this, but we need to distinguish between good and bad regulation. Cutting bureaucracy and red tape can be welcome, where appropriate, but the Government’s emphasis on cutting red tape for business is in stark contrast to the red tape which they seek to impose on charities, the voluntary sector and unions in the transparency of lobbying Bill.

With regard to the task force’s report, does it really make sense to scrap new rules providing transparency about where the meat we eat has come from, in the light of the horsemeat scandal earlier this year? What about rules on agency work? They play an important role in deterring employers from using low-wage migrant labour to undercut local workers, but the task force says they should be watered down. What reassurance can the noble Lord provide that this will not simply mean cuts in wages and employment conditions—that is to say, a race to the bottom?

In relation to the tragedy at Lampedusa, I agree with the noble Lord that it is of the utmost importance to help stop the problems at their source and that the focus of our development assistance is on helping countries at risk of instability.

On broader economic policy, I note what the Prime Minister said at the end of his European summit press conference: that his priority was now to make sure it is a recovery for all. Does this represent an acknowledgment that, despite the welcome news on growth, millions of people still feel worse off because of the cost of living crisis? The Prime Minister also said after the summit that he wanted to help people “excluded from our economy”. That includes youth unemployment, mentioned in the communiqué. The shameful truth is that nearly one in five unemployed young people in Europe lives in Britain and those who are employed are often vastly overqualified. I am currently seeking a nine-month maternity cover for my PA/office manager and, of the tens of applications I have received, most are from people with a master’s degree and some have doctorates: many of them are working as unpaid interns. Something is wrong. The Government’s youth contract has recently been branded a failure by their own advisers.

What did the Prime Minister say at the summit about the changes needed in Britain when it comes to youth unemployment? For people struggling with their energy bills, seeing their wages falling, and for young people looking for work, is it not true that nothing is different after the summit than it was before? I fear that this European summit will feel like a lost opportunity for the citizens of the European Union, who share a common concern about growth, jobs and the cost of living.

19:42

[Lord Hill of Oareford]

My Lords, I am grateful to the noble Baroness the Leader of the Opposition for her remarks about the efforts being made by the emergency services and various companies to respond to the effects of the storm. I am not able to give her precise figures, but they are working flat out to help people caught out by the storm. I agree very much with what she said about our intelligence services. It is important that there should be rigorous oversight. We have that and it is right that we should do so.

On the subject of timing in relation to trade and Canada, the significant decisions on the deal have been taken so we are not expecting it to take long to resolve the remaining issues. I cannot give a precise timetable for the EU-US talks. The potential benefits of such a deal are, obviously, far greater than the EU-Canada deal. There was some possibility of an attempt to slow down the timetable for the EU-US talks at the European Council. That was resisted and the focus will now switch to trying to make progress on it.

There is a fair bit of detail in the communiqué about what was achieved on digital services. The real impetus of the Council was in terms of the digital single market, on which a number of conclusions were reached. It is very much in our interests that we make progress on that. We have a very active e-commerce sector which we need to capitalise on. There was a restatement of the timetables and an agreement to refocus efforts to make progress.

On the data protection directive, as the noble Baroness said, it is clearly the case that proper concerns about data protection must be addressed. There was no agreement to the earlier timetable which we sought because of concern about the cost which might be inflicted, particularly on small businesses—estimated at up to £300 million—by the over-early implementation of such a directive before the details were thrashed out. The position reached was to work on that—not to resile from it but to try and make sure that, when it is introduced, we do not have an unforeseen effect on small business.

There was significant progress made on regulation, not just here but reflecting a continuing process whereby the UK, working with its allies, is trying to shift the emphasis in a more deregulatory direction. This relates, in a way, to the noble Baroness’s final question about what difference this summit has made. The work of our own business task force contributes to that, as does the work the Commission itself is doing through the REFIT initiative, working in tandem with it.

As the noble Baroness says, there is good regulation which can increase competition, and there is regulation which harms prospects for employment or growth. We all agree that the urgent priority at the moment is to make sure we have economic growth across Europe so that more people can benefit from it, particularly the young. I know that the noble Baroness is concerned about youth unemployment. We all want to see much faster progress but, since the general election, the total number of young unemployed people has fallen by nearly 80,000. Our level is below the EU average and below that of France and of Italy. We have been creating more training opportunities, which are part of the solution. The noble Baroness will know that the number of apprenticeships has grown enormously: we have doubled the number and this is also part of the solution. The 1.4 million private sector jobs created since the general election are also helping. Altogether, the number of NEETs is now the lowest it has been for a decade. There is obviously an awful lot more work to do and ultimately the process starts with what goes on in schools, where we must try and make sure our young people have the skills they need to equip themselves for the growing number of available jobs.

19:47

[Lord Alderdice (LD)]

My Lords, I would like to identify these Benches with the condolences to those who have been bereaved, the sympathy for the injured and the appreciation of the tremendous efforts being made by the emergency services in dealing with results of the storm.

I thank my noble friend for repeating the Statement made in another place by the Prime Minister. Much of it encourages me. I am encouraged to see improvements in our own economy and more widely. Thoughtful and appropriate deregulation is a useful step forward, although we have to be careful. Wider trade deals are bound to be very welcome, and that with Canada, with which we have such a long and friendly relationship, is particularly so, both for itself and for what it may lead to in the rest of North America.

I am also encouraged by developments on the e-commerce front although, as the Statement made clear, we have to be careful as it also opens opportunities for e-crime. I rather suspect that your Lordships’ House will have to face rather complex legislation over the next few years to deal with many aspects of this. It will not be easy because it will be a challenge for all of us to know exactly what we are legislating about in this area and to keep up with the changes.

I am encouraged by the clear statement that the way to deal with immigration problems is not to create a fortress Europe but to address the needs and problems of the countries from which people flee. They do not come because they are happy in their own countries: they come because they do not have a good future there. We have to try to help them improve on that.

Coming from my part of the United Kingdom, I have a particular perspective and a deep appreciation of the work that the intelligence services have done for us over many years in ensuring that our community did not fall apart and that we were able to engage later in a peace process. The intelligence services do important work for us and it is silent work at its best.

However, one part of the Statement gave me a little cause for concern. It was what the Prime Minister said in respect of countries outside the European Union and the eastern partnership. He said that we continue,

“to insist on proper standards of governance and justice that such a relationship should entail”.

Our right honourable friend the Prime Minister is right about that but in one country within the EU, Hungary, those standards of governance and justice simply do not apply any more, and it has been getting worse for a number of years. Sadly, this has been happening under the prime ministership of Viktor Orban. I knew him many years ago when he was, as he still is, the leader of Fidesz—in those days the young liberals. He was, like me, a vice-president of Liberal International and we served together on the officers’ board. I well remember the first thing that he did. Fidesz, because it consisted of young liberals, had a rule whereby when you were over 30 you had to resign and join the Alliance of Free Democrats. What did Viktor do? When he reached 30 he changed the rules, which has been and still represents one of his characteristics. When the rules tend to take away some of his power, he simply changes the rules. I remember well a meeting of the committee of Liberal International when he walked out and said that he was going to join a more conservative group. That is what he did and he has produced a more authoritarian country. My concern is that the Prime Minister entertained him in Downing Street this month before the European Council and friendly photographs are being used by Mr Orban in Hungary to show that this country is supportive of him. I seek a reassurance from my noble friend that the Prime Minister is pressing Mr Orban to address the real problems of authoritarianism, anti-immigration and the destruction of European values in that important part of the European Union.

[Lord Hill of Oareford]

My Lords, I shall not resist the temptation to say that my noble friend has highlighted some of the dangers of joining the young liberals. I know that he makes a serious point about his concerns.

I am grateful for his support for the Statement more generally. I am sure that many will have heard his remarks about Hungary. As with all EU member states, Hungary is subject to clear obligations and has to adhere fully to the laws and values of the Union. I am sure my noble friend knows that earlier this year the Commission launched a detailed review to ensure that newly introduced legislation in Hungary was brought into line with accepted EU standards. I understand that Hungary has engaged with the Commission on that review and is making changes to its constitution that have addressed many of the concerns. We welcome Hungary’s engagement with the Commission on areas that fall within EU competence.

[Lord Davies of Stamford (Lab)]

My Lords, the noble Lord, Lord Alderdice, quite rightly was given a lot of scope because what he said about Hungary was well said. The progress on deregulation at the summit and the decision not artificially to hold up the progress of the US-EU trade negotiations are welcome. They will of course take a long time anyway. Is the noble Lord aware of any member state other than the United Kingdom which has made a public statement that on a permanent basis it will not join the banking union that is being put together? Is he aware of the substantial evidence presented to your Lordships’ Sub-Committee A by a series of witnesses and experts to the effect that if we remain outside the banking union our financial services industry will have an increasing handicap competitively over a number of years and we will end up paying a significant economic price for doing that?

[Lord Hill of Oareford]

I am grateful to the noble Lord for what he said about progress on regulation. We keep chipping away at this and there has been progress. The fact that seven countries joined the UK in lending support to the report produced by the British Business Task Force shows that there has been a shift. The Prime Minister has been working hard in that respect, particularly with Chancellor Merkel. I am also grateful to the noble Lord for what he said about how vital the EU-US talks are. I understand the noble Lord’s views on banking union. Obviously, the Government take a different view and their position has not changed as a result of the recent European Council.

[Lord Tugendhat (Con)]

My Lords, I, too, associate myself with what has been said about the emergency services and the intelligence services. I was encouraged by what my noble friend said about the deregulation agenda. In particular, I noted that the Prime Minister had chaired a meeting that brought together the leaders of a number of countries with President Barroso. There is of course a big difference between countries agreeing on the need for deregulation in general and agreeing on what precisely should be deregulated. Can my noble friend enlighten the House—if he cannot do so now, perhaps he can in some other way—as to the degree of agreement on the range of regulations and directives that ought to be repealed?

[Lord Hill of Oareford]

I am not sure that I can enlighten the House on a huge amount of detail but there are two strands to what the Prime Minister and those who agree with him in the EU are seeking to achieve. One is that the Commission has its own process under the REFIT programme that my noble friend will know about, which is coming up with a series of regulations, measures and so on that it thinks could be repealed, not introduced or otherwise revised. That is a Commission-led process. Alongside that, the Prime Minister has been working with British business, and the British Business Task Force has been working with European businesses, to come up with suggestions from a business perspective regarding further changes that could be made. A twin-track process is going on. One track is led by the Commission and, in the other, Britain with its allies is trying to take forward this issue of how one can have the right amount of regulation that will not hold back economic growth, which is our priority, and get that balance right.

[Lord Deben (Con)]

Does my noble friend agree that the opposition Front Bench was a little curmudgeonly in the second part of its response on youth unemployment, given that this Government have done remarkably well on unemployment during a very difficult time? Was it not also true that his Statement showed just how important it is for Britain to be a full member of the European Union? None of these things would have happened in the way they have and to the degree they have had not the Prime Minister taken an active part. Is it not time that people stopped complaining about the European Union and in fact spent their time improving it in the way in which the Prime Minister is clearly doing?

[Lord Hill of Oareford]

My Lords, I would never—although perhaps I might occasionally—accuse the noble Baroness, Lady Royall, of being curmudgeonly. My noble friend is quite right about what has been achieved in terms of generating jobs generally and the improving trend of economic figures that we are beginning to see. There is much more to do but there has definitely been progress. He is also right about what has been done to tackle youth unemployment. On his broader point, the Prime Minister has demonstrated that it is possible both to argue strongly for Britain’s national interests and to build alliances with other similar-minded countries in Europe to bring about change for the common good. The issue is sometimes presented as a false dichotomy, whereby if you argue for Britain’s national interests you jeopardise your influence within Europe and you either have to go with the consensus or become an outist. The Prime Minister has set out that one can argue very strongly from within the EU for what is in the interests of the whole of Europe as well as Britain.

[Lord Phillips of Sudbury (LD)]

My Lords, will my noble friend say a word more about trust in politics as he very wisely referred to it early on in the Statement. It seems to many here today that there is a slow but very worrying creep of disaffection across Europe with democratic politics. There can be no more signal demonstration of the cynicism that exists in some parts of the political establishment at the very highest levels than the bugging of the phone of Angela Merkel. I suspect that tens of millions of people will have noticed that who do not notice much else—good things—about the world they live in.

My question is this—I apologise if it is a question that cannot elicit a direct reply. Is there any consequence to that extraordinary event? It must have been a criminal offence in Germany and in the United States. Is there any accountability for what happened?

[Lord Hill of Oareford]

My Lords, I will make two points in response. First, my noble friend is right to point to a growing disaffection across Europe with the institutions and processes of the European Union. One of the things that many people are trying to work for is to bring the work of the Union more into contact with the everyday concerns of the citizens of Europe and overcome this growing democratic deficit as people call it. That is something that my right honourable friend the Prime Minister would say he is seeking to pursue by arguing against measures that would affect British businesses, choke off growth and all the rest of it.

Regarding the point about telephones, as my noble friend knows, he will not tempt me to comment in any detail on the work of our intelligence services. The leaders at the Council issued a statement after a great deal of thought in connection with the issue he raised and that has set out a way and a process in which the French and the Germans will talk to the Americans about what may or may not have gone on.

[Lord Brooke of Sutton Mandeville (Con)]

My Lords, paragraph 10 of the European Council conclusions that accompanied this Statement stated that the EU was in 2011 faced with 300,000 unfilled vacancies in the ICT sector. It added that if this trend was not checked there could be 900,000 unfilled vacancies in the sector by 2015. Could my noble friend contemplate covering a domestic omission in this Statement by putting in the Library a breakdown of the UK’s statistics within these EU-wide figures?

[Lord Hill of Oareford]

I am afraid, my Lords, I do not know the basis for the calculation made by the EU and whether it was based on data drawn from individual member states. If there are any data I can find I will, of course, let my noble friend have them, but I cannot say with any certainty what the basis of that calculation was.

[Lord Flight (Con)]

My Lords, I cannot entirely agree with the comment of the noble Lord, Lord Davies, that Sub-Committee A was of the view that the UK would suffer if it did not join the banking union. The point was surely that the body to which the ECB is accountable has a voting structure and if virtually all EU members did end up joining the banking union, theoretically it would then be possible for it to tell the UK what to do. In the negotiations over the banking union this country should ensure that the independence of banking policy is safe.

[Lord Hill of Oareford]

I completely understand the points that my noble friend makes. Those are very alive in the minds of our Ministers and officials negotiating this because they are keen to safeguard the position that my noble friend sets out very clearly.

[Lord Marlesford (Con)]

My Lords, I was very glad to see in the Statement the sentence:

“Deregulation is now part of the EU agenda in a way that it simply has not been before”.

I noted the distinguished membership of the meeting chaired by the Prime Minister on the Business Task Force report, including President Barroso and the leading countries in Europe. There was a startling and very prominent absence from that list of countries, which was France. Would I be right in thinking that part of the reason for France’s absence is that it does not share our approach on this matter at all? The biggest single bit of business regulation—and I would argue the most unjustified—that the French go in for is the 35-hour week, which is policed by a mixture of inspection and denunciation, which must be very bad for the business sector in France. Perhaps, in that sense, a bit of schadenfreude might be in order, but I do not express it. I say that it is wrong that the EU, if it means anything on these matters, should have such an example of business regulation.

[Lord Hill of Oareford]

My noble friend is right that the French approach things differently from us. When he talks of schadenfreude, the point to which I would refer him is the fact the Germans were there at the Prime Minister’s launch. Those who have, like my noble friend, studied the dynamic within Europe over a very long period of time would recognise the relationship between the UK and Germany. The work that my right honourable friend the Prime Minister has put into trying to strengthen that relationship is an important part of helping to counterbalance some of the views held by other member states to which my noble friend refers.

[Baroness Royall of Blaisdon]

With the permission of the House, perhaps I may ask the noble Lord to comment on the contrast between the search for deregulation in the business sector, which in many ways we welcome, and the imposition of bureaucracy and red tape on charities, trade unions and the voluntary sector in the Transparency of Lobbying, Non-Party Campaigning and Trade Union Administration Bill?

[Lord Hill of Oareford]

As the noble Baroness would expect me to say, these are different matters. I refute her point that the proposals on charities in the Bill would be as intrusive and destructive as the kinds of regulatory burdens that are operating in some ways within Europe, which we seek to remove. Like the noble Baroness, what one always wants is a proportionate approach in all areas.

European Public Prosecutor’s Office: EUC Report

Monday 28th October 2013 Lords Chamber

Motion to Take Note

20:10

Moved by

[Lord Rowlands]

That this House takes note of the Report of the European Union Committee on the Commission proposal for a Council Regulation on the establishment of the European Public Prosecutor’s Office (COM(2013)534, Council Document 12558/13) (3rd Report, HL Paper 65).

[Lord Rowlands (Lab)]

My Lords, I beg to move the first Motion on the Order Paper in the name of the noble Lord, Lord Boswell. The noble Lord, Lord Boswell, and the noble Baroness, Lady Corston, present their apologies. Both are attending the COSAC meeting in Vilnius. As a member of Sub-Committee E, which prepared this report, I have the pleasure of inviting the House to agree to its recommendation. That recommendation is that the House issue a formal reasoned opinion that the Commission’s proposal to create a European Public Prosecutor’s Office breaches the principle of subsidiarity.

The principle of subsidiarity enshrined in Article 5 requires that the EU should take legislative action,

“only if and in so far as the objectives of the proposed action cannot be sufficiently achieved by the Member States … but can rather, by reason of the scale or effects of the proposed action, be better achieved at Union level”.

No one now denies that there are significant problems with European Union fraud. Indeed, it was our committee which sought to highlight this point in its April report when it suggested that European fraud now ran to the tune of about £5 billion a year. We recognise that there are considerable shortcomings in the system for combating such fraud. We are not arguing this evening that one does not need to address these issues seriously but about in what way one should address them.

The Commission has now come up with the proposal that the way to deal with European fraud is to create a new supranational European body, with an independent power to investigate and prosecute EU fraud offences in national courts, called the European Public Prosecutor’s Office, or EPPO. Our report outlines, in detail, the structures and powers of the proposed public prosecutor’s office. I will identify some of the features that concern us most. The European Public Prosecutor’s Office will have a very wide jurisdiction as to what it investigates and prosecutes. Although the definition of European fraud has yet to be firmly fixed, it will be very likely to encompass any act or omission which has the effect of wrongly acquiring or retaining EU funds or assets or which results in the diminution of European Union revenue. It would include, for example, incitement, aiding and abetting such offences, and corporate criminal liability.

The committee was particularly concerned about the proposal for the prosecutor’s office to gain exclusive jurisdiction over any other offence which is inextricably linked to a European fraud offence. That has the considerable capacity to further expand and involve the office in national jurisdictions and expand its own jurisdiction. We should all be concerned at the nature and potential character of that proposal.

The proposed office will also have exclusive power to investigate and prosecute a wide range of offences. It will have a wide range of investigative powers such as the right to search premises and intercept telecommunications, to be exercised in accordance with national law and subject to obtaining a judicial warrant where national investigators would be obliged to obtain one. It can require information and assistance from national authorities. The proposals also suggest that it can operate under its own rules on the admissibility of evidence.

The committee, in considering these proposals, concluded that the proposal fails the subsidiarity test. The report lists nine bullet points at paragraph 14 to justify that opinion. I will briefly underline or summarise a few of them. First, we suggest that there are better alternatives, based on the current framework, which is built on criminal enforcement by member states. More can be done to prevent fraud happening in the first place through good quality legislation and careful administration of resources by the Commission and member states. We should remember that 80% of all European Union funds are administered by member states themselves. That is a vital factor, which should be taken into account. Co-ordinated action needs to be improved, but we do not believe that this particular proposal for this particular kind of office is justifiable.

The EPPO would undermine the effectiveness of existing EU fraud-fighting organisations such as Eurojust and OLAF. Giving the EPPO exclusive competence would create an unnecessary faultline between national and European Union efforts to counter fraud, introduce complication, and risk the moral hazard that member states will feel that they can leave EU fraud to the European Public Prosecutor’s Office. By contrast, it must be a shared responsibility, particularly given that, as I emphasise again, 80% of all European Union funds are administered by the member states themselves. Our committee was concerned that the proposal would interfere disproportionately in the sensitive area of member states’ criminal law systems, by conferring exclusive powers on the public prosecutor’s office and giving it power to dictate how finite national criminal law enforcement resources are deployed and by allowing it to operate according to its own rules on the admissibility of evidence.

Our committee found that the Commission has not made its case adequately. It underestimates the costs and overestimates the benefits of such an office, particularly as at least two member states, the UK and Denmark, will not be participating. The Government have made it clear that the UK is not going to opt into this proposal and, indeed, that a referendum would be required for it to do so. It is nevertheless, in our view, appropriate for this House to issue a reasoned opinion, and it does not absolve the House from coming to a position on the issue of subsidiarity. All national parliaments have a special role to play in monitoring compliance with subsidiarity in accordance with the treaties, and many national parliaments have been very active on this proposal.

Although Article 86 of the Lisbon treaty specifically envisaged the creation of a European Public Prosecutor’s Office, that does not undermine our reasoned opinion. First, the article is permissive. Our opinion is consistent with the treaty—we do not challenge the right of the EU to create such a body, but are saying that this particular set of proposals is far-reaching, intrusive and infringes the principle of subsidiarity. Under the subsidiarity procedures, national parliaments can force European institutions to review a proposal—it requires, as I understand it, 14 parliamentary votes across the union. Fascinatingly, there has been, in the past few weeks, a growing groundswell of parliamentary opinion across the union critical of these proposals. I understand that we have already reached 14 parliamentary votes and five more are in the pipeline including, I hope, in this House tonight. The House should support the report and our reasoned opinion, and put further pressure on the Commission to review these radical and unacceptable proposals.

[Lord Hodgson of Astley Abbotts (Con)]

My Lords, I rise to support the noble Lord, Lord Rowlands. He has laid out the case as to why this proposal to establish a European public prosecutor’s office does not comply with the principle of subsidiarity with forensic skill, and I will try to avoid repeating what he has said.

I was a member of Sub-Committee E, both at the time of issuing this subsidiary assessment and of the publication of the report, The Fight Against Fraud on the EU’s Finances. That report found that there appeared to be a significant level of fraud within the EU budget, and that official figures appeared, at least to us, to significantly underestimate the volume and value of that fraud. Therefore, at first blush one has some sympathy with a proposal that appears to have as its objective, the sharpening up of the organisational response to these defects. Further to that, our report found significant weaknesses in the work of the European anti-fraud office, known as OLAF, which included tensions between the supervisory committee and the executive arm of the agency; frequent turnover of representation so that consistent policies were not followed through; an absence of classification of fraud offences, which the noble Lord referred to; a reluctance to name and shame countries where it appeared that fraud was taking place; and last but not least, a lack of will among member states to report and follow up suspected cases of fraud.

To be fair to the commission, it has put in place a number of measures to improve OLAF’s operational efficiency, notably the regulations adopted just six weeks ago on 11 September. However, one of the more depressing features of the Brussels bureaucracy—at least to a Euro-agnostic like me—is the tendency, where an organisation is not operating up to par, not to undertake a serious attempt to improve the efficiency, but instead to pile on top of, or in this case alongside, that organisation yet another body to look after it. It is almost certain that an EPPO operating alongside OLAF and Eurojust will surely only serve to undermine OLAF’s work at this time, when the recent changes just introduced, as I mentioned, should give it a new sense of purpose and direction.

I particularly share the view expressed in the report that the anticipated costs of running the EPPO are woefully understated; a net annual cost of just €6.1 million is surely not credible. The reason for the subsidiarity judgment is that the fight against EU fraud needs to be developed from first principles, and they can be done without the introduction of the EPPO. The Commission needs to improve the clarity of its budgeting system; improve its own systems for overseeing that budget; and work more closely, where appropriate, through OLAF and Eurojust with member states so that they investigate and prosecute fraudulent activity with vigour and purpose.

The noble Lord, Lord Rowlands, quite rightly focused on the impact of this proposal on the national criminal law systems of individual member states. He was right to do so and I support him. However, I believe that even if it were possible to overcome these principle objections—and I, for the record, do not believe this would be possible—establishing the EPPO would, on purely practical grounds, likely offend the principle of subsidiarity and undermine the existing organisations of OLAF and Eurojust at the same time.

My concern on this point was underlined by the Written Statement published in Hansard on 15 October, which states:

“Vice President Reding presented her recent proposals for the creation of a European Public Prosecutor’s Office … There was support, in principle, from a large proportion of Member States … but less agreement on issues of substance, including scope; structure; competence; powers; jurisdiction and governance”.—[Official Report, 15/10/13; col. WS 52.]

In effect, the EU member states could not agree how this thing should be proceeded with on any practical level, and that is why I support this reasoned opinion.

[Lord Dykes (LD)]

Since my noble friend described himself as a Euro-agnostic, I do not think I would offend my friend—not noble friend—on the Labour side if I called him a Euro-realist or sometimes a Euro-hesitator about a number of aspects which he analyses with great precision. I am an unashamed Euro-enthusiast and yet, none the less, I think there is agreement about this particular document and report as was seen in the way in which we couched our recommendations having studied this matter carefully.

The European Union is evolving after the Lisbon treaty in what I hope will be a gradually accelerated fashion. It is inevitably slowed down by the realities of economic austerity and slowed down in the national economies of all the member states, not just the leading ones. That is a reality that we see, as well as the constant difficulty of blending different national cultures in all sorts of areas. Perhaps one of the most difficult areas is the law and the legal sector, because of the noticeable difference of the Anglo-Saxon legal system, mainly in the UK and Ireland, the Roman legal systems of the other member states, mixed with some of the new member states since 2004.

That is just the reality; it is not to be hostile to the evolution of Europe by annunciating those realities that we are facing in all sorts of complicated sectors. This one is particularly complicated, and I think that this is an occasion where the member states expressed a general support for the notion and the concept, but maybe for the future, as the noble Lords, Lord Rowlands and Lord Hodgson, mentioned without going into the details. Subsdiarity must be a real element of the Lisbon treaty in order to provide reassurance to the national publics of each member state, particularly the one in this country, which is particularly fragile in its Euro-hesitation; this disturbs me greatly because I think it is unnecessary, but it is because of the fight between the political parties and the rise of UKIP. It is necessary to balance all those things and not to rule out this concept for the future.

There is every prospect that the EPPO concept itself will gain confidence if it goes slowly forward but the national legal systems demand that the national prosecutorial authorities have the upper hand in the initial stages of that timeframe, which may be quite long, over a number of years, to gain reassurance. We have the co-operative tradition anyway between the forces of law and order in the European cockpit. Europol is proving to be a great success—under a UK executive head, I am glad to say—and is developing apace, and so are the other instruments that were mentioned by the two previous speakers in this debate.

If that is the way to do it, it may be that in future the EPPO will have a pragmatic construct, a special piece of instrumentation by way of a regulation agreed between the Council and the European Parliament that would include the national prosecutorial authorities inside the EPPO system to reassure the public, who will feel that subsdiarity will have therefore been satisfied. Our need for subsidiarity in a number of areas needs to be expressed. People should not be nervous about doing that. This is a classic example. I am very glad to be on the same committee as the noble Lord, Lord Hodgson, and to support enthusiastically this recommendation.

[Baroness Smith of Basildon (Lab)]

My Lords, I thank my noble friend Lord Rowlands for his explanation of the committee’s report. There seems to be a remarkable degree of agreement between us all this evening. I am pretty sure that the Minister is not going to demur from that.

This is a very detailed technical issue and it is quite clear from the speeches we have heard that not only does it deserve detailed scrutiny, it has received that scrutiny. This is not a new proposal. It has been raised on a number of occasions. The negative response from the Government is not new either.

Even before the 2001 Green Paper from the Commission first proposed a European public prosecutor, the idea had been discussed, particularly in discussions on the Nice treaty, when an outline proposal was put forward but then dropped through lack of member state support. In response to the Green Paper, the European Scrutiny Committee in the other place reported in 2002, saying that it was,

“unnecessary, particularly given the existence of Eurojust”.

At that time, the committee identified a number of concerns. Those concerns remain, for example: the combination of prosecution and investigative functions; the power of the EPPO to commit a person for trial and determine the location of the trial; the creation of differing standards of criminal responsibility for fraud depending on whether or not it related to fraud on the community’s financial interests; the lack of democratic accountability for the prosecution function; and, of course, the breach of the subsidiary principle and dilution of member state responsibility for prosecution of fraud.

Since then, the creation of a specialist EU prosecution authority has been raised again but still has not gained the support it would need to proceed. The 2011 European Scrutiny Committee echoed the concerns of the 2002 committee when, in recommending the 2011 communication for debate in the European Committee, it cautioned against the “inappropriate and unacceptable” use of national criminal justice systems in acting against crimes against EU finances.

However, as my noble friend Lord Rowlands made clear, it is fair to say that this proposal has not been thought up in a vacuum. It seeks to address a genuine problem and we recognise the seriousness of that problem, which is that there needs to be greater protection of the EU’s financial interests and we need to see further improvements in how the EU deals with fraud. The level of suspected fraud against the EU budget is obviously and rightly a source of concern. The report refers to the Commission’s estimate that it stands at around €500 million, or £425 million, in each of the last five years. British taxpayers bear part of the cost of that fraud, which is totally unacceptable. We must seek new and better ways of tackling this fraud, preventing it and bringing those responsible to justice.

The question that the European Union Committee was looking at was: is the EPPO the best way of achieving this? We again concur with the committee’s conclusion that it is not. We made our position clear when in government, and that has not changed. Our position remains, as my noble friend Lord Rowlands outlined very clearly, that the proposal for an EPPO breaches the subsidiarity principle. It is clear that the national-level approach, supported by existing EU mechanisms, is more appropriate.

When we signed the Lisbon treaty, we made it clear that although the treaty could allow for such an office, we were strongly against it, as the noble Lord will recall. We insisted on a “double lock” to ensure that it could not be established. Indeed, your Lordships’ House was, as always, very diligent in its scrutiny of this measure and, following debate, supported the position made very clear by my noble friend Lady Ashton of Upholland in 2008, when she said:

“We have secured legally watertight safeguards in the treaty against any move towards a European public prosecutor or subsequently, and just as important, towards extending that prosecutor’s role. It is what we would call a double lock”.—[Official Report, 9/6/08; col. 454.]

We were not just opting out at that point but securing essential safeguards for the future, which we are able to use today.

That double lock meant that, in order to proceed, the UK would first have to opt in and then, even if a future Government decided that they wanted to opt in, there would still need to be unanimity, and that would be retained for any decision to establish a prosecutor or extend the powers of any such prosecutor. Therefore, we concur with the comments made by the noble Lord, Lord Rowlands, on behalf of the EU committee, that the creation of the EPPO was not the appropriate response to tackling fraud.

20:29

The noble Lord, Lord Rowlands, outlined a number of issues of concern and we concur with them, particularly the point that the proposal would transfer responsibility for tackling fraud against the EU budget away from national-level decision-making to a supranational authority. The European delegated prosecutors would be required to prioritise EU fraud above other crime at a national level. It has always been a red line for us that member states determine their own national priorities, and the consequent use of resources for those priorities, in tackling crime.

Also, an EPPO system would result in a duplication of established national-level efforts to protect member-state and EU financial interests, including organised crime. It is somewhat surprising—and I read the reports again in case I missed something—that, although the Commission has reported two consecutive years of decrease in fraudulent and other irregularities affecting the EU budget and their estimated financial impact, it has not waited to evaluate the impact of the proposed new directives on tackling this issue. There is a danger that the establishment of an EPPO could disrupt that work.

The best way to tackle fraud is through prevention; that is reflected in the UK's own policy of zero tolerance towards all fraud, using robust management controls and payment systems, and requiring all agencies with responsibility for distributing EU funds to have processes in place to monitor and report fraud. There are genuine and—we consider—justified concerns that an EPPO would cause a shift from prevention to reaction after crimes have been committed, because each member state would be, in effect, less responsible for anti-fraud work at national level. Therefore, in terms of the practicalities and the implications of such an office as I have outlined, the creation of the EPPO fails the test.

The creation of an EPPO also fails the test on the important principle of subsidiarity. The principle is that the EU shall act only when,

“the objectives of the proposed action cannot be sufficiently achieved by the Member States”,

and that case has certainly not yet been made. On that specific point, it would perhaps be helpful if the Minister could tell us what further proposals the Government have, and in what timescale they will be able to bring them forward, for the UK to play its part in tackling EU fraud. If he has that information with him tonight, it would be helpful if, as part of this debate, he could show that we are playing our role and that he has further proposals to bring forward.

I welcome the committee’s report on this issue, and I welcome the Government’s approach on it as well. I hope that it remains the way forward for discussing issues relating to Europe, particularly on criminal justice matters. The Minister will be aware that we discussed similar issues on criminal justice on more than one occasion in this House, and he will be aware of our frustrations that government proposals seemed to be led by internal party and coalition concerns, rather than by what we regarded as being essential: the practical, principled and hard-headed examination of UK interests.

We have had the hokey-cokey of the opt in, the opt out and then the opt in again on justice and home affairs issues. In those debates, we fortunately had the wisdom of the European Union Committee of this House, and the debates we had then benefitted greatly by being shaped by the detailed, factual reports of that committee. As tonight, they were excellent, informative debates with contributions from noble Lords on the practicalities as well as the principles before us.

I appreciate—and I say this genuinely to the Minister—that Europe is a difficult internal issue for the Government, both in the Conservative Party and in the coalition, but we have to co-operate in order to have a real impact on crime. I am thinking particularly about cross-border crime, such as drugs trafficking, people trafficking and international fraud, where we greatly benefit from co-operation. Decisions must never be taken for internal party-management reasons; they must always be taken with a hard-headed practical approach in the national interest.

The tone of tonight’s debate is very welcome. We support maintaining the policy. We support the report from the EU Committee and the reasoned opinion. I look forward to hearing the Minister’s comments.

[The Parliamentary Under-Secretary of State, Home Office (Lord Taylor of Holbeach) (Con)]

My Lords, I thank the noble Lord, Lord Boswell of Aynho, for tabling this debate. He cannot be here this evening because he is exercising his responsibilities as chairman of the European Union Committee. I thank the noble Lord, Lord Rowlands, for moving the Motions of the committee and its reasoned opinion on the European Public Prosecutor’s Office proposal and for presenting the issues so clearly—as does the report that the committee produced.

It is laid out in the EU treaties that the Commission must consider the principle of subsidiarity when drafting all EU legislation. It must also include a detailed subsidiarity statement in the published text. It should be,

“substantiated by qualitative and, wherever possible, quantitative indicators”.

In effect, the Commission should not only say that the principle of subsidiarity has been met but also clearly demonstrate how it has been met and provide well researched and accurate evidence. To assess this, there is a two-limbed subsidiarity test. The Commission should clearly demonstrate in its rationale and impact assessments that the objectives of a proposal cannot be sufficiently achieved at member state level—the first limb of the test—and then that the objectives of a proposal can be better achieved at EU level by reason of their scale and effect, which is the second limb and the so-called EU added-value test.

The EU treaties give this House and Parliament the right to decide whether the proposal meets both limbs of the subsidiarity test. If noble Lords believe that the Commission has failed clearly to demonstrate that EU-level action is necessary and is of added value, it is their right to say so by issuing a reasoned opinion. This is therefore a matter for Parliament and not for the Government. In the case of the European Public Prosecutor’s Office proposal published in July this year, as we know, the European Union Committee considered the two-limbed test and found that the proposal does not comply with the principle of subsidiarity. The reasoned opinion clearly lays out the reasoning. The Government agree with the European Union Committee’s assessment.

In the Government’s Explanatory Memorandum on the proposal, we made it clear that we do not believe that the principle of subsidiarity has been met in this case. We share the view that the Commission has not presented a convincing case. The figures used by the Commission to justify the EPPO are flawed and inflated, while other evidence draws on inappropriate, partial and unsubstantiated information. There are many gaps and blanks, especially in the costs of change and future funding needs. While of course the issue of fraud must be tackled at all levels—including when it involves funds that form part of the EU budget—we do not agree that the establishment of an EPPO is the right approach. The relevant legal base in the treaties—Article 86 of the Treaty on the Functioning of the European Union—says that a European Prosecutor’s Office “may” be established. The treaties do not say that it “shall” be created, yet the Commission presents that as the only solution.

The Commission has not allowed time for current reforms at national level to take effect and make a difference. For example, reforms to the European Anti-Fraud Office—OLAF—are currently being introduced to improve information exchange between OLAF and national authorities and to improve OLAF’s internal quality control. Indeed, a new regulation governing the work of OLAF entered into force only on 1 October. We hope that the improved quality of evidence provided by OLAF to national courts will address many of the conviction issues that the Commission raises in its assessment of the EU fraud problem. These changes need time to be implemented before any action is contemplated. The Commission has not considered adequately other options to strengthen the current system further. For example, it has not considered enhanced incentives or other options for reform at regional or national level in any detail or in a rigorous manner.

In the Government’s view, the best way to tackle EU fraud is through prevention. The UK has a zero-tolerance approach to all fraud, with robust management controls and payment systems in place that seek to prevent incidents of EU fraud. Additionally, we should continue efforts that are already being made to strengthen the current system. The House is also aware of our long-standing position in the coalition agreement not to participate in the establishment of any European Prosecutor’s Office. The details of the proposal serve only to reinforce that position. This proposal is unnecessary, unsubstantiated and unwelcome.

On the principle of subsidiarity, every reasoned opinion sends a political message to the Commission. If a quarter of the votes allocated to EU national parliaments were cast, the so-called yellow card would be triggered. The Commission would then be obliged to review the proposal. I am pleased to say that, as the noble Lord, Lord Rowlands, indicated, the 14-vote threshold has now been achieved in the case of the European Public Prosecutor’s Office. I firmly believe that this House should join that group and send a political signal to the Commission that its proposal does not meet the subsidiarity test.

I thank the noble Lord, Lord Rowlands, for the way in which he has presented the report of the EU Committee, members of that committee and my noble friends Lord Hodgson of Astley Abbotts and Lord Dykes for their contributions to the debate. It has been a thorough report and a good debate. I thank the noble Baroness, Lady Smith of Basildon, for her support on this issue. Time is of the essence. I understand that our votes have to be in by midnight tonight.

To conclude, this Motion is for Parliament. It is not for the Government to act. I can only encourage your Lordships to agree this reasoned opinion and exercise the right given to this House under EU treaties.

[Lord Rowlands]

Our committee will take great comfort and satisfaction in the nature of this debate and in the unanimity that exists. I will not be tempted to rise to the bait of the noble Lord, Lord Dykes, and describe my Euro-tendencies at this time, except to say that this is one of the rarer moments when he and I agree on European issues. We have not agreed in the past. We certainly can agree on this issue.

I thank all those who have spoken. The noble Lord, Lord Hodgson, rightly emphasised the changes that are occurring within the existing institutions; the door should be left open to carry them through. My noble friend Lady Smith on the Front Bench rightly said that the primary responsibility will lie with national jurisdictions. That is where 80% of the funds are administered. Article 325 of the treaty says that responsibility for dealing with European fraud lies both with the Union and with member states. This proposal is therefore in this context wrong and I am delighted that all of us who have spoken in this debate share that view.

Motion agreed.

European Public Prosecutor’s Office (Reasoned Opinion)

Monday 28th October 2013 Lords Chamber

Motion to Resolve

20:44

Moved by

[Lord Rowlands]

To resolve that this House considers that the Commission proposal for a Council Regulation on the establishment of the European Public Prosecutor’s Office (COM(2013)534, Council Document 12558/13) does not comply with the principle of subsidiarity, for the reasons set out in the 3rd Report of the European Union Committee (HL Paper 65); and, in accordance with article 6 of the Protocol on the application of the principles of subsidiarity and proportionality, instructs the Clerk of the Parliaments to forward this reasoned opinion to the Presidents of the European institutions.

Motion agreed.

Energy Bill

Monday 28th October 2013 Lords Chamber

Report (1st Day) (Continued)

20:45

Clause 6: Regulations to encourage low carbon electricity generation

Amendment 6

Moved by

[Baroness Verma]

6: Clause 6, page 6, line 4, at end insert “or (CFD notification: offer to contract on standard terms)”

[The Parliamentary Under-Secretary of State, Department of Energy and Climate Change (Baroness Verma) (Con)]

My Lords, I shall speak also to the other government amendments in this group. These changes provide important clarifications to the implementation of contracts for difference and in addition respond to a number of recommendations made by the Delegated Powers and Regulatory Reform Committee, for which the Government are very grateful. This group also contains a number of minor but essential and consequential amendments.

Amendments 16 and 38 on contracts for difference give the Secretary of State the power to issue and revise standard terms for contracts for difference, subject to consultation and under an explicit duty to consider the matters listed in Clause 5(2), and to publish those standard terms. Amendments 17 and 19 enable provision to be made for how the system operator will notify the CFD counterparty that an eligible generator has been allocated a CFD and, in turn, how the CFD counterparty is to offer a contract to an eligible generator.

Amendment 18 provides for the Secretary of State to set out how the system operator will run the allocation process, in particular through an allocation framework, which will cover such areas as: the process to be used, such as the competitive process in the event of a constraint; the timing of allocation rounds; and any targets, such as minima and maxima, which the system operator will need to consider. The Government are seeking to include this sort of provision in an allocation framework, as opposed to in a statutory instrument, because these are issues that might need to change at short notice in order to manage costs and to ensure value for money along with the smooth functioning of the allocation process. However, it is important to note that the allocation framework will not be free-standing. Provision for an allocation framework will need to be set out through regulations, which will be subject to the affirmative procedure.

Amendment 20 gives the CFD counterparty the power to agree minor and necessary modifications to the standard terms, prior to contract signature. This ensures that the CFD regime is open to the widest possible range of eligible generators, while maintaining a level playing field. Amendments 13, 14 and 15 are consequential amendments, recognising that Clause 10 now refers only to contracts for difference that result from bespoke negotiations with the Secretary of State. This is because powers for contracts for difference that result from allocation by the system operator now have their own clause.

Amendment 21 enables provision to be made in regulations to enable calculations or determinations required by the regulations. Such calculations or determinations are to be made by specified persons—for example, the CFD counterparty. Amendments 6, 10, 26 to 37 and 39 are all consequential to the principal amendments that I have set out.

Amendments 8, 56 and 44 move most secondary legislation relating to contracts for difference, investment contracts and the capacity market to the affirmative resolution procedure, increasing parliamentary oversight in accordance with the recommendations of the Delegated Powers and Regulatory Reform Committee. Amendment 56 also goes beyond the committee’s recommendations by making all secondary legislation in Parts 1 and 3 of Schedule 2 subject to the affirmative procedure. This ensures that the provisions in Schedule 2 are consistent with the equivalent provisions in Chapter 2 on contracts for difference.

Amendment 40 also responds to the committee’s recommendations by preventing the authority—Ofgem—from conferring additional functions on itself when exercising the powers under Clause 28(3) to make capacity market rules, except with the consent of the Secretary of State. However, since tabling this amendment, the DPRRC has provided a further report and makes a recommendation in relation to this, which I will be considering carefully ahead of Third Reading.

Amendments 9, 45 and 57 make explicit provision that regulations made under contracts for difference, the capacity market and investment contract powers will not be treated as hybrid. I have tabled these amendments because the secondary legislation implementing EMR may specify determinations made by Elexon for the purposes of settlement of payments under these powers. As such, the regulations may potentially be considered hybrid and subject to investigation by the Hybrid Instruments Committee. The Government do not think that this is necessary or appropriate, as the existing duty to consult before making regulations will ensure that Elexon’s private interests are fully considered. My department is already working closely with Elexon, which has also confirmed that it has no objections to these amendments. To avoid the risk of delay to the programme and the investment that it will bring forward, I have tabled these amendments to make it clear that no hybridity will arise.

Amendments 11, 12 and 58 are minor drafting amendments with no impact on the substantial legal effect. They have been tabled in order to avoid any perception that we are giving the counterparty new powers to recover moneys owed to it. Amendment 46 is another minor change to make it clear that the duty to consult before making capacity market rules can be satisfied by consultation undertaken before Royal Assent. This aligns Clause 35 with other provisions of the Bill, such as Clause 18(2) and Clause 34(3).

Finally, Amendments 52 to 55 are minor and technical drafting amendments to clarify that an investment contract will continue to be an investment contract even where a party ceases to be an “electricity generator”, and that the definition of an “investment contract” is satisfied if at least one generator is under an obligation to make payments under the contract. I hope that noble Lords find that a helpful explanation of the government amendments and I beg to move.

[Lord Roper (LD)]

My Lords, I have tabled Amendment 41 in this group to give the Minister an opportunity, to which she has already referred, to respond to the 11th report of the Delegated Powers and Regulatory Reform Committee. The committee felt that the proposal in Amendment 40 was not satisfactory as it would still give the authority power to confer functions on itself without the consent of the Secretary of State, even though the proposed new subsection would allow for such consent to be given generally in relation to the capacity market rules of a particular kind. In its report, the committee did not find that a totally satisfactory response. I ask my noble friend whether she will be able to give some consideration to this point and perhaps bring back at Third Reading an amendment to Amendment 40, which will go some way to respond to the committee’s report.

[Baroness Worthington (Lab)]

My Lords, I am grateful to the Minister for introducing this group of amendments. This goes to show that the Government are listening—at least to the Delegated Powers and Regulatory Reform Committee if not, perhaps, to all sides of the House. It has obviously had more success in amending the Bill than some of us in our many days in Committee over the summer. There are a number of amendments here, many of which implement the recommendations.

To strike a serious note, it is important that the Government have listened and accepted the advice of the Delegated Powers Committee. This is quite an extraordinary Bill. It is quite an extraordinary intervention into the market and it carries with it quite considerable enabling powers that give the Secretary of State a huge amount of discretion in how he or she will intervene in the electricity market. It is only right and proper that those powers are subject to the affirmative resolution procedure in as many places as possible, so there can be a degree of parliamentary oversight in what is going to be a hugely significant intervention into the market.

The noble Baroness spoke to some of the amendments which relate to the allocation of contracts for difference under the levy control framework. I seek some form of comfort, and confirmation from the Minister that we will not descend into a system of micromanagement, trying to split up the pot of money into ever smaller, more precise groupings of technologies. We have seen this happen with other DECC policies; with the renewable heat incentive, for example, and the banding of FITs. This temptation to micromanage, to carve up the market and pick winners to make sure that we have control over what comes forward can make for a regrettable situation. It is regressive because it does not allow the market to demonstrate where there is a success. It does not allow the market to find solutions.

I find it quite odd that I am here on the Labour Benches chastising the Conservative Government for not allowing the market to deliver. However, it is clear that this is the current thinking: that we should not allow the market and competition to dictate but somehow try to use the powers in the Bill to organise and plan everything from the top down. That is a recipe for disaster. I am sure that others will agree with me that where we have already seen that in operation, with FITs and RHI, it has been shown to be really sub-optimal. I only say that as an illustration of why it is so important that the many regulations which will flow from the Bill are subject to full and proper parliamentary scrutiny, so that we can try to prevent some of those worst examples being repeated on a much larger scale.

I am grateful to the noble Lord, Lord Roper, for tabling his amendment, which is intended to correct one of the few issues which the Government have not conceded in response to the Delegated Powers and Regulatory Reform Committee. I look forward to the noble Baroness’s response to that, because it is evidently important that it has been raised here.

[Baroness Verma]

My Lords, I thank my noble friend Lord Roper for Amendment 41, which would remove paragraph (b). I am aware that this is in line with the recommendation of the Delegated Powers and Regulatory Reform Committee.

Before concluding on my noble friend’s amendment, I will respond to the noble Baroness, Lady Worthington, on splitting and micromanagement of the levy control framework. We are not looking to pick winners, but to ensure that costs can be controlled and that new technologies can come to the market. Like the noble Baroness, we want to see greater competition and new entrants. The last thing that we would want to do is to micromanage that and pick winners and losers. However, as with all things, there needs to be some management of ensuring that costs do not overrun or become artificially maintained.

I say to my noble friend Lord Roper and other noble Lords that I will consider carefully the committee’s recommendation and my noble friend’s amendment to the proposed powers in Clause 28 with a view to addressing them at Third Reading.

Amendment 6 agreed.

Amendment 7

Moved by

[Baroness Worthington]

7: Clause 6, page 6, line 5, at end insert—
“(2A) The Secretary of State shall as soon as reasonably practicable, and no later than five years from enactment of this section, by regulations provide that contracts for difference are subject to a competitive tendering process.
(2B) These regulations shall be subject to the affirmative resolution of both Houses of Parliament.”

[Baroness Worthington]

My Lords, briefly, we had a good and thorough discussion about the need for greater competition in the Bill; I do not intend to fully rehearse all the earlier comments. The amendment is intended to ask the Government when we will move away from an administrated, bilateral negotiation of CFDs to a more competitive tendering process. It seems that the entire Bill is subject to state aid approvals from the EU. I am sure that one of the main tenets of the argument being put to the EU will be that we are treating all technologies equally—that there is element of competition and a proper tendering process. That is not currently the case as the Bill is drafted at the moment. There is no indication in the legislation of a timeline to which the Government are working. There is no hint at when we will be moving to this competitive process. We hear that that is the intention but there is nothing in the Bill that compels it to be the case.

The reason for this amendment is to ask, if this amendment were accepted, that within five years of enactment the process of bilateral negotiation would cease and we would move to a competitive tendering process. Five years is perhaps too long or too short; I am not saying that it is a precise number. The point is that we cannot carry on for very long in this bilaterally negotiated world, where there is really no transparency at the moment and we do not see technologies being treated equally.

These are my two questions. What is the timeline to which the Government are working to get to this more competitive process? Can the Minister comment on any feedback that she has had from the EU on the need to get to this state and to move away from the bilateral negotiations?

21:00

[Baroness Verma]

My Lords, I thank the noble Baroness, Lady Worthington, for this amendment. It offers us another opportunity to debate the important matter of competition within EMR. Amendment 7 relates to the competitive allocation of CFDs. I begin by reassuring the noble Baroness and noble Lords that we have carefully considered competition throughout the design of EMR. Of course, CFDs themselves will enable new low-carbon generation to compete in the market.

We recognise the role that the competitive allocation process, including auctions, can play in ensuring least-cost decarbonisation for consumers. Indeed, the Secretary of State has stated that the reforms in the Energy Bill are specifically designed to,

“blaze a trail towards competition”.

However, we view the competitive allocation of CFDs as a means to ensure low costs to the electricity consumer rather than as an end in itself. Competitive allocation can help drive value for money only when market conditions allow. Key tests of the market conditions include the supply of new low-carbon generation exceeding the amount we need to meet our decarbonisation commitments, and there being enough potential players to ensure sufficient competitive tension.

Moving to competitive allocation before these conditions are met may increase risks to developers and costs to the consumer, without necessarily bringing the benefits of a competitive allocation. Of course, it is possible that the conditions for competitive allocation may be met relatively soon. In respect of most renewable technologies, we have said that we will consider moving immediately to allocation rounds and introducing constraints for certain technologies or groups of technologies, which might have the effect of triggering auctions for those technologies. In respect of nuclear and carbon capture and storage technologies, our officials are already working with stakeholders to explore how competitive tenders could work for those technologies. Where competitive allocation processes are not feasible or effective, I can reassure noble Lords that any final allocation decision will still be subject to strict value-for-money considerations and an assessment of an overall budget constraint.

Therefore, I say to the noble Baroness and to noble Lords who have expressed the concerns behind this amendment that we do care about value for money, but I do not think that a requirement to run competitive allocation processes within five years of enactment of the Bill is the right way to ensure value for money. Instead, we should focus on the action that we are taking to improve underlying conditions for new low-carbon generation and reduce barriers to entry, which may enable a faster move to competitive allocation processes. As I set out in an earlier debate, these include Ofgem’s ambitious package of reforms to improve market liquidity and meet the needs of independent generators, and our amendment to the Energy Bill to allow for the establishment of a power purchase agreement scheme, which will bring greater competition to the PPA and generation market.

The noble Baroness asked for an update about state aid. As she knows, we do not comment on discussions that we have with the Commission on state aid. As noble Lords might expect, it is likely to place importance on competition, as we do. However, I assure the noble Baroness that those conversations on state aid are taking place.

The noble Baroness also asked about the timescale for moving. Throughout my speaking notes I have tried to reassure the noble Baroness that we move as fast as we can. I therefore urge the noble Baroness to withdraw her amendment and be reassured that the Government take her concerns very seriously.

[Baroness Worthington]

I thank the Minister for her response. I am not fully reassured by her comments, but I am grateful for them. There is a bit of a problem here. The basic premise is to try to get to a point where all technologies can be treated equally. However, as the noble Baroness points out, not all technologies are at the same stage of development, so we find ourselves in quite an odd situation. We cannot allow this to persist. We must apply a discipline and a timetable to ourselves to ensure that when we move to the next decade, we will arrive at a point where we are able to compare apples and pears more adequately. We want to get to a position where, for the sake of the consumer, we fund only technologies that can deliver cost-effectively.

It is very good to hear the Minister mention value for money, as that is at the heart of my concern. At the moment we have strike prices here and there, and different contract lengths. We must seek to simplify this so that the best technologies can come forward. That will obviously take time. I hope that we can move swiftly to a much clearer and more competitive process, and I hope that time will achieve that. I beg leave to withdraw the amendment.

Amendment 7 withdrawn.

Amendments 8 and 9

Moved by

[Baroness Verma]

8: Clause 6, page 6, line 24, leave out subsection (8) and insert—
“(8) An instrument containing regulations of any of the following kinds may not be made unless a draft of the instrument has been laid before, and approved by a resolution of, each House of Parliament (in each case, whether or not the regulations also make other provision)—
(a) the first regulations which make provision falling within each of the following—(i) section (CFD notification: offer to contract on standard terms);(ii) section (Modification of standard terms);(iii) section 13;(iv) section 14;(b) regulations which make provision falling within—(i) section 9;(ii) section 10;(iii) section (CFD notifications);(iv) section (Allocation of CFDs);(v) section 11;(vi) section 12;(vii) section 15;(viii) section 16;(ix) section 17.”

9: Clause 6, page 6, line 29, at end insert—
“( ) If, but for this subsection, an instrument containing regulations would be treated for the purposes of the standing orders of either House of Parliament as a hybrid instrument, it is to proceed in that House as if it were not a hybrid instrument.”

Amendments 8 and 9 agreed.

Clause 8: Duties of a CFD counterparty

Amendment 10

Moved by

[Baroness Verma]

10: Clause 8, page 7, line 25, leave out “or the national system operator”

Amendment 10 agreed.

Clause 9: Supplier obligation

Amendments 11 and 12

Moved by

[Baroness Verma]

11: Clause 9, page 8, line 31, leave out from beginning to end of line 33 and insert—
“( ) Any sum which—
(a) an electricity supplier is required by virtue of regulations to pay to a”

12: Clause 9, page 8, line 36, at end insert—
(none0) “may be recovered from the electricity supplier by the CFD counterparty as a civil debt due to it.”

Amendments 11 and 12 agreed.

Clause 10: Direction to offer to contract

Amendments 13 to 15

Moved by

[Baroness Verma]

13: Clause 10, page 8, line 44, leave out “or the national system operator”

14: Clause 10, page 9, line 4, leave out “a direction under this section” and insert “this Chapter”

15: Clause 10, page 9, line 15, leave out subsection (6)

Amendments 13 to 15 agreed.

Amendments 16 to 21

Moved by

[Baroness Verma]

16: After Clause 10, insert the following new Clause—
“Standard terms
(1) The Secretary of State may issue standard terms and conditions of CFDs (“standard terms”).
(2) The Secretary of State may from time to time revise standard terms.
(3) Standard terms issued or revised under this section must be in accordance with provision made in regulations.
(4) In issuing or revising standard terms the Secretary of State must have regard to the matters mentioned in section 5(2).
(5) The Secretary of State must publish standard terms as issued or revised under this section.
(6) In publishing standard terms the Secretary of State may designate particular standard terms as terms that may not be modified under section (Modification of standard terms).
(7) Different standard terms may be issued for different categories of CFD.”

17: After Clause 10, insert the following new Clause—
“CFD notifications
(1) The national system operator may, in accordance with provision made by regulations, give a notification to a CFD counterparty (a “CFD notification”) specifying—
(a) an eligible generator, and(b) such other information as may be required for the purpose of making an offer under section (CFD notification: offer to contract) to contract with that generator.(2) A CFD notification must not be given if regulations made by virtue of section 17 prevent the giving of the notification.
(3) Regulations may make further provision about CFD notifications and in particular provision about—
(a) the circumstances in which a CFD notification may or must be given;(b) the kinds of information mentioned in subsection (1)(b) that must be specified in a CFD notification;(c) appeals against decisions not to give CFD notifications.(4) A CFD notification may not be given by virtue of regulations under this section in relation to an electricity generating station in Northern Ireland unless the Department of Enterprise, Trade and Investment consent to the CFD notification.
(5) But regulations may, with the consent of that Department, include provision for circumstances in which consent under subsection (4) is not required.
(6) In subsection (4) “Northern Ireland” includes so much of the internal waters and territorial sea of the United Kingdom as are adjacent to Northern Ireland.”

18: After Clause 10, insert the following new Clause—
“Allocation of CFDs
(1) Provision that may be included in regulations by virtue of section (CFD notifications) includes in particular provision about how CFDs are to be allocated to eligible generators (and for this purpose a CFD is “allocated” to a generator if the generator is specified in a CFD notification).
(2) Provision made by virtue of subsection (1) may include provision—
(a) conferring power on the Secretary of State to make rules (an “allocation framework”) about how CFDs are to be allocated;(b) for different periods within which CFDs are to be allocated (“allocation rounds”);(c) for different allocation frameworks to apply in respect of different allocation rounds;(d) for the publication of allocation frameworks;(e) about matters in relation to which provision may or must be made in an allocation framework.(3) Provision made by regulations by virtue of subsection (2) may impose requirements on the Secretary of State, including in particular—
(a) requirements as to the giving of notice before an allocation round is commenced;(b) restrictions on the circumstances in which amendments may be made during an allocation round to an allocation framework or to any other matter relevant to an allocation round (including any amount by reference to which a limit on the CFDs allocated during the round is to be determined).(4) An allocation framework may—
(a) confer functions on the national system operator with respect to the allocation of CFDs;(b) specify targets to be met or taken into account by the national system operator in giving CFD notifications by virtue of section (CFD notifications), including targets relating to—(i) the means by which electricity is generated;(ii) the generating capacity of electricity generating stations;(iii) the geographical location of electricity generating stations;(c) make any provision that may be made by regulations by virtue of subsection (3).(5) An allocation framework may include provision for—
(a) the determination of a matter on a competitive basis;(b) calculations or determinations to be made under the framework, including by such persons, in accordance with such procedure and by reference to such matters and to the opinion of such persons, as may be specified in the framework.(6) An allocation framework may—
(a) include incidental, supplementary and consequential provision;(b) make transitory or transitional provision and savings;(c) make different provision for different cases or circumstances or for different purposes;(d) make provision subject to exceptions.(7) Any power conferred by virtue of subsection (2) to make an allocation framework includes a power to amend, add to or remove an allocation framework.
(8) Subsections (4) to (7) are subject to any provision contained in regulations.”

19: After Clause 10, insert the following new Clause—
“CFD notification: offer to contract on standard terms
(1) Where a CFD notification is given to a CFD counterparty under section (CFD notifications), the CFD counterparty must, in accordance with provision made by regulations, offer to contract with the eligible generator specified in the notification on—
(a) standard terms, or(b) standard terms as modified in accordance with any modification agreement entered into between the CFD counterparty and the eligible generator for the purposes of the CFD notification (see section (Modification of standard terms)).(2) Regulations may make further provision about an offer to contract made under this section, including provision about—
(a) how a CFD counterparty is to apply or complete standard terms in relation to the offer in accordance with information specified in a CFD notification;(b) the time within which the offer must be made;(c) how the eligible generator to whom it is made may enter into a CFD as a result of the offer;(d) what is to happen if the eligible generator does not enter into a CFD as a result of it.(3) In this section, “standard terms”, in relation to a CFD notification, means standard terms published under section (Standard terms), determined in accordance with regulations as the standard terms that are to apply in relation to the CFD notification.”

20: After Clause 10, insert the following new Clause—
“Modification of standard terms
(1) This section applies where a person wishes to be specified as an eligible generator in a CFD notification (“the potential CFD notification”).
(2) A CFD counterparty and the person may, in accordance with provision made by regulations, agree to modify standard terms for the purposes of any offer that would be required under section (CFD notification: offer to contract on standard terms) if the potential CFD notification is given (a “modification agreement”).
(3) A CFD counterparty may enter into a modification agreement providing for the modification of any particular standard term only if—
(a) the CFD counterparty is satisfied that—(i) the effect of the modification is minor, and(ii) the modification is necessary; and(b) the standard term has not been designated under section (Standard terms) as a term that may not be modified under this section.(4) Regulations may make further provision about modification agreements, including—
(a) the circumstances in which a person may make an application for a modification agreement;(b) the time by which an application must be made;(c) the procedure to be followed, and the information to be given, by the person in making an application;(d) how a CFD counterparty is to determine an application (including how it is to determine whether the effect of a modification is minor and whether it is necessary);(e) the time by which determinations must be made;(f) the form of modification agreements.(5) Provision made by virtue of subsection (4)(d) may include provision under which the CFD counterparty may make alternative proposals for modifications in response to an application.
(6) In this section “modify” includes add to, alter or omit, and “modification” is to be read accordingly.”

21: After Clause 10, insert the following new Clause—
“Sections (CFD notifications) to (Modification of standard terms): further provision
Provision made by regulations by virtue of any of sections (CFD notifications) to (Modification of standard terms) may include provision for—(a) the determination of a matter on a competitive basis;(b) calculations or determinations to be made under the regulations, including by such persons, in accordance with such procedure and by reference to such matters and to the opinion of such persons, as may be specified in the regulations.”

Amendments 16 to 21 agreed.

Amendment 22

Moved by

[Baroness Worthington]

22: Clause 11, page 9, line 26, leave out “may” and insert “shall”

[Baroness Worthington]

In moving Amendment 22, I will speak to Amendments 23 and 24 in the same group. I will not detain the House any longer than is needed.

This amendment raises a very important issue that should be at the heart of the Energy Bill, and which the legislation is not sufficiently clear on at the moment—the nature of the contracts for difference. Noble Lords may remember that in a very early draft of the Bill—the one that went into pre-legislative scrutiny—there was a hint that it might be possible to sign a one-way contract for difference. That underscores any potential profit for a contract holder, but completely removes the downside risk. That means that if the contract holder was due to pay money back because the wholesale price was higher than the strike price, they could keep that money. The wording has now been changed sufficiently for that not to be in the current Bill, but there is still a question mark over the degree of latitude that the Secretary of State has over these contracts for difference.

I seek a strong reassurance on behalf of consumers and bill payers that we will not sign contracts in cases where, if the strike price is below the wholesale price, that money will simply end up in the profits of the company that holds the contract. It must flow back to the consumer. For this to be a fair system, we want to see contracts for difference that provide a stable price for the holders, but they should not be completely guaranteed profits over and above that. That is an important concept. I look forward to hearing the noble Baroness reassure me that one-way contracts will not be signed, and that all contracts for difference will be two-way.

[Baroness Verma]

My Lords, I thank the noble Baroness for her amendments and for prompting the debate on the matter of payments to suppliers. I am pleased to reassure her that the intention of her amendment is already delivered in the Bill. The purpose of Clause 11 is to allow the Secretary of State to make regulations to ensure that the counter party can pass payments from generators under the CFD on to suppliers and, furthermore, that the regulations we are consulting on specify that this must happen.

Amendment 22 provides that the regulations must set out the amounts to be paid to suppliers. I want to be clear why some flexibility is needed here and therefore why there is not already such a duty within the Bill. It is indeed the Government’s intention that surpluses will be returned to suppliers. A duty would, however, fix that this happened by way of a repayment of sums. The Bill as drafted allows us instead to use payments from CFD generators to offset future supplier payments. Offsetting such payments could be more efficient than making payments out to suppliers and then asking for payments back in again. This could provide more value for money for consumers and greater transparency of costs and savings.

Amendment 23 states that sums passing to suppliers must be rated at zero. I want to reassure noble Lords that if it is appropriate for sums to be paid back to suppliers—for instance when, as the noble Baroness has said, under a CFD the reference price is above the strike price—then the counter party is required to do so through draft regulations. However, sometimes the reference price will not be above the strike price and the sums to pay back would be zero. This amendment could lead to unintended consequences where the counter party has to pay suppliers money it does not have. This would then need to be recovered from suppliers, and this uncertainty is likely to be passed through to consumers and ultimately lead to increased consumer bills.

I turn now to Amendment 24. Clause 11(2) allows for regulations to include provision for the counter party to calculate any amounts it might owe to suppliers against specific criteria. It also enables regulations to allow for such calculations to be carried out on behalf of the counter party. Although we expect a settlement agent to carry out such calculations on behalf of the counter party, this amendment would impose a duty which would remove the long-term flexibility to consider how to carry out the calculations, whether in-house or otherwise, in the most cost-effective way. I hope that the noble Baroness has found my explanation reassuring.

[Baroness Worthington]

I am grateful for the reply. It does obviously reassure me that if something is paid back to suppliers it will be done in a sensible way, and indeed offsetting might be the most sensible way. How will the regulator ensure that the sums paid back are then handed on to consumers? Will there be regulations to that effect?

[Baroness Verma]

My Lords, as I said earlier, I think there needs to be some flexibility. Where money is returned to suppliers they have a choice between paying it out as dividends and salaries or using it to reduce costs to consumers. We believe that, as we have a competitive market, benefits should be passed on to consumers. It would be in the interests of suppliers to pass the money on to consumers. I suspect that as the market becomes far more competitive it will be in their interest to try to vie for as many consumers as they possibly can. I think we need to be able to allow that flexibility and not constrain it. On that basis, I hope that the noble Baroness will withdraw her amendment.

[Baroness Worthington]

I am grateful to the noble Baroness for bearing with me in answering my subsequent question and for her response. I am not fully reassured that this whole system is going to be very transparent or beneficial for the consumer. I do not want to rehearse the arguments we had earlier about the lack of competition, but we have seen previous examples of this. If there had been a truly competitive market and proper downward pressure on prices, would we have seen the large big six companies using their capital to buy back shares? I do not think so. Also, we have seen it with the introduction of the EU emissions trading scheme in which generators all opted to take a massive windfall by passing on the full costs of the ETS, even though they were not being incurred because all the allocations were free.

I say this only because these are recent examples of the regulatory system failing consumers and not being sufficiently strong and firm with the big six in ensuring that they make the right decisions. In this day and age, with pressures on the cost of living being so acute, these companies have to avoid a form of corporate overconfidence which does not put the consumer first, as the noble Lord, Lord Teverson, said. I am sure that we will come back to this again, but I am happy to beg leave to withdraw the amendment.

Amendment 22 withdrawn.

Amendments 23 and 24 not moved.

21:15

Clause 15: Regulations: further provision

Amendment 25

Moved by

[Lord Jenkin of Roding]

25: Clause 15, page 11, line 20, at end insert—
“(d) conferring on the Secretary of State further powers to require operators of generating stations which use woody biomass fuel to commit to a binding agreement to source no more than a specified amount of woody biomass fuel that is grown in the UK”

[Lord Jenkin of Roding]

I beg to move the amendment standing in my name and that of my noble friend Lord Roper. My noble friend the Minister will recognise that this is the same amendment which my noble friend Lord Roper moved in my absence in Committee. We have tabled it again to see whether the Minister has had any further thoughts about how she can best protect those wood manufacturers who depend on the same source of wood as that used for biomass by generators. That is what they are frightened of. Indeed, they go so far as to say that if there is no certainty that they will be able to source their raw material in this country, or from the same sources from which they have had it in the past, we will lose the industry. It will no longer invest here because it cannot be sure of getting its raw material. That was the case which my noble friend made in Committee.

I have reread the reply which the Minister gave on that occasion. It is not too strong to say that she dismissed the fear as unreasonable and the measure as one which would cause unnecessary bureaucracy. However, the Scottish authorities have decided that there should be a requirement on those intending to burn biomass as a fuel to make a statement of their sources, quantities and sustainability. I know that there is a voluntary scheme. Indeed, my noble friend made that point in Grand Committee. However, the fact of the matter is that this does not give the wood panel and other wood-using industries the confidence that they need. In those circumstances, have the Government had further thoughts as to whether there might be an advantage in preserving an important industry in this country in terms of the number of people it employs and the fact that it is a UK-based manufacturing industry? Will they give it the confidence to enable it to continue in business? I look forward to hearing my noble friend’s reply. Has there been any change in the Government’s attitude since we debated this in July? I beg to move.

[Lord Roper]

My Lords, as my noble friend Lord Jenkin has said, I moved a similar amendment in Grand Committee. As he has also said, we felt that the Minister’s reply on that occasion was not as helpful as it could have been. Although the wood panel industry is not large, it has a significant annual turnover and employs both directly and indirectly a significant number of people. If it is possible for appropriate guidelines to be issued in Scotland, it is not totally clear to me why it is not possible to have them here. Obviously, it is a good thing that a voluntary disclosure agreement now exists, but I think that the industry would prefer there to be a requirement regarding disclosure rather than this voluntary agreement. Like my noble friend Lord Jenkin, I shall be interested to hear the Minister’s reply.

[Lord Cameron of Dillington (CB)]

My Lords, I hesitate to speak to the amendment because I am not against it and I sympathise with the intentions of the noble Lords who are proposing it, particularly if it affected the price of construction timber and made housing more expensive, which would not be good. However, I advocate a bit of caution. I have recently come across a company which is trying to build four medium-sized biomass-powered electricity generating stations using brash, tops, coppice, sawmill offcuts and other non-value timber. They are putting them at different ends of the United Kingdom so they have good local sources for the timber. Each power station will be producing between 12 and 25 megawatts and will cost about £60 million. The material is sustainably sourced and will encourage the use of thinnings. For those noble Lords who do not know, thinnings are quite often not taken out because it costs more to do so than to leave them. If you could take more thinnings out it would create more high-value timber for construction or other uses.

I sympathise with the amendment but if it were applied across the board, with a generalised percentage, it would cripple a highly sustainable, beneficial biomass-generating business before it got off the ground. Before an amendment of this nature is enacted, it either needs to be reworded or we need a statement from DECC guaranteeing a flexible interpretation.

[Lord Berkeley (Lab)]

I support the amendment in principle, but I am concerned. The noble Lord, Lord Cameron, has made some interesting points. I have been told that the biomass market, as we see it today, probably has a life of about 10 years. Investment is going into ports at both ends for the wood, as well as in shipping lines and transport from the ports. I declare an interest as chair of the Rail Freight Group. A lot of investment is going into new wagons or converting coal wagons to keep this stuff dry, because if it gets wet it is not very nice. The message in the industry is that they have got 10 years and then the nuclear power station at Hinkley point, and perhaps others, will be on stream, after which there is no guarantee of what will happen.

If that is the case and if, in the interim, the furniture industry of which the noble Lord, Lord Jenkin, spoke, is decimated, that will not be very good. We will have had 10 years of biomass but no furniture industry after that. I do not know whether that is the case. There are clearly many millions of tonnes of biomass in other parts of the world, but there are problems certifying where it comes from. Also, I am told that if it comes in pellets you cannot convert it to woodchips and vice versa. I would hate to see an industry like that decimated just for 10 years of using local biomass which then proves to be uneconomic and where the plant closes down.

[Viscount Ridley (Con)]

My Lords, I wish to speak briefly in support of the amendment. I think I am right in saying that the Secretary of State has expressed a view similar to that of the amendment. Speaking to the BBC on 18 July, he said:

“Making electricity from biomass based on imported wood is not a long-term answer to our energy needs—I am quite clear about that.”

We are in a bit of a bind here, because the Department of Energy and Climate Change has said it expects about 90% of the biomass that will be burned in power stations to be imported. However, the wood panel industry is clear in saying that even if 10% of what is going to be burnt is produced domestically, it will have a devastating effect and could displace a lot of the wood panel industry, which it estimates would increase carbon emissions by about 6 million tonnes, because if you are burning something today instead of incorporating it into a piece of furniture, you are turning it into CO₂ much sooner. Making furniture also produces carbon emissions, but considerably less—about one-quarter or one-fifth of the amount.

Perhaps I may also take this opportunity to ask the Minister for clarification on my Written Question earlier this year about carbon dioxide emissions from burning biomass. It is clear that in the short term, biomass is about the highest carbon dioxide-emitting fuel there is. If you recapture that over a period of 35 or 40 years for softwood, and rather longer for hardwood, one can in the long run perhaps make the case that biomass is carbon neutral. However, all the calculations that I have seen show that because of the need to drive off water, and due to its chemical composition—there is a difference between cellulose which has hydrated hydrogen in it as opposed to coal which does not—the use of biomass will increase our carbon emissions over several decades. I thought that that was the period we are most worried about, so I am a little puzzled about the current dash for wood, as I call it.

[Baroness Verma]

My Lords, I am grateful to my noble friends Lord Jenkin and Lord Roper for tabling the amendment and prompting debate on the issue of using UK-sourced woody biomass for electricity.

The amendment would give the Government powers to set limits on the amount of UK-sourced wood used by each biomass power plant. As I outlined in Committee, one of the aims of the Government’s bioenergy strategy is that any support should consider the consequences of policy interventions on the wider energy system and economy, including non-energy industries. It is the Government’s view that where this and the other aims listed in the UK Bioenergy Strategy are met, bioenergy can make a significant contribution to meeting our renewable energy, energy security and emissions-reduction needs at low cost.

We have taken a number of measures that we believe are sufficient to ensure that the biomass policy meets this aim. The department made an assessment of the amount of woody biomass that may be available to the UK without significant impacts on other sectors. We then made an assessment of the amount of UK woody biomass that is likely to be used by electricity companies, which was well within the forecast availability. We have since then put in place measures to monitor these forecasts and their level of accuracy. We asked large-scale electricity generators using woody biomass to disclose to us on a voluntary basis the amount of UK wood that they estimate they will procure and use over the next five years, and we require this information to be signed off by the company’s board. We are pleased to say that all the operators responded to our request for information on their wood procurement. The department has now aggregated and published this data, and we will undertake to do this annually. The data provided by the operators supports the original forecast of wood use for electricity. Domestic wood supplies will not be their target.

In addition, we have aggregated the results of the sustainability reports that generators are required to provide to Ofgem. We have also now published on the website this aggregated data for the years 2009 to 2012. They also support the original departmental estimates of wood use for electricity and show that wood demand has remained within, rather than risen above, the 1.3 to 1.6 million oven-dried tonnes per annum. As well as these specific measures covering UK wood, the Government have made a number of proposals to limit the amount of biomass power that will be brought forward. We have limited the government support that can be claimed by former coal plants until 2027 under the contracts for difference.

21:30

We have set a 400 megawatt cap on the amount of new build dedicated biomass without combined heat and power that can expect to receive support under the renewables obligation band for dedicated biomass and we are proposing not to provide a strike price for new build dedicated biomass electricity under EMR. These proposals will have the result of limiting potential demand for UK wood, therefore reducing the likelihood that this becomes a future concern.

In response to my noble friend Lord Ridley’s question about air pollution from biomass worsening, the large-scale combustion biomass is regulated under the large combustion plant directive. This sets minimum emission limits for a range of polluters for both fossil fuel and biomass plants. This will soon be replaced with tighter emissions controls under the industrial emissions directive. At a smaller scale the combustion of biomass is regulated under a variety of regulations from the Clean Air Act to local planning laws.

Given the measures we have taken and the data we are seeing on demand for UK wood for electricity, we see it as unduly burdensome to impose new limits on individual operators. The key point on which we need to focus is assessing the development of the entire industry, rather than setting limits for individual plants, which could cause unintended consequences and needlessly disrupt this useful technology. I hope my noble friends will be reassured by this and agree to withdraw their amendment.

[Lord Jenkin of Roding]

My Lords, I am very grateful to all the noble Lords who have taken part in this short debate. Clearly this is a subject of some interest around the House. I can cap the story of the noble Lord, Lord Cameron, because I saw some people who build very small generators entirely fired by what is left over in a forest after the useable timber is all taken away. They are apparently making quite a good living out of that. Individual factories and distilleries may be fired in that way so there must be an enormous amount of that sort of thing going on.

There is this bit in the middle where, as other noble Lords have said, there is a competition between the biomass burners and those who hope to have wood for their furniture making and panelling and so on. The noble Baroness has answered my question. There is no change from what she told the Committee in the summer. In these circumstances, there is not much point in pressing the case. I therefore beg leave to withdraw the amendment.

Amendment 25 withdrawn.

Amendment 26

Moved by

[Baroness Verma]

26: Clause 15, page 11, line 23, at end insert—
“( ) the determination of an application for a modification agreement under section (Modification of standard terms);”

Amendment 26 agreed.

Clause 17: Order for maximum cost and targets

Amendments 27 to 36

Moved by

[Baroness Verma]

27: Clause 17, page 12, line 6, leave out “The Secretary of State may by order provide” and insert “Regulations may make provision”

28: Clause 17, page 12, line 7, leave out “direction under section 10” and insert “notification under section (CFD notifications)”

29: Clause 17, page 12, line 10, leave out “order” and insert “regulations”

30: Clause 17, page 12, line 12, leave out “direction by virtue of this Chapter” and insert “notification under that section”

31: Clause 17, page 12, line 13, leave out “direction” and insert “notification”

32: Clause 17, page 12, line 14, leave out “order” and insert “regulations”

33: Clause 17, page 12, line 15, leave out paragraph (c)

34: Clause 17, page 12, line 20, leave out “order” and insert “regulations”

35: Clause 17, page 12, line 22, leave out “order” and insert “regulations”

36: Clause 17, page 12, leave out lines 23 to 30

Amendments 27 to 36 agreed.

Clause 18: Consultation

Amendments 37 to 39

Moved by

[Baroness Verma]

37: Clause 18, page 12, line 32, leave out “or an order under section 17”

38: Clause 18, page 12, line 45, at end insert—
“( ) Before publishing standard terms under section (Standard terms) the Secretary of State must consult such persons as the Secretary of State considers it appropriate to consult.”

39: Clause 18, page 13, line 1, leave out “The requirement” and insert “A requirement under this section”

Amendments 37 to 39 agreed.

Clause 28: Power to make capacity market rules

Amendment 40

Moved by

[Baroness Verma]

40: Clause 28, page 18, line 21, at end insert—
“(4A) Provision made by virtue of subsection (3)—
(a) must secure that capacity market rules made by the Authority may not confer functions on the Authority except with the consent of the Secretary of State;(b) may permit any such consent to be given either in relation to particular capacity market rules or generally in relation to capacity market rules of a particular kind.”

Amendment 40 agreed.

Amendment 41 not moved.

Clause 33: Principal objective and general duties

Amendments 42 and 43 not moved.

Clause 34: Regulations under Chapter 3

Amendments 44 and 45

Moved by

[Baroness Verma]

44: Clause 34, page 20, line 34, leave out subsections (5) and (6) and insert—
“(5) Subject to subsection (6), an instrument containing (whether alone or with other provision) regulations under this Chapter may not be made unless a draft of the instrument has been laid before and approved by a resolution of each House of Parliament.
“(6) An instrument containing only regulations within subsection (7) is subject to annulment in pursuance of a resolution of either House of Parliament.
(7) The regulations within this subsection are—
(a) electricity capacity regulations which—(i) only make provision within section 27, and(ii) are not the first set of electricity capacity regulations to make such provision;(b) regulations under section 32 which do not make provision amending or repealing a provision of an enactment contained in primary legislation.”

45: Clause 34, page 20, line 42, at end insert—
“( ) If, but for this subsection, an instrument containing electricity capacity regulations would be treated for the purposes of the standing orders of either House of Parliament as a hybrid instrument, it is to proceed in that House as if it were not a hybrid instrument.”

Amendments 44 and 45 agreed.

Clause 35: Capacity market rules: procedure

Amendment 46

Moved by

[Baroness Verma]

46: Clause 35, page 21, line 26, at end insert—
“( ) Subsection (7) may be satisfied by consultation before, as well as consultation after, the passing of this Act.”

Amendment 46 agreed.

Clause 37: Pilot scheme for electricity demand reduction

Amendment 47

Moved by

[Baroness Verma]

47: Clause 37, page 22, line 6, at end insert—
“and such arrangements are referred to in this section as “a pilot scheme”.
(2) The Secretary of State must review the operation and effectiveness of any pilot scheme.
(3) The Secretary of State must set out the results and conclusions of the review in a report to Parliament—
(a) by laying a copy of the report before each House of Parliament, or(b) if the Secretary of State determines that the report should be made orally, by making a statement to the House of Parliament of which that Secretary of State is a member.(4) A report under subsection (3) must be made as soon as reasonably practicable after the conclusion of the pilot scheme to which the report relates.”

[Baroness Verma]

My Lords, In Committee, a desire was shown for more detail on the pilot: when it will happen, how long it will last and when the results will be reported. A demand-side response—short-term load shifting—is already part of our plans for a capacity market. The Government’s preference is that electricity demand reduction—permanent reductions in demand through the efficient use of electricity—can also join the capacity market in the future. However, given the uncertainties around a financial incentive for efficiency and its operation in the capacity market, we intend to pilot this approach before drawing conclusions. This work is a priority and, since Committee, the Secretary of State has announced the availability of at least £20 million for the pilot, which is expected to start in summer 2014 and run for around two years.

There have been calls to provide assurances that information on the outcome of any electricity demand reduction pilot would be provided to Parliament. In line with best practice, it was already the Government’s intention to report the results of the pilot. However, in order to reassure the House, I am moving this amendment so that reporting the results of the pilot to Parliament becomes a statutory requirement. That will be done as soon as practicable after the results of the pilot are available. I beg to move.

[Lord Roper]

My Lords, the noble Lord, Lord Jenkin, and I have Amendment 48 in this group. The group also includes Amendment 51, tabled by the right reverend Prelate the Bishop of London, which would insert a new clause.

When the draft Energy Bill was published in May 2012, a number of people were concerned that there was not sufficient indication of measures to reduce electricity demand, which is obviously the most satisfactory way of avoiding having to build further power stations. Both in the pre-legislative scrutiny in another place and in the informal committee chaired by the noble Lord, Lord Oxburgh, the question of demand-side measures was discussed. As a result of that, the Government launched a consultation in November last year and suggested a number of options for electricity demand reduction. Interestingly enough, out of the options on offer, a majority of the respondents favoured a system of electricity efficiency premium payments, which would provide electricity users with a payment on top of the savings that result from reduced use of electricity.

However, when DECC published its consultation response in May this year, it suggested that its preferred route to delivering permanent reductions in electricity demand was via a capacity market. That was of course contrary to the majority of the views expressed in the consultation. Similarly, the response dismissed the idea of introducing a premium payment without adequate explanation. None the less, on Report in another place, the Government introduced Clause 37, allowing the Government to run a pilot scheme for electricity demand reduction. The clause does not explicitly limit the Government to a single pilot or specify the mechanism that they might use. However, given what the Government said in their response to the consultation, there is a pretty clear indication that they wish to look at the capacity market only.

There are a number of uncertainties about the appropriateness of the capacity market, particularly for small and even medium-sized consumers. I am not sure what the right reverend Prelate might say about churches which are considering reducing their electricity demand and whether they would be large enough consumers to go into such a capacity market. None the less, there was a discussion in Grand Committee on an amendment that I tabled suggesting that there should be more than one pilot so that various methods could be explored as ways of dealing with this question of electricity demand reduction. Amendment 48, which I and the noble Lord, Lord Jenkin, have tabled, requires the Government to bring forward multiple pilot schemes so that not just the capacity market but premium payments and perhaps some other form of incentive could be considered. That would demonstrate which scheme or schemes might be most effective in delivering permanent demand reductions and scale.

I very much hope that the Government will give serious consideration to this proposal because I believe it will give us rather more information as a result of the pilot in order to make decisions as to what can be done. I should say that I have a good deal of sympathy with the new clause tabled by the right reverend Prelate which calls on the Government to prepare and implement a strategy for delivering further reductions in demand which the Government themselves say is achievable.

[Lord Grantchester (Lab)]

My Lords, I rise to speak to Amendment 50 in this group. In our Committee proceedings, we looked at the demand side response clauses introduced at the late stage of Report in the other place. We noticed that they were late additions to the Bill, yet they cannot be underestimated as there can be no simpler way to reduce the pressures on the capacity market, increase resilience, improve decarbonisation, and enhance efficiency and security of supply. Reducing energy demand is much cheaper than building new generating capacity. It is also the cheapest way to protect households from rising bills and cut carbon emissions.

Clause 37 introduced a spending power to authorise the spending of money to fund a pilot or pilots, yet concern was expressed about whether sufficient funds were being made available. Anxiety was also expressed that pilot schemes were proposed to take place in the capacity market, as the response to the consultation in May this year made clear that this was the Government’s preferred way forward.

Difficulties were expressed that the capacity market is designed primarily to ensure capacity during potential shortages or troughs in supply. In these circumstances, it will only reward demand reduction projects that reduce the amount of generating capacity needed at such times, and not reward projects that reduce demand more generally. The capacity market, therefore, only rewards energy efficiency for its security benefits and not its much larger benefits such as emissions reductions and affordability, as well as behavioural change policies.

Many submissions that we received wished to see multiple pilot schemes to include premium payments as well as capacity markets and other innovative incentive schemes. This was proposed to enable small businesses and generators to be able to access payments and to press the Government that demand reduction is not simply an afterthought to bolt onto the capacity market, designed around the provision of supply by large-scale plant prioritised through the workings of the capacity auction.

There is also the question of determining what capacity is required once demand has been reduced. These thoughts led us to consider that the Government need to set a coherent strategy about delivering permanent demand reduction and is the purpose of Amendment 50. The amendment adds to the Government’s own Amendment 47 and the amendment in the name of the noble Lord, Lord Jenkin. These only refer to pilot schemes and the Government’s Amendment 47 is eminently sensible. However, my amendment proposes that the Government must think further and more deeply and place demand reduction in a wider strategic context.

I also tabled it as an alternative to Amendment 51, proposed by the right reverend Prelate the Bishop of London, that seeks to place a numerical target for demand reduction. The difficulty here is that I have seen three different figures from three different methodologies. First, in November 2012, the McKinsey final report identified 92 terawatt hours of potential savings not covered by existing policy by 2030. Alternatively, the energy efficiency strategy, also in November 2012, used a different method and identified 69 terawatt hours of savings by 2020, based on existing and future policy. Yet in May this year, the Government used yet another method in response to the electricity demand reduction consultation where the figure of 32 terawatt hours saving was identified.

Will the Minister clarify which method and which figures her department recognise as correct and the most appropriate? My amendment avoids this difficulty being placed on the face of the Bill and seems an eminently sensible concession that the Government should agree to.

21:45

[The Lord Bishop of London]

My Lords, biblical studies teach me that when you have two amendments that look as much alike as my amendment and that of the noble Lord, Lord Grantchester, you must look for an Ur-text. Indeed, there is an Ur-text, as we all know, and the figures in my amendment are simply the latest figures available from the Government. This is intended to be a constructive and supportive amendment, which also reflects the concern mentioned by the noble Lord, Lord Roper, about the sole emphasis on the capacity market not really catching the full subject here.

According to the Secretary of State in his own foreword to the response to the consultation, which was published in May of this year, a 9% reduction in overall demand could save electricity equivalent to the output of four power stations in one year. I do not want to pose as an expert, of which there are many in this House, but I have been trying in my own diocese of London to improve energy efficiency. I have taken a keen personal interest in the various efforts and our churches have actually achieved a 22% saving in energy consumption between 2005 and 2011.

I represent the voice of the consumer—a rather small consumer. Nationally, through the environment campaign of the Church of England, which I chair, we have invested in a mixture of retrofit measures to address the heating and lighting of a stock of buildings that were not originally built with energy efficiency in mind. Renewable technology and behavioural change have helped an institution such as ours, which emits as much carbon as a large supermarket chain, to use energy more efficiently while maintaining open buildings at the heart of the local community countrywide. I am particularly proud of the fact that our new vicarage at St John’s, Wembley, was awarded the highest score ever under the code for sustainable homes at the 2012 awards.

We are not great experts on the general theme but we represent people who are seriously anxious to support the government policy and to operate in the most efficient way possible. We have learnt from colleagues in other European countries. In Sweden, which faces greater climatic challenges, the building code for new constructions has been strengthened; smart meters have been installed in almost all households—I understand that this is proposed for the UK but not yet implemented; public funding for research and innovation has been increased; and a new incentive programme has been launched.

Of course, these and other ideas were set out in the 2012 consultation, and the Green Deal is addressing the fact that in developed western countries the built environment uses half of all energy and generates half of all greenhouse gases, and there is very substantial wastage through walls, et cetera. But even the chief executive of the Green Deal Finance Company, Mark Bayley, has admitted that complexity is one reason why the take-up has been so disappointing. Many of those in fuel poverty, a substantial percentage of whom live in London, pay inflated prices through meters in their homes, and the current position whereby the more energy you use, the more likely it is that the tariff will be reduced, is surely unsustainable as well as unfair. This Bill, which I heartily support in the main, provides an opportunity to reflect on the wider costs of our energy habits and how to make the best use of our resources without penalising the poorest in our society. In the UK 6.5% of households say that they cannot keep their homes warm, as against 1.5% in Sweden. The figures for children living in fuel poverty, at 1.6 million, are especially alarming.

The amendment relies on the Government’s own latest estimates of the potential for demand reduction. It would seem obvious that a strategy setting out cost-effective policy options that go beyond what is currently being proposed by the Government should be published to show how these reductions can be achieved.

[Lord Teverson (LD)]

My Lords, I will speak briefly on Amendments 50 and 51. My heart is with them completely, and I congratulate the right reverend Prelate on his award. I am sometimes involved in green awards and energy efficiency—an area that has often been left out of these debates—and it is great to have someone who has been a recipient of one of those.

The difficulty with these two amendments is that they target a specific reduction in electricity. Coming back to the decarbonisation debate that we had earlier on today, better decarbonisation can, of course, actually be achieved by having an increase in electricity. One of the big challenges of decarbonisation is moving the transport sector from fossil fuels either into biofuels or, particularly, into electricity, using electric vehicles. We also eventually want to move home heating from gas into electric—non-carbon-generated electricity. It therefore makes it very difficult in these areas to have targets on terawatt-hours or proportions or whatever; you have to take it back to exactly what the right revered Prelate said, which is energy efficiency. I am a great advocate of the green deal, and it certainly has its issues at the moment and I hope it succeeds, though perhaps it needs a number of changes to do that. At the end of the day, however, the real thing we have to do is just to go out there and, perhaps rather brutally—whether it is street by street or village by village—ensure that we upgrade domestic and industrial premises so that they are energy efficient. Going down the route of specific electricity-target reductions could actually work against decarbonisation and the way in which we are trying to reduce carbon emissions in this country. I am absolutely with the intent, but I think the method in this case has great difficulty.

[Lord Berkeley]

My Lords, the noble Lord, Lord Teverson, has some very good points there. If, as I do quite often, you go around properties in different parts of the continent, you find that the energy usage and consumption and insulation are generally a lot better than many of our buildings here. I have a feeling, having talked to a few people in the building trade, that it is because the standards to which we build our properties actually require less insulation and draught-proofing than those of many other countries. It may be because we think that the temperature is always the same here, so it does not really matter.

Another problem that we have to sort out soon is the greater use of air conditioning in buildings, because in some countries—I do not think it is the case here—the current use of energy for air conditioning is a great deal more than that for heating. It is possible to design buildings which need much less air conditioning. Noble Lords will have seen them in the architectural press at some time. I do not know why we do not encourage more of this in this country; it has been an issue for years.

However, I am still not convinced that the energy suppliers have any incentive to sell less electricity or gas. It is a bit like the water companies: they love having leakages and no meters, because they sell more water and seem to think that is a good idea in places or times where there is a shortage. We are stuck with some perverse incentives. I agree that these are probably not the right amendments to achieve what we want, but it is something that we need to do to get the incentives, insulation and building regulations right, and look at the air conditioning and the design of our buildings so that they are fit for purpose in the time of global warming, as we debated earlier.

[Baroness Verma]

My Lords, I welcome the continuing interest shown in electricity-demand reduction. My noble friend Lord Roper’s Amendment 48 raises an issue that came up a number of times at both Second Reading and Committee—namely, that multiple pilots are necessary in order to test a variety of approaches. One of the pilot’s key aims is to test the Government’s preferred approach of delivering electricity demand reduction through the capacity market. That said, from a legal viewpoint the amendment is unnecessary as the Secretary of State is already able to design and run a pilot, or pilots, to test different approaches if this is necessary.

Before I move on, I, too, add my congratulations to the right reverend Prelate the Bishop of London on the great energy reductions he has achieved, which just shows that behaviour change towards energy usage can make a huge amount of difference. I commend what the right reverend Prelate has done. He also mentioned the very important Green Deal and smart meters. These measures will help to revolutionise the way we approach energy usage. It is about being able to ensure that consumers understand the usage of energy, which is why I listened very keenly to what the right reverend Prelate said. Where the Green Deal is concerned, 80,000 assessments have been carried out. Under ECO, many tens of thousands of homes have already benefited from the Green Deal. Like my noble friend Lord Teverson, I think the Green Deal is an excellent vehicle for being able to bring greater efficiency towards homes.

My noble friend Lord Roper and the noble Lord, Lord Grantchester, spoke about there being more than one pilot. We would rather start with what we consider the preferred option but we do not rule out there being multiple approaches simultaneously. If we have too many, it will be difficult to evaluate. We want to be sensible and see a range, if that is what is needed, but we have a preferred approach. It would be better for us as a Government to see that preferred approach dealt with first. There is nothing in the Bill to stop us having more than one approach.

I reiterate that Clause 37 is simply a spending power, required to authorise the spending of Government money. I appreciate the concern to ensure sufficient funds are available for piloting. We considered raising funds for the pilot using the capacity market powers but rejected this approach because it would delay the start of the pilot, which we announced is expected to start next summer.

Amendments 50 and 51, from the noble Lord, Lord Grantchester, and the right reverend Prelate the Bishop of London, would require the Secretary of State to publish a strategy to reduce a stated amount of electricity demand by 2020 and 2030. While I welcome the principle behind these proposals, the Government have already published a number of documents, including on how we will meet our existing energy efficiency commitments. That is through the energy efficiency strategy which will be updated later this year, the DECC energy and emissions projections, and the Government’s response to the EDR consultation. These documents already provide a comprehensive view of Government strategy. As the pilot is designed to improve our understanding of the cost-effectiveness of EDR in relation to that of a variety of supply-side and demand-side measures, we do not consider it appropriate to set a specific EDR target.

The noble Lord, Lord Grantchester, asked about the difference in the estimates that the department has given out. The estimate of the untapped potential was revised from 92 terawatt hours to around 32 terawatt hours by 2030 because there is considerable uncertainty as to the exact level of potential for electricity demand reduction. We believe that this figure represents a much more sensible picture of what can be achieved. That analysis has also been subject to external peer review.

In conclusion, we have listened to concerns about reporting the results of the pilot and have introduced an amendment on this. Our existing legal powers already allow us to test other approaches if it becomes necessary. We believe the minimum £20 million allocated to the pilot is sufficient to support a range of projects in different sectors in these difficult times. We already have an energy efficiency strategy, which will be updated shortly. I hope that my noble friend Lord Roper, the noble Lord, Lord Grantchester, and the right reverend Prelate the Bishop of London will agree to withdraw their amendments. I beg to move the amendment that stands in my name.

Amendment 47 agreed.

22:00

Amendment 48 not moved.

Amendment 49

Moved by

[Lord Oxburgh]

49: After Clause 37, insert the following new Clause—
“Capacity payments: gas
The Secretary of State shall have the power to make such arrangements as are necessary for capacity payments to be made for the supply of gas if it is deemed likely that this could allow gas to be supplied to consumers at lower prices or more securely than otherwise.”

[Lord Oxburgh (CB)]

My Lords, this, too, is intended to be a helpful and supportive amendment. During the various clauses that we have debated today, the costs of natural gas to consumers and the effect on their prices have come up time and again. As we go forward into the coming decades, gas from the North Sea will get progressively less, and we shall be more dependent on imported liquefied natural gas, or LNG. The market shows strong seasonal spikes already, with the winter price significantly higher than that in the summer.

This amendment offers the Secretary of State an extra tool in his tool box for controlling gas prices that are paid. It allows the Secretary of State to invite bids from anyone who supplies gas to undertake to make available to the market an agreed amount of gas over an agreed period at not more than a particular price. It is not clear that this will be necessary, but it could be. I beg to move.

[Baroness Worthington]

My Lords, I support Amendment 49 of the noble Lord, Lord Oxburgh. Throughout the evening and the passage of this Bill we have discussed the need for competition and for keeping downward pressure on price a great deal. It is clear, as the noble Lord, Lord Oxburgh, has pointed out, that the majority of the increases in consumer and business bills in recent years have been down to the increase in gas prices.

It is regrettable that we heard recently from British Gas that it had decided to withdraw a project to enhance and expand its gas storage capabilities. This is another sign that there is insufficient downward pressure on prices. It probably suits British Gas quite well to have prices rising, because that leads to higher profits. It is probably the wrong body to make any kind of economic assessment on whether it makes sense for them to invest in gas storage. There has to be some form of intervention from government to ensure that there is timely investment in gas capacity.

Gas prices fluctuate between the summer, when demand is low, and winter, when it is high. If we can smooth that out and provide a more stable price throughout the year, it makes sense to have a tool in the armoury, as the noble Lord, Lord Oxburgh, has said, to facilitate this. I am sure that the Minister will come back with some thoughts on this. It is quite a new element to introduce to the Bill at this late stage and perhaps an amendment of this kind is not the way to deliver it, but I strongly support the sentiment behind it. As the noble Lord, Lord Oxburgh, has pointed out, we are seeing our North Sea gas reserves diminish and we are moving into a more international situation in which we rely on gas from many different parts of the world. Much of it is being delivered by ship. Ships can change course in the middle of the ocean if they see fit, if offered a better price. Our reliance on gas needs to be underpinned and secured through greater capacity and gas storage.

I hope that the Minister can say something about how the Government intend to bring more of this to ensure that we are not facing a situation where it is in everyone’s interest apart from the consumer to have gas prices rising continually, and that there is some way in which they can intervene to bring investment to this important aspect of energy security and affordability.

[Baroness Verma]

My Lords, I am grateful to the noble Lord, Lord Oxburgh, for his amendment, which returns to the matter of gas storage that he raised in Committee. My department published analysis and made a Statement in the other place on 4 September on precisely this issue and I am glad to discuss it today.

The amendment is intended to enable the Secretary of State to make arrangements to provide capacity payments in exchange for the supply of gas more securely, or at lower prices, than would otherwise be possible. I should make it clear from the outset that the capacity market is not intended to support the gas market. Rather, the capacity market is an integral part of our electricity market reform programme.

On the face of it, this amendment aims to facilitate a simple and attractive concept: cheaper and more secure gas for consumers. While the Government recognise that rising energy bills are a worry for many households and businesses, this amendment is not the solution. It is difficult to imagine that any supplier of gas would sign a contract to sell gas at a future date at a discount to the prevailing market price. The capacity payment is required to offset the risk to the supplier of being out of pocket and it would need to top up any shortfall to the point where there would be no net benefit to consumers.

Specifically, it has been argued that capacity payments may facilitate the construction of additional gas storage capacity, which offers the potential to buy cheaply in summer and store the gas until it can be sold when prices are higher in winter, as the noble Baroness, Lady Worthington, pointed out. This is a service that the market currently provides. Storage capacity is currently increasing, with two facilities having been completed in the past 18 months and two more facilities under construction. There are 10 more projects with major planning consents in place, which are awaiting the right commercial signals to invest. Where the market is not already providing this signal, supporting a storage project through subsidy, whether by a capacity payment or other means, would just transfer the risk currently faced by the market to the Government. In other words, it would be passed on to consumers and taxpayers.

DECC considered in detail the case for supporting gas storage. Analysis shows that, although there are interventions that could enhance our gas security, under most scenarios they would not do so cost-effectively. All options risk adding disproportionate costs to energy bills and risk distorting a well functioning GB gas market. We will not be taking these interventions forward and do not envisage needing the powers that these amendments propose.

As I explained earlier, we are introducing a capacity market to provide for capacity payments to ensure security of our electricity supplies. This is because the electricity market faces new challenges. These include the planned closure of a large proportion of our existing generating capacity and an increased amount of low-carbon generation. That means that there is an increased need for additional reliable capacity. The capacity market is specifically designed to address this.

These issues do not translate to the gas market. The security of gas supply outlook is robust. There is spare supply capacity: the available capacity of nearly 700 million cubic metres a day is far in excess of even the highest recorded daily demand of 465 million cubic metres. The gas system also has greater flexibility to rectify demand/supply imbalances within the balancing period and, for gas, unlike electricity, there are readily available means for storage which the market is currently expanding. The Government therefore do not consider this amendment to be necessary. I hope that the noble Lord, Lord Oxburgh, has found my explanation reassuring and on that basis will withdraw his amendment.

[Lord Oxburgh]

My Lords, I have to confess that I did not find the Minister’s reply at all reassuring. The fact that existing capacity meets the maximum plausible demand is not quite the point. The Minister might be aware—or perhaps would remember if she had been in her post a year or two back—that all we need is a major fire at one of our terminals or a catastrophe of some kind and we would be in very severe difficulties. In drafting this amendment, I deliberately did not specify the means—I did not specify gas storage. All I specified was the end. Whether someone is willing to provide gas at a fixed price for a fixed period and how they do it were deliberately not specified. For that reason, some of these arguments are a little wide of the mark.

I am not as convinced as the Minister that the existing gas market works at all well. It is in the interests of the major gas suppliers to hold supply back and then to dribble it in at times of high demand. That is when they make a lot of money. There is no one in the loop at present who protects the interests of the consumer. It is certainly not in the interests of the gas supply companies to do so. I am disappointed that the Government are not taking a more active position on this matter. However, if they are determined to turn their back on this, there is nothing more to be done today and I beg leave to withdraw the amendment.

Amendment 49 withdrawn.

Amendments 50 and 51 not moved.

Schedule 2: Investment contracts

Amendments 52 to 58

Moved by

[Baroness Verma]

52: Schedule 2, page 117, line 2, leave out from “generator”” to “intends” in line 3 and insert “, in relation to an investment contract, means—
(a) a person who at the time the contract is entered into”

53: Schedule 2, page 117, line 5, after “who” insert “at that time”

54: Schedule 2, page 117, line 8, after “who” insert “at that time”

55: Schedule 2, page 117, line 19, at end insert—
“( ) In the case of a contract entered into with more than one person, the reference in sub-paragraph (1)(c) to the parties is a reference to the Secretary of State and any of those persons who is an electricity generator.”

56: Schedule 2, page 120, line 15, leave out sub-paragraph (5) and insert—
“(5) An instrument containing regulations of any of the following kinds may not be made unless a draft of the instrument has been laid before, and approved by a resolution of, each House of Parliament (in each case, whether or not the regulations also make any other provision)—
(a) the first regulations which make provision falling within paragraph 10,(b) the first regulations which make provision falling within paragraph 11, or(c) regulations which make provision falling within any other paragraph of Parts 1 to 3 of this Schedule.”

57: Schedule 2, page 120, line 20, at end insert—
“( ) If, but for this sub-paragraph, an instrument containing regulations would be treated for the purposes of the standing orders of either House of Parliament as a hybrid instrument, it is to proceed in that House as if it were not a hybrid instrument.”

58: Schedule 2, page 121, line 28, leave out sub-paragraph (10) and insert—
“(10) Any sum which—
(a) an electricity supplier is required by virtue of regulations to pay to the Secretary of State, an investment contract counterparty or a CFD counterparty, and(b) has not been paid by the date on which it is required by virtue of regulations to be paid,may be recovered from the electricity supplier by the Secretary of State, the investment contract counterparty or the CFD counterparty (as the case may be) as a civil debt due to that person.”

Amendments 52 to 58 agreed.

Amendment 59

Moved by

[Baroness Parminter]

59: After Clause 42, insert the following new Clause—
“Strategy on interconnection
Within 12 months of this Act coming into force, the Secretary of State shall bring forward a strategy for the UK to increase its interconnection links with other European countries, in order to support the continued development of a European internal electricity market.”

[Baroness Parminter (LD)]

My Lords, this is the same amendment I moved in Committee, where I spoke of the benefits of greater interconnection across Europe. Given the lateness of the hour and the unanimity around the Committee at that time, I do not intend to repeat those arguments, but it is important to remember that if we are to deliver that greater level of interconnection we are going to need more investment in infrastructure. That means that the Government need to make quite clear their commitment to prioritising interconnection in the same way that they have with the capacity market and demand side reduction measures in this Bill.

I was grateful for the warm words from the Minister about the Government’s commitment to interconnection when I moved this amendment in Committee, as I said at the time. Therefore, I hope this evening that over the summer, those warm words have translated into a rather firmer commitment to action.

[Lord Teverson]

My Lords, I want to reinforce the comments of my noble friend Lady Parminter. One of the great challenges of the electricity supply industry is to de-peak its supply. One of those is demand side, but the other is very much around alternative sources of supply. Energy storage is not really where it needs to be at the minute, but interconnection is a technology that has been around for decades. It works and we should multiply it. I know that the Government have a number of schemes that they are looking at currently. I welcome those and congratulate them on being so proactive in this area. I hope that the Government and the Minister will be able to propel this even faster and further by taking notice of my noble friend’s amendment.

[The Earl of Caithness (Con)]

My Lords, while I support in principle what my noble friend Lady Parminter is trying to do, I am concerned about her wording. The idea that a Government should prepare a strategy, and then that is it, leaves a lot of questions begging. I suppose the Government would have to implement that strategy, but the amendment does not specify that.

My noble friend Lady Parminter will recall the evidence we heard when we were on Sub-Committee D together. Therefore, perhaps this is a good opportunity to ask my noble friend the Minister a couple of questions regarding what progress has been made with the energy infrastructure regulation, in particular the PCIs, so that that can be implemented. It is no good, we discovered, having one side that was keen to do an interconnection if the other side was not.

That leads me on to the seemingly constant battles between the regulators in each country. We had evidence from the Agency for the Cooperation of Energy Regulators and the European Network of Transmission System Operators for Electricity about that. Has there been any progress between the regulators? If there has, that would make future interconnection much easier.

22:15

[Lord Cameron of Dillington]

My Lords, I support the amendment. I, too, served on Sub-Committee D and this was a major part of the message in our report No Country is an Energy Island—a very apt name.

The joy of a pan-European grid—or even an intercontinental grid, because the geothermal springs of Iceland could bring electricity down to the industrial heartlands of the UK—and interconnection would be to allow intermittent renewables to complement each other. When it is not windy in Germany, for instance, it might be sunny in Italy; when it is windy in Portugal in the middle of the night, that power can go to Poland where they are just waking up, and so on. Such interconnection could bring a whole new justification to the renewables yet to be built. Intermittency could become an issue of the past and our energy security would be greatly enhanced.

Furthermore, if this interconnection were to grow, it would not only help to keep the lights on but should ensure that we could get the cheapest and most economic electricity available for both domestic and industrial uses. It is obviously going to cost a lot of money and will take a lot of planning. There are many regulatory and political obstacles to be overcome, not least the public acceptance of more pylons. However, as with everything else in the electricity industry, we must start planning now—that is where I am at odds with the noble Earl, Lord Caithness—in order to get these long-term gains. That is why I strongly support the amendment.

[Lord Whitty (Lab)]

My Lords, I register our support on these Benches for the amendment, although the Minister will already have detected that this is a big conspiracy by Sub-Committee D to get its report discussed again at this late stage. I was party to that. However, as the noble Lord, Lord Cameron, has said, there is enormous possibility here.

I will make only two points. First, as long as there is a sniffy attitude towards interconnectors in any of the European energy markets, we are all going to be operating at higher cost than we need, with greater misery for consumers and, eventually, higher cost to the taxpayer. Secondly, this matter is not separate from the rest of the Bill. When asked earlier in the proceedings where their CFDs could apply in relation to supply from French nuclear power stations or Irish wind farms, the Minister said that in certain circumstances they probably could. That is important. It is not tomorrow’s solution, but it could be quite important as long as they were connected with projects here. The same question arises with the capacity market. This is potentially a hugely important way in which we maximise our capacity, and therefore the report to which the noble Baroness, Lady Parminter, refers is important. Whether the Government want to put it in the Bill or not, they really ought to be looking at the strategy for interconnectors as an integral part of overall energy policy.

[Baroness Verma]

My Lords, I am grateful to my noble friend Lady Parminter for raising the matter of electricity interconnection, which the Government agree is an important area given the range of potential benefits. Through my notes I will also be able to answer my noble friend Lord Caithness’s two questions.

We have previously considered the amendment in Committee. The Government considered the arguments made and, earlier this month, committed to publishing a policy statement on electricity interconnection by the end of 2013, well in advance of the date which my noble friend’s amendment would require. This will set out our support for increased interconnection that is appropriate and economic. My noble friend will be aware that the Government also recently supported a number of interconnection projects to become projects of common interest under the EU regulation on guidelines for trans-European energy infrastructure. The UK Government support that regulation and its intention to accelerate completion of the internal energy market by facilitating cross-border energy infrastructure. Five GB electricity interconnection projects have been selected as projects of common interest under the regulation, including with France, Belgium and Norway. They will enjoy streamlined planning procedures and, where appropriate, a mechanism to agree cross-border cost allocation. They will also be eligible to access financial instruments such as loan finance, grants for feasibility studies and, potentially, grants for work under the Connecting Europe Facility, which has a pot of €5.1 billion over seven years. Four renewable generation projects located in Ireland, with potential to develop into interconnection, were also selected as projects of common interest. This brings the combined capacity of all potential interconnection projects currently in the pipeline to more than 12 gigawatts. My noble friend will also have seen our proposals for how interconnected capacity may be able to participate in the capacity market from 2015. We are currently working proactively on the details of this proposal and we will welcome further engagement with stakeholders to try to make this possible.

I also highlight work being undertaken by Ofgem to develop a supportive approach to interconnection. Ofgem is developing a new cap and floor regulatory approach for interconnection for application to the proposed Project NEMO between GB and Belgium. The Government are confident that this approach, if extended, will promote investment in interconnection. However, as the cap and floor approach looks to consumers potentially to take on some risk, it is important that careful consideration is given to its application. We are working closely with Ofgem as it takes forward its wider Integrated Transmission Planning and Regulation project, considering the need for enhanced planning or strategic evaluation of future interconnection. Ofgem is also working to ensure that GB electricity prices reflect scarcity to a greater extent. As interconnection developers invest on the basis of price differentials on either side of the link, this is likely to make investment more attractive.

I hope noble Lords will appreciate that, following Committee, the Government have made a public commitment that will satisfy the intention behind this amendment, and do so sooner than the amendment itself would require. I therefore hope that my noble friend will be reassured and will feel content to withdraw her amendment.

[Baroness Parminter]

I thank my noble friend the Minister for that very fulsome reply, for the way in which she has outlined the Government’s commitment to interconnection and, in particular, for the policy statement—which is probably civil servant speak for “strategy”—or as near as we are going to get it. I thank all my colleagues around the House for their support. I think they have done a great job in actually persuading the Government to move a bit on an issue in this Bill. I am grateful to the Minister for having an open-door policy and for having listened to us on this important issue, which will make our approach to the Energy Bill and how we secure energy in the future better. On that basis, I beg leave to withdraw the amendment.

Amendment 59 withdrawn.

Consideration on Report adjourned.

House adjourned at 10.23 pm.